orascom construction - initiation of coverage

MENA EQUITY RESEARCH | EGYPT CONSTRUCTION| CEMENT

Orascom Construction a global contractor not leaving awards to come by chance

A Shift to Egypt to dominate the company`s backlog; securing the highest EBITDA margins` projects based on the accelerated current nature.

We initiate at a target price of EGP 141.30/share implying a 26.01% upside potential. Hence, we assign OC a “Buy” rating.

ORASCOM CONSTRUCTION LTD. COMPANY … THE BEST IS YET TO COME … AN ANTICIPATED SKEWED BACKLOG

TOWARDS EGYPT … GUARANTEES MARGINS ENHANCEMENT

MENA EQUITY RESEARCH | EGYPT

CONSTRUCTION INITIATION OF COVERAGE | ORASCOM CONSTRUCTION LTD. COMPANY

05 May 2015

MENA EQUITY RESEARCH | EGYPT CONSTRUCTION| CEMENT

ORASCOM CONSTRUCTION LTD. COMPANY … ONE OF FEW FULLY CAPABLE CONTRACTORS A demerger is the beginning of a new story for further specialization; OCI N.V announced on the 16

th of February that it commenced proceeding to demerge the

engineering and construction group from the fertilizer and chemicals business; a decision previously announced by the Board of Directors on the 6

th of November. The

demerged construction group known as Orascom Construction got dually listed on NASDAQ Dubai and the Egyptian Exchange. The demerger resulted in a USD 1.4bn reduction in OCI N.V.`s share capital whereby each shareholder for OCI N.V received one share in Orascom Construction for each two held in OCI N.V as of a record date of 6 March 2015. Currently the global nitrogen, methanol and other natural gas base chemical derivatives group will continue to be listed on the Euronext Amsterdam; while OC became dually listed on NASDAQ Dubai and the EGX as a global engineering and construction group encompassing Weitz, Contrack and BESIX.

A Leading international engineering and construction contractor characterized by extensive capabilities. Orascom Construction is a general engineering, procurement and construction contractor that designs the assigned and awarded projects, proceed to installation, then shifts to procuring the necessary materials and fully construct with an increasing ability to handle the different projects sizes on accelerated timeline schedules. OC hands the assigned projects to their clients ready for operations. Other cases the awarded projects scope gets larger; turning into a Build-Operate-Transfer (BOT) and Build-Own-Operate (BOO) contracts; adding the financing role to the contractor obligations through self financing or in most cases raising debt in addition to the EPC procedures but with another addition towards the cycle end of operating the assigned project. In such method of contracting, OC receives its share from executing the EPC contract in addition to a streamline of fees/revenues from operations based on the contracts` specifications. OC currently focus on large-scale infrastructure, complex industrial and high-end commercial projects in its main markets; the United States and MENA region with more focus on Egypt and Saudi Arabia. OC is characterized by a good reputation for their awards completion that facilitated building a solid public entities and government client base, in addition to growing private sector partners and clients. 2015 is estimated to be a reflection for the turnaround that took place in 4Q2014; a good year ahead with the company`s backlog shifting towards the higher margins` markets. In 4Q2014 the company was able to achieve the highest revenues in a single quarter in 4 years of USD 910mn; to take the whole year`s top line to a new level of USD 3,067.9mn registering a Y-o-Y increase of 30.56%. The last quarter in 2014, is believed to be the first quarter for what is believed to be a real turn around; through which several valuable contracts were signed among which comes GE USD 642mn project. 2015 started with several huge award assigned to Orascom Construction; mainly coming from Egypt driving the company`s top line to come in as USD 4,256.8mn to register a 38.75% Y-o-Y increase. The top line enhancement comes on the back of an estimated USD 6,183.2mn of new awards; out of which several projects are on a fast tracked basis in addition to a 60bps increase in completion ratio to stand at 36.6%. It is estimated that the year`s EBITDA will stand at around USD 241.9mn a Y-o-Y reversal from USD (155.4)mn in 2014; 2015`s EBITDA margin is expected to stand at 5.68% driven by Egypt`s higher contribution; characterized by proportionally higher EBITDA margins.

MENA EQUITY RESEARCH | EGYPT CONSTRUCTION

19 March 2015 RECOMMENDATION BUY CURRENT PRICE USD 14.89 TARGET PRICE USD 18.77 UPSIDE 26.01%

CURRENT PRICE EGP 112.13 TARGET PRICE EGP 141.30 UPSIDE 26.01%

THE USD TP IS ADJUSTED FROM THE EGYPTIAN TP BASED

ON AN FX RATIO OF EGP 7.53/USD SHARE DATA

Ticker ORAS.CA/ORAS EY 52-week range EGP 103.2 – 132.79 2015`s Av. Daily Turnover EGP 18.5mn No. of shares 118.04mn Market Cap EGP 13,235.9mn

SHAREHOLDER STRUCTURE

Sawiris Family 51% Southeastern Asset Management 4.98% Cascade Investments 5.8% Free Float 38.2%

Auto SHARE PERFORMANCE (Absolute & Relative)

Since Inception 1M

3.15% 1.2%

Source: Reuters

KEY FINANCIAL HIGHLIGHTS & MULTIPLES USD mn 2014e 2015f 2016f 2017f

Revenue 3,067.9 4,256.8 5,202.1 4,863.5 EBITDA (155.4) 241.9 334 332 Net Income (96.1) 180.6 248.2 218.5

Revenue gr (%) 30.57% 38.75% 22.21% -6.51% EPS gr (%) NA 100% 37.80% 12.09% EBITDA margin (%) -5.07% 5.68% 6.42% 6.83% ROE (%) -11.85% 16.93% 21.93% 19.63% EV/EBITDA (x) NA 8.26 6.33 6.30 PE (x) NA 9.54 6.94 7.89 ND/Equity (x) 0.83 0.71 0.79 0.74 EBITDA/Net Int. (x) NA 0.99 0.93 0.98

Source: OC, CFH estimates All prices are as 4th May 2015

Mohamed Marei Analyst

[email protected] +202 27924281/2/3

Please see page 29 for analyst certification and important disclosure

0

50

100

150 ORAS.CA EGX 30

mailto:[email protected]


INITIATION OF COVERAGE | ORASCOM CONSTRUCTION LTD. COMPANY

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05 May 2015

SOURCE: COMPANY DATA, CFH ESTIMATES

Egypt`s contribution to backlog is anticipated to be the largest going forward … replacing the United States The United States percentage of ending backlog in 9m2014 come in as 43.1%, a figure estimated to have reached 44.9% by year end. However, such huge contribution was mainly accomplished through the large award received for establishing Natgasoline methanol production complex. An award size not estimated to be replenished going forward, voluntary as the country`s awards margins are characterized by the lowest EBITDA margins in comparison to other OC`s points of presence. On the contrary, Egypt is promising with huge quantity of new projects declared and/or planned on an accelerated construction time line basis, due to the country`s need for power, social infrastructure and industrial projects fast execution to match the country`s anticipated increasing social needs and support the anticipated economic expansionary. A belief that led to overweighting Egypt`s contribution to backlog by around a Y-o-Y increase of 19% over 2014`s estimated year end contribution of 27% to stand at 46% in 2015; calculated according to the current announced awards received by OC. Egypt margins are the most attractive due to the current accelerated projects` nature; to stand at an estimated and guided EBITDA margin of 7.5% in 2015 due to the current presence of other lower margins` projects; that are anticipated to be turned over gradually coming in correlation with a 50bps forecasted annual increase in Egypt`s EBITDA margin going forward until reaching 9.5% by 2019. Saudi Arabia is risky, Algeria is promising and Iraq construction spending status remains vague going forward In 2015, it is estimated that awards coming from Saudi Arabia will significantly be affected by the current on-going war over Yemen; estimated to drop by 23% Y-o-Y from 2014`s estimated yearend total awards of USD 650mn. In 2014, an assumed completion ratio of 29% is estimated driving Saudi Arabia`s ending backlog contribution to come at 22.9% a figure anticipated to drop reaching 15.4% by 2015`s yearend mainly driven from the drop in awards. Algeria forecasted path is somehow moderate based on a recent guidance of an increase for projects` auctions from the government along with the anticipated increase in private sector investments in the industrial sector. While Iraq is extremely promising due to the country`s economic potential and deteriorated infrastructure status; a market that might grow to shape a respectful contribution to the company`s backlog, however such assumption will be underweighted based on the current political and security conditions there. Due to a 22.41% upside potential, we assign a “Buy” rating for Orascom Construction | Using the DCF valuation methodology for OC, the company was valued using a 10.7% discount rate for 2015 (and an average WACC over the 5-year forecasted period of 11.1%) based on a 12.08% cost of equity and a post tax cost of debt of 7.4%. Leading to a 26.01% upside potential above the current market price of EGP 112.13 (USD 14.89) per share as of the 4

th of May 2015 implied in our estimated target price of EGP 141.3 (USD 18.77) per share.

Key Financial Data & KPIs

2014e 2015f 2016f 2017f

2014e 2015f 2016f 2017f

Income Statement (USD mn`)

Profitability Ratios Total Revenues 3,067.9 4,256.8 5,202.1 4,863.5

Gross Profit Margin

2.73% 12.68% 13.42% 13.83%

Cash Cost of Goods Sold (2,984.0) (3,716.9) (4,504.0) (4,191.1)

EBITDA Margin

-5.07% 5.68% 6.42% 6.83% Gross Profit 83.9 539.9 698.1 672.4

EBIT Margin

-10.21% 7.22% 7.58% 7.06%

EBITDA (155.4) 241.9 334.0 332.0

EBT Margin

-11.69% 5.80% 6.19% 5.81% Depreciation & Amortization (87.3) (83.4) (95.9) (110.3)

Net Income Margin

-3.07% 4.33% 4.87% 4.58%

Net Operating Profit (242.7) 158.5 238.1 221.6

ROIC

-2.74% 13.81% 17.27% 14.47% EBIT (313.2) 307.5 394.1 343.2

ROA

-3.22% 4.90% 5.82% 5.37%

Net Interest Expenses (45.4) (60.5) (72.2) (60.8)

ROE

-11.85% 16.93% 21.93% 19.63% EBT (358.6) 247.0 322.0 282.4

Liquidity Ratios

Net Income (96.1) 180.6 248.2 218.5

Cash Ratio

0.15 0.20 0.18 0.17 Balance Sheet (EGP mn)

Quick Ratio

0.76 0.86 0.85 0.84

Total Assets 2,929.27 3,765.36 4,354.36 4,153.72

Current Ratio

0.88 0.97 0.96 0.96 Current Assets 1,791.60 2,509.65 2,963.66 2,786.76

Valuation Ratios

Net Fixed Assets 234.57 209.49 209.81 210.18

EPS

NA 1.56 2.15 1.89 Total Liabilities 2,134.29 2,676.97 3,199.57 3,018.25

DPS

0.00 0.00 0.00 0.30

Current Liabilities 2,044.81 2,577.17 3,089.90 2,914.48

BVPS

7.57 9.22 9.78 9.62 Total Debts [Short- and Long-term] 658.46 767.34 915.27 837.17

CFPS

2.94 4.44 4.70 4.22

Shareholders' Equity 794.97 1,088.39 1,154.79 1,135.46

FCFPS

NA 1.55 2.29 2.43 Net Working Capital | NWC (253.21) (67.52) (126.24) (127.72)

P/E

NA 9.54 6.94 7.89

Cash Balance 308.84 524.20 554.47 498.09

P/BV

1.97 1.62 1.52 1.55 Enterprise Value 1,912.14 1,997.22 2,113.50 2,092.38

P/Sales

0.51 0.41 0.34 0.36

Cash flow (EGP mn)

D/Y

0.00% 0.00% 0.00% 2.03%

NOPLAT (38.53) 198.69 275.23 209.05

EV/EBITDA

NA 8.26 6.33 6.30 Gross Investment (153.84) (141.48) (152.35) (81.33)

