Orascom IANNUALREPORT2008

ANNUAL REPORT 2008

Orascom Construction Industries is a leading international construction contractor and fertilizer producer based in Cairo. We are one of Egypts largest corporations with projects and investments across North Africa, the Middle East and Europe. We aspire to be a company that our clients are proud to work with, our customers can rely on and our employees are proud to work for. A company committed to delivering quality work and products, safely and on schedule. A company with an open mind ready to embrace new opportunities and driven to deliver exceptional value.

Overview

01 06

Operational review

06 CONSTRUCTION08 Summary of operations 10 Orascom Construction16 BESIX Group20 Contrack International

22 CONSTRUCTION MATERIALS 24 National Steel Fabrication26 Alico Egypt28 United Paints and Chemicals28 National Pipe Company28 SCIB Chemical

30 PROPERTY MANAGEMENT 32 Suez Industrial Development Company33 Contrack FM

CONSTRUCTION GROUP

34 FERTILIZER 36 Summary of operations 38 Egyptian Fertilizers Company40 Egypt Basic Industries Corporation42 Notore Chemical Industries42 Sorfert Algrie42 Gavilon

FERTILIZER GROUP

34

01 2008 highlights02 Letter to shareholders04 The business

ORASCOM CONSTRUCTION INDUSTRIES 1ANNUAL REPORT 2008

New construction awards totaled $5.5 billion (LE 29.8 billion), an increase of 14.4% over the same period last year.

Year end construction backlog totaled 6.9 billion (LE 37.7 billion).

Produced and sold 1.3 million tons of granular urea at an average price of $488 per ton.

Fertilizer group contributed to 50.2% of net income.

Governance

46 61 104

Financial statements Additional information

46 Board of Directors50 Report of the Directors52 Corporate governance55 Managements discussion and analysis of

financial condition and results of operations60 Report of the Audi Committee of the

Board of Directors

63 Auditors report64 Directors statement in respect of responsibility

for financial reporting65 Consolidated income statement66 Consolidated balance sheet68 Consolidated statement of changes in equity70 Consolidated cash flow statement71 Notes to the consolidated financial statements100 Selected financial data

104 Management and corporate information Business segments and activities

2008$

2007$

2008LE

2007LE

Revenue 3,717.1 2,322.6 20,252.6 13,147.9

EBITDA 881.1 422.8 4,800.5 2,393.4 Net income without discontinued cement operations 719.8 212.1 3,921.8 1,200.4 Net income including discontinued cement operations 985.0 11,662.8 5,366.7 66,020.9 Earnings per share 3.5 0.9 18.9 5.1 Total assets 7,823.1 17,127.0 43,025.5 94,952.0 Cash and cash equivalents 1,503.5 706.5 8,268.7 3,917.0 Total debt 2,077.3 2,107.3 11,424.7 11,682.6 Minority interest 41.2 189.2 226.7 1,048.8 Shareholders' equity 3,155.5 13,139.8 17,354.7 72,847.0

Egyptian Pounds (LE) and US Dollars ($) figures in millions except per share data. Growth percentages calculated based on US Dollar figures. Amounts include discontinued operations.

2 ORASCOM CONSTRUCTION INDUSTRIES ANNUAL REPORT 2008

LETTER TO SHAREHOLDERS

DEAR SHAREHOLDERS,

During 2008, the world experienced unprecedented swings in commodity prices and a global economic crisis of substantial proportions. Both of our business groups, construction and fertilizer, benefited from the wave of optimism during the first half of the year and weathered the economic storm during the second half. At year end, Orascom Construction Industries remains financially strong, with a healthy balance sheet, and more than $1.5 billion of cash, after paying record dividends and launching a share buyback program.

For the year, consolidated revenue from continuing operations was up 56.2% to $3.7 billion and consolidated EBITDA rose by 151.1% to $878.1 million. Our consolidated EBITDA margin was 23.6% and our construction group margin was 12.9% for the year. Net income from continuing operations increased 229.9% to $719.8 million. Net Income including the gain on sale of our stake in Sokhna Port Development Company was $985.0 million. Based on our results, the Board of Directors has approved an additional cash dividend of $1 per ordinary share ($2 per global depository receipt).

CONSTRUCTION GROUPDuring 2008, our construction group secured a record $5.5 billion in new orders and ended the year with a consolidated construction backlog of $6.9 billion, 31.7% higher than last year. Although we are active in 20 countries, 62% of our backlog was in Algeria, Qatar, and Abu Dhabi, with another 16% in Egypt. We continue to serve a diversified client base including regional sovereign clients which accounted for 60% of our backlog at year end.

During the year, we handed over the Nagaa Hammadi barrage and hydro power plant after six years of work on site in partnership with Vinci from France and Bilfinger Berger from Germany. Work progressed on the El Tebbin, Sidi Krir, and

Overview

WE START 2009 ARMED WITH A HIGH QUALITY CONSTRUCTION BACKLOG NEAR ITS RECORD LEVEL, THE MOST COST-EFFICIENT FERTILIZER PRODUCTION PLANTS IN THE WORLD, AND A PIPELINE OF ORGANIC GROWTH PROJECTS UNDER EXECUTION WHICH DO NOT REQUIRE FURTHER EQUITY CONTRIBUTIONS OR DEBT FINANCING. WE WILL CONTINUE TO MONITOR OUR RECEIVABLES AND LIQUIDITY, REDUCE OUR PRODUCTION COSTS AND OVERHEADS, AND LOOK FOR EXCEPTIONAL INVESTMENT OPPORTUNITIES IN ORDER TO RESPONSIBLY DELIVER AND CREATE SHAREHOLDER VALUE.

EBITDA

AN INCREASE OF 151.1%

$881.1 MILLION IN 2008 COMPARED WITH $349.8 MILLION IN 2007

881.1M


Kuraymat power plants in Egypt and on the Terga power plant in Algeria. We completed hand over of a cement plant in Nigeria to Lafarge and look forward to completing work on their plants in Syria and Saudi Arabia during 2009.

The BESIX Group completed work on The Address, a 63 story hotel and apartment building in Dubai, and continued work on the Burj Dubai tower, the tallest building in the world. It also completed construction work on Ajman wastewater treatment plant, which it will operate under a 25 year BOOT (build, own, operate and transfer) concession in partnership with Veolia from France. BESIX was also awarded a contract to construct the new Abu Dhabi and Al Ain wastewater treatment plants, which it will operate under similar 25 year BOOT concessions in partnership with Veolia.

Contrack International made steady progress on the construction of the Sidra Medical and Research Center in Qatar working in partnership with OHL from Spain. The Sidra project is the single largest project our construction group has ever undertaken, valued at more than $2.4 billion.

FERTILIZER GROUPFollowing the divestment of our cement group to Lafarge, we took the strategic decision to expand our investments in the fertilizer industry by acquiring Egyptian Fertilizer Company (EFC) from Abraaj Capital in February and purchasing a 20% stake in Gavilon Group alongside Ospraie Management in July. We also increased our ownership in Egypt Basic Industries Corporation (EBIC) up to 60% from various minority investors throughout the year. Combined with our majority stake in Sorfert Algrie, our new fertilizer group is well on its way to be ranked among the worlds top five producers of nitrogen-based fertilizers, with a total combined annual capacity of 4.65 million tons by 2010.

Despite record low inventories for several commodities, the agriculture sector was not immune to the global economic upheaval at the end of the year. We believe strongly in the long

term growth fundamentals of this sector and our ability to generate exceptional returns in the fertilizer industry. All of our production plants utilize state-of-the-art technologies and have long-term natural gas supply agreements ranking them among the worlds lowest cost producers.

During Q4 export prices for Egyptian granular urea dropped from a record high of $900 per ton to below $200 per ton as traders and wholesalers experienced difficulties in obtaining trade finance and were reluctant to clear existing higher cost inventories at discounted prices. As fertilizer prices spiraled downward, our low cost production plants continued to operate at full capacity gaining market share while our competitors in Europe, Ukraine and the USA announced plant shutdowns.

CORPORATE SOCIAL RESPONSIBILITYAs one of the largest businesses in North Africa and the Middle East, we are committed to improving the communities where we live and work. We do this in many ways including reinvesting our capital in new plants and businesses in the region which provide essential supplies or services and provide employment opportunities both direct and indirectly. We are committed to maximizing the use of local resources whenever possible bringing local people into our company and developing their skills, choosing local partners to supply materials and other services. This differentiates us from our competitors, increases our operational efficiency, and ensures our ability to operate uninterrupted in the communities we serve.

FUTURE OUTLOOKIn construction, we will continue to focus on infrastructure projects in our core geographic markets both as an EPC (engineering, procurement and construction) contractor and as a developer. We believe opportunities for our construction businesses will be driven by accelerated public sector spending on infrastructure projects, which will offset slowing private sector investment on residential, commercial, and industrial projects.

Regional governments must invest in the upgrade of public infrastructure and services to cope with growing populations. Some of these investments will take the form of public private partnerships. We also believe there will be large number of power, water, transportation, and petrochemical projects over the next few years which will enable our construction businesses to grow and prosper. While we expect a challenging market environment for the foreseeable future, our existing backlog of construction contracts should benefit from declining construction material costs and a generally more timid inflation environment.

