Investor Presentation: Orascom Construction 16 February 2015
2
Disclaimer– Important Information
2
This document has been prepared by Orascom Construction Limited (the “Company”) and is the responsibility of the Company and comprises the written materials for a presentation concerning the Demerger and the proposed Admission of the Company's shares (the "Shares") to the Official List of Securities maintained by the Dubai Financial Services Authority (the "DFSA") and to trading on NASDAQ Dubai ("Admission"). This presentation and the information contained herein are strictly confidential and are being shown to you solely for your information. The information may not be reproduced, distributed to any other person or published, in whole or in part, for any purpose.
This document does not constitute or form part of any offer to sell or issue or invitation to purchase or subscribe for, or any solicitation of any offer to purchase or subscribe for, any securities of OCI N.V. (the "Parent") or the Company, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. The information and opinions contained in this document are provided as at the date of the presentation and are subject to change. None of the Company, the Parent or the Sponsor undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. Any purchase of or subscription for ordinary shares in the Company in the public trading market after Admission should be made solely on the basis of the information contained in the final Prospectus issued by the Company in connection with the proposed Admission . Such Prospectus will include a description of risk factors in relation to an investment in the Company.
To the extent available, the industry, market and competitive position data contained in this presentation come from official or third party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company reasonably believes that each of these publications, studies and surveys has been prepared by a reputable source, EFG-Hermes UAE Limited (the "Sponsor"), the Parent and the Company or any of their respective directors, officers, employees, agents, affiliates or advisors have not independently verified the data contained therein. In addition, certain of the industry, market and competitive position data contained in this presentation come from the Parent’s and the Company’s own internal research and estimates based on the knowledge and experience of the Parent’s and the Company’s management in the markets in which it operates. While the Company and the Parent reasonably believe that such research and estimates are reasonable and reliable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change. Accordingly, undue reliance should not be placed on any of the industry, market or competitive position data contained in this presentation.
The information contained in this document has not been independently verified and does not purport to be comprehensive or to contain all the information that a prospective purchaser of securities of the Company may desire or require in deciding whether or not to offer to purchase such securities. The Company, Sponsor and their respective subsidiary undertakings or affiliates, or their respective directors, officers, employees, advisers or agents do not accept any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, fullness, accuracy or completeness of the information in this presentation (or whether any information has been omitted from the presentation) or any other information relating to the Parent, the Company, their subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.
This document has been prepared by the Company solely in connection with the Admission. Neither this document nor any part or copy of it may be taken or transmitted into the United States (US) or distributed, directly or indirectly, in the US, as that term is defined in the US Securities Act of 1933, as amended (the “US Securities Act”). Neither this document nor any part or copy of it may be taken or transmitted into Australia (other than to persons in Australia to whom an offer of securities may be made without a disclosure document in accordance with Chapter 6D of the Corporations Act 2001 (Cth)), Canada or Japan or to any resident of Japan, or distributed directly or indirectly in Australia (other than persons in Australia to whom an offer of securities may be made without a disclosure document in accordance with Chapter 6D of the Corporations Act 2001 (Cth)), Canada or Japan or to any resident of Japan. Any failure to comply with this restriction may constitute a violation of US, Australian, Canadian or Japanese securities laws. This document does not constitute an offer of securities to the public in the United Arab Emirates, the Dubai International Financial Centre, Egypt, the United Kingdom, South Africa or in any other jurisdiction. The distribution of this document in other jurisdictions may be restricted by law, and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Persons into whose possession this document comes should observe all relevant restrictions. In the Republic of South Africa, this document is distributed for information purposes only on a confidential basis to a limited number of persons who are market professionals or institutional investors. The shares of the Company have not been, and will not be, registered under the US Securities Act and may not be offered or sold in the United States except pursuant to an exemption from, or a transaction not subject to, the registration requirements of the US Securities Act or unless registered under the US Securities Act and in compliance with the relevant state securities laws. There will be no public offering of the shares in the United States.
This presentation is only directed at and being communicated to the limited number of invitees who: (A) if in the European Economic Area, are persons who are “qualified investors” within the meaning of Article 2(1)(e) of the Prospectus Directive (which means EU Directive 2003/71/EC and any amendments thereto, including the amending directive, Directive 2010/73/EU to the extent implemented in the relevant member state and any relevant implementing measure in each relevant member state) (“Qualified Investors”); and (B) if in the United Kingdom are persons (i) having professional experience in matters relating to investments so as to qualify them as “investment professionals” under Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); and (ii) falling within Article 49(2)(a) to (d) of the Order; and/or (C) are other persons to whom it may otherwise lawfully be communicated under the laws and regulations of each applicable jurisdiction without giving rise to any approval, regulatory or filing requirement on the part of the Sponsor, the Company or the Parent (all such persons referred to in (A), (B) and (C) together being “Relevant Persons”). This document must not be acted or relied on by persons who are not Relevant Persons. Any investment activity to which this document relates is available only to Relevant Persons and may be engaged in only with Relevant Persons. Nothing in this presentation constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. If you have received this presentation and you are not a Relevant Person you must return it immediately to the Company.
Any purchase of shares in the public trading market after the proposed Admission should be made solely on the basis of the information contained in the final Prospectus to be issued by the Company in connection with the Admission. No reliance may or should be placed by any other person for any purposes whatsoever. The information in this document and any other material discussed at the presentation is subject to change up until any the publication of the final Prospectus to be issued by the Company in connection with the Admission.
The information in this document may include forward-looking statements, which are based on current expectations and projections about future events. These forward-looking statements, as well as those included in any other material discussed at the presentation, are subject to risks, uncertainties and assumptions about the Company and its subsidiaries and investments, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. No representation or warranty is made that any forward-looking statement will come to pass. No one undertakes to publicly update or revise any such forward-looking statement.
The Sponsor is acting for the Company and the Parent in connection with the Admission and no one else and will not be responsible to anyone other than the Company or the Parent for providing the protections afforded to their respective clients or for providing advice in relation to the Admission or any transaction or arrangement referred to in this presentation.
By attending the presentation to which this document relates and/or by accepting this document you will be taken to have represented, warranted and undertaken that: (i) you are a Relevant Person (as defined above); and (ii) you have read and agree to comply with the contents of this notice.
Orascom Construction Limited was incorporated on 18 January 2015 as a DIFC entity. The Company has not produced / prepared audited consolidated financial statements to date. The reviewed Combined Special Purpose Financial Statements for the period ending 30 September 2014, and the audited Combined Special Purpose Financial Statements for 31 December 2013 and 2012 resulted in net losses for the Group. For more explanation on the reasons of the losses, please refer to pages 46 and 47 of the presentation.
3
Transaction Structure Summary
Commentary
Demerger of Orascom Construction (OC) from OCI N.V.
USD 1.4 billion repayment of capital to OCI N.V. shareholders
OCI N.V. remains listed on Euronext Amsterdam and does not retain a shareholding in OC post demerger
Same shareholding for both companies at demerger record date OCI N.V.
Sawiris Family
Free Float
Fertilizers &
Chemicals
Orascom Construction
BESIX (50%) Contrack Weitz
Structural Overview
OCI N.V.
Sawiris Family
Free Float
Fertilizers &
Chemicals
OC (DIFC)
Sawiris Family
Free Float
Orascom Construction
BESIX (50%)
Contrack Weitz
46% 54%
46% 54% 46% 54%
¹ Dates are indicative and could be subject to change ² Also includes construction related and infrastructure investments ³Pre-Egyptian Capital increase; shareholding percentages are approximate
²
³
Dual Listing Structure for OC
Primary listing on NASDAQ Dubai where all OCI N.V. shareholders will receive shares in OC
Secondary listing of ordinary shares on the Egyptian Exchange (EGX)
Shares fungible between the two markets subject to respective procedures of relevant regulatory bodies
Egyptian Capital Raise
Up to 15% of share capital of Orascom Construction
Proceeds to be used for general corporate purposes including debt settlement
Key Milestone Dates¹
16 Feb: demerger press release issued
19-26 Feb: institutional bookbuilding process; pathfinder prospectus published on 19 Feb
1-4 Mar: retail subscription period
6 Mar: demerger record date
9 Mar: OC to trade on NASDAQ Dubai and OCI N.V. trades ex-OC
9-11 Mar: trading on the EGX commences
³
Demerger Highlights
The spin-off creates two separately-listed pure play companies offering distinct investment propositions:
– Orascom Construction: global engineering and construction group
– OCI N.V.: global producer of natural gas-based fertilizers and chemicals
Timing coincides with record 45% growth in backlog as at 30 September 2014 as compared to 31 December 2013
Streamline Shareholder Base
Focus
Growth Opportunities
Efficient Capital Structure
4
Attracts clear market valuations
Provides global emerging markets and regional investors with new exposure to MENA infrastructure and capital investment
Strong construction base in the US provides natural hedge and an opportunity to capture US infrastructure growth
Improved visibility allows for a better understanding of OC’s prospects and impact of sector-focused events on performance
Provides greater focus to manage own resources and pursue strategic options appropriate to OC’s markets
Actively participate in infrastructure spending growth across the Middle East and USA
Pursue value-accretive investments and partnerships in respective markets
OC to adopt its own capital structure, balance sheet and financing strategy which will more effectively meet its individual requirements
Improves lenders’ ability to evaluate the business, increasing balance sheet effectiveness
Investment Highlights
5
Global contractor with a major position in MENA and US infrastructure and industrial projects
– Record backlog of US$ 5.6 billion using equity consolidation and pro forma US$ 7.7 billion including our share in BESIX & other JVs as of 30 Sept 2014
– Track record of growth and shareholder value creation
– History of successfully entering new markets and incubating new businesses
Accelerating momentum in 2014 – backlog a key driver of growth
– Significant opportunities in our core markets Egypt (major projects), Saudi Arabia (social infrastructure) and USA
– Provides momentum for 2015-2016 revenue and margin growth
Infrastructure investments to provide attractive and stable cash flows
– Strong balance sheet allows us to effectively pursue value accretive equity investments
– New coal-fired power plant initiative with International Petroleum Investment Corporation (IPIC)
– Egypt’s first Public-Private Partnership (PPP) project (Orasqualia)
– US subsidiaries studying similar infrastructure opportunities in USA
Strategic shareholding of 50% in BESIX Group, providing consistent annual dividend
– Leading contractor with 55% of high-profile backlog located in MENA
– 2013 revenue of over €2 billion and net cash of €190 million¹
– Provides OC with exposure to specialty capabilities (e.g. high-rise and marine works) that provide access to projects like Burj Khalifa and Grand Egyptian Museum
¹ 9M 2014 backlog for BESIX and other JV’s sourced from OCI N.V. Trading Updates; BESIX figures are sourced from public BESIX filings and converted at the following rates: EUR:USD BS rate of 1.2957, 1.3190, 1.3761 for 2011, 2012, and 2013 respectively. EUR:USD IS rate of 1.4028, 1.3041, 1.3284 for 2011, 2012, and 2013 respectively.