EV/EBIT

NA 6.50 5.36 6.10

Free Cash Flow (273.65) 183.19 270.82 286.67

EV/Sales

0.62 0.47 0.41 0.43

ND/Equity 0.83 0.71 0.79 0.74

EBITDA/Net int

NA 0.99 0.93 0.98



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05 May 2015

SOURCE: CFH ESTIMATES

Valuation and Assumptions Revenues & Backlog Assumptions

Orascom Construction has an impressive year ahead … Orascom construction has not yet announced its 2014 full year figures; however the 4

th quarter in 2014 indicated an obvious turning

point, represented in a significant increase in awards we believe its full materialization to take place in 2015. In Egypt, Orascom Construction awards are anticipated to increase by 3.4 folds in 2015 before dropping by 18% in 2016; however in 2015 and 2016 the level of anticipated awards are expected to be the highest throughout the company`s history of operations in Egypt mainly driven by the country`s aggressive need for social infrastructure, power and several mega industrial projects. The announced projects and rewards assisted in providing guidance for the upcoming 2-years, with Egypt economic status, margins and construction spending expectation providing guidance for the remaining period till the end of the forecasted horizon. OC consortium with General Electric was awarded the construction of two power plants worth USD 1.05bn to be fully constructed in 24 months, out of which OC`s EPC share stands at 61.14% equivalent to USD 642bn. OC received advance payments in 4Q2014 equivalent to 25% of its share value, a portion treated as the company`s implementation in 4Q2014, with the remaining portion to be spread over 21 months ending in 9m2016. Another significant award came in 2014 was the USD 450mn worth of roads and airport work granted to be fulfilled by OC; such award implementation is anticipated to be divided between 2014 and 2015 on 25% and 75% percentages of completion respectively. Adding to the previous awards, Metro Line phase 3 Package 4A awarded in 2015 to link Heliopolis with Cairo Int. Airport; the award value stands at USD 105mn to be fully constructed over 18 months to end by 1H2016 according to the company`s guidance. Two mega projects added to Egypt`s awards represent 60.48% of 2015`s total anticipated awards; namely OC share of the announced USD 1.6bn 3 tunnels project in the new Suez canal and its consortium with IPIC to construct phase 1 of the announced coal fired power plant at an investment cost of USD 3bn to generate 1.6-2GW. OC share of the 3 tunnels Suez canal project stands at 46.8% equivalent to USD 750bn, a project estimated to be finalized over 4-years ending 2018. In 2015, a completion rate of 10% is anticipated that would increase to 40% in 2016 taking the aggregate completion rate to 50%. In 2017 another 40% rate is anticipated and for the remaining 10% to be completed in early 2018. Orascom Construction has a 50% EPC share in constructing the coal fired power plant equivalent to USD 1.5bn to be completed over 3 years. OC will receive revenues from operating the facility after the beginning of operations; however, that depends on the government awaited tariffs, conditions and terms of operations to be released and depends as well if another specialized coal-generating power company will join the consortium or not; so for optimizing higher accuracy the revenue sharing basis was not considered in the assumptions and only OC EPC share was. Another Mega project awarded, that we expect to materialize on the company`s awards in 2016 is the consortium with Siemens to construct 2 power plants and a wind rotor blade addition; the total investment cost stands at USD 4.6bn. OC share is assumed to stand at 50% as no detailed indication was available; the project is anticipated to be finalized by 2018 at yearly equal percentages of completion of 33%. In 2017, Egypt awards are believed to decline by around 40% Y-o-Y as the majority of the emergency plan will already be executed, and the decline to smooth down reaching 3% in 2018. Egypt is the company`s highest EBITDA margin point of presence; a margin expected to increase gradually to stand at 7.5-8.0% in 2015 and 2016 during the critical portion of executing the emergency plan before and to proceed reaching 9.5% by 2019. As a result of turning over the current lower EBITDA margin projects in the ending backlog as indicated. Orascom recently announced being awarded with constructing the hanging rail project in cooperation with Arab contractors on an assumed 50:50 basis; according to the release the project is anticipated to be initiated in 2016 and to end by 2018.

Table 1: Egypt - in USD mn 2014f 2015f 2016f 2017f 2018f 2019f Egypt`s Beg Backlog 1185.6 1471.1 3395.2 3609.4 2870.5 2330.5

Egypt`s Awards 1092.0 3720.0 3050.0 1830.0 1775.1 1721.8 Implemented during the year 806.5 1795.9 2835.8 2568.9 2315.1 2019.5

Ending Backlog 1471.1 3395.2 3609.4 2870.5 2330.5 2032.9 Completion Ratio 35.4% 34.6% 44.0% 47.2% 49.8% 49.8%

% of Aggregate Ending Backlog 27.0% 46.0% 49.0% 44.6% 40.9% 38.2%

EBITDA Margin 7.5-9.5% - 7.5% 8.0% 8.5% 9.0% 9.5% EBITDA - 134.7 226.9 218.4 208.4 191.8



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In 2014, implementation value during the year for all the presented countries are assumed as no break down was available; however, the most reasonable in accordance to the nature of operations and business environment changes. Saudi Arabia, has one of the largest announced projects` pipeline over the upcoming 5-years; as the Kingdom faces energy problems especially during the peak months of summer and pilgrims` arrivals in addition to several mega infrastructure and social projects. The current ongoing war over Yemen and the decline in oil prices that represent a major share of the Kingdom`s budget; have led to assuming a 23% decline in awards in 2015 that are anticipated to grow at a CAGR of 5.74% from 2015 to 2020; a CAGR that would definitely be considered undervalued in case a faster than expected increase in oil prices over the upcoming years and a political end to the religious and political conflict over Yemen. The completion rate is anticipated to increase along with the EBITDA margins in Saudi Arabia starting from 2015, mainly driven from OC`s current status of tendering solely for mega projects besides tendering through its JV with Binladin group. It is anticipated that Saudi Arabia`s percentage of total backlog will significantly be impacted from 2015 to 2017 before rebounding in 2018; due to the current and forecasted country status.

Table 2: Saudi Arabia - in USD mn 2014f 2015f 2016f 2017f 2018f 2019f Saudi Arabia`s Beg Backlog 815.9 1250.0 1137.5 1077.4 1055.2 1065.6

Saudi Arabia`s Awards 650.0 500.0 520.0 546.0 584.2 625.1 Implemented during the year 430.0 612.5 580.1 568.2 573.8 591.8



EBITDA Margin 6-9% - 6.0% 6.0% 7.0% 9.0% 9.0% EBITDA - 36.8 34.8 39.8 51.6 53.3

Algeria is a very promising market with lots of potential and a need for spending to develop its infrastructure and power generating capacities. However, the Algerian government did not use to organize tenders for the desired projects instead a direct assignment to specific qualified contractors take place; but the government is slightly changing that strategy towards more tenders. A change in equation that might act for international contractors with huge capabilities as OC, bringing them on equal distance in comparison with domestic contractors. However, the Algerian private sector assign and tender projects. The value of awards is expected to increase by double digits throughout the forecasted time horizon, affected by the recent announced infrastructure spending plan and the projects. at the time of a deteriorated oil and gas sector status, the country’s main source of revenues having generated about 70% of 2012 & 2013 total budget receipts; still the abundance in hydrocarbons and the government`s ability in diversifying the economy would provide a buffer for infrastructure spending to proceed. OC completion ratio in Algeria is expected to increase gradually before stabilizing in 2017; due to the anticipated increase in OC`s ability to choose and tender over specific projects and to gear up for any increase in awards. In addition to, the presence of cement production lines` construction awards in the current backlog as such projects are usually finalized in a 2-2.5 years` horizon. The EBITDA margin forecasted in Algeria is almost stable at the 9% level according to indication.

Table 3: Algeria - in USD mn 2014f 2015f 2016f 2017f 2018f 2019f Algeria`s Beg Backlog 83.6 140.0 223.2 279.1 316.3 353.3

Algeria`s Awards 200.0 220.0 242.0 266.2 292.8 322.1 Implemented during the year 143.6 136.8 186.1 229.0 255.8 283.7



EBITDA Margin 9% - 9.0% 9.0% 9.0% 9.0% 9.0% EBITDA - 12.3 16.7 20.6 23.0 25.5



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Rest of the world markets, comprise several countries that have small over crowded markets but Iraq. The company is anticipated to complete its current operations in Afghanistan with no anticipated increase in awards, with expectations to remain at its lowest levels due to the high security risk. According to the company`s guidance only attractive high margins projects awarded will be considered after weighting its risk versus reward matrix. Qatar and Kuwait are not expected to drive the rest of the world aggregate awards higher, as in Qatar the historical termination act for Sidra Medical Project by OC partner and project majority owner Qatar Foundation after exceeding 95% project completion has led to the consideration of USD 188mn of provisions; an act that do not play on encouraging much future partnerships due to the foreseen high risk of repetition. In Kuwait, the market is already tight due to good current infrastructure status, so no significant weight was assigned to neither Qatar nor Kuwait in the anticipated awards. The UAE is characterized by an over-crowded market as the major international contractors operate in the UAE; however, the government spending capability, announced projects pipeline including the Expo 2020 and OC strong presence through its 50% JV with BESIX that have established solely and in consortiums several mega projects as Burj Khalifa and the Ferrari World in Abu Dhabi gives the company an edge of capturing several awards for itself in addition to an increasing investment income from BESIX exceeding EUR 25mn. Finally comes Iraq, a nation in extreme security risk, political turbulence and high budget constraints; but throughout the assumptions Iraq is anticipated to contribute by a significant portion to the rest of the world new awards as according to the company`s guidance most of the company`s competitive peers have already left the country for its high risk leaving room for OC to capture more awards; especially when the ongoing turbulences and ongoing war approach an end.

Table 4: Rest of the World - includes Afghanistan, UAE,

Qatar, Iraq & Kuwait - in USD mn 2014f 2015f 2016f 2017f 2018f 2019f

Rest of the world Beg Backlog

320.5 350.3 370.5 378.0 381.8 397.1 Rest of the world Awards

240.0 247.2 259.6 280.3 302.8 317.9

Implemented during the year

210.2 227.1 252.0 276.5 287.5 300.3 Ending Backlog

350.3 370.5 378.0 381.8 397.1 414.7

Completion Ratio

37.5% 38.0% 40.0% 42.0% 42.0% 42.0%

% of Aggregate Ending Backlog

6.4% 5.0% 5.1% 5.9% 7.0% 7.8%

EBITDA Margin 6%

- 6.0% 6.0% 6.0% 6.0% 6.0% EBITDA

- 13.6 15.1 16.6 17.3 18.0

MENA & Rest of the World table below sums up all of the previously mentioned activity excluding the United States, the presented increase in percentage of aggregate awards in 2015 is mainly driven by the company`s intentions to intensify its focus on the MENA region due to its high potential and highest EBITDA margins among all; with the major driver being Egypt due to its current political stability and enhancing economic performance driving the number of projects and spending upward. Starting from 2017, the forecasted 40% decline in Egypt`s awards will partially be compensated by the increase in awards from Saudi Arabia and the remaining markets with an anticipated decrease from the USA which will help in maintaining the awards skewed towards the MENA region going forward; hence, an anticipated higher EBITDA margin.

Table 5: MENA & Rest of the World Aggregates - in USD mn 2014f 2015f 2016f 2017f 2018f 2019f Add: Beginning Backlog Balance 2405.6 2997.3 4912.2 5129.8 4409.7 3932.3

Growth -24.7% 24.6% 63.9% 4.4% -14.0% -10.8% Add: New Awards 2182.0 4687.2 4071.6 2922.5 2954.9 2987.0

% of Aggregate New Awards 46.7% 75.8% 78.4% 74.3% 78.5% 79.0% Less: Implemented During the Year 1590.3 2772.3 3854.0 3642.6 3432.2 3195.1

Growth in Implementation 35.7% 74.3% 39.0% -5.5% -5.8% -6.9% % of Aggregate Implementation 51.8% 65.1% 74.1% 74.9% 76.3% 76.9%

Ending Backlog 2997.3 4912.2 5129.8 4409.7 3932.3 3724.2 % of Aggregate Ending Backlog 55.0% 66.6% 69.6% 68.5% 69.0% 70.0%

Completion Ratio 34.7% 36.1% 42.9% 45.2% 46.6% 46.2%

Ebitda margin 7.4-10.1% - 7.12% 7.62% 8.11% 8.75% 9.03% Ebitda - 197.4 293.5 295.3 300.3 288.7



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The United States, a country with a stable and solid growing GDP that promises a huge potential in terms of the declared new contracts` awards announcements and forecasted upcoming construction spending. However, Orascom Construction provided a guidance that the company will voluntary work on decreasing the USA contribution to total backlog from the 9m2014 level of 43% to stand at below the 30% level. As the company faces high corporate tax rate of 40% on its 2012`s acquired subsidiary Weitz in addition to that the margins have generally been low and are anticipated to be maintained at that level. However, by the nature of Weitz presence in the market, operations and awards in and from the United States will continue to exist but at lower levels.