In fertilizer, our goal over the coming two years is to execute our organic growth business plan, which includes bringing the greenfield plants of EBIC and Sorfert Algrie to full production capacity on schedule and developing our channels of distribution to ensure maximum sales volumes and prices. EBIC will have an annual production capacity of 700,000 tons of ammonia and is scheduled to begin full scale production in May 2009. Construction work on our Sorfert plant was 47% complete at year end and is scheduled to begin urea production in late 2010. Our Sorfert plant will be able to produce 2 million tons of nitrogen fertilizer annually making it one of the largest plants in the world.

Despite the uncertainties of the current global economy, we are confident that our businesses will generate exceptional returns for shareholders.

ONSI SAWIRISChairman

NASSEF SAWIRISChief Executive Officer

CONSTRUCTION BACKLOGREVENUE NET INCOME

AN INCREASE OF 31.7% OVER THE SAME PERIOD LAST YEAR

AN INCREASE OF 56.2% OVER LAST YEAR AN INCREASE OF 229.9% OVER LAST YEAR FIGURES EXCLUDE DISCONTINUED OPERATIONS

$6.9 BILLION AT 31 DECEMBER 2008 COMPARED WITH $4.7 BILLION IN 2007

$3.7 BILLION IN 2008 COMPARED WITH $2.4 BILLION IN 2007

$719.8 MILLION IN 2008 COMPARED WITH $218.2 MILLION IN 2007

6.9BN3.7BN 719M


THE BUSINESS

Overview

THE GROUP

Orascom Construction Industries is a leading international construction contractor and fertilizer producer based in Cairo. We are one of Egypts largest corporations with projects and investments across North Africa, the Middle East and Europe.

Our construction group ranks among the worlds top global contractors and operates under three distinct and separate brands. Orascom Construction targets large industrial and infrastructure projects principally in North Africa and the Middle East. The BESIX Group undertakes major commercial, industrial and infrastructure projects throughout Europe, northern and central Africa and the Middle East. Contrack International pursues institutional projects in the Middle East.

To complement our construction businesses, we have investments in manufacturers of fabricated steel products, glass curtain walling, paints and concrete pipes, as well as investments in two property management companies.

Our fertilizer group specializes in the production of nitrogen-based fertilizers. We have investments in facilities in Egypt and Nigeria, with one fertilizer plant under construction in Algeria. These operations alone will rank us among the regions largest fertilizer producers. We are actively looking for new investment opportunities to grow this business into a global leader.

REVENUE BY GEOGRAPHY

NORTH AMERICA 3.8%AFRICA 4.6%NORTH AFRICA 6.6%CENTRAL ASIA 4.6%EGYPT 19.3%EUROPE 23.8%MIDDLE EAST 37.3%

NET INCOME CONTRIBUTION

CONSTRUCTION GROUP 49.8%

FERTILIZER GROUP 50.2%

EBITDA CONTRIBUITON

CONSTRUCTION GROUP 43.2%

FERTILIZER GROUP 56.8%


WE WILL WORK TO CREATE EXCEPTIONAL VALUE FOR OUR SHAREHOLDERS BY FOLLOWING A COHERENT AND CONSIDERED STRATEGY ENABLING US TO STRENGTHEN AND GROW BOTH OUR CONSTRUCTION AND FERTILIZER BUSINESSES.

OUR STRATEGY OUR VALUES OUR CORE STRENGTHS

Targeting large, complex construction projects in emerging markets.

Expanding investments in fertilizer production and selected down stream activities.

Working in partnership with local and global leaders.

Investing in the best people and technologies.

Maintaining our commitment to quality and safety.

Being a good corporate citizen wherever we operate.

Providing products and services for people in developing economies.

Searching for new opportunities in order to deliver exceptional value.

Excellence in every aspect premium quality and performance resulting from our expertise, efficiency, attention to detail and passion.

Exceptional value value based on our strong financial position, our local knowledge, our resources and our technical expertise.

Constructive partnerships strong, enduring relationships with clients, customers and partners based on trust, transparency and results.

Safety focused an important consideration in every aspect of our operations.

Setting global standards and respecting local sensitivities putting our expertise and experience to work for our clients, customers, partners and host communities. Developing our people to match global standards and maintaining a commitment to use local materials and suppliers.

Ultimately it is for others to judge our strengths, but we believe that these factors set us apart from our competitors:

Our people their expertise, hunger for knowledge and passion to excel. Above all, their loyalty and commitment to Orascom Construction Industries.

Our resources capital resources that enable us to respond faster than our construction competitors, raw materials that enable us to trade fertilizers at market leading prices.

Our experience a tradition for excellence and achievement reaching back over 50 years; an ability to share our clients perspective that gives us a unique understanding of their needs throughout the project cycle.

Our investment capability financial resources that allow us to partner with clients as an investor and a contractor. The ability to self perform and to diversify into new industries.

Our entrepreneurial attitude a strong appetite for investment and diversification to grow our business and increase revenue streams.


Operational review

CONSTRUCTIONConstruction has been at the heart of our business for over 50 years. We offer engineering, procurement and construction services to public and private clients in four continents primarily under three distinct and separate brands. Our companies offer complete building solutions for large, complex and demanding projects.

Picture captionTEN YEARS OF SUCCESSIn 2001 Orascom Construction and the BESIX Group completed construction of the El Ferdan Rail Bridge the longest double swing bridge in the world.

08 Construction group 10 Orascom Construction16 BESIX Group20 Contrack International


ORASCOM CONSTRUCTIONA leading engineering, procurement and construction contractor targeting large industrial, commercial and infrastructure projects for public and private customers primarily in Egypt. Orascom Construction is based in Cairo, Egypt and was founded in 1950.

MARKETS Active across emerging markets in North Africa and the Middle East.

EMPLOYEES44,000

OWNERSHIP100%

BESIX GROUPA collection of companies active in construction and real estate development. BESIX is the largest construction company in Belgium and is active on projects primarily in Europe and the Middle East. The BESIX Group is based in Brussels, Belgium and was founded in 1909.

MARKETS Active across Europe, northern and central Africa, the Middle East and the Caribbean.

EMPLOYEES20,000

OWNERSHIP50%

CONTRACK INTERNATIONALA major international engineering and construction contractor focusing on institutional projects in the Middle East. Contrack is based in Virginia, USA and was founded in 1985.

MARKETS Active in Afghanistan, Egypt, Jordan, Lebanon, Qatar, Bahrain and the UAE.

EMPLOYEES3,100

OWNERSHIP100%


Operational review

CONSTRUCTION GROUP NEW CONTRACTS GROWTH$ BILLIONS

04 05 06 07 08

1.2

2.32.6

4.8

5.5


Our construction group operations are focused on infrastructure projects in the Middle East, North Africa and Gulf regions. We believe opportunities for our construction businesses will be driven by accelerated government spending in this sector in an effort to curb slowing private investment. Our business will also benefit from declining construction material costs and from a generally more timid inflation environment.

Growth in non-residential and commercial construction should remain strong over the medium term to cater for pent-up demand built over the past oil boom. We think the current drop in project costs may well encourage project awards to contractors.

The strength of our construction group is demonstrated by several factors; most clearly by a 14.4% increase in new awards for the year ending 31 December 2008. We believe project cancellation risks are low, 60% of our backlog is sovereign-backed. Our exposure to real estate and commercial property developers is only 30%. Even if some projects were to be cancelled, all of our contracts have compensation clauses, including cover for demobilization costs.

Our high level of vertical integration allows for better cost management versus our peers. Over half of our projects are negotiated on fixed price contracts and we have favorable payment terms on our construction backlog. The deflationary environment should give cost relief to the portion of our backlog based on fixed prices of raw materials, as these estimates were based on higher prices of raw material.

Contracts negotiated include cost escalation formulas, which we expect to streamline margins

and mitigate the impact of any cost increase on profitability. However, we expect construction costs to ease further following the recent significant drop in cement and steel prices. This combined with our high-margin infrastructure and industrial projects should improve our operation margins over the next two years. We have a strong balance sheet with low capex needs.

Middle Eastern governments remain committed to investing in infrastructure. They continue to invest in the upgrade of public packages to be spent on ready to go infrastructure projects of confirmed higher overall expenditure. Despite the significant drop in oil prices, we believe infrastructure spending in North Africa, the Middle East and Gulf regions, which contributes to 55.7% of our current consolidated backlog, will remain relatively high.

A POSITIVE OUTLOOKIn Algeria GDP growth is expected to fall to 2.2% in 2009 from an average of 4.6% annual growth in the last three years. The government has devoted a large portion of the $160.0 billion public investment program introduced in 2005 to upgrading the transport, power and utilities sectors from 2009-13. Projects being tendered include $11.0 billion for a 1,216 kilometer East-West highway and $2.0 billion upgrade of 1,200 miles of railway.

The situation is similar in Egypt, with the Ministry of Housing and Urban Development having an urgent need to provide low income housing, requiring significant investment in supporting power generation and other utilities. GDP growth is expected to fall to 3.3% in 2009 and 3.9% in

2010 from an average of around 7.0% annual growth in the last three years.

The Egyptian governments public private partnerships program is moving in a positive direction, with a $3.0 billion stimulus package earmarked mainly for infrastructure spending and an additional $2.4 billion to be spent during the first half of 2009. The government plans to award construction contracts for two to three power plants a year, in addition to large-scale road, metro and airport expansion projects. There are also plans to develop six wastewater treatment plants across the country through public private partnerships.