1999 9M 2014
335
2,350 2,157
2009 2013 9M 2014
Putting the Track Record into Perspective
6
1950 2002 2004 2005 - 2008
2009 2011 2012 - 2014
OCI IPOs on EGX
OCI launches 50-05 Action Plan to achieve 50% of
revenue outside Egypt by 2005
OCI and BESIX management jointly acquire BESIX Group in
50/50 LBO
Achieves 50-05 Action Plan a year
early
Significant backlog growth with major awards in Algeria,
Egypt and UAE
Led initiative to develop Egypt’s
first private ammonia plant in 2006 and Africa’s largest fertilizer complex in 2007
Awarded Egypt’s first PPP project
(New Cairo Wastewater
Treatment Plant) in a JV with
Aqualia
Formed Orascom Saudi Ltd (60% owned JV with Saudi Binladin)
KSA backlog contribution grows from 0% in 2010 to
21% in 2014
Acquires Weitz in 2012 to establish strategic
foothold in USA
Began work on first world scale greenfield fertilizer plant in USA in 25 years & largest
new methanol plant in USA
JV with IPIC to develop coal-fired power plant
in Egypt
1985 1999
Contrack formed to pursue USAID and USACE work
in Egypt
Founded by Onsi Sawiris in Upper
Egypt – first project was the
refurbishment of a school wall
Strong Track Record of Growth and International Expansion
Revenue Growth (US$ Million) Well-balanced geographic backlog presence1
7.0x
2,131
Backlog Growth (US$ Million)
1,495
5,566 5.2x
3.7x
BESIX
& JV
s 1Backlog excludes BESIX and other joint ventures accounted for under the equity method beginning 1 January 2014
Egypt 26.5%
Saudi Arabia 20.7%
Algeria 3.7%
USA 43.1%
Rest of World 5.8%
As at 30 September 2014 7,697
1999
A Long and Successful Track Record of Growth and Geographic Expansion Both Organically and Through Acquisitions
ENR Ranking: 120 on Top 400 US Contractors list
Established in 1855 and is present in 12 US states
One of the oldest commercial contractors in the US
ENR Ranking: 69 on International Contractors list; 99 on Global Contractors list
Established in 1909 with 100+ years of infrastructure and high-end commercial experience in MENA and Europe
Strategic Geographic and Sector Diversification
United States 43% of Backlog
Egypt 27% of Backlog Saudi Arabia
21% of Backlog
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Large geographic presence – each region with an established customer base
ENR Ranking: 67 on International Contractors list; 138 on Global Contractors list
Leading MENA industrial and infrastructure contractor
Established in 1950
ENR Ranking: 142 on Top 400 US Contractors list
Preferred US government contractor for the last 10 years
Established in 1985 and operates in MENA
1 Backlog contributions as at 30 September 2014 ² Engineering and News Record rankings published August 2014 based on 2013 revenues
8
Recent Developments
Infrastructure Investments
Announced on 5 Nov 2014 along with International Petroleum Investment Company (IPIC) the intention to jointly commence studies to develop, construct, and operate a 2,000-3,000 MW coal-fired power plant in Egypt
MoU signed on 12 November 2014 by the partners and the Egyptian government to formalize the parties’ cooperation
Orascom Construction and IPIC would aim to develop this project on a fast-track basis to help meet Egypt’s rising demand for electricity
This is a strategic step in further developing OC’s infrastructure focus in Egypt and other key regional markets
Such joint efforts with IPIC lay a solid foundation for collaboration on future projects
Additions to the backlog
During Q4 2014, Orascom Construction was awarded the following significant projects:
In December 2014, a consortium of General Electric and OC was awarded the construction of two power plants in Egypt as part of the country’s Emergency Power Generation Program
‒ Expected to be completed during Q2 and Q3 of 2015 to meet expected high demand for power during the summer months
‒ OC’s share of the contract value is approximately US$ 642 million
OC was awarded the construction of three tunnels estimated at EGP 12 billion as part of the New Suez Canal mega-project in Port Said, which will enlarge the canal’s transit capacity and increase industrial activity in the area1
Other OC awards total approximately US$ 330 million in USA and Egypt
Renewable Energy Program in Egypt
Shortlisted by the Ministry of Electricity as one of the qualified developers for a new solar and wind renewable energy program in Egypt
OC constructed the first solar power plant in the Middle East in Kuraymat, Egypt as an EPC contractor
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Board of Directors
Non-Executive
Nassef Sawiris
Non-Executive Board Member
Non-Executive Board Member
Chairman
Osama Bishai Salman Butt
Arif Naqvi
Founder & CEO Abraaj Group
CFO
OCI N.V. CEO of OCI N.V.
Non-Executive Board Member
Khaled Bichara
Co-CEO - Accelero Capital
Chairman - Dada.it
Non-Executive Board Member
Sami Haddad
Former CEO/Chairman
Byblos Bank
CEO
Executive Board Member
CEO
Orascom Construction
Non-Executive
Independent Non-Executive
Non-Executive Board Member
Azmi Mikati
CEO
M1 Group
The Board of Directors will establish three committees: Audit Committee, Remuneration Committee and Nomination Committee All to be chaired by independent non-executive directors
Non-Executive
10
Strong leadership team led by skilled professionals who have a proven track record of growing the business historically, both organically and through acquisitions, led by our CEO
– Clear sense of long term focus and commitment to the business
– Unrivalled experience in the international construction industry that has been central to our growth and strong track record
The leadership team laid the foundation and roadmap for successful development of the Company with a vision of shaping the business for expansion and growth
Depth of knowledge and experience extends beyond senior management and deep into our organization, with a comprehensive structure of experienced managers and highly skilled workforce, which is at the forefront of the industry
Leonard Martling GM Weitz
Joined Group in 1985
Maged Abadir Operations Director
Orascom Joined Group in 1988
Wahid Hakki GM Contrack
• Joined Group in 1994
Senior Operational Management
Osama Bishai
CEO
Joined the Group in 1985
Played a key role in developing the business of the Group, particularly in the oil & gas sector and OCI N.V.’s infrastructure and industrial investments in Egypt, Algeria and USA
Dalia Khorshid EVP & Group Corporate
Treasurer/Finance Operations Joined Group in 2005
Mark Littel CFO
Joined Group in 2014
Management Team
Commercial Strategy
11
Strategic Market and Geographic Expansion Establish and Leverage Strategic Partnerships and Joint Ventures
Pursue Value Accretive Investment Opportunities Operational Excellence
Expand market presence in our core markets in MENA and USA
Further strengthen activities in our key sectors in Egypt, USA, Saudi Arabia, Algeria and Iraq
Continued commitment to pursue strategic market and geographic expansion
Simultaneously selectively pursue and grow business in new markets
Work in partnership with industry leaders to increase success rate in obtaining new project work
Historical relationships and strategic partnerships have enabled us to participate in some of MENA's largest construction projects and maintain a strong market position among local construction companies in North Africa
Key current partnerships such as Saudi Binladin Group, IPIC, Aqualia, GE and VINCI
Leverage our investment track record to identify and pursue new investment opportunities that provide stable cash flows, scalable platforms and potential further scope for growth (co-contractor and owner of Egypt’s first PPP project)
Expand participation in infrastructure investments both as standalone brands and in consortiums in all of our core markets, including PPP and DBFM projects (currently bidding for BOT/PPP projects)
This allows Orascom Construction to pursue larger industrial and infrastructure projects as well as lock in ongoing steady returns
Consider strategic tuck-in acquisitions that enhance our core competencies and add valuable human resources to our construction team (such as Weitz)
Key determining factors when contracting:
‒ Continued commitment to quality, safety, environment and ethical business practices
‒ Maintain a safe and healthy workplace for all employees by implementing the highest safety standards and training programs
Set global standards by putting our expertise and experience to work for our clients, our partners and our host communities, all while respecting local sensitivities
3.3
4.9
3.8 4.0
5.6
2.7 2.6
1.2
0.6
3.9
2011 2012 2013 9M 2013 9M 2014
Backlog New Awards
New Awards Accelerating and Record Level Backlog
12
Record levels of Quality Backlog Across Diversified Markets – representing 2.4 times our FY2013 Revenue
1Backlog excludes BESIX and other joint ventures accounted for under the equity method; backlog excludes intercompany work; geographic segmentation based on project location
Strong momentum led by $3.9 billion in new awards during 9M 2014 compared to $1.2 billion in FY 2013
Orascom Construction
78.8%
Contrack12.9%
Weitz8.3%
Public50.7%
Private22.6%
OCI N.V. F&C26.7%
Infrastructure53.8%
Industrial34.6%
Commercial11.6%
Egypt26.5%
Saudi Arabia20.7%
Algeria3.7%
USA43.1%
Rest of World5.8%
Backlog by Sector - 30 Sep 14 Backlog by Geography - 30 Sep 14 Backlog by Client- 30 Sep 14 Backlog by Brand - 30 Sep 14
Momentum accelerating since beginning of 2014