Table 6: USA - in USD mn 2014F 2015F 2016F 2017F 2018F 2019F Beginning Backlog Balance 1434.3 2450.0 2461.5 2235.3 2024.3 1766.6

Growth -14.3% 70.8% 0.5% -9.2% -9.4% -12.7%

New Awards 2493.3 1496.0 1122.0 1009.8 807.8 791.7

% of Aggregate New Awards 53.3% 24.2% 21.6% 25.7% 21.5% 21.0% Implemented During the Year 1477.6 1484.5 1348.1 1220.8 1065.5 962.5

Growth in Implementation 25.4% 0.5% -9.2% -9.4% -12.7% -9.7% % of Aggregate Implementation 48.2% 34.9% 25.9% 25.1% 23.7% 23.1%

Ending Backlog 2450.0 2461.5 2235.3 2024.3 1766.6 1595.8 % of Aggregate Ending Backlog 45.0% 33.4% 30.4% 31.5% 31.0% 30.0%

Completion Ratio 37.6% 37.6% 37.6% 37.6% 37.6% 37.6%

EBITDA margin 3-3.5% - 3.00% 3.00% 3.00% 3.00% 3.00% EBITDA - 44.5 40.4 36.6 32.0 28.9

Table 7: OC Aggregate Backlog - in USD mn 2014f 2015f 2016f 2017f 2018f 2019f

Add: Beginning Backlog Balance 3839.9 5447.3 7373.7 7365.1 6434.0 5699.0 Add: New Awards 4675.3 6183.2 5193.5 3932.3 3762.7 3778.6

Less: Implemented During the Year 3067.9 4256.8 5202.1 4863.5 4497.7 4157.6


Blended EBITDA Margin - 5.68% 6.42% 6.83% 7.39% 7.64% EBITDA - 241.9 334.0 332.0 332.2 317.5

CAPEX No projects under implementation capital expenditure are anticipated throughout the forecasted period, as nothing was declared to take place. However, an annual increase of 10% is anticipated in other fixed assets in 2014 and 2015, and to increase to 15% from 2016 till reaching 2019 in time with the increasing operations and accumulated depreciation.



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Downside Risks Lower than anticipated new contract`s awards from Egypt, and the risk of a volatile period in the Egyptian economy before the

anticipated expansionary period becomes effective.

Lower than anticipated completion ratios for Orascom Constructon`s assigned projects; hence lower implementation rates driven from the inability to fulfill the newly assigned projects in Egypt in the assigned accelerated time frame that represent 60-80% of the standard implementation period in response to Egypt`s emergency plan; mainly due to the increase in overhead, wages and other costs in addition to the unavailability of more construction equipment to work simultaneously.

A further than expected intensified security conditions in Saudi Arabia due to its border-to-border with Iraq and Yemen and a

more severe war over Yemen that would affect the government spending, hence affecting the number of anticipated new awards and OC in relation.

A slower than anticipated rebound in oil prices over the upcoming years, would adversely impact the expected construction

spending in Saudi Arabia, Iraq, Algeria and the UAE.

Orascom Construction`s inability to perform its backlog shift from being dominated by the United States representing 43% in 9m2014, to Egypt mainly and other MENA region countries. Hence, a failure in obtaining higher EBITDA margins.

The risk of an un favorable outcome from the Egyptian Tax Authority appeal, after OC was fully exonerated by the public prosecutor of tax claims related to the USD 15bn sale of Orascom Building Materials Holding S.A.E to Lafarge in 2007; given that OC has reversed the tax liability with no provisions reserved in case the appeal did not end in the company`s favor.

The risk of an unfavorable outcome concerning the arbitration case referred to UK court related to July 2014, termination notice from Qatar Foundation for the USD 2.4bn 95% completed contract awarded for the Sidra Medical and Research Centre in Doha to the JV consisting of Obrascon Huarte Lain (OHL-55%) and Contrack (45%)(OC`s Subsidiary) in February 2008. In accordance to the dispute, OC has already reserved USD 188mn of provisions of which USD 166.5mn represent the carrying amount and another USD 21.5mn of expected losses.

Upside Risks More than anticipated new awards mainly from Saudi Arabia in first place, Algeria and Iraq. Leading to a faster than expected

increase in such markets contribution to backlog.

Higher than estimated EBITDA margins; Egypt margins to proceed at higher than 11% EBITDA margin going beyond 2016 and same for Saudi Arabia. And for the USA to exceed the 3% estimated EBITDA margin going forward after finalizing the mega low margins` projects contributing largely to the current backlog.

A political end for the war over Yemen that would halt the estimated high risks for Saudi Arabia security conditions and secure the announced spending with no war spending burden on the Kingdom`s budget.

The end for the religious and civil conflict and war in Iraq that would definitely push spending and construction projects higher; hence directly impacting Orascom Construction amount and value of new awards as its among the few contractors remaining to fulfill projects in the Iraqi market undertaking the persistent high risk and waiting for higher rewards.

An accelerated rebound in oil prices, pushing spending in MENA region higher to exceed the assumptions and secure the pre-announced projects` pipeline execution.



8

05 May 2015

CHART 1: MENA REGION CONTRACTS` AWARDS FROM 2009-2014E

SOURCE: MEED INSIGHT, MEED PROJECTS

CHART 2: 2015-2020 PIPE LINE VS. 2009-2014E


CHART 3: 2015-2020 PIPE LINE VS. 2009-2014E


Global & Regional Construction Status … MENA Region … Increasing population, Low-to-Medium quality infrastructure … A buffer to grow

The principal markets in the MENA region, where Orascom Construction focus on are mainly Saudi Arabia, Egypt, Algeria, Iraq, UAE and to a certain extent Qatar as well. Those markets have outstanding characteristics in comparison to other emerging markets in terms of an aggregate high population of around 50% of the region`s population that is growing at faster paces than others, along with high unemployment rates. The fast growing population in those countries drives the need to boost spending on utilities, social infrastructure and to increase investments in transportation services. The anticipated increase in infrastructure and utilities spending is considered to be a must in the upcoming period not only to cope with the increasing demand but to substitute a historical underinvestment.

Middle East & North Africa Projects anticipated pipeline from 2015 to 2020 stands at USD 1.4trn excluding all oil & gas projects; 2.13 folds up from 2009-2014 pipeline of USD 657bn.

From 2009 to 2014E around USD 656.7bn of contracts awards have been allocated to the represented countries in chemical, transport, construction, power, water and transport industries; spread over a large horizon of sectors; among which the most important are the commercial, infrastructure, residential, hospitality, healthcare, transmission and treatment projects. Awards have been increasing at an increasing pace historically until 2012 came, where the effect of the Arab Spring had its shadow taking over the governments activities; a year the political turbulences’ materialized causing a 22.31% decline in new contracts awards to stand at USD 101bn down from USD 130bn in the previous year. A position that was slightly reverted in 2013 reaching 2011 awards value once again of USD 130bn; due to several reasons the relative stability in the ruling regime and political conditions in Saudi Arabia that shaped 49% of the picked countries new awards, contributing by USD 63.7bn. Saudi Arabia`s awards increased by 43.3% in 2013, while the UAE came in 2

nd place in terms of contribution and in 1

st place in terms of the

increase in new awards by 31% and 47.8% respectively standing at USD 40.3bn. While Egypt`s new awards dropped by 74.1% in 2013 reaching around USD 2.6bn due to the heavy political turbulences during 1H2013 until the ruling regime was changed. However, the economic performance remained in a stagnant stage, resisting towards an uptrend until 2H2014; when an economic outlook enhancement slightly materialized in around USD 5bn of new awarded contracts taking 2014 total contracts awarded to stand at around USD 7.6bn.

The Saudi market currently has the largest anticipated pipeline for the upcoming 5-years horizon; represented in a USD 674bn of new awards. The Saudi market offers a huge potential for OC to capture a respectful percentage. However, with the risk of a continuing deterioration in oil prices that might increase pressure on the government spending plans in addition to the on-going war in Yemen Republic; such investments` outlook might be postponed or extended over larger time horizon. The UAE follows anticipated awards of USD 465bn driven by a planned infrastructure spending program as well as for preparations concerning the Expo 2020 and other tourism and commercial projects. Egypt comes in 3

rd place in terms of the

anticipated pipeline of USD 157bn worth of new projects; driven by the Suez canal project, power plants, roads` network in addition to the massive new capital city to be established. Iraq has a USD 102bn; that depends on the current security conditions to be implemented.

674

465

157

102

35

1,433

657

Saudi Arabia

UAE

Egypt

Iraq

Algeria

MENA 2015-2020

MENA 2009-2014

9.4 12.8 11.7 9.1 2.6 7.6

40.4 50.3

65.0

44.4 63.7 34.6

37.6

34.2 23.4

27.3

40.3

41.2

2.8

4.3 5.2

9.1

13.0

6.6

3.8

5.4 24.7

11.1

10.4

2.8

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

2009 2010 2011 2012 2013 2014E

Egypt Saudi UAE Algeria Iraq

674

72 29

344

272 43

47%

5% 2%

24% 19% 3%

0

200

400

600

800

Const. Chem. Industrial Power Transport Water

0%

50%

100%

2015-2020 Estimated New Projects Awards By Sector-LHS

Contribution-RHS



9

05 May 2015

CHART 4: EGYPT`S CONSTRUCTION VALUE & CONSTITUENTS – EGP BNS

SOURCE: CBE, CFH ESTIMATES

CHART 5: EGYPT CONTRACTS` AWARDS 2009-2014E – USD BNS

SOURCE: MEED INSIGHTS, MEED PROJECTS, CFH ESTIMATES

CHART 6: 2015-2020 PROJECTS` PIPELINE BY SECTOR – USD BNS

SOURCE: MEED INSIGHTS, MEED PROJECTS, CFH ESTIMATES

Egypt … A Populous country, trying to catch up and compensate its historical underinvestment …

Egypt is one of the largest markets in the MENA region, with a population exceeding 90mn growing at an average net growth rate of 2%

per annum. Egypt is characterized by relatively a high unemployment rate, currently standing within the 13.0-13.2% range with

expectations for that range to drop on an accelerating pace in correlation with the increase in investments and mega projects correlated

with the necessity of securing more temporary and permanent jobs to ensure the sustainability and improvement of one of the most

diversified economies. A reverting path towards enhancement that we believe in its occurrence after several years of severe strikes

leading to turbulences in the country`s political stability and economical welfare. Egypt`s GDP has been growing on double digits nominal growth rates

over the past two fiscal years; where the industrial and other activities

influencing the economy were still in relative paralysis, that started

regaining the normal operations partially reaching the end of FY2014.

Hence, an anticipation of a double digit growth for the upcoming years

is to take place, while the foreseen drop in core inflation rate from its

current levels will be pushing the real GDP growth rates higher after

already dropping by 190bps Y-o-Y to stand at 7.21% in April 2015.

Egypt`s construction industry value reached EGP 88.9bn (equivalent to

USD 12.5bn) in FY14, up by 15.88% over FY13 value of EGP 76.75bn

(Equivalent to USD 11.2bn). The total construction and building

spending has been standing at an average of 4.5% of GDP from FY09 to

FY14, a percentage anticipated to increase to an average of 4.62% for

the fiscal years from 2015 to 2019. The contribution of the private

sector spending is anticipated to drop from an average of 88.25% in the

historical period from FY09 to FY14 and anticipated 88.39% FY15 to

87.58% in FY19. While the remaining portion will represent the

increasing contribution from the public sector in spending over

construction and building that is anticipated to grow at a CAGR of 18%

reaching an estimated value of EGP 23.4bn by the end of the forecasted

horizon.

Egypt`s fiscal position is forecasted to witness gradual improvements

over the upcoming short term time horizon; derived from relatively

declining expenditures on oil derivatives resulting from the current

lower prices, the fuel subsidies reform that took place with anticipation

of further subsidies` cuts to subsequently take place. Boosting the

industrial activities as well as working on tourism sector strong revival

while increasing the tax receipts through a better collection system will

all add to a better fiscal position. Such healthier fiscal governmental

path will assist in growing the infrastructure and construction pipeline

even further than the announced and estimated range of USD 157.4bn.

In line with a declining fiscal budget deficit that is estimated to shrink

reaching 11.3%-10% according to the World Bank estimates and the

Finance Minister respectively, down from 12.4% of GDP registered in

FY14 versus 13.8% in FY13.

9.4

12.8

11.7

9.1

2.6

7.6

53.2

2009

2010

2011

2012

2013

2014E

2009-2014E

85.0

6.3

1.6

26.8 24.4 13.4

54.0%

4.0%

1.0%

17.0% 15.5% 8.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

0.0

20.0

40.0

60.0

80.0

100.0


2015-2020 Estimated Egypt New Projects Awards By Sector-LHS

Contribution-RHS

38.9 46.3 52.9 59.5 67.8 78.7 91.3

106.8 123.9

143.1 165.3

5.2 6.3

7.2 7.9

8.9

10.2 12.0

14.4

17.0

19.9

23.4

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

0

20

40

60

80

100

120

140

160

180

200

FY09 FY10 FY11 FY12 FY13 FY14 FY15f FY16f FY17f FY18f FY19f

Private Spending

Public Spending

T. Construction & Building Spending % of GDP -RHS



10

05 May 2015

SOURCE: EEDC, BMI

The Egyptian Government aims to enhance the private sector confidence in the Egyptian economy while directing focus on several catchy investments … The Egyptian government has lately been putting extensive efforts in action to encourage the private sector to pour more investments in Egypt on the back of an announced new investment law that guarantees rights and inform concerning obligations along with a well known taxation scheme along; adding to that the improving security and political conditions. The Egyptian government took procedures to promote Public Private Partnerships (PPP) as a mean for hedging against certain country specific risks and minimizes projects and performance risks to increase investments in infrastructure; the common adopted models include Build-Operate-Transfer (BOT) and Build-Own-Operate (BOO) mainly for projects targeting power, Transport and water projects.