In Qatar GDP growth expected to fall to 9.8% in 2009 from an average 12.7% annual growth in the last three years. We expect strong spending on general public services including utilities, hospitals and business tourism, including $2.0 billion for Ras Laffan Port and $3.0 billion for a 40 kilometer causeway and rail line to Bahrain.

Saudi Arabia increased its 2009 spending budget by 16% as part of economic stimulus policy. GDP growth is expected to fall to 0.8% in 2009 and 2.6% in 2010 from an average 3.6% annual growth in the last three years. Continuation of the governments five year public spending stimulus plan, worth $200.0 billion includes $12.0 billion for the Riyadh Womens University, $8.0 billion for the Dammam-Jeddah railway and $1.0 billion for the Medina expansion project.

Across the UAE GDP growth expected to fall to 9.8% in 2009 and 2.9% in 2010 from an average of 7.2% in the last three years. Although many real estate projects, particularly in Dubai are under threat, the demand for infrastructure across the region remains high. The government of Abu Dhabi plans to spend around $275.0 billion in the next five years on infrastructure projects. Across the UAE, funds have been committed for projects including $1.0 billion for the Ras Al Khaimah Education Park, $1.0 billion for eleven new bridges and roads, $1.1 billion for the expansion of the Dubai Metro and $40.0 billion upgrades to airports.

DURING 2008 OUR CONSTRUCTION GROUP SECURED A RECORD $5.5 BILLION IN NEW CONTRACT ORDERS AND ENDED THE YEAR WITH A CONSOLIDATED BACKLOG OF $6.9 BILLION OF WHICH 85% SPANS EGYPT, ALGERIA, QATAR, THE UAE AND SAUDI ARABIA. WE CONTINUE TO SERVE A DIVERSIFIED CLIENT BASE, OF WHICH 60% OF THE CONSOLIDATED BACKLOG IS FROM REGIONAL SOVEREIGN CLIENTS.

ORDER BACKLOG GROWTH

$ BILLIONS

04 05 06 07 08

2.72.2

4.7

6.9

BACKLOG BY SECTOR

INDUSTRIAL 13.6%

COMMERCIAL 30.8%

INFRASTRUCTURE 55.7%

BACKLOG BY REGION

ALGERIA 22.8%

EUROPE & OTHER 15.0%

DUBAI 6.8%

ABU DHABI 19.5%

EGYPT 15.6%

QATAR 19.3%

SAUDI ARABIA 1.0%1.8


Operational review

ORASCOM CONSTRUCTION

During the year new contract awards for Orascom Construction totaled LE 6.87 billion ($1.25 billion), a decrease of 34% on 2007. Seventy-two percent of new awards and 42% of Orascom Constructions turnover was from outside Egypt. At 31 December our order backlog was LE 15.82 billion ($2.76 billion), an increase of 0.73% on the same period last year.

For a number of years it has been our strategy to offer specialist construction services to clients where we see opportunities in the market. During 2008 we have seen demand increase in specialist infrastructure services particularly in roads and in foundation works. Despite the economic turndown, we predict that this trend will continue over the coming years.

SPECIALIST FOUNDATION SERVICESIn response to the lack of specialist foundation and geotechnical engineering services across North Africa and the Middle East (particularly the Gulf territories), in Egypt we established a specialist foundations unit within Orascom Construction. Since 2007, our knowledge and resources have helped to kick start many large-scale projects where progress were hindered due to the noticeable shortage of these specialist services.

Our foundations unit executes all foundation works on Orascom Construction mega projects, giving us a strong competitive advantage. We are one of the largest specialist foundation contractors in Egypt. Our foundations unit supplies services to third party clients across Egypt and we have recently expanded activities into Algeria and the UAE.

In Algeria, we were able to leverage the credibility of Orascom Construction Industries and secure major projects including foundation work for the Skikda LNG Plant. In June 2008 we established a new joint venture company in Abu Dhabi under the name of The Arabian Sea Foundation. This partnership links us with three leading Abu Dhabi based developers: Sorouh Real Estate, Hydra Commercial Investments and Capital Investment.

The Arabian Sea Foundation is specialized in geotechnical engineering and foundation works including piling, grouting and D-walls. It can also perform sub-structure works up to ground level. During the year it invested Dhs 220.0 million ($59.8 million) in buying specialist equipment to execute most foundation works, including diaphragm walls, secant pile walls, sheet piles for excavation retaining/shoring, large diameter bored piles, micro piles and ground anchors. At the end of 2008, Arabian Sea Foundation was working on two major city developments in Abu Dhabi.

In order for us to meet demand for our foundation units services we have heavily invested in specialist equipment for operations in Egypt and Algeria. Over the past two years we have invested approximately LE 500.0 million ($91.8 million) in equipment. During 2008, we spent LE 55.0 million ($10.1 million) in Algeria on specialist pile drivers and other piling equipment for new projects. We have also invested heavily in recruiting and training a skilled team of over 1,200 people to work for our foundations unit across the three countries in which it currently operates.

ORASCOM ROAD CONSTRUCTIONSince its establishment in 1999, Orascom Road Construction has grown rapidly. It is employed on the road and paving element of all Orascom Construction projects and has proved its excellence in executing road construction projects for third parties, including the New Assuit Road in Egypt.

During 2008 revenue increased to LE 213.0 million ($39.1 million), up 145% on 2007. New project awards totaled LE 301.0 million ($55.2 million), an increase of 82% on the previous year. Orascom Road Construction continues to reinvest in resources to capitalize on the surge in road construction. In the year under review it invested LE 100.0 million ($18.4 million) in new specialist equipment including dozers, graders, compactors and asphalt plants.

Owning a specialist road company has enhanced our capabilities and has enabled us to offer clients a better, more inclusive service. We have a longstanding relationship with the Egyptian Air Force and are one of the primary contractors involved in the upgrade of its military airports. Work on public transport infrastructure is also an important revenue stream.

ORASCOM CONSTRUCTION IS A LEADING ENGINEERING, PROCUREMENT AND CONSTRUCTION CONTRACTOR ACTIVE IN EMERGING MARKETS ACROSS NORTH AFRICA AND THE MIDDLE EAST. WE TARGET LARGE, COMPLEX AND DEMANDING PROJECTS IN THE REGION, WHICH BY THEIR NATURE HAVE FEWER COMPETITORS AND HIGHER MARGINS. WE HAVE EARNED A REPUTATION FOR DELIVERING QUALITY WORK UNDER DIFFICULT CONDITIONS ON SCHEDULE AND AT COMPETITIVE PRICES.

www.orascomci.com


TURNOVER BY SECTOR TURNOVER BY REGION

COMMERCIAL 12.1%

INDUSTRIAL 27.0%


OTHER 2% EUROPE 9% EGYPT 16%

AFRICA 24%

MIDDLE EAST 49%


Operational review


BUSINESS FOCUSOur strategic positioning in the construction market place should enable us to benefit from the visible pipeline of power and infrastructure projects across North Africa and the Middle East over the coming years. For more than 10 years, we have played a leading role in energy projects intended to support growth in emerging markets completing an impressive list of power plants and energy storage facilities across North Africa. Our list of transport and utilities infrastructure projects is equally impressive.

With a global focus on the need to reduce carbon emissions, governments in North Africa and the Middle East are exploring opportunities to develop renewable energy. Billions of dollars are being poured into research and development of wind, solar, water, nuclear and hydrogen generated power supplies. Egypt, Algeria, Morocco, the UAE and Qatar are all planning to develop such schemes.

In the case of North Africa, plans are in place to export power to Europe. Algiers has a target of producing 10% of its electricity from renewable sources by 2020, while Cairo is aiming for 20% within the same time frame. Plans for solar energy complexes that cover vast swathes of desert and feed power to Europe are now being taken seriously by governments in the European Union, who are backing the initiative, called Desertec.

With increasing demand for sustainable energy solutions we are focusing resources in this area. Our recent experiences at the Kuraymat solar power and Naga Hammadi hydro power plants demonstrate the beginning of our commitment to this growing industry. We are well positioned to work on new renewable energy projects as they arise across the region.

In the Gulf, the UAE is leading the way in developing renewable and alternative energy. The government predicts the countrys power requirements will increase from 15,500 mega watts to more than 40,000 mega watts in 2020, with only enough gas to meet half of the additional demand. Our regional operations in Abu Dhabi and Dubai are strategically positioned to take on such projects.

POWER PLANTS Work on the solar island of the Kuraymat solar power plant in Egypt proceeds ahead of schedule. Site leveling, construction of temporary access roads and storm water drainage for the 625,000 square meter island commenced late in 2007. In January 2008 concrete works for the support system started, in parallel with leveling of the rock strata. Work on the underground cables and permanent open storm drainage ditches commenced in Q4. By the end of the year, actual progress was approaching 50% completion. The plant is due for commissioning in March 2010.

We are also subcontracted for civil and underground utility works on the combined cycle power plant at Kuryamat, an integral part of the solar power plant complex. The first concrete was poured in July. By year end 50% of the concrete work was complete, two of six buildings were ready for final finishes and 15% of the underground utilities were in place. Actual progress on site was almost 35% complete.