– 30 Sept 2014 backlog reached record level of $5.6bn, up 39% y-o-y
– US$ 3.9 bn new awards during 9M 2014, up 6x y-o-y
2011-2013 period was challenging, but measures are starting to pay off
– Economic downturn, combined with Arab Spring in our core markets
– Significant provisions taken in 2012 and 9M 2014
New projects awarded in Q4 2014 include two power plants in Egypt worth approximately US$ 642 billion
Significant potential pipeline of new awards 2015 - 2020
13
Backlog and expertise focused on high growth markets / segments in MENA and United States with promising bidding pipeline
Significant progress in core markets Egypt, Saudi Arabia and USA
– Egypt: US$ 450+ million of road and airport work; cemented position as a leader in the power sector with US$ 600+ million of new power projects
– Saudi Arabia: continued to build on proven track record with c. $500 million of additional infrastructure work awarded during the year
– USA: expanded footprint through the construction of one of the largest methanol plants in the US and an 89% increase in Weitz backlog y-o-y
2014 Key Turning Point Looking Ahead
Build on previous experience in infrastructure investments and concessions to provide steady investment income and cash flow
Strong and well-established sovereign and large private client base with repeat business
Growing track record in the US: through Weitz and Orascom E&C (first world scale greenfield fertilizer plant in USS in 25 years)
Significant local resources: a global work force of c.53,000; with a proven ability to mobilize these resources across regional markets
Benefitting from post-financial crisis and post-Arab Spring resurgence in core construction markets
Backlog as key driver of significant revenue growth:
– Typically provides on average 18 - 24 months of revenue visibility
– Further revenue growth as ongoing projects to continue filter into our accounts in 2015 - 2016
Proven ability to promptly respond and capitalize on new opportunities when they arise in existing as well new markets
MENA: Capitalize on Market Opportunities
14
Core OC Markets: Middle East & North Africa
Algeria:
Project pipeline 2015 – 2020E US$35 billion
Egypt:
Project pipeline 2015 – 2020E US$157 billion
Iraq:
Project pipeline 2015 – 2020E US$102 billion
United Arab Emirates:
Project pipeline 2015 – 2020E US$465 billion
Saudi Arabia:
Project pipeline 2015 – 2020E US$674 billion
Core markets: Egypt, Saudi Arabia, United Arab Emirates, Algeria and Iraq
US$ 1.4 trillion of planned projects through 2020, excluding oil & gas, announced in core MENA markets
Egypt is launching major projects (such as Suez Canal, power plants, roads)
Saudi Arabia is the largest construction market in the region and infrastructure spending continues
United Arab Emirates is the second largest market: driven by infrastructure spending and Dubai Expo 2020 – a key focus market for us
Summary Outlook
US$ 1.4 Trillion New Awards Expected in Core MENA Markets from 2015 – 2020 (US$ bn)
The Group is well positioned to Capitalize on Opportunities that MENA Markets Present to us
2009-2014 2015-2020
Iraq
Algeria
UAE
Saudi Arabia
Egypt
636
1,433
Source: MEED Insight and MEED Projects
USA: Growing US Business and Track Record
Established to Pursue US Government Work
Acquiring Strong Presence Within the US
Organically Strengthening USA Operations
Established in 1985 to work on US federal and USAID projects in Egypt and the Middle East
In 1991, Contrack was recognized as a Top 400 US Contractor by ENR
One of the top contractors for the US Army Core of Engineers
Strengthened US federal business following the acquisition of Watts (Weitz’s federal business) for Weitz
US general contractor based in Des Moines, Iowa with 160 years of experience in USA
Acquired In 2012 thereby allowing the Company to establish strong presence in the US
Amongst the largest contractors in the US and the oldest ranked on the ENR Top 400 list
Weitz is a pure play on US general construction and is already benefiting from the rebound in construction activity – revenue exceeding $1.5bn pre-financial crisis
Orascom E&C
Established Orascom E&C USA in 2013 to develop OCI N.V.’s fertilizer growth in the US, further strengthening the Company’s US foothold
Construction of the first world-scale fertilizer plant in the US over the last 25 years
Construction of a methanol plant at Beaumont, Texas for Natgasoline LLC
De-bottlenecking project at OCI Beaumont, TX
Expected to benefit from growing petrochemical and fertilizer sectors
15
United States: Construction Spending (US$ bn)
0.0
0.5
1.0
1.5
19
94
19
96
19
97
19
98
19
99
20
00
20
01
20
03
20
04
20
05
20
06
20
07
20
08
20
10
20
11
20
12
20
13
Total Non-Residential Residential Construction spending has returned to pre-economic crisis levels and is expected to return to near record levels by 2018 - construction sector expected to grow by 7.1%/ 6.6% in 2015 /2016
New awards opportunities are expected to exceed US$ 4.6 trillion through 2018
Non-residential market estimated to grow 5% p.a. 2015-2018, driven by educational, commercial and manufacturing projects
Significant infrastructure and industrial spending expected over the next 10 years
Power projects are expected to amount to US$ 455 billion through 2018
Industrial projects are expected to amount to US$ 244 billion through 2018
United States: Construction Spending (US$ bn)
Source: US Census Bureau and Bloomberg
64
122
2004 2013
877
2,314
2004 2013
1,364
2004 201316
The BESIX Group – 2004 v. 2013 (EUR Million)
# 69 2014 ENR International
contractors ranking
EUR 2.3 bn 2013 revenue
EUR 2.7 bn 2013 backlog
EUR 194 mn 2013 net cash
Founded in 1909
Acquired 50% of the BESIX Group in a joint leverage buyout in partnership with BESIX management in 2004
Significant value creation in the process, an investment that is considered strategic to the Group
Revenue EBITDA Backlog
2.6x 1.9x 2.0x
Key strategic player that allows OCI to access particular projects
Global Presence: operates in 6 continents with a key focus on Europe, Middle East, North Africa, Australia and select African markets
MENA experience: over 60 years of experience in the MENA region
‒ Operating major water, sewage and recycling concessions in Ajman, Al Wathba (Abu Dhabi) and Al Allahamah (Al Ain), UAE
‒ Facility management experience in UAE including Burj Khalifa (technical upkeep) and Dubai Mall
‒ OC/BESIX have complementary expertise that allows for joint cooperation on projects
Europe experience: Benelux’s largest contractor focused on high-end commercial and infrastructure projects
Concessions & Real Estate Portfolio: BESIX leverages its construction and property development expertise to invest in concessions
Annual divided: consistent annual dividend stream
Company Highlights
# 99 2014 ENR Global contractors
ranking
2,716
2013
Source: based on public information – BESIX 2013 Activity Report and company website
Burj Khalifa World’s tallest building
Tangiers Port, Morocco Africa’s largest port
Sheikh Zayed Bridge Abu Dhabi
Ferrari Park Experience Abu Dhabi
30% 2013 backlog in
UAE/Bahrain
20 Countries active in
Yas Island Development Abu Dhabi
King Abdullah Sports City Jeddah, Saudi Arabia
18,000 Employees worldwide
Sheikh Zayed Al Nahyan Mosque - Abu Dhabi
Strategic Investment in BESIX: 55% of Backlog in MENA
Pursuing Value Accretive Investments Construction business was integral to OCI’s value creation story:
– developed and incubated businesses both independently and with partners for nearly 20 years …
– … successfully translated into shareholder value creation
Key executives have been with the Company for 10+ years, guaranteeing OC’s continuity in its ability and intention to create new growth channels
1996 – 2007
History of Successfully Incubating New Businesses Across a Number of Industrial and Infrastructure Sectors
Cement Group
(1996 – 2007)
Sokhna Port
(1999 – 2007) 1.5 3.0 5.3 7.0 7.5
9.7
13.8
19.5
32.0
35.9
0.0
10.0
20.0
30.0
40.0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Cem
ent
Cap
acit
y (m
tpa)
Constructed Acquired
Fertilizer & Chemicals Group
(2005 – Present)
Started cement business with 1.5 mtpa green-field project in Egypt in 1996
Became top 10 global cement producer in 2007 with 44 mtpa capacity
Divested to Lafarge at an EV of US$ 15 billion
Distributed US$ 11 billion in dividends in 2008
Started construction of a new port near Suez Canal in 1999 and was main contractor since privatization
Only BOT privatized port in Middle East at the time – OCI held 45% stake
Sold stake to Dubai Ports World for US$ 372 million in 2007
Exit Multiple: 20.6x EV/EBITDA
IRR: 49% over 8.5 year investment period
Started construction of first fertilizer plant in 1998
Identified and invested in EBIC in 2005 (30% stake)
Constructed EFC, which was acquired in 2008
Sorfert Algérie in JV with Sonatrach built by OCI, commissioned end-2013
Started construction of Iowa Fertilizer Company (USA) in 2012
Started construction of Natgasoline (USA) in 2014
Cement Group: Capacity Build-Up
Fertilizer & Chemicals Group: Capacity Build-Up
17
Orasqualia
(2009 – Present)
First seed for company’s infrastructure investments
Constructed and operates New Cairo Wastewater treatment plant
Our participation as the developer of the project positioned us well to be awarded relevant portion of the EPC contract
Egypt’s first PPP concession in JV with Aqualia (20 years)
1.3 2.0
4.7 5.7 5.7
7.8 7.9
10.4