Egypt`s Future Hunt starts with an integrated and well diversified capital investments` and projects` plan … The USD 8.5bn expansion of the Suez Canal project announced in August 2014, which is currently under construction with plans to be finalized by the end of 2015; was the first announced mega project in line of a series of many others that followed. As the Suez canal is the gate for around 8% of the world`s see trade generating over USD 5bn of revenues that will definitely increase after finalizing the widening process that allows ships to transit in both directions simultaneously as well as increasing the depth to 24m. An expansion plan that is considered the seed for a 76K Sqm industrial and logistics hub that has a master plan of turning Egypt into a storage and trading global center.

Transport Infrastructure investments … come after a period of severe underinvestment and reflect a positive outlook Egypt has been ranked 100 of 144 in infrastructure quality according to the World Economic Forum`s 2014 Global Competitiveness Report due to the country`s partially depreciated transport infrastructure to a great extent. As a result of an increasing lack in investing in such sub-sector over the past 5-years. A trend coming to an end after an indicated political awareness concerning the matter that was quite well represented in the previous Egyptian Economic Development Conference during which the announcement of new investments on roads, ports, railways and airports at an estimated value exceeding USD 32bn including the Suez Canal USD 8.5bn investment. The below table shows only a portion of the announced projects that will be taking place in the upcoming period; however several projects have been excluded from the below list as the table includes only the projects with announced estimated investment cost and time line.

Table 8: Egypt`s Transportation Projects - in USD mn Sub-sector Value - in USDmn Size Status-Stage Al-Minya Civil Airport, Al Minya Airports 2,000 150Km Planning

Borg Al Arab Airport New Terminal Airports 167.7 36Km Planning

Hurghada Int. Airport New Terminal Airports 300 2.9mn Passengers Under

Construction

Cairo Int. Airport Terminal no.2 Renovation Airports 500 3.75mn

Passengers Under

Construction Mashreq Fuel Bunkering Terminal (PPP) Ports 430 881.9K Tons Contract Awarded

Safaga Port Project (PPP) Ports 858 60K Tons Study

Suez Canal Expansion Project Ports 8,500 160Km Under

Construction

Chanel Parallel to Existing Suez Canal Ports 1,500 50 Km Under

Construction

Ain Soukhna Port Expansion Ports 69.9 450K TEU Under

Construction

Suez Canal Container Termina Expansion - East Port Said phase 2 Ports 1,000 2,600K TEU Under

Construction

Cairo Metro Line 3 - Phase 3 Al Ahram station to El Bohy & Shehab Rail 1,200 7.5Km Under

Construction

Alexandria-Cairo-Luxor (PPP), High Speed Rail Project Rail 10,000 1,087Km Planning

10th of Ramadan City - Ain Shams Rail Link (PPP) Rail 727 72Km Under

Construction Heliopolis New Cairo Tram Line Phase 1 Rail 435 31Km Feasibility Study

New Rail Tunnel Construction under Suez Canal Rail 715 5Km Contract Awarded Beni Suef-Asyut Rail Line Project Rail 116 - Contract Awarded

Shobra Banha Highway, El Kalubia Roads 331 40Km Feasibility Study

Upper Egypt - Red Sea Road (PPP) Project Roads 419 414Km Under

Construction Rod El Farag Highway Extention (PPP) Project Roads 1,000 34Km In Tender

Suez Canal 3 Tunnels Roads 1,600 - Under

Construction 20 Projects Total 31,868



11

05 May 2015

SOURCE: EEDC, BMI

Energy & Utilities … Last Chance for securing the population needs along with nearly all the industries involved within the Egyptian Economy … Egypt Current Usage of energy stands at around 140-145 Terrawatt-hours (TWh) an amount anticipated to increase annually by around 5-6% to surpass 185TWh by 2020. However, the current national electricity grid goes back to ages with decreasing durability and life remaining duration to continue on supplying the current and increasing population needs before adding the anticipated industrial activity increase in the coming period. This led to continuous power outages that significantly materialized in the past 2 summer seasons; leading the government to step in setting a plan to minimize such outages gradually until reaching a point where the supply matches the increasing demand. Through adding Coal and other alternative fuels to the usable sources of energy after a declaration from the Ministry of Environment concerning the environmental risk as a consequence for such decision. Egypt plans to add around 30K MW of new energy generation capacity as well as expansions and renewals for existing power plants and supply networks. However, several projects are still in the announcement phase with no designing, planning, studying or feasibility studies provided; leading to their removal from the below table. Many projects from the announced will get established and operated on an IPP (Independent Power Projects) basis; waiting for the government to settle on the tariffs, supply and pricing schemes and other terms and conditions. Around USD 660mn worth of investments in waste water projects are currently under construction among which the main is New Cairo`s PPP waste water plant; in addition to the promising Abu Rawash treatment plant that is planned to pump 0.5bn m³ of treated water in a PPP agreement. The water treatment new awards are believed to increase in the upcoming period due to the increasing population and falling per capita share of water that reached 500m³/Capita according to the United Nations Water Organization.

Table 8: Power & Water Projects - in USD mn Sub-sector Value - in USDmn Size Status-Stage Assiut Power Plant Upgrade - Upper Egypt Power 597 650MW Planning

El Shabab Power Plant Capacity Increase Project Power 520 500MW Planning Gabel El-Zeit Wind Complex - Red Sea Power 1,000 600MW Planning

Coal Fired Powe Plant Phase 1 - Res Sea Power 3,000 3,000MW Planning El Dabaa Nucleur Power Plant Power 5000 4,800MW Planning

Kom Ombo Thermal Solar Power Plant – Aswan Power 796 100MW in Tender Abu Qir - Badr City Electricity Link Project Power 183 1,300MW Planning

Open Cycle Turnkey Power Plant - 6th of October City Power 343 600MW Contract Awarded Nuweiba Combined Cycle Plant - Coast of Aqaba Power 714.2 750MW Planning

Gulf of Suez Wind Farm IPP Project- Cairo Power 178 120MW Under Construction Wind Power IPP Project - Red Sea Power 550 120MW Contract Awarded

North Giza Power Plant - Giza Governorate Power 2,200 1,500MW Under Construction Samalout Thermal Power Plant – Minya Power 2,900 3,167MW Planning

Gabel El-Zeit Wind Farm Power 457 200MW Under Construction Beni Suef Combined Cycle Power Plant Power 2,800 2,250MW Planning

Qena Steam Power Plant Power 250 1,300MW Planning South Helwan Super Critical Power Plant Power 1,950 1,950MW Under Construction

Gabel El Asfar Waste Water Treatment Plant Water 183 912.5mn m³ p.a Under Construction Abu Rawash Waste Water Treatment Plant Water 752 511mn m³ p.a In Tender New Cairo Waste Water Treatment Plant Water 475 182mn m³ p.a Under Construction

20 Projects Total 24,373 22,907MW - 1,423.5mn m³ p.a



12

05 May 2015

CHART 7: THROUGH FY19 TOTAL REAL ESTATE SPENDING, ITS % OF GDP

CHART 8: … AND ITS CONSTITUENTS` CONTRIBUTION – IN EGP BNS

SOURCE: CBE, CFH ESTIMATES SOURCE: CBE, CFH ESTIMATES

SOURCE: EEDC, BMI

Residential & Non-Residential Investments Egypt has an average urbanization rate of 3% that might be moving upward throughout the upcoming years; which drives the assumptions for residential and non-residential spending increase. The residential sector has been growing on double digit rates historically; a trend to proceed with the current gap between supply and demand for units mainly driven by the low and middle income class segments. The private sector has been supplying new units but directed primarily to the higher and upper middle income classes to enhance the received margins. With the exception of the recently announced 1mn units project, expected to materialize in 2015 through around 100K units’ delivery executed by Arabtec, along with other several communities` establishment plans to be carried on by the private sector. Another major project is the New Capital City that is anticipated to cost around USD 45bn; to around 5mn capita such project will strongly add to the spending scheme after final announcements and construction work begins. Other planned social infrastructure projects include USD 1.3bn for establishing 6 new hospitals across Egypt and another planned USD 9bn residential projects. Spending from the private and public sector is anticipated to reach a CAGR of 17.3% by FY19f to stand at EGP 60.4bn up from around EGP 27.3bn in FY14E. Not neglecting the tourism sector, that is anticipated to show a strong come back after touching down the trough over the past three

years. With the parliamentary elections to take place during 2H2015, the political risk reduction will help enhancing tourists’ confidence

level in visiting the country. Several countries that largely contribute to the total number of visiting tourists as Germany, Italy & Belgium

have eased travel advisories on Egypt that bodes for a future growth in the number of arrivals. The belief in tourism`s rebound,

encouraged the private sector to start planning and pumping investments in the sector`s infrastructure and utilities; as for instance the

Qatari Diar Real Estate Company received approvals for its North & South Sinai USD 2.16bn project in January 2015, to establish new

hotels, malls and residential units and communities.

Table 9: Residential & Non-Residential - in USD mn Sub-sector Value - in USDmn Size Status-Stage Logistic Centre 6 of October City Project Mixed 100 5.5K Sqm Feasibility Study

North & South Sinai Mixed Use Development Mixed 2,160 - Approved The Gate – Cairo Mixed 587 35K Sqm Planning

Nile Corniche Project Commercial Construction 1,000 9.4K Sqm Under Construction Sawari Marina - Sahl Hasheesh Resort Mixed 444 2.5mn Sqm Under Construction

Secon Nile Towers – Maadi Mixed 210 110K Sqm Under Construction Sharm El Sheikh Coastel Resort Project Commercial Construction 80 - Under Construction

Mall of Egypt - 6 of October Commercial Construction 642 162.5K Sqm Under Construction Cairo Gate Retail Project, Cairo-Alex Freeway Commercial Construction 811.3 647.5K Sqm Planning

Emaar Square – Cairo Mixed 862 2.5mn Sqm Under Construction Integrated Medical City - Madinaty Cit Health Care 385 161.9K Sqm Planning

New Capital City Mixed 45,000 2.8mn Sqm Under Construction 12 Projects Total 52,281.3 8,931.8K Sqm

13 15 17 19 22 26 32 38

46 54

65

12 14 16 18

19 23

27

31

37

43

50

0.4 0.5

0.6 0.6 0.7

0.8

1.6

3.5

6.2

10.6

18.0

0.7 0.8

0.9 1.0 1.1

1.3 1.6

1.9

2.3

2.7

3.2

0

15

30

45

60

75

90

105

120

135


Private Spending - Ownership Private Spending - Business Services

Public Spending - Ownership Public Spending - Business Services

25.4 29.0 32.6 36.4 41.7 49.1 58.3 69.4

82.3 97.1

114.5

1.1 1.3 1.5 1.6 1.8

2.1 3.2

5.4

8.5

13.3

21.3

0.0%

0.2%

0.5%

0.7%

1.0%

1.2%

1.5%

1.7%

2.0%

2.3%

2.5%

2.8%

3.0%

3.3%

3.5%

0

20

40

60

80

100

120

140

160


Private Spending- Ownership & Services

Public Spending- Ownership & Services

T. Real Estate Spending % of GDP-RHS



13

05 May 2015

CHART 9: SAUDI ARABIA INFRASTRUCTURE, RESIDENTIAL & OTHER NON-RESIDENTIAL SPENDING CHART 10:

… AND TOTAL CONSTRUCTION SPENDING % OF GDP – IN USD BNS

SOURCE: SAUDI ARABIA MONETARY AGENCY, CFH ESTIMATES SOURCE: SAUDI ARABIA MONETARY AGENCY, CFH ESTIMATES

Saudi Arabia … The Largest in Anticipated New Projects` Awards & Spending …

But With Increasing Risks Hovering Around …

The security conditions in Saudi Arabia have been worsening over the past months, with consistent threat from Iraq that represents a huge portion of the Saudi Arabia`s borders with its neighbors in addition to the deteriorated situation in Yemen that turned into a war zone led by Saudi Arabia as a response to the multiple attacks recorded in the past months. A war that might turn into a regional or religious conflict across many groups and/or countries is definitely the worst case scenario that might impact the Saudi economy or spending status for the annual upgrades performed and new projects needed especially the residential and infrastructural ones. In 2014, the total construction spending came in as USD 39.8bn; out of which 54.7% represented the infrastructure spending while the remaining portion was divided between residential and non-residential spending. In 2015, it is estimated that the total construction spending will slightly grow by 4% after a period of double digits growth rates ending by 11.5% in 2014, taking the construction spending to USD 41.4bn. Construction spending in Saudi Arabia is anticipated to continue on growing at smooth rates in 2016 and 2017 of 2% and 5% respectively before accelerating once again by 2018 to continue in 2019 at 17% and 22% respectively. The forecasted period is influenced by a force majeure aspect exceeding the oil prices decline that is expected to rebound to the USD 75-80 bpd level within a 2-years time horizon. But aside from the oil status a more intensified situation over Yemen putting the conservative forecast for construction spending and the below projects` pipeline in risk of cancellation or delay; while a political solution will definitely push the value bars upward, regaining the double digits growth rates by 2016/2017.

