DUBAI HOLDING COMMERCIAL OPERATIONS GROUP LLC CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2014 Dubai Holding Commercial Operations Group LLC CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2014 Pages CEO’s message i – ii Operational review iii – v Independent auditor’s report 1 Consolidated balance sheet 2 Consolidated income statement 3 Consolidated statement of comprehensive income 4 Consolidated statement of changes in equity 5 – 6 Consolidated statement of cash flows 7 Notes to the consolidated financial statements 8 – 75 2014 Audited Financial Results CEO’s Message I am delighted to announce that 2014 has marked yet another solid year for Dubai Holding Commercial Operations Group (“DHCOG”). DHCOG delivered its fifth consecutive year of consistent, competitive and profitable growth with total revenue increasing by 13.6% to reach AED 13.2 billion. Normalised EBITDA grew to AED 6.9 billion, a 25.5% increase over 2013; while net profits increased by a remarkable 41.7% to reach AED 4.7 billion. Once again our growth has been balanced and broad based with DHCOG continuing to outperform our expectations and we have robust growth strategies to keep this momentum going. Sustainable recurring revenues from our hospitality, leasing, facilities and property management businesses registered a growth of 8.5% to reach AED 7.6 billion. Property sales, driven by the handover cycle, and land sales, complemented by growing investor demand, contributed a substantial AED 5.6 billion to total revenues. In addition to our focus on innovation, we continue to drive the development of the Islamic Economy, the growth of the SME sector and the long term success of the tourism industry. Strong and effective corporate governance remains an important pillar of our strategy. Our Boards of Directors continue to be active and diligent and we welcome their oversight that allows us to make robust decisions to increase stakeholder value and provide stable, reliable and growing returns. TECOM Investments’ (“TECOM”) growth during 2014 was driven by consistently high occupancy levels across its business and industrial parks, as well as commercial land sales led by strong investor demand. TECOM’s Dubai Design District (d3) which aims to create a sustainable, innovative and thriving ecosystem for the region’s design industry is expected to be ready to welcome new business partners very soon. d3 has already attracted 161 local and international design companies. TECOM also launched Villa Lantana, a vibrant new villa community in the heart of new Dubai, while its industrial park, Dubai Industrial City, announced the launch of the Halal Cluster. TECOM continues to hold the mandate to drive Dubai’s efforts to become the global engine for innovation, the global centre for the Islamic economy and to make Dubai the smartest city in the world. Jumeirah Group (“Jumeirah”) performed well during 2014 with stable occupancy levels in Dubai and increased levels across the international portfolio, especially in Frankfurt and Spain. i The construction of Madinat Jumeirah Phase IV is already on track for completion in 2016. This will now be complemented by expansion of facilities at the flagship hotel, Burj Al Arab, as well as the design finalisation of a new phase of the Jumeirah Beach Hotel. As Jumeirah continues to expand its geographical footprint by signing new management contracts for multiple hotels in China, India and Mauritius, as well as additional hotels in Dubai, it also launched a new contemporary hotel brand, ‘Venu’. During 2014 Dubai Properties Group (“DPG”), development arm, Dubai Properties (DP) launched new residential and commercial projects across Dubai including the second phase of Mudon Villas, and Manazel Al Khor and Dubai Wharf as part of its destination, Culture Village; while it continued to hand over completed units in its projects, Remraam and Bay Square. DPG also continued to increase sustainable revenues from its leasing, facilities and property management businesses. DPG is poised for future growth as it continues to leverage market demand, strengthen its portfolio of residential units, and regional expansion of its facilities and property management business. Emirates International Telecommunications’ (“EIT”) portfolio companies demonstrated stable overall results with ‘du’, Tunisie Telecom, GO and Forthnet showing strong growth in their customer base and market shares. OUTLOOK 2015 will see several high profile and important projects from Dubai Holding. Just a few of the many include; the first phase of Mall of the World, a project that has captured the imagination of people both here and abroad; the official openings of d3 as well as Jumeirah expansion projects, and the execution of the recently announced ‘innovation strategy’, a major multi-year project that will create a global innovation powerhouse and support the development of Dubai’s economy for generations to come. I would like to extend my sincere