11.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2008 2009 2010 2011 2012 2013 2014 2015 2016
Co
nst
ruct
ed
Fe
rtili
zer
Cap
acit
y (m
tpa)
Constructed Under Construction Acquired
Partnership with the Abu Dhabi-based IPIC to jointly develop a 2,000 – 3,000 Megawatt coal fired power plant initiative in Egypt
The MENA region is encouraging private investment in power & infrastructure as governments seek leaner balance sheets and stimulate private and foreign investment
Egypt’s power capacity needs expected to double to 60,000 MW over next 10 years at estimated investment cost of $35bn-$40bn – private sector involvement is key
Develop New Opportunities – Infrastructure Investments
Long-term investments with additional revenue and stable cash flows
Power Sector: OC-IPIC Partnership
OCI is bidding for other BOT/PPP projects – solid track record as co-contractor and owner of Egypt’s first PPP project
Investments to be funded through off-balance sheet project financing and OC’s equity to be disbursed throughout the life of construction from OC’s cash flow generation
OC would be the EPC contractor or part of an EPC consortium
Construction focus on upcoming infrastructure investments and PPP projects
Owner of Egypt’s first PPP project
OC and Aqualia (a leading wastewater management company based in Spain) established Orasqualia, Egypt's first public-private partnership, in 2009
The US$472m/EGP2.646bn project was initiated by the New Urban Communities Authority (NUCA) and was tendered by the Egyptian Ministry of Housing, Utilities and Urban Development in coordination with the Ministry of Finance as a 20 year PPP
Construction completed in 2013 and plant operations commenced in Q4 2013
18
Strategic Investments and Self-Generated Work
Developed, structured and financed over US$ 10 billion in corporate and project financing debt over the last decade
Leveraged our expertise to secure debt for complex industrial and infrastructure projects worldwide across several industries
Strong relationship with major regional and international banks
Comprehensive knowledge of debt raising, including different types of financing products with risk allocation regime
Streamlining internal off-shore cash pooling structure to increase efficiency of cash up-streaming among our subsidiaries and reduce cost of borrowing
19
Strong Financing Capabilities
Relationships with Lending Institutions
First PPP transaction in Egypt
Longest EGP funding structure for private sector without benchmarks for matching tenors
Deal closure in a record time of 7 months in Jan 2010
15 year tenor with 3% over Bid Corridor
Awarded PPP African Deal of the Year by Euromoney/Project Finance Magazine
Issued US$ 1.2 billion Midwest Disaster Area tax-exempt bond in May 2012
3x oversubscribed and rated BB- by both S&P and Fitch
Interest rate reduced by 10 basis points due to high demand
The largest non-investment grade transaction ever sold in the US tax-exempt market
Largest and first private sector non-recourse project finance facility done in Algeria involving local banks only
Largest nitrogen fertilizer complex in Africa
15 year tenor
Pricing: 5.95% & 1.95% post construction completion
USD 1.9bn refinancing in October 2011
Refinancing to help streamline construction and fertilizer groups
Included Egyptian, regional and international banks as well as the IFC
Covered subsidiaries in Europe and the Middle East
Precedent Transactions
EUR 1.1bn USD 1.9bn USD 1.2bn EGP 566m
Financial Section
1,482 1,144 1,172
756 965
329
313
1,178
869
1,192
2011 2012 2013 9M 2013 9M 2014
MENA USA
21
Significant Rebound in Revenue and Healthy Backlog Coverage
Total Revenue (US$ Million) Backlog / Revenue (US$ Million)
1.8x
3.3x
1.6x 1.9x 1.9x
2011 2012 2013 9M 2013 9M 2014
1,811
1,457
2,350
1,624
2,157
Increase in MENA contribution by 28% during 9M 2014 primarily due to growth in Egypt and Saudi Arabia
Several significant projects that were signed at end-2013 began contributing to revenue in 2014
Significant contributors include King Abdul Aziz Airport and National Guard’s military housing in Saudi Arabia and Cairo-Alex Freeway and Giza North Power Plant in Egypt
Revenues declined in 2012 due to a slowdown in Egypt related to political events and the winding down of large projects in Algeria
Development of Revenue in MENA Development of Revenue in USA
During 9M 2014, contribution from the USA increased by 37% primarily due to rapid execution of large projects
Significant contributors to revenue were Iowa Fertilizer Company (IFCo) by Orascom E&C as well as Trillium Woods Senior Living Centre and Wells Fargo campus by Weitz
Increase in 2013 revenue led by integration of Weitz and execution of IFCo
2011 and 2012 revenue categorized as part of USA includes Contrack projects ex. Qatar and Bahrain; reduction of work in Afghanistan after 2012 has been outweighed by increase in work in the Pacific Rim in 2013 and 2014
Note: geographic segmentation based on location of entity managing the contract; USA is comprised of Orascom E&C, Weitz and Contrack projects ex. Qatar and Bahrain
22
Deleveraging Strategy: Net Debt Down 58% From 31 Dec 2013 to 30 Sept 2014
Net Debt Overview
USD million 2011 2012 2013 9M 2014
Loans and borrowings 588.7 795.6 806.8 585.5
Less: cash 448.1 428.0 419.7 421.2
Net debt 140.6 367.6 387.1 164.3
Total equity 1,111.2 431.3 874.5 796.9
Net debt/equity 0.13 0.85 0.44 0.21
EBITDA 290.5 14.8 47.9 -151.5
Net Debt / EBITDA 0.48 nm nm nm
Adjusted net debt calculation
Loans and borrowings 588.7 795.6 806.8 585.5
Less: cash 448.1 428.0 419.7 421.2
Of which:
Restricted Cash 29.4 37.8 37.6 35.1
Adjusted net debt 169.4 405.4 424.7 199.4
Commentary
OCI N.V. capitalized the Engineering & Construction Group via debt settlements of approximately US$150 million over the 9 months period to 30 September 2014, which was previously related to OCI S.A.E. group debt (including fertilizers)
Net debt decreased to US$164.3 million as of 30 September 2014 from US$387.1 million as of 31 December 2013
Gross debt was reduced by 27% from 31 Dec 2013 to 30 Sept 2014
Average cost of borrowing is 7-8%
Equity decreased from 31 December 2011 to 31 December 2012 primarily due to provisions for the tax dispute liability
589
796 807
586
448 428 420 421
141
368 387
164
2011 2012 2013 9M 2014
Loans & borrowings Cash Net debt
Deleveraging Strategy: Capitalisation and Indebtedness as of 31 Dec 2014
23
The demerger allows OC to pursue a capital structure appropriate for its own business strategy and capital needs
The Company continues to pursue its deleveraging strategy
The tables below set out the OC’s capitalisation and indebtedness as at 31 December 2014 – this information has not been audited, is based on management accounts and excludes proceeds from the Egyptian Offering
USD million As at 31 Dec 2014
CAPITALISATION
Guaranteed current debt 369.3
Secured current debt 35.9
Unguaranteed/unsecured current debt 25.4
Total current debt 430.6
Guaranteed non-current debt -
Secured non-current debt -
Unguaranteed/unsecured non-current debt 30.9
Total non-current debt 30.9
Share capital -
Legal reserves -
Other reserves -
Shareholder's equity1 785.0
Total debt and shareholder's equity 1,246.5
1Inclusive of minority share
USD million As at 31 Dec 2014
NET INDEBTEDNESS
A. Cash & Cash equivalents 379.0
A1. Net Egyptian Offer proceeds -
B. Trading securities 7.2
C. Liquidity (A+A1+B) 386.2
D. Current financial receivable -
E. Current bank debt 430.6
F. Current portion of non-current debt -
G. Other current financial debt 30.9
H. Current financial debt (E+F+G) 461.5
I. Net current financial indebtedness (H-C-D) 75.3
J. Non-current bank loans -
140
368 387
-245 -197 -129
2011 2012 2013
OC BESIX
3,321
4,869 3,840
5,566
2,327
2,027
1,869
2,131
2011 2012 2013 9M 2014
OC BESIX
24
Revenue & Backlog Key Highlights – BESIX Pro Forma Consolidation
Total Revenue (US$ Million)
Backlog, split (US$ Million)1
Backlog / Revenue (US$ Million)
Net Debt (US$ Million)
1,811 1,457
2,350
1,201 1,390
1,537
2011 2012 2013
OC BESIX
3,013 2,848
3,887
1.9x
2.4x
1.5x
2011 2012 2013
5,648
6,896
5,709
7,698
(104)
171 258
¹ 9M 2014 pro forma figures are comprised of BESIX backlog and new awards as well as other construction-related JV’s; annual figures accurately reflect BESIX disclosure figures on a proportionate and FX-translated basis; 9M 2014 backlog for BESIX and other JV’s sourced from OCI N.V. Trading Updates; BESIX figures are sourced from annual public BESIX filings and converted at the following rates: EUR:USD BS rate of 1.2957, 1.3190, 1.3761 for 2011, 2012, and 2013 respectively. EUR:USD IS rate of 1.4028, 1.3041, 1.3284 for 2011, 2012, and 2013 respectively
25
EBITDA Bridge Analysis
Commentary
Total provisions during the 9 months to 30 September 2014 amounted to US$149 million, of which US$98.5 million in SG&A expenses
The US$98.5 million in provisions in SG&A expenses included US$48.5 million in VAT owed to the company for work completed in Algeria and a one-off US$22.9 million provision related to a project in Algeria
In addition, some smaller valuation allowances totalling US$18.0 million were taken to cover risks related to accounts receivable as well as under billings and aged accounts receivable that are older than 360 days in other MENA markets
Excluding provisions, SG&A would have increased by US$25.9 million, or 28.4%, in line with the increase in revenue during the period.