The Kingdom of Saudi Arabia has the largest economy in MENA region with a GDP of USD 745.3bn reported for 2014, with massive hydrocarbon reserves standing at 268bn barrels as of the end of 2014 that act as a safeguard along with registered USD 734.5bn foreign reserves as of the end of January 2015. The Kingdom is characterized by a 30.6mn population that is anticipated to grow at a net average rate of 2.5% p.a according to the International Monetary Fund and US Energy Information Administration. The Kingdom has the largest project pipeline in the MENA region dominating most of the sectors` spending in comparison to other nations. The government made plans for 465 new schools in 2014`s budget, to be added to another 1,544 already under construction along with 11 new hospitals and 2 medical complexes other than the annual spending on roads and bridges, ports and airports additions and existing projects` infrastructure expansions, the government has also planned a SAR 33bn dedicated to new water projects. Saudi Arabia is characterized by being the largest in anticipated new awards; however, the recent dramatic fall in oil prices is threatening the government spending. But still no severe impact has been tracked affecting the government spending on infrastructure or affecting the quantity and/or value of new projects on the expense of cancelling or postponing several other metals and petrochemical projects.

19.3 21.8 22.8 22.4 24.4 28.5 35.8

16.4 18.0 18.6 19.8 19.9

23.3

27.5

54.0% 54.7% 55.0% 53.0% 55.0% 55.0% 56.5%

46.0% 45.3% 45.0% 47.0% 45.0% 45.0% 43.5%

0%

10%

20%

30%

40%

50%

60%

0

10

20

30

40

50

60

70

2013 2014E 2015F 2016F 2017F 2018F 2019F

Infrastructure Residential & Non-Residential Spending Infrastructure Spending % of Construction Spending Resid. - Non-Resid. % of Construction Spending

734.0 745.3 756.8 779.5 841.8

968.1

1142.3

9.6%

1.5% 1.5% 3%

8%

15%

18%

4.9% 5.3% 5.5% 5.4% 5.3% 5.4% 5.5%

0%

5%

10%

15%

20%

0

200

400

600

800

1000

1200

2013 2014 2015f 2016f 2017f 2018f 2019f

Saudi Arabia GDP Y-o-Y growth in GDP Construction Spending % of GDP



14

05 May 2015

CHART 11: SAUDI ARABIA CONTRACTS` AWARDS 2009-2014E – IN USD BNS

SOURCE: MEED INSIGHT, MEED PROJECTS, BMI, CFH RESEARCH


CHART 12: SAUDI ARABIA PROJECTS` PIPELINE 2015-2020 – IN USD BNS

The Kingdom of Saudi Arabia has awarded over the years from 2009 to 2014 new contracts with an aggregate value USD 299.5bn,

while according to announcements the government will award new contracts worth of USD 673.8bn targeting all sectors.

Industrial & Petrochemical investments … a need for diversifying the economy away from the hydrocarbon and oil revenues dependency… The kingdom has announced around USD 53.9bn of projects in the social infrastructure and industrial sectors, focusing on petrochemical plants, mining and metal production; in addition to improving and expanding the educational and healthcare platform.

Energy & Utilities … Saudi Arabia faces an annual increase in power consumption by approximately 5% p.a that drives the government to focus on energy mix diversification a case similar to Egypt but less severe. Hence, the government announced a pipeline of projects to add further energy and power generating capacities of around 60K MW out of which 25K MW will be generated from renewable energy; the total power awards represent around 42% of the announced contracts awards that includes upgrading the existing grids performance and transmission capacities as well to provide sufficient power supply to cope with the new anticipated industrial projects to be executed along with the 2.5% annual increase in population. The inefficient use of electricity and the low imposed electricity tariffs have all led demand to surpass supply causing shortages, blackouts and forcing the authority to execute power rationing plans during the peak demand periods. Residential, Non-residential construction & Transportation infrastructure spending … The Saudi government spent over the Ninth Development plan an amount of USD 130bn and a bill addition of USD 66.7bn; to stand at a total of USD 196.7bn spent over several residential and non-residential constructions. Spending targeted the educational, housing and healthcare sectors; with the housing projects representing a key priority of the government as according to estimations developers will need to build around 300K units p.a to stabilize the housing deficit at 1.65mn units. Health care spending is a major item in Saudi Arabia`s budget with ambitions to enhance and increase access to medical centers while increasing the number of available beds in proportion to the increasing population and religious visitors; a non-stop spending plan from the government over the sector targeting a regional excellence. Transportation infrastructure implementation is a major focus as well that comes in 3

rd place according to the planned new contracts awards; a spending

package that includes lots of cities` linking projects, rail roads and airports expansions to serve the annual increasing numbers of pilgrims that shape an increasing load on the existing transportation network. The kingdom of Saudi Arabia represents the largest contributor to the Gulf Cooperation Council`s Gulf`s Railway Network which will in take a large portion of spending in addition to the metro lines intended to be spread to link major meeting points as well; the largest project of which is the Mecca Metro that will absorb USD 16bn of spending to be completed.

40.1

51.2

65

45

63.6

34.6

299.5

2009

2010

2011

2012

2013

2014E

2009-2014E

202.1

33.7 20.2

283.0

121.3

13.5

30.0%

5.0% 3.0%

42.0%

18.0%

2.0% 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

0.0

50.0

100.0

150.0

200.0

250.0

300.0


2015-2020 Estimated Saudi Arabia New Projects Awards By Sector-LHS Contribution-RHS



15

05 May 2015


Table 10: Top announced power & Industrial

Projects in Saudi Arabia - in USD mn Sub-sector Value - in USDmn Size

Power Stations & a Desalination plant - Jubail Power 1,050 2,500 MW Shuqaiq Steam Power Plant Power 3,300 2,640 MW

Jeddah South Power Plant - Phase 2 Power 3,600 2,650 MW Rabigh 6 Thermal Power Plant (PPP) Project Power 3,440 2,800 MW Yanbu 3 Power & Water Project - Al Madinah Power 3,000 3,100 MW

Qurayyah Combined Cycle Gas-Fired Power Plant Power 2,800 3,927 MW Ras Abu Qamis Power Plant Power 4,500 3,600 MW

Ras Al-Khair Power Plant - Phase 1 Power 3,000 3,600 MW Duba IPP - Phase 2 Power 2,700 1,800 MW

Saudi Egypt Power Interconnection Power 1,600 3,000 MW Mecca Solar Power Plant PV Power 640 100 MW

Industrial Complex Jubail City Expansion Project Industrial 800 600K tons Ethylene & Polyethylene Jubail City Expansion Project Industrial 750 200K tons

13 Projects Total 31,180 29,717 MW – 800K tons

Table 11: Top announced Transport projects - in

USD mn Sub-sector

Value - in USDmn

Size Status-Stage

Prince Mohamed Bin Abdel Aziz Int. Airport Phase1

Airports 1,400 8mn Passengers P.a Under Construction

King Abdel Aziz Int. Airport Expansion Project Airports 7200 32mn Passengers P.a Under Construction Hail Int. Airport Expansion Project Airports 150 NA Planning

King Khaled Int. Airport Airports 800 25mn Passengers P.a Under Construction Jazan, Abaha, Al Qasim Airports Airports 10,660 NA Planning

Port at King Abdullah Economic City - Phase 1 Ports 665 1,300K TEU Operational King Abdulaziz Port Expansion – Dammam Ports 914 1,500K TEU Under Construction

Riyadh Metro Project - Lines 1 & 2 Rail 9,450 64Km Contract Awarded Riyadh Metro Project - Line 3 Rail 5,210 40.7Km Contract Awarded

Riyadh Metro Project - Lines 4 & 5 Rail 7,820 73Km Under Construction Mecca Public Transport Program Rail 16,531 114Km In Tender

Haramain High Speed Rail Link - Phase 2 Rail 9,236 NA Under Construction Haramain High Speed Rail Link - (Makkah-

Medina) Rail 14,000 450Km Under Construction

Jeddah Metro Project Rail 2,666 NA Planning Haramain High Speed Rail (HPR) Phase 1 pt. 1 &

2 Rail 21,100 1,350 Km Under Construction

Riyadh Northern Saudi Border Road Roads & Bridges 2,666 1,418 Km Under Construction King Fahd Causeway Expansion Project Roads & Bridges 553 NA Planning

Makkah Third Ring Road Roads & Bridges 133 5.5 Km Under Construction Qulaiba-Abu Ajram Road Roads & Bridges 757 140 Km Under Construction

19 Projects Total 111,912 65mn Passengers - 2,800K TEU – 3.6

Km

Table 12: Top Resi.-Non-Resi. & Health

projects - in USD mn Sub-sector

Value - in USDmn

Size Status-Stage

Sudair City Development Project Commercial Construction 42,500 266,000 Km Under Construction King Abdullah Financial District Commercial Construction 7,800 16,000 Km Under Construction

Madinnah Knowledge Economic City Educational 7,000 4,800 Km Planning King Khaled Medical City Healthcare 4300 1,500 beds Under Construction

Riyadh Security Forces Medical City Healthcare 3,350 1,668 beds Under Construction National Guard Hospital Program Healthcare NA 1,422 beds Contract Awarded

King Abdullah Medical City Healthcare 1,200 1,500 beds In Tender King Fahad Medical City Healthcare 316 510 beds Under Construction

Mecca Gate Residential 2,800 7,500 units Under Construction

Villas Housing Project - Al Hasa Residential 1350 5,000 units Under Construction Khaleej Salman Housing Project Residential 1,600 25,000 units Under Construction

Blom Invest Maskan Arabia Fund Residential 155.5 312 units Under Construction Mutrafiah Housing Project - Phase 1 Residential 270 800 units Contract Awarded

13 Projects Total 72,642 287K Km - 6.6K beds - 38.6K

units



16

05 May 2015

CHART 13: UAE CONTRACTS` AWARDS 2009-2014E – IN USD BNS



CHART 14: UAE PROJECTS` PIPELINE 2015-2020 – IN USD BNS

United Arab Emirates … The 2nd largest in MENA Concerning the Declared New

Awards …

The UAE has currently become the world`s commercial and business center, possessing one of the largest economies in the region; with its GDP recording 3.5% growth in 2014 to stand at USD 416bn. Although the decline in oil prices pose a threat to the country`s economy and might lead to a fiscal deficit for the first time over 2015. The construction industry seems to be on a railway track supported by less reliance from Dubai and the Northern states on oil inflows in addition to the crucial preparations for EXPO 2020; of needed investments in tourism related projects, infrastructure and commercial segments to accommodate and serve an estimated number of 25mn EXPO visitors. Such investments pushes the estimations for the country`s GDP growth rates upward to hover around 4.8%-5% in 2015 and 2016 according to IMF and BMI consensus forecasts.

Over a 100% increase in the 5-years planned pipeline ending 2020 in comparison to the previous one … The UAE`s construction sector new awards almost represent 63% of the USD 465bn anticipated new contracts awards aggregation for the upcoming 5-years. Out of which the commercial sector is anticipated to stand at around USD 120bn of new projects, with the mixed use constructions including new hotels, administrative towers, retail complexes and malls and residential developments. Contributing to the hike in such sector is the estimated USD 9bn estimated total construction cost for the EXPO 2020 that will feature an underground service rail network. Announcements concerning the transportation sector almost stand at USD 93bn of new contracts, among which the Abu Dhabi`s USD 7bn Metro lines network that is planned to cover over 70Km and the USD 2.5bn Light Rail Transit projects in addition to Dubai Metro expansions to add 130-135Km of coverage through adding and expanding 4 lines, a project solely exceed USD 4bn. The chemical and industrial sectors combined represent around 9.5% of the announced pipeline; including the USD 20bn Al-Gharbia Chemicals Industrial City comprising 12 plants divided between aromatics, olefins and fertilizers and other production facilities. The power and water projects aggregately represent around 7.5% mainly driven by UAE`s aim towards shifting its energy mix towards renewable energy through establishing a USD 30bn nuclear plant currently under construction, in addition to another 1,200 MW coal-fired plant under construction that was issued in late 2013 by Dubai Electricity and Water Authority.

