FY 2012 Annual Report - Orascom Development

F-79 Orascom Development 2012 Annual Report F-80
Monetization plan
Management has also prepared a monetization plan to sell certain assets and implement other actions to generate cash. This will
free up cash to be injected into the business of the group. This monetization plan would generate between CHF 29 million on a
worst case basis in 2013 up to more than CHF 90-100 million on best case basis in 2013.
However, should the action steps under the monetization plan not be sufficient to fund the Group’s operations for the next twelve
months assuming conservative cash generation of only CHF 29 million in the initial phase of monetization, then the group intends
to postpone certain planned capital expenditure investments that are discretionary; such postponement of these projects will
result in shifting their related revenues forward to the future until they are completed. Such related revenues in any case were not
assumed in the current 2013 plans.
From an operational perspective management is also working on several cost saving initiatives that should generate savings in
overhead expenses, direct expenses and interest expenses. These initiatives target enhancing the performance of the group in
certain segments where we believe that there is room for enhancement mainly in the hotel segment in Egypt.
Management believes that these plans are sufficient to substantially mitigate the liquidity risk.
Given that there is a certain degree of uncertainty in major countries where the Group operates, namely Egypt and Oman, the loan
from our Chairman is extended to support the company in the coming few months should such uncertainties prevail.
However management keeps monitoring the events as they unfold in case further immediate action is required.
44 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 11.6 million over projects under constructions (see note 11).
– Transfer of treasury shares to the members of the Board of Directors of CHF 0.6 million
– Non-cash acquisition of properties of CHF 3.1 million
– Additions to Property, plant and equipment related to transferred assets of CHF 10 million.
– Transactions related to disposal of LUPP Middle East, Tab Heights Tours (see note 36) and deemed disposal of ASS (see note
37)
45 OPERATING LEASE ARRANGEMENTS
45.1 The Group as lessee
45.1.1 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.
45.1.2 Payments recognised as an expense in the period
CHF 2012 2011
Minimum lease payments 1,629,825 1,692,922
TOTAL 1,629,825 1,692,922
45.2 The Group as lessor
45.2.1 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 25 years for the resort in Mauritius. 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.
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 17.
45.2.2 Non-cancellable operating lease receivables
CHF 2012 2011
Not later than 1 year 5,189,230 6,248,417
Later than 1 year and not longer than 5 years 21,815,733 26,268,597
Later than 5 years 36,141,306 51,287,319
TOTAL 63,146,269 83,804,333
46 COMMITMENTS FOR EXPENDITURE
The following commitments for expenditure have been made for the future development of the respective projects:
CHF 2012
Salalah Beach Tourism Development Company (S.A.O.C) 14,226,600
Sifah Tourism Development Company (S.A.O.C) 2,371,100
Andermatt Swiss Alps AG (i) 37,985,000
Eco-Bos Development Limited (ii) 5,325,607
(i) The Swiss subsidiary Andermatt Swiss Alps AG (ASA) has obligations towards the canton of Uri and the municipality of
Andermatt. ASA is responsible for the construction of certain parts of the tourism resort Andermatt. Within certain periods of
time or should the construction work be stopped for whatever reason, ASA has the obligation to rebuild the relevant plots of
land to the original state. At 31 December 2012, 36,985 ASA shares with a nominal value of CHF 1,000 each, amounting to a
total book value of CHF 36,985,000, have been pledged as a security to the canton and municipality. Additionally, land with a
value of CHF 1,000,000 is pledged under this transaction and the security towards the canton of Uri amounts to CHF
33,347,000.
(ii) The UK subsidiary Eco-Bos Development Ltd. is committed to purchase three plots of land from Imerys, a multinational
industrial minerals company, to develop an integrated Eco Town in Cornwall, UK.
One part of the Group’s business is to acquire land for the development of touristic 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. Such commitments should be considered together with the legally binding commitments for expenditure listed
above.
45.1.3 Non-cancellable operating lease commitments
Total of future minimum lease payments
CHF 2012 2011
Not longer than 1 year 210,600 236,612
Longer than 1 year and not longer than 5 years 842,400 842,400
Longer than 5 years 3,369,600 3,580,200
TOTAL 4,422,600 4,659,212
In respect of non-cancellable operating leases, no liabilities have been recognised.
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