In January, the West Delta Electricity Production Company awarded us the civil works package for the Sidi Krir combined cycle power plant in Alexandria, Egypt. The award is for the construction of two 250 mega watt combustion turbine generators and one 250 mega watt steam turbine generator. Our scope covers piping for the onshore cooling system, construction of the pump house and seal well structures, including installation of the cranes, stop logs, steel structure and the water filtration system. The contract also includes civil works and structural steel relating to the power block and

main control building. Work on all underground piping, the duct bank, irrigation and sanitary systems, in partnership with BESIX, commenced in November 2007 and is scheduled to last for 31 months. Our share of the contract is valued at LE 554.7 million ($101.8 million).

During the year over 2 million cubic meters of earthworks were completed to clear and level the site for the Terga combined cycle power plant in Algeria. Our contract for the 1,200 mega watt plant is valued at 560.0 million ($826.1 million). In October we commenced civil works, including the marine works for the intake structure. We also achieved 30% progress on the engineering, ahead of our contract schedule. At year end overall progress was 10% complete. The plant is due for commissioning in September 2011.

In Egypt, construction work at the El Tebbin thermal power plant is on schedule to allow commissioning in September 2010. During the year major works focused on completing the piping for the cooling system, including jacking works under the main road outside of the plant, as well as civil works for the off-site intake pump house and discharge structures, including cofferdam sheet piles, cranes, water filtration system, stop logs and steel structure. Other priorities were the civil works for the power block area, steel structure, water treatment area, and main control, electrical and ancillary buildings. At year end overall progress was 67.4% complete.

Work on the Naga Hammadi barrage and hydro power plant for the Ministry of Water Resources and Irrigation was completed in Q2 2009 after six years on site. The barrage consists of a seven bay sluiceway, a 64 mega watt hydro power plant and two navigation locks. The project also included the diversion of the river Nile and the construction of a high road bridge. We completed the project in partnership with Vinci and Bilfinger Berger, our share of the contract was worth LE 336.0 million ($61.7 million).


PETROCHEMICALSIn Oran, construction at the fertilizer plant of Sorfert Algrie proceeds ahead of schedule and is due for commissioning in Q4 2010. One hundred percent commercial production is scheduled in Q1 2011. At year end overall progress was 47.1% complete. All long lead and critical items were ordered early in 2008, by the end of December all procurement was 92.8% complete. On site at Sorfert, civil works commenced in Q1 2008 and during the year 83.9% of all basic and detailed engineering was completed. The first bulk shipment of piping was delivered allowing fabrication to start. At year end steel structure fabrication was approximately 22% complete with approximately 15% of the steel structure erected.

Construction work, in conjunction with KBR at the fertilizer plant of Egypt Basic Industries Corporation (EBIC) was completed in Q4 2008. Our scope covered all civil works. We poured 30,000 cubic meters of concrete, supplied and erected 1,900 tons of steel structure, installed 206 pieces of mechanical equipment, welded and erected 55,000 meters of piping above ground level. We calibrated and fitted 1,471 instruments, laid 400 kilometers of cables and wires in trays above ground. We also laid an 8 kilometer ammonia export pipeline connecting EBIC to Sokhna Port and constructed two 30,000 ton ammonia storage tanks within the port grounds.

Our work on the 400 kilometer Skikda LNG Train in Algeria is divided into four contracts: buildings, LNG storage tank, civil works and piling. The combined value of the contracts, awarded between March and August 2008 by KBR, is valued at 1.8 billion ($331.5 million). The project will be completed by the end of 2011 when the LNG storage tank is handed over.

MANUFACTURING FACILITIES During the year we worked on four cement plant contracts for Lafarge. Construction work on line one of the United Cement Company of Nigeria was completed and the plant was commissioned in February 2009. Work on the second line of the Arab Union Cement Company in Libya was completed in March 2009. Line one at Al Safwa Cement Company in Saudi Arabia and line one of the Syrian Cement Company are both due for completion at the end of 2009. The combined value of these projects is LE 3.0 billion ($550.0 million).

Construction of the factory of the Algerian Emirati Tobacco Company in Kolea, Algeria, continues and is due for completion in Q3 2009. Our contract, valued at 22.0 million ($32.5 million), includes the civil works package, finishing and electromechanical installations for six production lines.

In Egypt work on the expansion of a factory for the Eastern Tobacco Company is also due for completion in Q3 2009. The factory extension consists of a basement and two floors, with a combined are of 51,000 square meters. The contract also includes construction of four 14,400 square meter storage warehouses, each with a storage capacity of 9,000 tons of tobacco.

WATER & MARINE INFRASTRUCTURE Work on the Al Maleh Lock Extension is due for completion in Q2 2010. The lock connects Al Nubaria Canal with the Mediterranean Sea in Egypt. We are doubling the length of the small lock to 120 meters, which will match the length of the existing large lock. We are also carrying out rehabilitation of the electro-mechanics on the large lock. As the main contractor our scope includes all civil works for the 60 meter extension, on and offshore soil investigation and topographic survey, verification of design, piling, construction of the diaphragm wall and dewatering, installation of the new main and side gates and installation of navigation aids, monitoring devices and the new control system. The contract is valued at LE 89.0 million ($16.0 million).


Operational review


TRANSPORT INFRASTRUCTUREIn December we completed our 110.0 million ($162.3 million) contract on the Mchria Behar Rail Link in Algeria. We worked in partnership with TSO and Contrack International on the 360 kilometer stretch of track, which included ancillary buildings, stations and all telecommunications. We laid all tracks and installed associated supplies and maintenance equipment.

Orascom Road Construction is on schedule to complete phase one of the New Assuit Road by the end of Q3 2009. Phase one of the 112 kilometer road is divided into three contracts: excavation and backfilling, construction of the base course and batching for the road slopes, construction of the asphalt pavement. By December 2008 40% of all contracted work had been completed.

In Alexandria work on the Borg El Arab International Airport modernization continues on schedule for completion in Q1 2010. In partnership with BESIX we are contracted to construct a new passenger terminal building with a capacity of 1,000 passengers per hour, a cargo terminal building with a capacity of 10,000 tons of freight per year, aircraft parking and taxiways, an administration building, service buildings, car parking, aircraft fuel station, metrological data centre and air traffic control towers.

We are employed by Alstom, as subcontractor on the Algiers Tramway project. Our contract is to execute all civil works on the Bordj El Kiffan stretch and the terminal building. Valued at 32.0 million ($47.2 million), our contract also includes installation of underground utilities, electromechanical and finishing works for the terminal building and construction of ancillary buildings. Work is due for completion in Q4 2009. At year end progress was 35% complete.

The new air traffic control tower at Cairo International Airport is due for completion at the end of 2009. The contract, for which we are employed as the main contractor, was awarded June 2007 and is valued at LE 162.5 million ($29.8 million). The state of the art, 120 meter tower is situated in the center of the airports three runways; construction has proceeded without any disruption to airport operations.

Work for the National Authority for Tunnels on the Greater Cairo Metro line three extension is valued at LE 493.3 million ($90.5 million) and is divided over three contracts: electromechanical, track and civil works. Our work on the extension is due for completion in Q4 2011. At year end we had completed 52% of the civil works contract and 9% of the electromechanical contract. Track works are due to start in Q3 2009.

CITY INFRASTRUCTUREIn Q1 2008, we were awarded a Dhs 765.0 million ($209.5 million) share of a contract awarded by Bunya for Al Reem Island in Abu Dhabi. The joint contract, with Contrack International, is for the construction of regional roads and the islands central utilities infrastructure over a site of approximately 2 kilometers square. By March 2009 the combined contract value had increased from Dhs 765.0 million ($207.9 million) to Dhs 1.2 billion ($315.8 million).

The Al Reem Island mega city development is located on a natural island to the north of Abu Dhabi City. Three developers, commissioned by the government, are involved: Tamouh Investments, Sorouh Real Estate and Al Reem Investments. Each developer controls one of the three districts that make up the 8 kilometer square island. Development of the area at the centre, where utilities are fed onto the island and out to each district is managed by Bunya Enterprises an independent partnership between all three developers.

The combined contract includes delivering:

A 10,030 kilometer road network, including traffic control systems

Underground power, water and telecommunication networks

Storm water collection, irrigation and force main networks

Fire fighting and security systems A Traffic control system, including a satellite

traffic control tower A 500 meter tunnel entrance to the

underground car park of Tamouh Towers, part of the Tamouh North development

Management of the project, including logistics and materials supply is being handled from our Abu Dhabi office, with support from head offices in Cairo and Virginia (USA). At year end the project was approximately 20% complete and on target for completion in March 2010. During 2008 the first major project milestone, completion of all earthworks, was met on time. The priority for 2009 is to meet all requirements to enable the opening of the Paris-Sorbonne University in September an event being attended by the presidents of the UAE and France.

In Q1 Sorouh Real Estate awarded Orascom Construction a Dhs 149.0 million ($40.5 million) contract for Corniche infrastructure and landscaping works on the Saraya Abu Dhabi development. At year end we had replaced the old sheet piling in the lagoon area and completed all underground infrastructure works including: storm water drainage, sewer drainage, water supply, irrigation network, power and lighting and the installation of telecommunications networks.


In June, the Arabian Sea Foundation announced its first contract award. Valued at Dhs 593.0 million ($161.0 million), it is for enabling works for towers three to eight of The Gate Towers, Shams Abu Dhabi on Al Reem Island. The contract, awarded by a Sorouh Real Estate and Tameer Holdings Investments joint venture, includes shoring, piling, dewatering, earthworks and materials supply. Work is due for completion in September 2009. At year end 18.5% of the work had been completed.