37.3

34.8

22.6

27.5

40.2

41.2

203.6

2009

2010

2011

2012

2013

2014E

2009-2014E

293.0

23.3 20.9 30.2

93.0

4.7

63.0%

5.0% 4.5% 6.5%

20.0%

1.0% 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0


2015-2020 Estimated UAE New Projects Awards By Sector-LHS Contribution-RHS



17

05 May 2015


SOURCE: MEED INSIGHT, MEED PROJECTS, CFH RESEARCH

CHART 15: ALGERIA CONTRACTS` AWARDS 2009-2014E – IN USD BNS

SOURCE: BMI

Table 13: UAE Sectors` Top projects - in USD mn Sub-sector Value - in USDmn Size Status-Stage

Al Maktoum Int. Airport - Phase 1 Dubai Airports 32,670 160mn passengers p.a Under Construction Abu Dhabi Int. Airport Midfield terminal Airports 2,930 40mn passengers p.a Under Construction

Abu Dhabi Metro - Phase 2& 3 Rail 4,000 NA Planning Abu Dhabi Metro - Phase 1 Rail 1,906 300mn Passengers P.a In Tender

Eithad Rail Project Rail 10,800 1,200 Km Under Construction Mafraq Ghweifat Highway (PPP) project Roads 2,720 327 Km Finance Closure

Lower Zakum Oil Lines Replacement Project Power 885 90 Km Contract Awarded Industrial City Waste-to-energy power Project Power 850 100 MW Under Construction

Civil Nuclear Programe Power 30,000 NA Under Construction Coal Fired Plant Power 3,900 3,500 MW Under Construction

Abu Dhabi Alumina Refinary Industrial 1,500 4.1K Tons/day Under Construction Al Gharbia Chemicals Industrial City Chem-Indust 20,000 NA Under Construction

Renaissance City Residential 2,900 Km NA Under Construction Al Habtoor City Residential 3,000 NA Under Construction

Dubai Expo 2020 - Jebel Ali Non-Residential 9,000 4,380 Km Planning Mall of the World Entertainment Distract Commercial 6,800 4,459 Km Planning

Al-Zohra Flagship project Commercial 16,335 5,400 Km Under Construction Amusement Park Complex Commercial 2,900 NA Planning

18 Projects Total 150,196

Algeria … A Stable Market with a Huge Government Spending Plan Ahead …

Algeria is a large nation characterized by around 39mn population that grows rapidly at 1.9-2% p.a. The country`s economy is dependent to a great extent on the abundant oil and gas production and secured by large reserves. The Algerian government rarely issues construction projects` tenders; instead the government allocates projects to contractors based on their mutual historical track record and contractors` capabilities. Recently the government announced its 5-year infrastructure development plan that stands at around USD 262bn; the plan includes the completion of existing projects in addition to maintaining and servicing the existing roads and bridges networks. The plan also includes power projects, comes on top of it the previously announced 22K MW project to be completed by 2030; out of which 12K MW will be targeted towards satisfying domestic needs and the remaining portion to be exported. Algeria has several industrial projects currently under planning as well; aiming to establish fertilizers, steel and mining facilities.

Table 14: Algeria Sectors` Top projects - in USD mn Sub-sector Value - in USDmn Size Status-Stage

Saida - Moulay Slissen Railway Line Rail 832 120 Km Under Construction Saida - Tiaret Railway Line Rail 777 153 Km Under Construction

Metro Algiers Line 1 Extention Rail 115 4 Km Contract Awarded Highland Highway Roads 5,000 1,020 Km Under Construction

Power Station in Mostaganem Power 1,370 Na Contract Awarded Naama Solar Plant Power 285 70 MW Under Construction

Concentrated Solar Power Plant Power 5,000 2,475 MW Under Construction Oued Keberit Fertiliser Plant Industrial 2,000 NA Under Construction Hassi Messaoud New Town Residential 6,000 11,000 Km Under Construction

Dounya Park Mixed Use 5,900 13K units - 500 beds hotel - 200 beds hospital Under Construction 10 Projects Total 27,278

2.8

4.3

5.2

9.1

13.0

6.6

41.0

2009

2010

2011

2012

2013

2014E

2009-2014E



18

05 May 2015

SOURCE: MEED INSIGHT, MEED PROJECTS, CFH RESEARCH

CHART 16: IRAQ CONTRACTS` AWARDS 2009-2014E – IN USD BNS

CHART 17: THE UNITED STATED ANTICIPATED CONSTRUCTION SPENDING

CHART 18: … AND GDP – IN USD BNS

SOURCE: FEDERAL RESERVE SYSTEM, CFH ESTIMATES SOURCE: FEDERAL RESERVE SYSTEM, CFH ESTIMATES

Iraq … The highest in security risk … the highest in potential …

Iraq has awarded a total of USD 58.2bn of contracts over the years from 2009 to 2014. In 2014, with the increasing tensions and conflicts and the internal war turning brutal; the number of newly awarded contracts have dropped significantly by 95.2% in comparison to the previous year. However, over the years from 2015 to 2020 the Iraqi government announced a pipeline of USD 102bn. Despite the current on-going war, the Iraqi construction industry has a huge potential due to the country`s mostly destructed infrastructure and the government inability to fulfill any social infrastructure supply commitments due to war spending. However, the current government is struggling to enhance spending gradually over the country`s infrastructure and to tackle the severe housing shortage, power supply shortage, transportation unavailability and water and sewage sectors. Hence, the situation in Iraq remains ambiguous with no remarkable indications for a short term solution until 1 of 3 options take place; the defeat of ISIS, country partitioning based on sectarian lines or a gradually stabilizing security and political situation. But whenever the conflict ends we should witness a change in MENA region ranking in accordance to the added new contract awards.

United States … The highest in Construction spending … A return to the pre-

crisis levels … Still the lowest margins` market in OC points of presence …

The United States is the world`s largest economy which is believed to maintain such position over at least the upcoming 5-years taking into consideration beyond such horizon, China`s higher annual growth rates. However the USA GDP registered USD 17.4trn in 2014 vs. China`s USD 10.4trn. The US GDP is believed to grow at a CAGR of 5.24% from 2014 to 2020 to surpass USD 22trn. The US has the largest construction spending budget and announced new awards globally. However, the market is overcrowded by strong contractors and construction firms. Construction spending in the US has returned back to the pre-economic crisis levels indicated in a V-shaped growth rates` trend that tapped the USD 1trn+ spending per annum starting from 2012. Spending over the residential and non-residential construction is almost stable on a 67:33 ratio. The US construction activity and spending is expected to regain historical highs by 2018; as the aggregate value of new awards` announced through to 2018 are expected to exceed USD 5trn. The construction sector is expected to grow by 6% and 4.8% in 2015 and 2016 respectively. The non-residential sector is estimated to grow by around 5% p.a from 2015 to 2018, driven by further educational, commercial and manufacturing projects. The planned power projects value are expected to stand around USD 455bn, while the announced industrial projects` pipeline amounts to USD 244bn for the same time horizon.

1.40 1.38 1.28

1.09 0.97 0.95 1.03

1.09 1.16 1.23

1.29 1.34 1.39

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

USA Total Construction Spending Y-o-Y %-Change

3.8

5.4

24.7

11.1

10.4

2.8

58.2

2009

2010

2011

2012

2013

2014E

2009-2014E

15.5 16.2 16.8 17.4 18.1 19.0

19.9 20.8

21.6 22.5

3.7% 4.2%

3.7% 3.9% 4.1% 4.6% 4.8% 4.6%

4.1% 4.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

0.0

5.0

10.0

15.0

20.0

25.0

2011 2012 2013 2014 2015f 2016f 2017f 2108f 2019f 2020f

United States GDP - In USD Trillions-LHS Y-o-Y Growth-RHS



19

05 May 2015

SOURCE: COMPANY DATA

Orascom Construction Ltd. Company Overview The Demerger … OCI N.V. announced on the 16

th of February that it commenced proceeding to demerge the engineering and construction group from

the fertilizer and chemicals business; a decision previously announced by the Board of Directors on the 6th

of November. The demerged construction group known as Orascom Construction got dually listed on NASDAQ Dubai and the Egyptian Exchange. The demerger resulted in a USD 1.4bn reduction in OCI N.V.`s share capital whereby each shareholder for OCI N.V received one share in Orascom Construction for each two held in OCI N.V as of a record date of 6 March 2015. Currently the global nitrogen, methanol and other natural gas base chemical derivatives group will continue to be listed on the Euronext Amsterdam; while OC became dually listed on NASDAQ Dubai and the EGX as a global engineering and construction group encompassing Weitz, Contract and BESIX. Orascom Construction offered a total of 12,984,565 new ordinary shares representing 12.4% of the company`s shares to public retail investors and through a private placement to qualified institutional investors. Around 9% of the capital enlargement was offered to qualified institutional investors standing at 10,623,735 shares offered at EGP 108.71/share (approximately USD 14.28/share); while 2,360,830 shares were offered to believed to be qualified institutional buyers or professional high net worth investors.

The Company`s rationale behind the demerger … The decision came to create two separately listed companies, offering distinct business models to favor the different shareholders and investors preferences while enhancing both shares liquidity and to separate the different industries` upside and downside risks that might adversely affect each other. As well as providing a better understanding for the core activities and operations related to the two companies`. Another important reason for such demerger was a better managerial focus and performance oriented; to be able to sharpen the focus on any value accretive opportunity and/or new partnerships while maintaining separate capital structures that provide a better outlook for lenders` assessing the company`s effectiveness and repayments ability. After the demerger became effective Orascom Construction Ltd. is currently considered as a newly established entity with all the preceding financial status extracted on a pro-forma basis from OCI N.V financial statements.

OCI N.V. `s Shareholder Structure (Pre-demerger)

Sawiris Family Free Float

Incorporating

Fertilizers

Group

Orascom

Construction

Contrack Weitz BESIX

(50% JV)

54 % 46 %



20

05 May 2015


Orascom Construction … The construction group roots goes back to the 1950s when it was founded by Onsi Sawiris in Upper Egypt and got awarded the first

project of refurbishing a school wall, before turning into a general contracting and trading company known as Orascom Construction

Ltd. in 1976. A company limited by shares incorporated in the Dubai International Financial Centre (DIFC) as of the 18th

of January 2015,

with its head quarters located in the DIFC, Emirate of Dubai in the United Arab of Emirates as the holding company for the demerged

engineering and construction group. OC is an international engineering and construction contractor focused on large-scale

infrastructure, complex industrial and high-end commercial projects in the United States, the Middle East, Africa and Central Asia for

public and private clients that sum up to over 20 different countries of executed projects and track record. OC is currently highly

exposed to the Saudi Arabia, Egypt and the US markets along with exposure to the Algerian market and further expansion plans in Iraq

to capture the country`s deep need for infrastructure and construction activities when the time suit increasing the company`s exposure

and penetration there. Orascom Construction Industries, has consistently been ranked among the world`s top contractors and was

ranked number 67 on ENR`s Top 225 international Contractors list published on 28 August 2014.

The Sawiris family owns 51% of the total company`s shares; with Nassif holding the largest portion of a 27.14% ownership through

himself and his entities represented in a 32mn shares, while Onsi follows with a contribution of 16.36% represented through holding

19.3mn shares and at last comes Sameh Sawiris holding almost 8mn shares equivalent to a 6.75% stake. The family aggregately holds

60.2mn shares out of 118mn shares issued at a par value of USD 1/share equivalent to USD 118mn of capital.

51% 38.2%

OC Ltd. Shareholder Structure (Post-demerger)

Sawiris Family Free Float

Incorporating

Orascom

Construction

Contrack Weitz BESIX

(50% JV)

Institutions

Southeastern Asset Management In – 4.98%

Cascade Investment LLC - Bill & Miranda Gates –

5.8%

10.8%



21

05 May 2015

LONG TERM INVESTMENTS: EGYPT NETHERLANDS USA CYPRUS ALGERIA SAUDI ARABIA REST OF INVESTMENTS & SUBSIDIARIES


OC Group`s Subsidiaries and Long Term Investments … The company mainly operates under three main business units and a 50% JV, encompassing their respective subsidiaries …

Long term investments and entities under the umbrella of OC Ltd. includes a list of 42 fully consolidated companies and 14 others based on the equity consolidation method. Out of the 56 companies; 14 are located in Egypt, 14 in the Netherlands, 7 in USA, 6 in Cyprus, 3 in Algeria, 3 in Saudi Arabia and the remaining 9 companies are divided over several other countries including Luxembourg, Pakistan, Bahrain, Nigeria, UAE and Belgium.