USD million 2011 2012 2013 9M 2013 9M 2014
Net profit / (loss) 208.5 -600.7 -0.3 66.8 -79.5
Profit / (loss) attributable to:
Owners of the Company 199.9 -609.3 -14.7 56.3 -89.9
Non-controlling interests 8.6 8.6 14.4 10.5 10.4
Income tax -56.4 -555.8 -0.7 -10.7 288.7
Profit / (loss) before income tax 264.9 -44.9 0.4 77.5 -368.2
Income from associates (net of tax) 109.1 79.7 58.4 71.5 -174.9
Financing income & expenses
Finance income 10.2 29.3 81.9 52.9 26.0
Finance Cost -43.6 -75.2 -109.2 -64.9 -19.5
Net finance cost -33.4 -45.9 -27.3 -12.0 6.5
Depreciation & Amortization 101.3 93.5 78.6 56.7 48.3
EBITDA 290.5 14.8 47.9 74.7 -151.5
Margin 16.0% 1.0% 2.0% 4.6% -7.0%
Provisions & Other One-Off Items -30.0 -115.8 -46.9 0.0 -149.4
EBITDA pre-provisions 320.5 130.6 94.8 74.7 -2.1
Margin 17.7% 9.0% 4.0% 4.6% -0.1%
26
CAPEX and Investments
CAPEX (US$ Million)
Historical Capex Review
Capital expenditures include:
– Acquisition of property, plant and equipment related to projects under construction. For example; construction cranes, bulldozers, excavators, diggers, trucks, and other related construction equipment required by the Group’s projects
– Acquisitions of companies
Majority of project related CAPEX is financed through advance payments and cash flow
In 2012:
– Orascom Construction acquired indirectly all the membership units of The Weitz Company, LLC. for a net consideration of USD 27.4 million, which includes an amount of goodwill of USD 8.5 million
– Due to expansion into Saudi (a new core market for us); USD46 million was spent during the year
43
97
53 54
2011 2012 2013 2014
Appendix
Longstanding Position as Global Contractor of Choice
28
Track Record and Competitive Strengths
Tradition: construction has been the core business since inception in 1950
– Orascom Construction is now a leading global company employing c 53,000 people, with over 60 years of experience in MENA markets and 160 years in the United States through Weitz and Contrack
Wide variety of core competencies: execution of large and complex infrastructure, industrial and commercial projects
Track record with global presence: proven track record in over 20 countries across infrastructure, industrial and commercial sectors, with strong focus on high growth markets and significant local resources – ranked 67th on ENR’s 2014 International Contractors rankings, the highest MENA construction company
Experienced management team: key executives have been with the Company 10+ years and have a proven track record of growing the business both organically and through acquisitions
Strong and well-established client base: comprising sovereign and blue chip clients with longstanding relationships
Backlog: record level of quality backlog and strong balance sheet, now scaled to embark on next phase of growth and margin expansion
– 39% increase y-o-y in backlog to US$ 5.6 bn
– Strong momentum in 2014 with additional US$ 3.9 bn in new awards during 9M 2014, up 6x y-o-y
High corporate governance standard: culture of strict corporate governance as part of a publicly traded company since 1999 enhanced by experience as part of a Dutch company listed on Euronext Amsterdam for 2 years
Entrepreneurial Track Record
29
Shareholder return: IRR of c.40% on US$ basis for OCI S.A.E. / OCI N.V. since 1999 IPO
– Shareholder return driven by strong longstanding leadership along with investment vision of principal shareholders
Focus on infrastructure investments to provide steady cash flow and support long-term growth
Awarded first PPP concession in Egypt in 2009 – co-contractor and co-operator of Orasqualia
History of successfully entering new markets:
– Expanding outside Egypt since early 1990’s; operating in four countries as at IPO and in more than 20 countries today
– Backlog outside Egypt now accounts for 73% of total as at 30 September 2014
– Successful acquisitions: BESIX in 2004 and Weitz in the United States in 2012
History of successfully incubating new businesses including:
– Cement: developed a top 10 global cement producer primarily through greenfield projects in over 10 countries until divestment in December 2007
– Ports: held a strategic stake in a key port in Egypt on a Build-Own-Operate (BOT) basis, which was divested in 2007
– Fertilizer & Chemicals: built three of OCI N.V.’s operating plants in Egypt and Algeria, and in the construction phase for two production complexes in the United States, which will help transform the business of OCI N.V. to a top three global fertilizer producer
Creating Shareholder Value
Appendix Wide Range of Core Construction Competencies
31
Global Contractor of Choice – Infrastructure (53.8% of Backlog)
Infrastructure
Power Generation Water / Wastewater Transportation Social & Federal
Infrastructure
Leader in energy projects in Egypt and Algeria
Construction of more than 15,000 MW of power generation capacity across the Middle East
EPC contractor on Kuraymat, the Middle East’s first solar power plant
Alliance with water, desalination and wastewater process providers
Co-constructed and co-operates the first wastewater treatment plant under Egypt’s PPP program
Projects include the Six of October Wastewater Treatment plant (100,000 cubic meters of capacity) and the Hamma water desalination plant in Algeria (OC-BESIX JV)
Over 15 airports constructed in the Middle East
Own a modern fleet of road specialty equipment
Over 1,020 kilometres of rail projects in the Middle East, through 15 railway projects in the last 15 years
Constructed El Ferdan Bridge, world’s the largest swing bridge
Own railway specialty equipment
BESIX is a leading marine / port contractor - built Africa’s largest port
Top contractor for the United States Army Corps of Engineers and other military and naval branches through Contrack
Contrack is specialized in US Government funded defense projects in the Middle East and Central Asia
Watts Constructors is specialised in in US Government funded defense projects in the US and its territories (Pacific Rim)
El Ferdan Double Swing Rail Bridge Hamma Desalination Plant Kuraymat Solar Power Field
Submarine Drive-In Magnetic Silencing Facility, Beckoning Point, Pearl Harbor, Hawaii
32
Global Contractor of Choice – Industrial (34.6% of Backlog)
Industrial
Petrochemicals / Oil & Gas Manufacturing & Pharmaceuticals Heavy Industrials
Over 12 million metric tons per annum of nitrogen fertilizer capacity completed in Egypt, Algeria, and under construction the United States
Seven petrochemicals projects (excluding fertilizers) in the Middle East
Strategic alliance with major EPC companies in the field including KBR and Uhde
Repeat business / direct negotiation
AstraZeneca's first pharmaceutical plant in the region
Leading contractor for Procter & Gamble in Egypt and Nigeria
Leading steel plant contractor in Egypt
Weitz has constructed more than 50 projects for Cargill Inc.
Over 40 million metric tons per annum of cement production capacity around the world
Key regional partner for leading cement technology providers including FL Smidth and Polysius
Damietta LNG Pot Sygentia Seeds Processing Unit Egyptian Cement Company
33
Global Contractor of Choice – Commercial (11.6% of Backlog)
Commercial
Hotels & Resorts High-Rise Leisure / Commercial Residential
Leading contractor for hotels in Egypt
Construction of several luxury beach resorts and communities on the North Coast and Red Sea
Clients include Emaar Misr, Palm Hills, Fairmont, Marriott
World’s tallest building: Burj Khalifa
Nile City Complex in Egypt
Largest archaeological museum in the world: Grand Egyptian Museum
Egypt’s largest leisure and retail centres: Mall of Egypt and Cairo Festival City
Repeat work with Al Futtaim
Leading contractor for residential communities and housing developments in Egypt
Weitz is a leading retirement community contractor in the United States
Mall of Egypt Nile City Complex JW Marriott, Mirage Le Meriden/New Hyatt, Cairo
34
Client: New Urban Communities authority ( NUCA)
Contract Structure: EPC Joint Venture Member
Technology provider: Aqualia
Duration: 2 years construction + 18 O& M
Capacity: 250,000 m³/ day
Summary: The New Cairo Wastewater Plant’s execution is on a Design, Build, Finance, and Operate basis (DBFO) with the renewal and transfer of the ownership back to NUCA at the expiry date or early termination date; the new domestic wastewater treatment plant has a capacity of 250,000 m³/day to treat domestic wastewater within New Cairo through a Private Public Partnership. The project duration is 2 years for construction and 18 years for operation and management
Developer: Orasqualia for the development of wastewater treatment plant S.A.E; a company formed 50%/50% between Orascom Construction Industries and Aqualia (Spain) part of the FCC group
Case Study: Construction of the First PPP Project in Egypt
PPP Wastewater Treatment Plant – Egypt
35
Case Study: Iowa Fertilizer Company (Industrial)
Nitrogen fertilizer & industrial chemical complex currently under construction – first greenfield plant to be built in USA in 25 years
Expected to produce up to approximately 2 million metric tons of nitrogen fertilizers (ammonia, granular urea, and UAN) and diesel exhaust fluid
Broke ground on 19 November 2012 and scheduled to begin production in Q4 2015
Plant Overview
Construction Progress on
Schedule
OCI Engineering & Construction is EPC contractor, using KBR ammonia and Stamicarbon urea technologies, and Tecnimont and Uhde as main engineering and procurement subcontractors
Currently 1,900 construction workers on-site; overall mechanical completion and operations on schedule with the engineering, procurement and construction of the project
Construction
36
Case Study: Cairo Festival City (Commercial)
Project Overview
Description
Constructed one of Cairo’s largest retail centers comprising 400 shopping units
Located in the Cairo suburb of New Cairo.