The second contract awarded to the Arabian Sea Foundation, again by Sorouh Real Estate and Tameer Holdings Investments is for enabling works for Central Park, Shams Abu Dhabi. The contract, awarded in August, is valued at Dhs 99.4 million ($27.0 million) and includes shoring, piling, excavation, dewatering and materials supply. Work is due to be complete in June 2009, however due to site possession and building permit issues only 6% was completed at the end of December.

BUILDINGS In Cairo, work on the Nile Corniche Towers development for Qatari Diar is due for completion in December 2009. Our contract, a joint venture with BESIX is valued at LE 323.8 million ($59.4 million), and includes earthworks, construction of diaphragm walls, dewatering, concrete pile foundations, raft foundation and four basements below ground level for three towers buildings on a 9,361 square meter plot on the east bank of the River Nile.

During 2008 work, in partnership with BESIX, on the 25 storey Fairmont Hotel at the landmark Nile City Towers complex in Cairo continued and is scheduled for client handover in Q2 2009.

Al Reem InvestmentsTamouh InvestmentsSorouh Real Estate

0.5 km

At the Smart Village Cairo, we continue to be awarded new contracts. The combined value of these contracts in 2008 was LE 1.0 billion ($183.9 million). During the year we were awarded seven new buildings contracts as well as the contract for the infrastructure development for the business parks new financial district. This contract, awarded by the Smart Village Company, is valued at LE 255.0 million ($41.3 million) and is due for completion in Q4 2010.

New building contract awards at the Smart Village Cairo were for the offices of Sphinx Real Estate, Commercial International Capital Holding Company, HC Securities, Beltone Financial, Bank of Alexandria, Corplease and EFG-Hermes. In 2008, we received the largest amount of contract awards by any contractor on the site. During the year we completed work on new offices for Oracle and Mobinil. Work continued on the headquarters building of the Piraeus Bank.

In the year under review we were awarded major buildings contracts in Egypt, including the Mall of Africa and Cairo Festival City developments. The Mall of Africa project was awarded in February and is due for completion in Q2 2010. The contract is valued at LE 1.1 billion ($201.9 million). Work on the Cairo Festival City started in May. The contract is valued at LE 1.9 billion ($348.7 million).

Other buildings contracts awarded in Egypt include the Embassy of Oman (Zamalek Tower) and the residence of the Ambassador of Oman. We were also awarded a LE 103.0 million ($18.9 million) contract to construct the skeleton frames of 54 villas at the Marassi Sidi Abdul Rahman waterfront development.

During the year, work in New Cairo continued for the new headquarters of Misr for Clearing, Depository and Registry (MCDR) and for BNP Paribas.

AL REEM ISLAND


Operational review

BESIX GROUP

www.besix.com

Financially, 2008 was a very good year for the BESIX Group. New contract awards totaled 2.1 billion ($3.1 billion), an increase of 34% on 2007, and a record for the Group. Its order backlog grew from 2.3 billion ($3.4 billion) to 3.6 billion ($5.3 billion) of which 74.6% was from outside of Benelux-France region. The international market continues to be a major strength, with projects in the United Kingdom, Central Europe, Central and North Africa, the Middle East, Central Asia and the Caribbean.

Due to its presence in the Gulf region for over 40 years, BESIX and its regional entities (including Six Construct) have been awarded various high profile projects, including the Burj Dubai (the tallest building in the world), Yas Island (home to F1s new Grand Prix in Abu Dhabi) and the Jumeirah Golf Estate Sewerage Treatment Plant (the worlds largest membrane biological reactor plant). Gulf region contracts accounted for 53% of the groups turnover in 2008.

In recent years BESIX has consolidated its presence in existing markets and targeted new markets, most recently Trinidad & Tobago and the Republic of Azerbaijan. It is the groups strategy to continue to target new markets, but focusing on niche clients and undertaking more contracts which use its core skills i.e. the construction of large buildings and marine works.

BUSINESS UNITSThe BESIX Group reviewed its organizational structure in order to meet new objectives, as well as local and world market requirements. It now operates under three business units:

Contracting is responsible for construction and its related resources, with a view to establishing synergies between its constituent divisions: Construction, Construction Middle East and Contracting New Developments.

Real Estate enables BESIX to promote residential, office and commercial projects.

Concessions enable the group to provide total solutions to its clients. It can design, finance, manage and maintain infrastructure or civil engineering structures. This business develops synergies between the companies of the group.

In March, BESIX signed a partnership agreement with Suez Energy Services, and its Belgian subsidiary Axima Services, to jointly develop engineering maintenance, energy management and facility management activities in the Middle East.

In May, Coentunnel Company, a concession company in which BESIX holds a stake, signed a design, build, finance and maintain contract with Rijkswaterstaat for extending the capacity of the Coentunnel in Amsterdam.

In July, BESIX, as part of a consortium, signed a BOOT (build, own, operate and transfer) contract with the Emirate of Abu Dhabi, relating to the financing, design, construction and operation of two waste water treatment plants for the cities of Abu Dhabi and Al Ain.

In December, BESIX announced an agreement for the acquisition of the Franki Foundations Group Belgium and its subsidiaries. Franki offers total solutions for numerous types of foundations, from engineering, consultancy and design to the execution of a wide range of techniques for pile foundations and slurry walls, deep excavations and soil improvement. It is a renowned leader in this industry and is widely known for its technical robustness and engineering capabilities. Franki is an innovator in the deep foundations market. The deal was concluded in January 2009.

INVESTMENTBESIX are in the process of developing a common technology platform to run across all of its businesses. The strategic benefits of such a system include: a faster management decision process, real-time transparency on the profit and loss of each contract, optimization of supplier management, improved workforce planning, better management of human capital, improved financial control and visibility of cash flow. The first pilot of the new system is scheduled during Q4 2009.

During the year, BESIX made a net investment of approximately 40.0 million ($59.0 million) in new equipment, specifically for its marine and land based fleet. The most significant investment, a new pedestal crane for the Self Elevating Platform Pauline, will be used primarily for large marine projects. The crane, valued at 4.2 million ($6.2 million) was ordered in 2008, and its installation is due for completion in Q2 2009. The new crane will allow Pauline to lift loads that are double the capacity of its former ringer crane, allow it to work faster and to work in more difficult weather conditions (particularly heavier seas).

THE BESIX GROUP HAS BEEN IN OPERATION FOR 100 YEARS. IT IS A MULTI-SERVICE GROUP OPERATING IN THE CONSTRUCTION, REAL ESTATE AND CONCESSION SECTORS IN 19 COUNTRIES. IN CONSTRUCTION THEIR FOCUS IS ON BUILDINGS, INFRASTRUCTURE AND ENVIRONMENTAL PROJECTS, INDUSTRIAL CIVIL ENGINEERING, MARITIME AND PORT WORKS AND REAL ESTATE DEVELOPMENT.


GULF STATES BUILDING AWARDS

BEST INFRASTRUCTURE PROJECT

1STAWARDED FOR AL GARHOUD BRIDGE

TURNOVER BY SECTOR

MARINE WORKS 10%

TURNOVER BY REGION

OTHER 2%

ENVIRONMENTAL 2%

BUILDINGS 47%

CIVIL WORKS 31%

GULF REGION 53%

BELGIUM 27%

NETHERLANDS, LUXEMBURG & FRANCE 12%

NORTH AFRICA 3%

CENTRAL AFRICA 2%

EASTERN EUROPE 1%

OTHER 2%

CONSTRUCTION MANAGEMENT 5%

QUARRIES 3%


Operational review

BESIX GROUP

TRANSPORT INFRASTRUCTUREBESIX is involved in many significant transport infrastructure projects across Europe, North Africa and the Middle East. Despite the downturn in building development projects, specifically in the UAE, construction of government supported infrastructure development continues and BESIX projects proceed as planned.

Work on Yas Island, BESIXs flagship city infrastructure project proceeds as scheduled, driven by the arrival of the F1 Grand Prix in November 2009. Aldar Properties and BESIX (50/50 partnership) have set up a management contracting company to carry out the contracts awarded to them on Yas Island. ALDAR-BESIX is responsible for logistics, planning, supply, design and management of the site and general project supervision. BESIX also has the contract for the construction of infrastructure services across the island including a marina, a shopping centre, the Ferrari Theme Park and all the access routes to the island.

In February, work on Al Garhoud Bridge in Dubai was completed, for which BESIX was awarded Best Infrastructure Project at the Gulf States Building Awards. The bridge is a combination of two independent decks each with seven lanes, spanning 520 meters over Dubai Creek. With the help of more than 2,000 engineers, technicians and workers, the project team completed the complex project in two years without interruption to daily traffic in the busiest area of the city.

A consortium of Six Construct and Alstom received a contract from the Roads and Transport Authority to design, construct and maintain the Al Safooh Transit System in Dubai. The contract represents phase one of the project, which will span 9.5 kilometers and have 13 stations. BESIX expects additional work on phase two, a 4 kilometer extension with six more stations. Upon completion the transit system will link Madinat Jumeirah, Mall of the Emirates, Dubai Marina and Jumeirah Beach Residence.

A number of BESIXs transport infrastructure projects in the UAE are outside of Dubai, including the Shahama Saadiyat Freeway in Abu Dhabi, which was completed for Aldar Properties in November. The scope included the construction of a ten kilometer highway with three interchanges and 17 bridges, each with ten lanes and all associated utilities and lighting.