thanks to all our employees for their continued dedication and tremendous support throughout the year. I would also like to extend a special thanks to our partners and customers, who continue to give us their trust and confidence. Together, we continue to be well positioned to move forward towards another milestone year, and, of course, a range of fresh and new initiatives. ----------------------------- Ahmad Bin Byat Chief Executive Officer Dubai Holding ii Operational Review Key Highlights: Total revenues increased by 13.6% to AED 13,233 million Recurring revenues increased by 8.5% to AED 7,573 million Net profit grew substantially by 41.7% to reach AED 4,679 million Normalized EBITDA grew to AED 6,930 million Total equity increased by 17.6% to AED 21,072 million thereby decreasing the debt equity ratio to 0.52 AED million 2014 2013 Recurring revenues 7,573 6,981 Property and land sales 5,660 4,664 Total revenues 13,233 11,645 Gross profit 6,640 4,544 % margin 50.2% 39.0% Other operating income 643 510 EBITDA1 6,930 5,522 Impairment reversal – net (750) (372) Net profit 4,679 3,302 % margin 35.4% 28.4% Selected balances sheet highlights AED million 2014 2013 Total assets 87,411 85,490 Total equity 21,072 17,914 Cash and cash equivalents 4,907 3,459 Total financial debt 11,058 10,981 DHCOG continues to strengthen its balance sheet along with its liquidity and cash position. This enabled DHCOG to repay its EUR 750 million (AED 3.7 billion) bond in January 2014 on maturity, as well as to prepay an amortizing corporate bank facility in April 2014. DHCOG raised additional financial debt at highly favourable terms at its business units’ level in order to maintain optimum leverage. DHCOG’s next and only significant public debt maturity is a GBP500 million bond due in February 2017. At the end of 2014, DHCOG’s debt-to-equity ratio stood at 0.52 (2013: 0.61). The performance of each of DHCOG’s business unit is outlined below: TECOM continued to see strong occupancy levels across its business parks with overall commercial office occupancy rising to 89.1% and occupancy of Dubai Industrial City (“DI”) rising to 88.6%. In Dubai Internet City, Dubai Knowledge Village and Dubai Media City, occupancy levels continued their trend of 95%+, way ahead of the wider commercial 1 Normalized EBITDA (excluding impairments and provisions for other liabilities and charges) iii market occupancy rates of around 76%1. Such occupancy levels along with gradual price increases allowed office rental revenue to grow by 8%. DI also signed a significant number of new land leases pushing land lease revenues to grow in excess of 30%. TECOM continues to play an instrumental role in transforming Dubai’s economy. In 2014, TECOM also took up the mandate to drive Dubai’s efforts to become a global engine for innovation, media and content and to integrate the industries it operates in within the UAE national innovation system. This will be achieved through pioneering projects including business innovation incubators, financial funds and smart laboratories. TECOM’s Dubai Design District “d3”, which aims to create a sustainable, innovative and thriving ecosystem for the region’s design industry, continues to develop Phase 1 as planned and is expected to be ready to welcome new business partners very soon. TECOM’s DI announced the launch of its Halal Cluster, a dedicated platform for companies and investors operating Halal businesses in the UAE, an initiative that is in line with Dubai’s strategy to become the global centre for the Islamic Economy. Global Village remains Dubai’s preferred family entertainment and cultural destination and witnessed significant increase in the number of visitors for its 19th season, resulting in a 12.5% increase in revenues in 2014. TECOM’s media, events and radio business, AMG, exceeded its goal of reaching 40,000,000 digital listening sessions in 2014 and hosted a number of mega concerts of internationally acknowledged artists and reported consistent growth of 9.2% in 2014. SmartCity, a developer of knowledge-based business townships, made significant progress in 2014. SmartCity Malta occupancy levels stand over 72%, while SmartCity Kochi’s first phase was substantially completed, with new agreements to develop additional 4 million sq. ft. of space. TECOM’s 11 industry-specific business parks employ over 74,000 individuals through 4,658 businesses based there. TECOM also offers 400 educational programmes. Jumeirah performed well in 2014 and continued to expand market share in a challenging international environment while at the same time remaining ahead of its competition, which highlights the power of its brands and global appeal of its products and services. Overall room revenues grew by 3.1% with occupancy levels of 76.5% and revenue per available room (“RevPAR”) growing by 2.8%. The construction of Madinat Jumeirah Phase IV, the 430 room resort development opposite Burj Al Arab, is on track for completion in 2016.