Contract size: over $ 340 million
OCI’s share: 35%
Awarded the main contractor role for this project in 2009
The retail center contains a covered shopping area with more than 400 shopping units including hypermarkets and cinemas, integrated with an outdoor retail village
Includes a 3 basement level car parking
Appendix Construction Materials & Property Management
38
Construction Materials and Property Management
Founded in 1995, manufactures fabricated steel products primarily for energy, petroleum, industrial and construction clients
Operates two plants in Egypt, supplying clients primarily in North Africa, the Middle East and Europe
Established in 2000, manufactures and installs glass, aluminium and architectural metal works
Provides services in landmark projects across its core markets, often in conjunction with Orascom Construction and BESIX
Operates a plant in Egypt with a total production capacity of 250k square meters, supplying products to clients primarily in Egypt and North Africa
Egypt’s premier facility and property management services provider
Main clients are large-scale financial and commercial business complexes in Egypt housing the headquarters of regional offices of more than 70 local and international companies
Owner, developer, operator and utility facilitator of an 8.75 million square meter industrial park located in Ain Sokhna, Egypt
Develops industrial land and provides utility services for light, medium and heavy industrial users in Ain Sokhna, Egypt
Established in 1997, UPC owns DryMix, Egypt’s largest manufacturer of cement based ready mixed mortars in powdered form used by the construction industry
Capable of producing 240k metric tons of productand and supplies products to clients in Egypt and North Africa
Holds 50% stakes in BASF Construction Chemicals Egypt, Egyptian Gypsum Company and A-Build Egypt, forming a group of companies that manufacture diversified building materials, construction chemicals and specializing contracting services
Subsidiaries operate from 4 plants in Egypt and 1 in Algeria, supplying products to clients primarily in Egypt and North Africa
Manufactures precast/pre-stressed concrete cylinder pipes and pre-stressed concrete primarily
The two plants are located in Egypt –supply Egypt and North Africa, with annual production capacity of 86 km of concrete piping
Manufactures up to 70k kilolitres of decorative paints and industrial coatings primarily for the construction industry
Founded in 1981 and operates two plants in Egypt, supply products to clients in Egypt and North Africa
100%
50%
United Paints & Chemicals 56.5%
14.7%
60.5%
100%
56.5%
National Pipe Company
40%
Appendix Additional Backlog Information
76% 57% 54% 51%
22%
18% 22% 23%
1%
25% 25% 27%
0%
20%
40%
60%
80%
100%
2011 2012 2013 9M 2014
OCI N.V. F&C Private Public
40
Evolution of Backlog Backlog by Sector Backlog by Client
Backlog by Brand Backlog by Geography
Dominance of higher-margin infrastructure and industrial work Healthy balance of sovereign and private clients
Increasing diversification across brands Rapid expansion into Saudi Arabia and USA
78% 57% 56% 54%
8%
28% 30% 35%
14% 15% 15% 12%
0%
20%
40%
60%
80%
100%
2011 2012 2013 9M 2014
Commercial Industrial Infrastructure
53%
32% 31% 27%
19%
12% 21% 21%
7%
1% 2%
4%
0%
34%
37% 43%
20% 19% 8% 6%
0%
20%
40%
60%
80%
100%
2011 2012 2013 9M 2014
Rest of World USA Algeria Saudi Arabia Egypt
80% 78% 83% 79%
20% 16% 9% 13%
6% 8% 8%
0%
20%
40%
60%
80%
100%
2011 2012 2013 9M 2014
Weitz Contrack OC
___________________________________
Note: Backlog charts exclude BESIX and other joint ventures accounted for under the equity method; backlog excludes intercompany work; geographic segmentation based on project location
41
Top 20 Projects in the Backlog – 30 September 2014
Top 20 Largest Projects Represented 64% of the Total Backlog as of 30 Sept 2014
Value: USD 3,613.0 million % of total backlog: 64% Average % completion: 16%
By Geography By Sector By Client
Egypt 19.8%
Saudi Arabia 29.5%
Algeria 4.5%
USA 42.7%
Rest of World 3.4%
Infrastructure 46.7%
Industrial 49.1%
Commercial 4.2%
Public 43.8%
Private 16.3%
OCI N.V. F&C 40.0%
Note: geographic segmentation based on location of entity managing the contract; USA is comprised of Orascom E&C, Weitz and Contrack projects ex. Qatar and Bahrain; RoW should be grouped with USA
Top 20 projects portray key revenue drivers for OC
Infrastructure and industrial work constitutes 96% of the top 20 projects
Geographic segmentation mirrors that of the consolidated backlog picture with a slightly higher concentration in MENA
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2011 2012 2013 9M 2013 9M 2014
USD
bill
ion
Backlog New Awards
42
Pro Forma Snapshot Including BESIX
USD million 2011 2012 2013 9M 2013 9M 2014 %
OC ex. BESIX
Backlog 3,321.3 4,869.3 3,839.9 4,015.6 5,566.2 39%
New awards 2,659.7 2,618.9 1,233.3 646.2 3,869.6 499%
Proforma incl. BESIX
Backlog 5,648.4 6,895.9 5,708.7 6,032.1 7,697.5 28%
New Awards 4,193.7 3,670.7 2,533.2 1,631.8 5,301.4 225%
Proforma Backlog Including 50% of BESIX1
Proforma Revenue and EBITDA – assumes 50% consolidation of BESIX
Revenue – USD billion Adjusted EBITDA – USD million Standalone – EUR billion
2.3
3.1
2.4
3.1
3.6
3.1
2.7
2007 2008 2009 2010 2011 2012 2013
Evolution of BESIX Backlog
3.0 2.8
3.9
2011 2012 2013
BESIX OCI
*9M pro forma figures are comprised of BESIX backlog and new awards as well as other construction-related JV’s; Annual figures accurately reflect BESIX disclosure figures on a proportionate and FX-translated basis
¹ 9M 2014 backlog for BESIX and other JV’s sourced from OCI N.V. Trading Updates; BESIX figures are sourced from public BESIX filings and converted at the following rates: EUR:USD BS rate of 1.2957, 1.3190, 1.3761 for 2011, 2012, and 2013 respectively. EUR:USD IS rate of 1.4028, 1.3041, 1.3284 for 2011, 2012, and 2013 respectively; Adjusted EBITDA represents OC EBITDA pre-provisions and one-offs plus BESIX EBITDA
414
186
134
2011 2012 2013
BESIX OCI
Appendix Additional Financial Information
44
Key Revenue Drivers
Existing Backlog
New Awards & Bidding Pipeline
Record backlog levels as at September 2014
– Provides revenue visibility for 18-24 months
– Since September 2014 we have received additional new awards on a direct order basis totalling US$ 642 million in Egypt, amongst other awards totalling c. US$1.0 billion for the Group (excl. BESIX)
Strong momentum of new awards stemming from significant pipeline of projects in our core markets
– The group actively bids for new projects in key markets such as Egypt, Saudi Arabia, US
– Our varied skill-set has allowed us to establish a significant track record of proven industrial and infrastructure experience, which gives us a competitive advantage vis-à-vis our competitors in bidding for new projects
– We have established an extensive and stable network of clients in our markets, which include sovereign or sovereign-backed entities and large private sector clients. The quality of our work has enabled us to maintain, on the whole, strong and long-standing relationships with several repeat clients
– The strength of our balance sheet, including available direct and contingent facilities, provides us with the capacity to bid for and execute large scale projects which by nature require adequate contractor balance sheet capitalization
Stable and Recurring
Cash Flows
We aim to grow our recurring revenue streams by investing in value-accretive infrastructure related projects
– We are growing our sources of stable long-term cash flows through value accretive concessionary contracts
– We command a disciplined approach in evaluating potential investments / acquisitions, evident by our strong track record of high level of investment returns
– Our participation as the developer of these projects positions us well to be awarded the relevant portion of the EPC contract
Geographic Footprint
We have entered into several new markets over the past 3 years, including US, Saudi Arabia, and Iraq, which we consider today core to our operations and where we expect to continue to pursue growth initiatives
– Strong anchor in the US industrials market due to recent first mover advantage into the market underscores our growth initiatives
45
Profitability Drivers
Cost Base and FX Movements
We are able to minimize our operating and overhead costs due to our presence in low-labour cost markets
Our backlog is a natural hedge against currency exposure with a significant portion in US$/US$ pegged currencies, driving revenues and improved profitability
– Our backlog and financials are reported in US$, while exposed to a wide range of currencies including EGP, EUR, DZD, and JPY
– We are mostly currency neutral, particularly in the US which mitigates against any currency risk
Exogenous Factors
Historically, our business faced extraordinary factors that negatively impacted our profitability
– One-off factors, such as events related to the Arab Spring or political uncertainty in Afghanistan, may affect our operations and profitability