In Equatorial Guinea, BESIX worked on two major bridge projects. The Timbabe Bridges involved the construction of two 134 meter pre-stressed concrete bridges each to carry three traffic lanes. Work was completed at the end of 2008. The Riaba Bridges are due for completion mid 2010. This project involves the construction of three pre-stressed reinforced concrete bridges of 185, 139 and 192 meters long, spread over a distance of 5 kilometers. The combined value of both projects is 78.0 million ($115.1 million).

In Europe, where BESIX are involved in numerous transport infrastructure projects, the company led the construction of the Bijlmer Railway Station near Amsterdams Arena Stadium. This 109.0 million ($160.8 million) contract involved the design and construction of a new station, including two metro lines and six national rail lines, as well as the Schiphol Frankfurt high speed rail link. Work was completed in early 2008.

MARINE INFRASTRUCTUREThe BESIX Group has built up a solid reputation for marine works jetties, quay walls and the like in Belgium and abroad. In the United Kingdom BESIX was involved in a complex project involving renovation, demolition and reconstruction of the South Hook LNG jetty to enable large LNG tankers to dock.

In Qatar, Six Construct is working on the civil engineering package and construction of pontoons for the expansion of the Ras Laffan Port for Qatar Petroleum. The three year project, due for completion in 2011 is valued at 101.0 million ($149.0 million). In the UAE, BESIX are working on the construction of the inner harbor

of Hamriyah Port. Phases three and four involve the construction of the quay wall as well as dredging and excavation of approximately 4 million cubic meters.

WATER TREATMENT BESIX continues to develop their recurrent long-term income streams by strategically positioning themselves in the rapidly growing water treatment market. The following projects highlight some of their most prestigious water treatment contracts.

In August the Abu Dhabi Water and Electricity Authority awarded BESIX and Veolia Water a 525.0 million ($774.5 million) contract to build, own and operate the new Abu Dhabi and Al Ain wastewater treatment plants. The operational contract is to last 25 years before it is due to transfer.

Work on the Emirate of Ajman sewer and wastewater treatment scheme in the UAE was completed. The ambitious project involved the construction of a sewer system to serve 380,000 citizens and a wastewater treatment plant to process 48,000 cubic meters per day. Moalajah, a BESIX-Veolia Water company, has now commenced their 25 year operational contract.

The Jumeirah Golf Estate Sewerage Treatment Plant in Dubai is the largest membrane biological reactor plant in the world. BESIX, through Six Construct and BESIX Sanotec, are involved in the construction of the plant, they also have a ten year operation and maintenance contract. When fully operational the plant will have the capacity to treat 220,000 cubic meters every day.


BUILDINGS BESIX have the privilege to work on many landmark buildings across Europe and the Middle East, the most significant of which is the Burj Dubai tower in Dubai.

The Burj Dubai tower is the worlds tallest, standing at more than 800 meters. When complete it will house a 42 floor hotel, 98 floors of residential accommodation and 21 office levels, including an observatory. BESIX have been involved in the project since February 2005. During 2008 the focus was on completing the structural works, facades and finishes. Building a tower of this magnitude has created many technical, financial and resourcing challenges on top of strict deadlines, but despite all the challenges work proceeds on schedule for completion by the end of 2009.

Adjacent to the Burj Dubai, BESIX were involved in the construction of two more exclusive developments for Emaar Properties. First to be completed was The Address, a 63 storey five star hotel and serviced apartment building. Still under construction is the Burj Dubai Development, two high rise residential towers which are due to be completed in 2010.

In Abu Dhabi, construction of the complex and sculptural Sheikh Zayed Bin Sultan Al Nahyan Mosque was completed in 2008. BESIX was main contractor and project manager for the three year project. The mosque, which covers a total area of 22,412 square meters, is the third largest in the world. It boasts four minarets, each rising 115 meters above ground level and 57 white marble domes. It has the capacity to hold 40,000 worshippers across several rooms the largest has the capacity for 9,000 people.

The structural works of the iconic Tornado Tower in Doha, Qatar, were finished in November 2008. The uniquely designed tower is now one of the highlights on the city horizon due to its distinctive shape, outer steel structure and lighting system. BESIXs contract included full fit-out of the central core, basement, ground and first floors, as well as shell and core works.

Across North Africa towns and cities are undergoing much needed development for local and visiting tourists. In Morocco, BESIX are contracted to build the Magazan Resort, a 500 room hotel set over 5 hectares inspired by traditional Moroccan architecture. The project, valued at 115.0 million ($169.6 million) is due for completion in August 2009 and includes the construction of roads and utilities networks, a waste water treatment and recycling plant and landscaping.

In Europe landmark building projects include the Schiecentrale in Rotterdam, Netherlands a former power station which BESIX are converting into an office complex for creative industries. In Brussels renovation of the Palais des Congrs proceeds on schedule for completion in July 2009 and will include three auditoriums, a 4,000 square meter, 5.5 meter high multifunctional exhibition space and twenty meeting rooms. The 60.0 million ($88.5 million) contract includes demolition, structural, finishing, mechanical and electrical works as well as preservation and restoration of the Monts des Arts garden and streets.

POWER AND INDUSTRIAL PLANTS BESIX Benelux-France is active in industrial projects. During the year work for AREVA progressed well on the Georges Besse II uranium enrichment plant in the South of France. Also in France, civil works for the Pont-sur-Sambre combined cycle power plant, a 400 mega watt facility proceeded on schedule to be completed in June 2009.


Operational review

CONTRACK INTERNATIONAL

www.contrack.com

Against an adverse global construction climate, Contrack Internationals performance during 2008 was exceptionally strong. New contract awards totaled $1.4 billion up 515.7% from $0.2 billion in 2007. Revenue increased to $0.4 billion from $0.3 billion last year.

Contrack ended the year with a record backlog of orders totaling $1.3 billion, an increase of 334.7% over the same period last year. Its strength comes from a well diversified program, which includes infrastructure development in the UAE and institutional programs in Qatar. Added stability comes from working with the US Government on significant rebuilding projects in Afghanistan.

CITY INFRASTRUCTURELate in 2007, Sorouh Real Estate awarded a joint contract to Contrack and Orascom Construction for infrastructure and landscaping works on the Saraya Abu Dhabi development. In February, both companies were awarded a second joint contract, also in Abu Dhabi. This contract, for Al Reem Island, was awarded by Bunya Enterprises for the construction of regional roads and the islands central utilities infrastructure over a site of approximately 2 kilometers square.

BUILDINGSSoon after the completion of the QAR 1.2 billion ($337.0 million) Science and Technology Park in Qatar, Contrack was awarded another contract by the Qatar Foundation. This contract, for the design and construction of the Sidra Medical and Research Center is valued at QAR 8.8 billion ($2.4 billion) and is a joint venture with OHL of Spain. Contracks share is valued at QAR 4.0 billion ($1.1 billion).

The medical centre, part of the Education City development in Doha, will offer clinical care as well as education and biomedical research facilities. The design features three-zones, for patient, family, and staff. The all-digital, wireless clinical care facility will house approximately 412 beds with infrastructure to enable expansion to 550 beds. The biomedical research component will house five core facilities.

Construction at Sidra started in February 2008 and is scheduled for completion in 2012. Work includes the construction of the main hospital, the outpatient clinic, an underground car park, a multi-storey car park and the central services building, as well as numerous ancillary buildings and facilities.

In April 2008, Emaar Properties awarded Contrack three contracts at the Marassi Sidi Abdul Rahman waterfront development on the north coast of Egypt. Contrack will construct 199 villas, 64 townhouses, a beach club house and associated facilities. The combined value of the contracts was LE 252.0 million ($46.2 million). However, at the request of the client, the beach club house was expanded from 2,500 square meters to 9,400 square meters and the contract value increased by LE 73.1 million ($13.4 million). At year end all projects were approximately 35% complete.

HUMANITARIAN AND DEFENSEIn the year under review, the US Army Corps of Engineers awarded Contrack with approximately $64.0 million of new contracts in Afghanistan. They also received a third year option to continue operation and maintenance contracts for Afghan National Army Bases throughout Afghanistan. This contract covers over 50 different facilities located across extremely volatile parts of the country and regularly employs over 1,350 people including US, local and third country nationals.

Work for the US Army at Bagram Air Base continues on the new tanker truck fuel offloading facility, the perimeter fence, guard towers and bulk fuel storage facility. The air base, which runs over 100,000 flight operations per year, has been the US stronghold in the region for the last six years. Contrack have had a regional presence at the airfield since 2003.

At Kabul International Airport work on the new fuel storage facility proceeded well during the year and was completed on schedule in February 2009. Other completed projects include the class three fuel line and a fuel point facility near the airport in Kabul.

Work progressed well on the construction of new facilities for special aircraft operations at Al Udeid Air Base in Qatar as well as the renovations to the Mudeirej Bridge in Lebanon. Both projects should be completed at the close of 2009.

CONTRACK INTERNATIONAL IS A LEADING INTERNATIONAL CONSTRUCTION CONTRACTOR. IT PROVIDES ENGINEERING, PROCUREMENT AND CONSTRUCTION SERVICES PRIMARILY ON INSTITUTIONAL AND INFRASTRUCTURE PROJECTS THROUGHOUT THE MIDDLE EAST, THE GULF AND CENTRAL ASIA, AS WELL AS OPERATION AND MAINTENANCE SERVICES.