Established in 1976, Orascom is an engineering, procurement and construction contractor with over 60 years of experience in the MENA region, US and Asia; fulfilling large industrial complexes construction, commercial and infrastructure projects.

Established in 1985, and is based in McLean, Virginia. Contract inclusion provided the construction group by a strong EPC capability; acting as an engineering, procurement and construction contractor. As well as providing other services as facilities operation and maintenance primarily on institutional and infrastructure projects throughout the Middle East and Central Asia.

.

Weitz was established in 1855,

and it is a leading general

contractor, design builder and

construction manager based in

Des Moines, Iowa. Weitz is the

largest contractor in the state of

Iowa, targeting commercial,

industrial, infrastructure and

other plant services

construction projects in the

United States.

Orascom Weitz Contrack

OC has a 50% non-controlling

stake in BESIX; the Belgium

Engineering, Procurement and

Construction Contractor based

in Brussels and has executed

EPC projects and others in 19

different countries throughout

Europe, MENA and Central

Africa. BESIX is accounted for as

an associate company using the

equity method.

BESIX

Construction Segment of

OCI-99.8%

Orasqualla for Construction

S.A.E -50%

United Company for Paint &

Chemicals S.A.E -56.5%

Orascom Construction S.A.E

-99.9%

Orascom for Storage &

Maintenance -100%

Orasqualie for Development

of Wastewater S.A,E -50%

Orasqualla for Operations &

Maintenance S.A,E -50%

Suez Industrial Development

Company -60.5%

Orascom Road Construction

S.A.E -99.98%

National Steel Fabrication

S.A.E -99.9%

Alico Egypt S.A.E -50%

United Holding Company

S.A.E -56.5%

OCI Construction Egypt S.A.E

-100%

National Pipes Company

S.A.E -40%

OCI Construction

International B.V -100%

Mena Mining B.V -100%

Red Sea Holding B.V -100%

Contrack B.V -100%

OCI Construction B.V -100%

Orascom Holding

Cooperatief U.A. -100%

OC IHC 1 B.V. -100%

OC IHC 2 B.V. -100%

OC IHC 3 B.V. -100%

OC IHC 4 B.V. -100%

OC IHC 5 B.V. -100%

OC IHC 6 B.V. -100%

OC IHC 7 B.V. -100%

OC IHC 8 B.V. -100%

Contrack International Inc. -

100%

The Weitz Group LLC -100%

Orascom E&C USA Inc -100%

URS Contrack Pacer Forge IV

JV -45%

Watts – Webcor Obayashi JV

-55%

Alexander – Weitz JV -49%

RW Constructors LLC JV -

50%

OCI Construction Holding

Ltd. -100%

OCI Construction Ltd. -100%

Contrack Cyprus Ltd. -100%

OC International Ltd. -100%

OC Overseas International

Ltd. -100%

OC Investments S.A.R.L -

100%

Orascom Construction

Industries –S.P.A. -99.9%

Orascom Tervi Skikda Ltd.

50%

Algerian Co. for Industrial

Cement LLC -99.9%

OCI Saudi Arabia Limited

Company -100%

Orascom Saudi Company -

60%

El Yamama United Company

-50%

Cementech Limited BVI -

100%

BESIX Group Belgium -50%

OCI Nigeria Ltd -99.9%

Sidra Medical Center JV

Qatar -50%

Medrail Limited - UAE -50%

Contrack International Wll

Bahrain -100%

OCI Luxemburg S.A.R.L -

100%

OCI Pakistan Ltd -100%



22

05 May 2015


OC`s Track Record of Growth and Expansion …

OC`s four Pillars` Commercial & Operating Strategy …

OC Management has set the company`s strategic goals that can be summarized in pursuing selected projects in core markets and penetrate others; while hunting other opportunities to expand the company`s activities in key sectors in Egypt, USA, Saudi Arabia, Algeria and Iraq.

The second pillar depends on establishing new partnerships and joint ventures with other market leaders; to mitigate risks and increase success rates in obtaining and fulfilling new awards; as such consortiums have enabled the company to participate in some of MENA`s largest construction projects. OC`s current key partnerships include the Saudi Binladin Group, IPIC, Aqualia, GE and Vinci.

Pursing value adding investment opportunities that promise a stable cash flow, scalable and growing platforms OC puts in efforts to capture respectful portions of the anticipated infrastructure spending. Such strategy materialized in 2009 through being the co-contractor and owner of Egypt`s first PPP project through establishing New Cairo Waste Water Plant in a JV with Aqualia. The company`s flexibility in bidding for projects to be executed on a standalone basis as well assists in securing further awards while capturing higher margins as the company is currently bidding for other BOT/PPP projects (OC handles the financing, designing, constructing and operating stages for the BOT awarded projects). OC focus as well in expanding its capabilities, construction capacity and human resources through considering valuable acquisitions likewise fully acquiring Weitz group in 2012.

OC has set its operational strategy high; in order to provide excellence through being committed to follow quality, safety, environmental and ethical business practices; in addition to utilizing the highest possible calibers expertise and operational field experience available in order to deliver quality work.

1950

1985

1999

2002

2004

2005-08

2005-08

2009

2011

2012-2014

Oracom was founded by Onsi Sawiris in Upper Egypt and got awarded the first project of refurbishing a school wall.

Establishing Contrack company in USA, with the aim of targeting the USAID and US-Army Corps of Engineers projects in Egypt.

Orascom Construction Industries Initial Public Offering Execution to list on the EGX.

OCI S.A.E launches a (50%-05) plan to generate 50% of its revenues outside Egypt by 2005.

OCI S.A.E and BESIX management jointly acquire BESIX Group in a 50/50 leveraged buyout – OCI achieves its 50%-05 plan.

OCI S.A,E backlog grows through new awards in Algeria, Egypt & UAE.

OCI S.A.E to lead the first initiative of developing Egypt`s first ammonia plant in 2006 and Africa`s largest fertilizer complex in 2007

OCI got awarded with Egypt`s first PPP project of constructing “New Cairo Waste Water Plant” in a JV with Aqualia

Establishing Orascom Saudi Ltd in a JV with Saudi Binladin family, 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. A new JV with the International Petroleum Investment Corporation to develop a coal-fired plant in Egypt.



23

05 May 2015

CHART 19: THE DEVELOPMENT OF OC CEMENT STORY

CHART 20: … AS WELL AS; ITS FERTILIZERS` SECTOR PENETRATION

SOURCE: COMPANY DATA SOURCE: COMPANY DATA

Investments Highlights … From construction to operation; a capable EPC contractor with a historical track record of creating value …

The company `s points of presence provides a mix of secured business stream due to the company`s manufactured hedge through diversifying its operations. Orascom Construction presence in a developed nation as the United States of America that is characterized by a strong construction base provides a strong hedge against any political or specific countries risks found in the MENA region. However, the company`s presence in the MENA region also provides a huge potential in capturing such developing economies rise; being characterized by a lower to moderate infrastructure base status along with an anticipated boost in infrastructure, Industrial, Construction and Real Estate activities and spending. The company`s hunt for value generating investments and projects is in action around the clock; mainly in the Middle East and USA. With a track record of successful projects being executed that support the company in bidding against others for mega projects. In 1996, Orascom started its cement business with a 1.5mn tpa green field project in Egypt that was divested in 2007 at an Enterprise Value of USD 15bn after becoming 32mn tpa business distributed over the various cement plants owned by that time. The company distributed USD 11bn in the following year; and retained the remaining portion for other investment opportunities. The construction group divested its 45% stake in another investment; mainly the Soukhna port in 2007. OCI by that time exited such investment in return of a USD 372mn received from Dubai Ports World equivalent to an exit EV/EBITDA multiple of 20.6x and a double digit IRR created over an investment period of 8.5 years of 49%.

Two other investments OCI got involved in and remain until the current time with no future announced plans for divestments; namely establishing a fertilizers group in 2005 and establishing a joint venture with Aqualia in 2009. OCI constructed its first fertilizer plant in 1998; before identifying and investing in Egypt Basic Industries Corporation (EBIC) through acquiring a 30% stake in 2005 in partnership with KBR, government-owned EGAS, and a number of other private investors. OCI increased its stake to 60% after completing the plant construction in 2009; a state-of-the-art 0.73mn tpa Greenfield ammonia plant characterized by being the only merchant ammonia producer in the Middle East. OC group constructed the Egyptian Fertilizers Company`s two production lines in 2000 and 2006 respectively, before fully acquiring the 1.55mn tpa company in 2008. OC group built Sorfert Algerie in a JV with Contrach that commissioned by end-2013. And started the construction of the Iowa Fertilizer Company in USA in 2012 before starting in Natgasoline`s construction in USA in 2014. OC constructed a USD 472mn (EGP 2.646bn) New Cairo Wastewater treatment plant over a 20 years PPP contract, through a joint venture with Aqualia; and operates the plant as well. the company received a relevant portion of the EPC contract due to the company`s participation in developing the project.

1.5 3.0

5.3 7.0 7.5

9.7

13.8

19.5

32.0

35.9

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Million Tons Per Annum

1.3 2

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 2015E 2016E

Million Tons Per Annum



24

05 May 2015

Recent Developments … A forward looking vision, eyes on attractive new auctions & awards; to secure the future …

The company has significant growth opportunities represented in several recent awarded projects and partnerships; with hopes concerned with capturing further ones in the upcoming period correlated with the increasing anticipation for new upcoming awards especially from the MENA region. An announcement came on the 5th of November indicating a joint agreement with the International Petroleum Investment Company (IPIC) to jointly commence studies to develop, construct and operate a 2-3K Mw coal-fired power plant. The deal was finalized on the 12th of November through signing a MoU with the Egyptian government to formalize the cooperation. OC and IPIC decided to accelerate the development and construction schedule to meet Egypt`s rising demand for electricity. Such step comes in favor of the company through gaining further governmental trust in assigning future projects, the strategic partnership comes on the back of the company`s increasing focus in capturing more projects in Egypt and other key regional markets. In December 2014, a consortium of General Electric and OC was awarded the construction of 2 power plants in Egypt as part of the country`s Emergency Power Generation Program; the two plants have an estimated investment cost of USD 1.05bn out of which OC share stands at USD 642mn. The two plants are expected to be fully constructed and operational by 1H2016 to meet the Egypt`s high demand for power. A similar scope project awarded to Orascom Construction is the USD 4.6bn signed JV contract with Siemens to establish another two power plants and a wind rotor blade; anticipated to produce 7.2GW of energy a project, OC share is expected to stand at 50% of the total contract value. Another mega project was the award received in cooperation with Arab Contractors and the Egyptian Military Armed Forces Engineering and Construction Authority from the Egyptian government for the construction of three tunnels as part of the New Suez Canal project in Port-said at an estimated cost of EGP 12bn out of which OC`s share stands at 46.8% equivalent to EGP 5.62bn (USD 750bn). The project targets to enlarge the canal`s transit capacity and increase the utilities available to facilitate the industrial activity expansion in the area. The company has contracted similar power projects in Saudi Arabia and Algeria besides sever social infrastructure and industrial construction projects. In addition to, other new lower investment value projects` awards throughout 2014 standing at approximately USD 330mn in USA and Egypt. OC was shortlisted by the ministry of electricity as being 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; and it seems that the company`s success in conducting the project has paid off as the company expects at least one or two other projects to be awarded by 2015. In 2014, OC was assigned a USD 450mn of road and airport work, and around a similar value throughout the year from Saudi Arabia in the infrastructure sector. OC expanded its foot print in USA through the construction of one of the largest methanol plants participating in the Y-o-Y 89% increase in Weitz backlog that is believed to be completely finalized by 2015. In 2015, the company was able to capture a USD 101mn award to build a 330-rooms hotel to be connected to Iowa events center and entertainment complex. In addition to, the most recent award of constructing the hanging rail in Egypt; in cooperation with Arab Contractors. The project`s investment cost stands at USD 1.5bn funded by a 14 year loan to be registered on the Ministry of Housing, Utilities and Urban Development accounts. The project`s implementation is anticipated to start in 2016 and to be finalized by mid-2018 according to the company`s latest release.