Our COGS may include provisions/one-off items related to on expected future losses regarding certain projects
– As part of our regular review of expected future profits and losses on certain projects, our COGS may include provisions for future losses expected to be incurred on certain projects
Profitability Profile of Our Core Markets
Our consolidated margins are a function of the profitability profile of the main contributing markets in which we operate
– Generally, developed markets (e.g. US) yield lower margins vis-à-vis emerging markets (e.g. MENA)
– Cost reimbursable contracts in the US, with predictable profitability
46
Income Statement USD million 2011 2012 2013 9M 2013 9M 2014
Revenue 1,811.3 1,457.3 2,349.7 1,624.3 2,157.4
% growth -19.5% 61.2% 32.8%
Construction cost and cost of sales -1,512.1 -1,373.6 -2,257.4 -1529.4 -2138.4
Gross profit 299.2 83.7 92.3 94.9 19.0
Margin 16.5% 5.7% 3.9% 5.8% 1.6%
Other income 33.0 15.3 22.1 20 12.6
Selling, general and administrative expenses -139.3 -151.1 -139.3 -94.6 -226.8
of which provisions -30.0 -88.0 -7.7 0 -98.5
Other expenses -3.7 -26.6 -5.8 -2.3 -4.6
Results from operating activities 189.2 -78.7 -30.7 18.0 -199.8
EBITDA 290.5 14.8 47.9 74.7 -151.5
Margin 16.0% 1.0% 2.0% 4.6% -7.0%
EBITDA pre-provisions 320.5 130.6 94.8 74.7 -2.1
Margin 17.7% 9.0% 4.0% 4.60% -0.1%
Financing income & expenses Finance income 10.2 29.3 81.9 52.9 26.0
Finance Cost -43.6 -75.2 -109.2 -64.9 -19.5
Net finance cost -33.4 -45.9 -27.3 -12.0 6.5
Income from associates (net of tax) 109.1 79.7 58.4 71.5 -174.9
Profit / (loss) before income tax 264.9 -44.9 0.4 77.5 -368.2
Income tax -56.4 -555.8 -0.7 -10.7 288.7
Net profit / (loss) 208.5 -600.7 -0.3 66.8 -79.5
Profit / (loss) attributable to: Owners of the Company 199.9 -609.3 -14.7 56.3 -89.9
Non-controlling interests 8.6 8.6 14.4 10.5 10.4
Net profit / (loss) 208.5 -600.7 -0.3 66.8 -79.5
Commentary
Gross profit decreased during 9M 2014 due to:
– New projects typically require the Company to take on mobilization, labour, and administrative costs at the onset of project execution
– Cost of construction includes a US$12.8 million impairment related to lost equipment in Iraq following evacuation of our construction workers from the Baiji power plant site
2013 gross margin decreased primarily due to:
– This decrease was primarily attributable to the full integration of lower margin United States-based work from Weitz
– Inflationary pressures in Egypt and reduction of operations in Egypt of about 60 days due to curfews imposed across the country during the summer months
2012 gross margins decreased due to:
– Higher costs in Egypt due to revolution-related inflation, in particular labour costs and an increase in construction costs
– Lower margin projects in Egypt in 2011 during the revolution. These projects were mostly completed by end-2013
47
Other P&L Line Items USD million 2011 2012 2013 9M 2013 9M 2014
Financing income & expenses
Finance income 10.2 29.3 81.9 52.9 26.0
Finance Cost -43.6 -75.2 -109.2 -64.9 -19.5
Net finance cost -33.4 -45.9 -27.3 -12.0 6.5
Associates 109.1 79.7 58.4 71.5 -174.9
Profit / (loss) before income tax 264.9 -44.9 0.4 77.5 -368.2
Income tax -56.4 -555.8 -0.7 -10.7 288.7
Net profit / (loss) 208.5 -600.7 -0.3 66.8 -79.5
Profit / (loss) attributable to:
Owners of the Company 199.9 -609.3 -14.7 56.3 -89.9
Non-controlling interests 8.6 8.6 14.4 10.5 10.4
Net profit / (loss) 208.5 -600.7 -0.3 66.8 -79.5
Commentary
One-off items
– Following the Company’s exoneration of any tax evasion by the Independent Appeals Committee in 2014, several provisions for this liability have been reversed during the 9M 2014 period. The tax dispute liability has been allocated to Orascom Construction on a 50% basis, including tax amounts of US$360 million already paid in 2012
– The total impact of the tax liability amounts to c.US$525 million cost in 2012 and US$335 million profit during 9M 2014
– Finance Income in 2013 included a foreign exchange gain on the tax settlement with the Egyptian Tax Authority
– Finance Cost in 2013 and 9M 2014 included a non-cash interest charge related to the tax dispute liability and a subsequent reversal respectively
– Associate income in 9M 2014 includes US$188 million loss for the termination of the Sidra Medical Centre project in Qatar
Finance income
– Finance Income decreased during 9M 2014 primarily due to lower FX gains related to the Egyptian Grand Museum project
Associate income
– OC has investments in a number of complementary construction and materials businesses, including a 50% shareholding in BESIX, Orasqualia (a waste water treatment plant concession) and investments in manufacturers of fabricated steel products, glass curtain walling, paints and concrete pipes as well as investments in property management companies
– Associate income decreased by US$18.8 million, or 24.4%, in 2013, primarily due to lower contributions from BESIX
Income tax
– The Group’s blended tax rate is determined by revenues in the different jurisdictions, mainly Egypt, Saudi Arabia and the US. During 2014, the corporate income tax rate in Egypt increased from 25% to 30%
– Taxes in 2012 and 9M 2014 included a tax provision for the tax dispute liability and a subsequent reversal respectively
Minority interest:
– In 2013 and 9M 2013 mainly comprised of 60%/40% Orascom Saudi JV with Saudi Binladin Group and 56.5% UHC JV
– UHC contribution significantly larger than that of the other entries in 2011 and 2012
48
Balance Sheet - Assets
Commentary
USD million 2011 2012 2013 30-Sep-14
Assets
Non-current assets
Property and equipment 379.8 331.4 269.4 239.2
Goodwill and other intangible assets - 9.8 13.2 13.1
Trade and other receivables 4.1 130.5 368.9 49.7
Associates 408.3 437.0 494.8 377.6
Deferred tax assets 1.8 4.2 7.7 7.5
Total non-current assets 794.0 912.9 1,154.0 687.1
Current assets
Inventories 156.3 142.1 181.5 167.3
Trade and other receivables 939.4 812.7 950.7 821.6
Contracts receivables 286.6 406.6 375.4 586.5
Cash and cash equivalents 448.1 428.0 419.7 421.2
Total current assets 1,830.4 1,789.4 1,927.3 1,996.6
Total assets 2,624.4 2,702.3 3,081.3 2,683.7
1. Goodwill relates to the acquisition of the Weitz Group in 2012
2. Trade and other receivables:
– In 2013 the increase in trade and other receivables is related to longer payment cycles in Egypt following the revolution, and to under billings in Saudi Arabia amongst others
– During the nine month period ended 30 September 2014, OCI settled the majority of its intercompany balances between the Engineering & Construction and Fertilizer & Chemical groups in order to prepare the demerger of the Construction business, resulting in a decrease of non-current trade and other receivables (from US$441.1 million to US$27.8 million as at September 2014)
3. Associates decreased from 31 December 2013 to 30 September 2014 due to provisions related to the Sidra Medical Centre Project in Qatar
– As of Sept. 2014, investment in associates represents US$321million for BESIX, and US$55.8 million for all of the Group’s remaining equity accounted investees
4. The increase in Contracts Receivables represents construction contracts in progress, primarily related MENA region projects
1
2
4
3
2
1
2
3
4
49
Balance Sheet – Liabilities & Shareholders’ Equity
Commentary
The increase in income taxes payable in 2012 is related to the Egyptian Tax Authority's tax dispute with OCI S.A.E. As a result of the favourable ruling in the tax appeal case, the Company has reversed liabilities (income taxes payable) in Q3 2014
During the 9-month period to 30 September 2014 accrued expenses included in trade and other payables increased as a result of prolonged payment terms relating to payables for our US operations
USD million 2011 2012 2013 30-Sep-14
Net investment Owner’s net investment 1,058.7 380.1 815.6 726.1
Non-controlling interest 52.5 51.2 58.9 70.8
Total net investment 1,111.2 431.3 874.5 796.9
Liabilities
Non-current liabilities
Loans and borrowing - 38.8 56.1 36.3
Trade and other payables 5.1 23.8 24.2 30.6
Provisions 44.9 1.2 - -
Deferred tax liabilities 0.7 1.9 4.3 4.3
Income tax payable - 257.4 207.4 -
Total non-current liabilities 50.7 323.1 292.0 71.2
Current liabilities
Loans and borrowings 588.7 756.8 750.7 549.2
Trade and other payables 577.5 734.3 653.9 988.4
Billing in excess of construction contracts 198.3 113.7 300.7 166.1
Provisions 82.1 51.4 73.1 104.1
Income tax payables 15.9 291.7 136.4 7.8
Total current liabilities 1,462.5 1,947.9 1,914.8 1,815.6
Total liabilities 1,513.2 2,271.0 2,206.8 1,886.8
Total net investment and liabilities 2,624.4 2,702.3 3,081.3 2,683.7
1
2
1
2
Appendix Board of Directors and Management Bios
Board of Directors
Chief Executive Officer of OCI N.V.
Joined the Orascom Group in 1992 and became the Chief Executive Officer of OCI N.V.’s predecessor, Orascom Construction Industries (OCI S.A.E.), in 1998
Appointed Chairman of OCI S.A.E. in 2009
Mr. Sawiris is also a board member of Lafarge S.A.