TURNOVER BY SECTOR

INSTITUTIONAL 45.1%


OPERATION & MAINTENENCE 17.4%

GOVERNMENT 23.7%


TURNOVER BY REGION

AFGHANISTAN 30.7%

EGYPT 8.3%

IRAQ 0.1%

QATAR 43.5%

JORDAN 5.4%

LEBANON 3.8%

UAE 8.2%


Operational review

CONSTRUCTIONMATERIALSWe invest in complimentary construction materials to broaden our offer and increase our value to our clients. Value comes from being able to provide sought after products and services inclusively, within market leading prices and delivery times from companies that have a proven track record.

Picture captionTEN YEARS OF SUCCESSIn 2000 National Steel Fabrication supplied the fabricated steel structure for the 55 towers of the wind farm at Zafarana, Egypt.

24 National Steel Fabrication26 Alico Egypt28 United Paints and Chemicals28 National Pipe Company28 SCIB Chemical

NATIONAL STEEL FABRICATIONManufacturers of fabricated steel products primarily for energy, petroleum, industrial and construction clients.

MARKETS The company operates from three plants in Egypt and one in Algeria, supplying customers primarily in North Africa, the Middle East and Europe.

EMPLOYEES3,650

OWNERSHIP100%

ALICO EGYPTFabrication and installation of aluminum and glass curtain walls, doors and windows as well as architectural aluminum works primarily for building projects.

MARKETS The company operates from a plant in Egypt, supplying products to customers across North Africa, primarily in Egypt, Libya, and Sudan.

EMPLOYEES560

OWNERSHIP50%


UNITED PAINTS & CHEMICALSManufacturers of cement based, ready mix mortars for the construction industry.

MARKETS The company operates from a site in Egypt, supplying products to customers primarily in Egypt, Libya, Saudi Arabia, Lebanon and Syria.

EMPLOYEES200

OWNERSHIP50%

NATIONAL PIPE COMPANYManufacturers of precast concrete pipes and pre-stressed concrete cylinder pipes primarily for infrastructure projects.

MARKETS The company operates from two sites in Egypt, supplying customers across Egypt and in neighboring countries.

EMPLOYEES500

OWNERSHIP40%

SCIB CHEMICALManufacturers of decorative paints and industrial coatings primarily for the construction industry.

MARKETS The company operates from a site in 6th October City and sells to customers across Egypt and in neighbouring countries.

EMPLOYEES345

OWNERSHIP15%


Operational review

NATIONAL STEEL FABRICATION

www.nsfegypt.com


The skills and services of National Steel Fabrication (NSF) are essential in maintaining Orascom Constructions position as Egypts leading contractor for power generation projects in both Egypt and Algeria, and to enable us to embark on major new projects being tendered in the UAE. The capability of NSF gives Orascom Construction a competitive edge when tendering for such demanding projects.

National Steel Fabrication is investing in specialist equipment and developing the skills of their employees, particularly to meet requirements on renewable energy projects. Orascom Construction has have been looking at ways to maximize that investment and develop synergies between both businesses.

In September NSF announced the signing of an agreement with Babcock-Hitachi KK of Japan for the future cooperation on the design, manufacture and erection of super critical technology boilers for power projects in Egypt. Babcock-Hitachi will be working closely with NSF to transfer technology, and share knowledge and experience. Together we aim to maximize the localization of their products and to establish a strong base for power boilers in the region.

The Babcock-Hitachi agreement reflects the visions of National Steel Fabrication and Orascom Construction to continue expanding core competences in the power sector. This precedes the acquisition in 2007 of IBSF, designers and manufactures of boilers, pressure vessels,

condensers and heat exchangers which serve as integral components in power plants and industrial projects.

In collaboration with Babcock-Hitachi, NSF and Orascom Construction are targeting contracts for the construction of Egypts new super critical power plants. Bidding has started on the contracts for two new 260 mega watt plants to be built in Ain Sokhna, Egypt.

PROJECT UPDATESDuring Q4, NSF completed major contracts in Egypt for the El Tebbin thermal power plant, Egyptian Cement Company (line five) and Misr Beni Suef Cement Company with a total combined contract value of LE 135.7 million ($24.6 million).

Ongoing work in 2008 totaled the supply of over 49,000 tons of fabricated steel works from cement plants to power stations and factories to liquefied natural gas plants. NSFs healthy backlog from early in 2008 has minimized the affects of the global credit situation and completion of these projects will take NSF billing well into 2009 with a further 45,000 tons to be supplied.

In Egypt projects due for completion in 2009 include the Nubaria III combined cycle power plant, Cairo West thermal power plant and the Kuryamat solar power plant the first of its kind in Egypt and a landmark contract for NSF. In Algeria, supply of steel for the construction of the fertilizer plant of Sorfert Algeri is due to be completed in June.

NEW CONTRACTSNew contract awards in 2008 totaled 40,400 tons over over 13 months. The most significant contracts being:

Supply and fabrication of locally manufactured equipment and fabrication of the steel structure for the factories of El Safwa Cement Company (Saudi Arabia) and the Syrian Cement Company. The contracts, awarded in January are worth a combined total of LE 129.6 million ($23.5 million).

Fabrication of steel structure, plate works and mechanical parts for the process building, lime kiln and pulp dryer for the sugar beet factory of the Nile Sugar Company in Alexandria. The contract was awarded in July and is valued at LE 43.6 million ($8.0 million).

Supply, fabrication and erection of steel structure, plate works, tank materials and accessories for the Terga combined cycle power plant for Sonelgaz in Algeria. The contract was awarded in August and is valued at LE 82.4 million ($15.0 million).

EXPANSIONIn April the Suez Industrial Development Company signed over 500,000 square meters of land in its industrial park in Ain Sokhna. The land, purchased for LE 50.0 million ($9.1 million) is now home to NSFs new state-of-the-art workshop facility. The plant has a total capacity of 60,000 tons annually and will produce structural steel and plate works.

A priority for 2009 is to get the new facility running at full capacity. Construction and equipment installation are running on schedule. Recruitment and staff training are progressing well. The facility commenced partial operation in Q4 2008, with a capacity of 1,000 tons a month. The plant should be running at full capacity by the end of Q2 2009.

Total capacity, when Ain Sokhna is at full capacity, will be 120,000 tons annually.

THE CORE BUSINESS OF NATIONAL STEEL FABRICATION IS THE FABRICATION AND ERECTION OF HEAVY STEEL STRUCTURE FOR THE CONSTRUCTION INDUSTRY. THEY SHIP PRODUCTS TO CUSTOMERS ACROSS NORTH AFRICA, THE MIDDLE EAST AND EUROPE INCLUDING THE UNITED KINGDOM. BY THE END OF Q2 2009, CAPACITY WILL INCREASE TO 120,000 TONS OF FABRICATED STEEL ANNUALLY.


Improving the financial and operational management of the business in 2008 was a key focus. Management teams for both areas were bolstered with the appointments of a new Chief Financial Officer, a new Technical Director and a new Operations Director.

Following a review of company operations and procedures Alico have in place ambitious plans to further increase revenues by 80% in 2009. This will be done through stricter compliance with schedules, maximizing the productivity of the labor force, improvements on project and cost control procedures, increasing production capacity and expanding their product range. Alico will also be more aggressive in developing export opportunities particularly in Algeria and Libya.

EXPANSIONAlico plans to expand its product range for the industrial glass sector to meet growing demand and secure a larger market share. To aid expansion they are purchasing new machinery for aluminum and glass fabrication at a total cost of LE 5.5 million ($1.0 million). The new machinery is to add additional capacity and enhance quality. Also on order for 2009 is a new computerized numerical control machine for aluminum fabrication. This will enhance quality and production capabilities, enabling Alico to

tackle more complicated projects. A new dryer for glass processing, also on order, will increase production capacity for the industrial glass sector.

Alico is preparing to develop new products, including new window systems for the residential sector, to aid the construction of villas and compounds. Production of these products is expected to start in April 2009 when equipment orders and reorganization work are complete.

PROJECT UPDATESDuring 2008 Alico completed a prestigious contract for the new terminal three building at Cairo International Airport. This contract worth LE 60.0 million ($10.9 million) includes the supply of 20,000 square meters of glazed curtain walls, 10,000 square meters of internal partitions and more than 30,000 square meters of external aluminum cladding.

At the Smart Village Cairo works were completed on the office buildings of Oracle, Mobinil, Raya Holdings, Delta Securities and the Kipling School. Also in Egypt work was completed on HSBCs new headquarters and the French Embassy in Cairo. During the year Alico completed their first export order to Libya, for aluminum doors and windows to the Swani Hospital.

Due to a healthy backlog of projects, Alico have over LE 165.0 million ($30.0 million) of contracts in progress taking them through to Q1 2010. However it is their intention to improve on the original delivery times quoted following the reorganization of their business in 2008.

Projects in Egypt due for completion in 2009 include the new terminal building at Borg El Arab International Airport in Alexandria, a new headquarters building for the Arab Bank, the new regional processing centre for HSBC and new buildings for the Kuwaiti Embassy and the Embassy of the Sultanate of Oman.