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05 May 2015

CHART 21: HISTORICAL COGS-TO-REVENUES RATIO AND ITS DRIVERS


CHART 22: ORASCOM CONSTRUCTION HISTORICAL MARGINS`


CHART 23: ALTHOUGH A NEGATIVE NPM IN 2014; IT STRONGLY INDICATED AN UPTREND


Historical Financial Results & Performance …

An Increasing COGS-to-Revenues ratio, driving the company`s margins down in time with an increasing backlog contribution from USA |the past

few years have been difficult for the company`s operations in MENA region; due to the political turbulences that took place mainly in Egypt (the forecasted highest contributor to backlog going forward) and other countries as Iraq; that has been witnessing brutal conflicts. Leading OC to direct its focus towards the USA which, characterized by high costs of implementation and lower margins`. The shift in focus towards the USA consequently led to declining gross profit margins. The USA awards have historically been characterized by low EBITDA margins according to the company`s indication; in addition to the country`s high corporate tax rate standing at 40%.

A 1.8% EBITDA margin in 2012 moved towards a -41.2% Bottom Line Margin |The company`s EBIT in 2012

came in at USD 14.1mn that was affected by a net debt service obligation of USD 59mn; a figure turning the Earning Before Taxes into a loss of USD 44.9mn. Such figure was impacted by a tax claim initiated by the ETA in Egypt accusing OCI S.A.E of tax evasion pertaining to the sale of Orascom Building Materials Holding S.A.E (OBMH) to Lafarge in 2007 after delisting the company. OCI S.A.E entered a planned payment agreement with the ETA totaling to EGP 7.1bn (around USD 1.1bn) for resolving the tax dispute. In 2012 OC incurred the first tranche registered on 2012 statements amounting to USD 554.6mn plus a USD 1.2mn of deferred. After the appeal presented from OCI S.A.E a reversal took place due to the court ruling in favor of the company, registered on 2013`s profit and loss statements turning the income tax net value to stand at a positive figure of USD 0.4mn. However, in 2013 the net debt service expense came in at USD 98.4mn that almost fully eliminated the USD 98.8mn EBIT figure. A residual of USD 0.4mn remained as an EBT that was diminished by net tax dues of USD 0.7mn; to end the year with a net loss of USD 0.3mn.

A Historical trend of declining Awards … Reversed in 9m2014 |In 9m2014, OC completion ratio declined from 38.5%

in 2013 to stand at 28% a decline actually showing the positive impact of new awards` additions to the company`s backlog that help in securing the company`s operations over the upcoming 1.5-2 years implementation hence revenues. However, revenues increased by 32.8% Y-o-Y from USD 1,624mn top line in 9m2013; reflecting a positive signal of the increase in operations. Still, a net loss took place of USD 79.5mn mainly due to the historical high COGS-to-Revenues; high SG&A expenses and undertaken provisions.

1811.3

1457.3

2349.7 2157.4

1410.8 1280.1

2178.8 2090.1

77.9%

87.8% 92.7%

96.9%

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0

500

1000

1500

2000

2500

2011 2012 2013 9m2014

Revenues COGS (Dep & Amort. Adjusted) COGS-to-Revenues

22.1%

12.2% 7.3%

3.1%

14.4%

1.8% 1.3%

-7.4%

11.5%

-41.2%

0.0% -3.7%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

2011 2012 2013 9m2014

GPM EBITDA Margin NPM

2660 2619

1233

3869.6

1811.3 1457.3

2349.7 2157.4

3321.3

4869.3

3839.9

5566.2

-1

-0.5

0

0.5

1

1.5

2

2.5

0

1000

2000

3000

4000

5000

6000

2011 2012 2013 9m2014

New Contracts Awarded Implementation-Revenues

Ending Backlog Y-o-Y Change in Awards

Y-o-Y Change in Backlog



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05 May 2015


CHART 24: 9M2014 ENDING BACKLOG BY SECTOR, MARKET & CLIENT

2014 full year top line came in as 30.56% above 2013`s figure |According to OCI N.V 2014`s annual report; the

discontinued operations represented in the executed demerger of the construction group came in showing revenues of USD 3,067.9mn; a figure placing 4Q2014 as the strongest quarter yet in the company`s 4-years past performance; as in 4Q2014 the company was able to generate USD 910mn which is almost 2.1 folds of the same period a year earlier. Such performance highlights the anticipated performance in the upcoming period showing completion rate acceleration in response to the fast tracked projects mainly coming from Egypt. However, the high exposure to USA slightly pushed 9m2014 COGS-to-Revenues ratio to 97.27% hence minimizing the transition of the 30.56% Y-o-Y increase in top line to gross profit which at around USD 84mn implying a 2.73% GPM the least in 4-years.

6.5x increase in net loss … although a tax income reversal |In 2014, a tax reversal of USD 263mn took place, that

slightly eased the estimated loss before taxes of USD 359mn. A figure accounted for due to the estimated USD 239mn of general and administrative expenses that drove the year`s EBITDA to historical low of USD 155.4mn loss. A net operating loss of USD 243mn was eased by USD 108mn of foreign gains and non operating income; being impacted by the provisions taken against Sidra 95% completed project cancellation by Qatar Foundation of USD 168.6mn. Hence, after accounting for the net interest expense for 2014 of USD 45mn, OC`s net loss stood at USD 96.1mn the 2nd lowest historical figure after 2012.

645.7

1925.9

2994.6

5566.2

2401.3

1477.3 1154.4

325.1 208.2

5566.2

1486.2

2822.1

1258.0

5566.2

0.0

1000.0

2000.0

3000.0

4000.0

5000.0

6000.0



27

05 May 2015

SOURCE: CFH ESTIMATES & RESEARCH

Company Outlook …

Orascom Construction history goes back to 1950 when it was established by Onsi Sawiris, the company has grown to be 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. The company has a wide variety of core competencies in executing large and complex infrastructure, industrial and commercial projects. OC has consistently maintained its strong and well-established client base, comprising sovereign and blue-chip clients, with longstanding relationships. Orascom Construction is the 67

th on the international contractors list and the 138

th on the

global contractors list according to ENR ranking, the company`s subsidiaries like Contrack is ranked as the 145th

on the USD top 400 contractors list. Contrack OC`s subsidiary operates in the MENA region and has been the governmental preferred contracting company for the last 10 years. While the recently obtained Weitz is the 120

th contracting company on USA top 400; it is currently operating in 12

states in USA and is considered one of the oldest commercial contractors in there. BESIX is the highest ranked among them all, coming in the 69

th place on the international contractors list, and the 99

th on global contractors list; it was established in 1909 with 100+ years

of experience in infrastructure and high end commercial experience in MENA and Europe. BESIX was founded in 1909, is Benelux’s largest contractor focusing on high-end commercial and infrastructure projects. In 2004, Orascom Construction acquired 50% of the BESIX Group in a joint leverage buyout in partnership with BESIX management. The investment is considered strategic to OC, with a significant value creation to date. The company operates in 20 countries with a key focus on Europe, Middle East, North Africa, Australia and other selected African markets. BESIX has high exposure to MENA markets, with 55% of its backlog coming from the region. The company was involved in a number of landmark projects including Burj Khalifa (Dubai), Tangiers Port (Morocco), Sheikh Zayed Al Nahyan Mosque (Abu Dhabi), Ferrari Park experience (Abu Dhabi), Yas Island development (Abu Dhabi), Sheikh Zayed bridge (Abu Dhabi), Ministry of Foreign Affairs new building (UAE) and King Abdullah Sport City (Saudi Arabia). However, the Emirati market is characterized by a higher competitive environment due to the commercial construction focus, dominated by few companies among which BESIX group stands strongly due to its executed projects. Orascom Construction has a growing exposure to the growing attractive infrastructure and industrial activities in several developing countries, the most important among which are Egypt and Saudi Arabia along other GCC countries. The company is planning to increase its presence in other high potential markets as Iraq along increasing its activities in Algeria. The current projects in the order book are skewed towards infrastructure projects within MENA, a region that we expect to witness increased infrastructure expenditure over the coming years. The dominance of infrastructure projects in the backlog implies increased exposure to the public sector, being the typical client type for such projects, which would in turn minimize the client default risk, in our view. Therefore, we think that the current backlog and the company’s strong market position in key MENA markets would give us comfort in forecasting strong contract awards over the coming two-three years, along with higher average profitability on the total order book that we think would be more skewed to projects in the MENA region rather than the US.

Table 15: OC Awards in Specific Markets - to - Announced Projects Pipelines in 2015-2019 - in USD mn

OC Awards in Egypt 12,097 OC Awards in Saudi Arabia 2,775

Egypt Announced Awards 131,250 Saudi Arabia Announced Awards 561,500

OC % in Egypt`s Awards 9.22% OC % in Saudi Arabia`s Awards 0.49%

OC Awards in Algeria 1,343 OC Awards in USA 5,227

Algeria Announced Awards 262,000 USA Announced Awards 6,650,000

OC % in Algeria`s Awards 0.51% OC % in USA Awards 0.1%

Industry Investment Grade Risk/Return Grade

CCyycclliiccaall GGrroowwiinngg AAbboovvee//HHiigghh AAvveerraaggee//MMooddeerraattee Short-term Long-term



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05 May 2015

We have a Positive Outlook for ‘Orascom Construction’ for the following reasons … On Industry Level

i. The anticipated increase in construction spending in United States to surpass USD 5trn over the upcoming 5-years; in line with the announced and estimated new awards and projects.

ii. The announced projects` pipelines in MENA region to drive awards further than expected for major contractors and construction companies; hence, driving construction spending higher for the announced and projected residential and non-residential projects. An assumed spending increase to compensate for the significant under-investment in infrastructure not coping with the growing needs and supported by a foreseen rebound in oil prices. Mainly due to the region`s political instability and worsened security conditions impacting major markets as Egypt, Saudi Arabia and Iraq. An under-investment status believed not to proceed in Egypt after the major announcements concerning energy and infrastructure projects.

On Company Level

iii. Orascom Construction existing capabilities of constructing mega projects and executing the construction processes and contracts on precise time management; puts the company at higher preferences for capturing new awards.

iv. The company`s existing backlog and announced additions secure 2 years of operations and a stable cash flow stream.

v. After turning over the existing OCI N.V contribution to the construction group backlog in the United States; the company`s margins are anticipated to move upwards on consistent basis touching new levels in comparison to the 4 past years according to the company`s guidance. Mainly through directing the company`s focus to Egypt and Saudi Arabia that are being characterized as promising markets.

vi. A stable investment income going forward standing at around EUR 25mn; distributed from BESIX with anticipation for further enhancements going forward.

However, there are some concerns …

On Industry Level i. A slower than anticipated effective expansionary period in Egypt; putting the anticipated awards at risk of postponement. ii. The current on-going war over Yemen putting Saudi Arabia in risk of a declining construction spending if the war status

continued for a longer time horizon over the expectations.

iii. For Iraq an assumed 3-years were assumed before reaching a better security conditions; the risk of a further than expected worsened security conditions may put the Iraqi market in further risk instead of being seen as a high potential market.

On Company Level iv. It was estimated that Saudi Arabia awards and contribution to the company`s backlog will significantly decline over the

upcoming 3-years before a rebound starting from 2018 based on the war conditions and current low oil prices.

v. Algeria`s invisibility in terms of the current status in awarding, characterized by the government assigning projects instead of tendering decrease the visibility concerning the anticipated volume and value of anticipated awards.

vi. The risk of an unfavorable ruling concerning the arbitration case referred to UK court related to July 2014, termination

notice from Qatar Foundation for the USD 2.4bn 95% completed contract awarded for the Sidra Medical and Research Centre in Doha to the JV consisting of Obrascon Huarte Lain (OHL-55%) and Contrack (45%)(OC`s Subsidiary);that OC has already reported USD 168.6mn of provisions for the matter.



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05 May 2015

Analyst Certification

The research analyst(s) mentioned on the cover of this research report, hereby certifies(y) that all views and forecasts

expressed in this research report accurately reflects his (their) personal views regarding the subject security (ies) and

issuer(s) and that no part of his (their) compensation was, is or will be, directly or indirectly, related to the specific

recommendation(s) expressed in this research report.

Disclaimer

This research report was prepared and issued by Cairo Financial Holding (‘CFH’), a Company regulated by the Egyptian

Capital Market law no.159 for year 1981. This research report is not to be used or considered as an offer to sell or a

solicitation of an offer to buy or subscribe any securities. Information and opinions contained herein have been compiled or

arrived by CFH from sources believed to be reliable, but CFH has not independently verified the contents of this document.

Accordingly, no representation or warranty, express or implied, is made as to and no reliance should be placed on the

fairness, accuracy, completeness or correctness of the information and opinions contained in this document. CFH accepts no

liability whatsoever for any loss arising from the use of this document or its contents. Opinions and estimates constitute our

judgment and are subject to change without prior notice. This document is not to be relied upon or used in substitution for

the exercise of independent judgment. Each recipient of this research report shall be solely responsible for making its own

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