Holds a BA in Economics from the University of Chicago, USA
Nassef Sawiris Chairman
Arif Naqvi
Founder and Group Chief Executive of The Abraaj Group which he established in 2002
With over 25 years’ experience of investing in public and private companies, Mr. Naqvi has led the Group’s involvement in some of the most notable private equity transactions in growth markets over the last decade
Mr. Naqvi has been the recipient of numerous awards, including the Oslo Business for Peace Award, and the Sitara-i-Imtiaz, a prominent civilian honor awarded by the Government of Pakistan
Mr. Naqvi is a graduate of the London School of Economics and Political Science
Salman Butt
Chief Financial Officer of OCI N.V. Mr. Butt joined OCI S.A.E. as CFO in 2005
An international banker with over 20 years of banking experience
Previously the head of Investment Banking for the Samba Financial Group in Saudi Arabia from 2003-2005
For 18 years prior to this, he worked with Citibank in Pakistan, Hong Kong, the United Kingdom, Egypt and Saudi Arabia
Mr. Butt holds a Masters degree in Business Administration from the University of Texas at Austin, USA, and a Bachelor of Science degree in Industrial Engineering from the Middle East Technical University, Ankara, Turkey
Executive Directors
Joined OCI in 1985 and held the position of Managing Director of the Construction Business since 1998
Played a key role in developing the business of the Group, particularly in the oil & gas sector, and OCI N.V.’s infrastructure and industrial investments in Egypt, Algeria and USA
Holds a Bachelor of Science degree in Structural Engineering from Cairo University and a Construction Management Diploma from the American University in Cairo
Osama Bishai CEO
Non-Executive Directors
51
Board of Directors
Mr. Haddad has decades of experience in both the private and public sectors, specifically in finance, politics and academia
Most recently he was also General Manager of Byblos Bank from 2008 to 2014
Previously at the International Finance Corporation, part of the World Bank Group for more than 20 years in a variety of positions including Director of the Middle East and North Africa based in Cairo
In 2005 he became Minister of Economy and Trade in Lebanon, a position which he held for three years
Mr. Haddad holds an MA in Economics from the American University in Beirut and pursued his postgraduate studies at the University of Wisconsin-Madison
Sami Haddad
Khaled Bichara
Chairman of Dada.it, and co-CEO of Accelero Capital
Prior to joining Accelero Capital, Mr. Bichara was CEO of Orascom Telecom Media and Technology (OTMT), Group President and COO of VimpelCom Ltd. as well as Group Executive Chairman of Orascom Telecom Holding
Played a pivotal role in the 6.6 billion merger of VimpelCom with Wind Telecom S.p.A, to create the world’s sixth telecommunications carrier
Mr. Bichara holds a Bachelor of Science degree from the American University of Cairo, Egypt
Azmi Mikati
CEO of M1 Group Ltd., a diversified investments holding company spanning telecommunications, real estate, aviation, finance, retail and consumer goods
Mr. Mikati was the CEO of Investcom LLC (formerly Investcom Holding Sa) where he was responsible for the global strategy and implementation
He is also a Director of M1 Group Ltd. and a Non-Executive Director of MTN Group Ltd
Prior to this role he served as Director of T-One Corporation (International Carrier) and was also a board member of FTML (France Telecom subsidiary and the previous operator of one of two mobile networks in Lebanon)
Mr. Mikati holds a Bachelor of Science degree from Columbia University, United States
52
Independent Non-Executive Directors
Senior Management
Mark Littel
CFO
Joined OCI N.V. in 2014 and brings extensive financial and audit experience and leadership
Previously at KPMG which he joined in 1985 and became a partner at in 2000. Audited and advised global clients at corporate and divisional levels and advised in the development and implementation of internal controls for international clients
Member of the Royal Dutch Institute of Chartered Accountants
Dalia Khorshid
Corporate Treasurer
Joined OCI in 2005 and has since headed the Company’s corporate treasury team
Responsible for all fundraising, liquidity and cash management, trade/contingent facilities management, Group Treasury control and administration, in-house bank management and interest rate and foreign exchange exposure management
Prior to joining OCI, was with Citibank for 8 years, where she most recently held the position of Vice President
She began her banking career with Commercial International Bank. Ms. Khorshid holds a Bachelor of Arts degree in Business Administration from the American University in Cairo
Wahid Hakki
GM Contrack
Joined Contrack in 1994 and has been responsible for overseeing operations at the company’s US headquarters in Virginia
Previously a Project Manager for Sigal Construction Corp, as a Project Engineer and QC Manager with Pegel Arabia in Damman, Saudi Arabia, and as a site manager with OCC Weavers in Jeddah, Saudi Arabia
Received his Bachelor of Science degree in Civil Engineering from Ohio University in 1981 and a Masters degree in Structural Engineering from Penn State University in 1982
53
Leonard Martling
GM Weitz
Has been at Weitz for more than 30 years, holding a variety of positions within the operations segment
Served as president of the Nebraska Business Unit, president of the Florida Business Unit, as well as Chief Operating Officer
Appointed General Manager in 2012
A graduate of Kent State University with a Bachelor of Arts in Economics
Maged Abadir
Operations Director Orascom
Joined OCI in 1988 and currently serves as the Executive Director for Heavy Civil, Infrastructure and Roads.
Has led the development of OCI’s road-construction business in Egypt since 2005.
Holds a Bachelor of Science degree in Civil Engineering from Cairo University and a Master of Science degree in Civil Engineering from Pennsylvania State University
Appendix Health, Safety and Environment
55
Continued Excellence in Health, Safety, Environment & Quality
LTIR Average 2011 2012 2013
Orascom Construction 0.014 0.016 0.014
Contrack 0.025 0.081 0.032
Weitz 0.100 0.200 0.300
Average 0.046 0.099 0.115
Project Name Location Client Million Manhours Without LTIs
Orascom Construction
El Merk Project, Lot 1 and 7 Algeria Petrofac UAE International Limited 9.0
King Abdel Aziz Saudi Arabia Saudi Binladin Group 7.0
Baiji Power Plant Iraq The Iraqi Ministry of Electricity 4.0
Marassi Project, PKG 13 Egypt Turner International Middle East 3.6
Credit Agricole Egypt Head Office Egypt Credit Agricole Bank 3.0
Terga Power Station Combined Cycle Algeria The Algerian Ministry of Electricity 2.5
Contrack
SIDRA Medical Center Qatar Qatar Foundation 10.0
Al Reem Island Roads and Utilities Infrastructure
Package 1 UAE Sorouh 9.6
Navy Milcon (all phases) Bahrain US Army Corps of Engineers 6.0
Waterfront Phases I and II Bahrain US Army Corps of Engineers 4.0
Peace Vector Village Egypt US Army Corps of Engineers 1.0
Low Lost Time Injury Rates (LTIR) compared to global average
Quality and safety audits are conducted often, at all sites, and for all activities
Weitz was awarded the following in 2013 in recognition of its safety performance:
OSHA CHASE Partnership Blue Level - Associated General Contractors
Award of Honor with Distinction - National Safety Council
Multiple Weitz locations have also worked over 1 million man-hours without a lost time accident
Location Million man-hours without LTIs
Florida 2.6
Phoenix 2.4
Iowa 1.3
Denver 1.0
For our commitment to health and safety, and for no ‘lost time injuries’, we have received safety awards and recognition letters from several international partners and clients, including the US Army Corps of Engineers, Kellogg Brown & Root, and ThyssenKrupp Uhde. These awards include:
Low Lost Time Injury Rates
Proven HSE Record
Appendix Industry Overview
57
Market Size – Total Historical Value of Contracts Awarded in MENA
Market Size – Value of Core Markets Contracts Awarded (US$ bn)(1) The Company’s core markets in MENA have historically exhibited strong construction levels with the value of contracts awarded averaging c. US$105 bn, led by the heavy investments in Saudi Arabia and the UAE
These markets, possessing undeveloped infrastructure and housing supply shortages, have high population growth rates which is increasing demand for utilities and social infrastructure, thus providing a platform for the historical level of contracts awarded to grow
96.6 93.5 107.3 129.8 101.5 130.1 74.0
9.2 9.7 12.4 11.7 8.7 2.7 5.6
23.6
40.1
51.2 65.0
45.0 63.6
27.6
55.7
37.3
34.8
22.6
27.5
40.2
33.8
5.4 3.0
3.8 5.3
9.1
13.1
4.9
2.7 3.4
5.2
25.3
11.1
10.5
2.1
2008 2009 2010 2011 2012 2013 2014
Egypt Saudi Arabia UAE Algeria Iraq
Source: MEED Insight and MEED Projects Note (1): Core markets include Egypt, Saudi Arabia, UAE, Algeria, and Iraq
58
Growth Opportunities in Orascom Construction’s Core Markets
Overview
OC’s principal construction markets in the MENA region are supported primarily by strong underlying demographic, macroeconomic and infrastructure related trends
Core markets in the MENA region: Egypt, Saudi Arabia, UAE, Algeria and Iraq
Collective GDP of core market MENA countries expected to reach US$ 3.0 trillion by 2019 from US$ 2.2 trillion in 2013 (IMF)
2015 growth in core market MENA countries of 5.4% is led by Saudi Arabia (3.5%), UAE (5.7%), Algeria (4.7%) and Egypt (3.5%)
Growth is driven by public spending on industrial, infrastructure and commercial projects to support growing populations and reduce essential infrastructure deficits, as well as a resurgence in private sector spending
Growth in construction activity in the sector is underpinned by solid fundamentals
– high population growth and increasing government spending: (9% growth by 2020, and a median age of 27.3)
– Infrastructure development in underserved markets: primarily Egypt and Algeria and Iraq (Egypt ranks 100 , Algeria 106 of 144 in infrastructure quality as per Global Competitiveness Report)
– Large spending programs for major global events (e.g. Dubai Expo 2020), and projects in Mecca and Medina to accommodate growing pilgrimage visitors
Planned pipeline 2015 – 2020E currently estimated at US$ 1.4 trillion
By
Co
un
try
By
Sect
or
By
Stat
us
636.2
1,433.3
Awards 2009-2014 Awards 2015E-2020E
11% 47% 32%
2% 7%
Egypt Saudi Arabia UAE Algeria Iraq
5% 47% 2% 24% 19%
3%
Chemical Construction IndustrialPower Transport Water
41% 2% 8% 2% 47%
Design FEED Main Contract Bid Main Contract PQ Study
Source: MEED Insight and MEED Projects; IMF
North Africa
GCC & Levant
United States
Egypt’s infrastructure announcements focus on power and transport development at an investment cost of approximately US$27 billion and US$39 billion, respectively
There has been a substantial push towards a PPP approach for projects in Egypt, allowing the government to proceed with development plans and minimise project and performance risks
Noteworthy are $40 bn low-cost housing project as well as US$8.5bn Suez Canal expansion in Egypt
Algeria, historically a large market for the Group having completed nearly 40 project (since 2011)
Five year public infrastructure development plan of US$262 billion
Massive infrastructure pipeline in the region including 60,000MW power expansion in Saudi Arabia, $20 billion transportation projects in UAE
The UAE has announced US$464 billion in projects through 2020 including high value developments such as Dubailand, Saadiyat Island and Capital District. Social and commercial construction projects comprise the largest share of the project pipeline for the UAE, the bulk of which is concentrated in Dubai
Despite the on-going instability in Iraq, announced projects through 2020 exceed US$100 billion. This value already excludes nearly US$51 billion worth of projects that were announced but have been put on-hold
Total construction spending has returned to pre-economic crisis levels, and is expected to return to near record levels by 2018
The total non-residential market including federal infrastructure spending is estimated to grow approximately 5 per cent. each year through 2018 totalling nearly US$2.7 trillion, mainly driven by educational, commercial and manufacturing projects.
59
Egypt has a pipeline of US$157 billion worth of construction
projects through 2020
In Algeria, power projects
comprise a critical component of
the US$35 billion project
pipeline through 2020(1)
With US$674 billion in projects
planned through 2020, Saudi Arabia has the largest pipeline of
planned infrastructure and industrial projects in the MENA
region
United States construction
spending outlook is expected to
reach nearly US$4.6 trillion through 2018, supported by
lower energy prices, generally low overall inflation, steady GDP
growth
Growth Opportunities in Orascom Construction’s Core Markets (Cont’d)
Source: MEED Insight and MEED Projects Note (1): Excluding Oil & Gas