NEW CONTRACTSDuring 2008 new contracts were awarded totaling LE 120.0 million ($22.0 million) an increase of 20% on 2007. Most significantly contracts were awarded for:

February: curtain walls and windows for the new headquarters building of Beltone Financial. Value: LE 7.7 million ($1.4 million).

April: curtain walls, windows and suspended glass walls for the regional processing centre of HSBC. Value: LE 7.0 million ($1.2 million).

May: curtain walls, cladding, automatic entrance doors and architectural canopies for the Mall of Africa a 260,000 square meter retail complex in Cairo. Value: LE 37.0 million ($6.8 million).

June: curtain walls, doors and windows for the new headquarters of EFG-Hermes. Value: LE 12.0 million ($2.2 million).

November: curtain walls, cladding and suspended glass walls for the new headquarters of BNP Paribas. Value: LE 12.6 million ($2.3 million).

December: curtain walls, decorative stainless steel structure, doors and windows for the new headquarters of the Royal Embassy of Saudi Arabia. Value LE 32.0 million ($5.8 million).

Operational review

ALICO EGYPT

DURING 2008, THE FACTORY LOCATED IN AIN SOKHNA, EGYPT, WAS REDESIGNED TO INCREASE PRODUCTIVITY AND CAPACITY AS WELL AS CREATING SPACE FOR NEW MACHINERY DUE IN 2009. IN 2008, REVENUE INCREASE BY 35% AND SALES TURNOVER INCREASED BY 10%.

www.alicoegypt.com


EXPANSION

CAPACITY INCREASE FROM 20042009 (1000m2)

04 05 06 07 08

100

126

205

240

100


Operational review

CONSTRUCTION MATERIALS

www.drymixegypt.com www.scibpaints.com


UNITED PAINTS AND CHEMICALSUnited Paints and Chemicals manufacture and sell cement based ready mix mortars under the brand name Dry Mix. The company also has investments in Egyptian Gypsum Company, BASF CC Egypt, manufactures of chemicals for the construction industry and A-Build Egypt, a waterproofing contractor.

Significant contracts awarded in 2008 include the supply of products to the Porto Marina, Porto Sokhna and El Gouna resorts in Egypt, the American University in Cairo and the Palm Hills compound in 6th October City, as well as Al Rehab City and Madinat City, both major new urban developments in New Cairo.

During the year, United Paints and Chemicals launched new retail sales and distributor channels, contributing LE 12.0 million ($2.2 million) to revenue. With the appointment of a dedicated retail sales team driving forward this side of the business is a priority.

We expect to see an improvement on export sales throughout 2009 due to the appointment of a new Regional Export Manager.

Business priorities for 2009 include rebranding and new marketing for Dry Mix, including specific product marketing for putty. There are also plans to improve the sales of Dry Mix decorative facade renders, as well as expanding the wider product range. Productivity will be improved in May following the installation of new mixing and packing machines, delivering small pack sizes faster will better serve the retail market.

NATIONAL PIPE COMPANYThe National Pipe Company (NPC) is Egypts leading manufacturer of precast and pre-stressed concrete pipes. Pipes are primarily for water transmission pipelines and wastewater force mains applications in infrastructure projects. They have an annual capacity of 38 kilometers.

In November, NPC was awarded a major contract by Arab Contractors for the water supply to Belbees City. During the year they were also awarded two significant contracts by the El Amr Construction Company, for the supply of piping for the water lines at the Tanta and Zefta Water Stations. Total new contract awards during 2008 were valued at LE 31.5 million ($5.8 million).

In the year under review, work was ongoing for significant projects including the Al Ayat Sewage Plant and the New Cairo Water Mains. At El Sheroook City the main irrigation network was completed, as well as the intake pipelines for the Sidi Krir, El Tebbin and Nubaria power plants. In 2008 NPC supplied approximately 10.9 kilometers of concrete piping to Egyptian power plants.

In August 2009 NPC will open a new production line at Badre City, Egypt. This will increase annual capacity to 86 kilometers of concrete piping annually.

SCIB CHEMICALSCIB Chemical manufactures decorative paints and industrial coatings primarily for contractors across Egypt. From their factory in 6th October City they produce up to 70,000 kiloliters of paint annually. Materials are provided for projects across the country, often in conjunction with Orascom Construction.


Operational review

PROPERTYMANAGEMENTOur investments in property management, facilities and in infrastructure concessions enable us to capitalize on business synergies across the companies that we have investments in. Orascom Construction Industries as a whole benefits from money and investment staying within the group.

32 Suez Industrial Development Company33 Contrack FM


SUEZ INDUSTRIAL DEVELOPMENT COMPANYOwner, developer, operator and utility facilitator of an 8.75 million square meter industrial park located in Ain Sokhna, Egypt.

MARKETS Light, medium and heavy industries, services and commercial clients.

EMPLOYEES91

OWNERSHIP60.5%

CONTRACK FMIntegrated property and facilities management company providing full hard (engineering) and soft services in Egypt.

MARKETS High asset value clients operating in the financial, corporate, commercial, public, residential, academic and industrial industries.

EMPLOYEES2,200

OWNERSHIP100%

Picture captionTEN YEARS OF SUCCESSOrascom Construction has built over 50% of the Smart Village Cairo since 2000. Contrack FM now provides services to over 90% of the buildings.


Clients operating from the industrial park include four Orascom Construction Industries companies: Egyptian Fertilizers Company (EFC), Egypt Basic Industries Company (EBIC), Alico Egypt and National Steel Fabrication. The workshop for Orascom Constructions pre-cast concrete products is also located at the Suez Industrial Development Company (SIDC), as well as our mobilization unit, warehousing and workshops for all Ain Sokhna based projects.

By having these companies and facilities based within SIDCs industrial park it can benefit from business synergies. Orascom Construction Industries as a whole benefits from money staying within the group.

During the year contracts were negotiated and signed with six new clients for land totaling 991,359 square meters at a combined value of LE 83.4 million ($15.3 million). The new clients, all freeholders, include DETAC (manufactures of ready mix concrete), the Egyptian Financial & Industrial Company (manufactures of phosphate-based fertilizers), Verdi for Ceramic and Porcelain Tiles and Ideal Home for Steel Fabrications (manufactures steel containers and structures).

As the developer and utilities facilitator SIDC is responsible for all onsite facilities, from irrigation, roads and street lighting to water, gas, electricity and telecommunications networks. Clients annual maintenance fee includes the provision and upkeep of all these services. Housing for employees of SIDC and its clients is also available at an additional cost.

SITE DEVELOPMENTDuring the year major site developments were initiated and/or completed, including:

Phase one of the main electrical cables tunnel for new and existing clients. This was completed in January and will save future excavation, time and cost.

In February, design and coordination for the tie-ins between EBIC and EFC started.

Excavation and construction of phase two of the electrical cables tunnel started in March.

SIDC purchased a new 25 mega volt ampere electricity distributor to increase available capacity to new clients. This was installed in December.

In July, SIDC started the construction of a 500 cubic meter water tank for pumping station number one to increase water capacity.

The pipe tunnel between EBIC and EFC was completed in December enabling ammonia and other commodities to be transferred between plants.

In 2009 further improvements are planned, including landscaping, which will enhance the industrial parks image. Water pumping station number one and electricity distributer number two will come into operation during 2009. SIDC is also preparing for construction of its new non-hazardous solid waste landfill.

LOOKING AHEADThe current global financial situation is putting strains on the business and they expect some delays or defaults on tenants land payment installments. Minimal land sale is expected and accounted for during 2009-10. In addition SIDCs ten year tax holiday ends in 2009 and they will start paying 20% income tax. SIDC is aiming to increase income from services and utilities, and is working on an expenses versus cash flow budget.

SUEZ INDUSTRIAL DEVELOPMENT COMPANY

Operational review

THE SUEZ INDUSTRIAL DEVELOPMENT COMPANY OWNS AN 8.75 MILLION SQUARE METER INDUSTRIAL PARK IN AIN SOKHNA, EGYPT. DURING 2008 A TOTAL OF 991,359 SQUARE METERS OF LAND WAS SOLD, WITH 3,264,185 SQUARE METERS REMAINING FOR SALE. BASED ON CLIENT NUMBERS AND LAND SOLD, THEY LEAD THE MARKET IN THE SUEZ AREA.

REVENUE 2008

TOTAL REVENUE LE 141.7MILLION ($26.0 MILLION)

LAND SALE 93%

SERVICES & UTILITIES 7%

www.sidc.com.eg


When Contrack FM was established in 2004 to serve the Nile City Towers Investment Company and the tenants of Nile City Towers, minimal capital was invested. The company started operations with 150 employees servicing one complex. At the end of 2008 it employed 2,200 people at sites across Egypt.

Most of Contrack FMs growth has been financed from its own cash flow, which is reflected in bottom line earnings. After four years of operation, it is still reinvesting all earnings back into the business as it works to achieve its long term goal to be the leading facilities management company in Egypt and the number one facilities management choice for companies in the financial sector.

Contrack FM offers total property and facility management; services include operation and maintenance of technical systems, housekeeping, janitorial, cleaning and catering services, security, landscaping and gardening and pest control, security and risk management. At a time when finances are tight, their services will maintain and add value to the physical assets of their clients.

CLIENTS AND NEW CONTRACTSContrack FM provides services to 40 client companies in Egypt including international clients based in the Nile City Towers complex two 34 storey office towers with over 20

Orascom IANNUALREPORT2008

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