Orascom Construction Industries

Annual Report 2003

Weill Cornell Medical College, Doha, Qatar

Orascom Construction Industries

160 26th July Street
PO Box 1911
Agouza, Cairo
Annual Report 2003 solid expansion in a
Egypt

T (202) 3026930
F (202) 3030506 / 3440201
dynamic region
www.orascomci.com
contents
Business Segments and Activities

Construction Group Cement Group

OCI Construction Activities Egyptian Cement Company (53.7%)

Regional engineering, procurement and construction services Cement manufacturer

Contrack International Inc. (45%) Algerian Cement Company (100%)

Construction services on US government-financed projects Cement manufacturer
Highlights 1 Auditor’s Report 31
OCI Algeria (100%)
Letter to Shareholders 2 Consolidated Income Statement 33
Engineering, procurement and construction services in Algeria
Construction 6 Consolidated Balance Sheet 34
Cementech Limited (100%)
Cement 10 Consolidated Statement of Changes in Equity 36
Specialized engineering, procurement and construction services
Concessions 14 Consolidated Cash Flow Statement 38 on cement plants
Other businesses 15 Notes to the Consolidated Financial Statements 40 Orascom Road Construction (90%)
Corporate Governance 16 Management and Corporate Information 55 Asphalt and concrete paving

Management’s Discussion and Analysis 20 Business Segments and Activities 57

Concessions Group Other Building Materials

Suez Industrial Development Company (59%) Ready Mix Egypt (100%)

Industrial park developer Ready-to-use concrete

Orascom Construction Industries (OCI) focuses on Egyptian Container Handling Company (50%)
Stevedoring services at Adabiya port
National Bag Company (75%)
Cement, building materials and agriculture bags

three high growth business activities – construction – Sokhna Port Development Company (70%)
Stevedoring services at Sokhna port Mehsas National Bag Company (50%)
– Egyptian Maritime Services (90%) Cement, building materials and foodstuff bags
services, cement manufacturing and infrastructure Inland and intermodal transportation services
National Steel Fabrication (50%)
concessions. Our Construction Group provides Nile Valley Gas Company (20%) Steel cutting, bending, welding, and painting services
Natural gas distribution in southern half of Egypt
engineering, procurement and construction services United Paints & Chemicals (50%)
Auto Gas Company (20%) Pre-blended dry plaster, putty, and tile adhesives
on industrial, commercial, infrastructure and railway Natural gas vehicle refueling stations – Egyptian Gypsum Company (45%)
Gypsum manufacturer
projects for public and private customers in the Egyptian Company for Tunnels (12%) – MBT Egypt (50%)
Maintenance of subway systems Construction chemicals
Middle East and North Africa. Our Cement Group – Den Braven Egypt (87.5%)
Silicone and acrylic sealants
owns and operates cement production plants in – A-Build Egypt (50.1%)
Waterproofing contractor
Egypt and Algeria. Our Concessions Group Alico Egypt (50%)
participates as an equity investor in long-term Building facade, curtain walling, and window systems

infrastructure concessions including port operations, National Pipe Company (40%)

Concrete pipe

industrial parks and natural gas distribution systems. SCIB Chemical (15%)
Paints and building chemicals
 highlights

Revenue EBITDA
2003 4,403 2003 1,204

2002 2,911 2002 801

2001 2,415 2001 782

2000 2,027 2000 637

1999 1,504 1999 369

Net Earnings Total Assets

2003 558 2003 8,111

2002 364 2002 6,327

2001 304 2001 5,633

2000 279 2000 4,476

1999 191 1999 3,842

2003 2002 2001 2000 1999

Revenue 4,403 2,911 2,415 2,027 1,504

EBITDA 1,204 801 782 637 369

Net Earnings 558 364 304 279 191

Earnings Per Share 5.56 3.60 2.84 2.70 1.98

Capital Expenditures 1,474 657 440 789 525

Total Assets 8,111 6,327 5,633 4,476 3,842

Cash & Cash Equivalents 917 787 1,072 616 885

Total Debt 3,277 2,414 2,518 1,985 1,937

Minority Interest 1,146 876 783 642 516

Shareholders’ Equity 2,158 1,439 1,247 1,015 739

Egyptian Pounds (LE) in millions except per share data

Orascom Construction Industries Annual Report 2003 01

letter to the shareholders

Onsi Sawiris
Chairman

A Remarkable Year
Few could have predicted the events which occurred over the past year. Even fewer could have predicted how positively
some of these events would affect our company. During the first quarter, consolidated revenue jumped, net income soared
and our stock price increased by 60%. By the end of June, our construction group had a record backlog, cement prices
began to rebound and revenue from sources outside Egypt reached 54% of total revenue. By September, Algerian Cement
Company had dispatched its first bag of cement and had captured an average daily market share of 10%. For the year,
consolidated revenue was up 51% to a record LE 4.4 billion and net income rose by 53% to a record LE 558 million
surpassing our expectations. Based on this outstanding performance, the Board of Directors intends to recommend a
dividend of LE 1.5 per share which represents an increase of 50% over last year and a payout ratio of 26%.

Operational Performance
As uncertainty gave way to optimism during the year, our dedicated managers and employees continued to generate
superior results by securing new business opportunities with customers throughout the region. From our home base in
Egypt, our operations have grown far and wide. During the year, OCI companies delivered cement to a customer in the
United States, supplied structural steel for a project in Tunisia, constructed a medical college in Qatar, and repaired damaged
infrastructure in Afghanistan. Our aim under the 50-05 Action Plan launched last year had been to generate 50% of
consolidated revenue from sources outside of Egypt by 2005. Perhaps we did not aim high enough. During the year,
revenues from sources outside of Egypt grew by 240% and reached LE 2.3 billion, 46% of total revenue.

Revenue from our Construction Group grew by 80% and reached LE 3.2 billion, contributing 65% of total revenue. As new
construction opportunities emerged throughout the region, our Construction Group secured a record LE 3.3 billion in new
work during the year, the majority of which was outside of Egypt and denominated in foreign currency. Our backlog of
construction work totaled LE 2.4 billion at year end, a 4% increase over last year. During the year, OCI completed work on
the five-star JW Marriott Hotel Mirage City located on the outskirts of Cairo and on the liquefied natural gas storage tanks
and offshore marine works for the new Union Fenosa LNG plant located in Damietta. Contrack International benefited
significantly from the reconstruction work undertaken in the region and was awarded a multi-year contract to provide
design-build construction services for a variety of humanitarian related projects in Afghanistan. We are also immensely
proud of their outstanding performance on the prestigious Weill Cornell Medical College in Qatar.

Revenue from our Cement Group grew by 31% and reached LE 1.2 billion, contributing 25% of total revenue. Egyptian
Cement Company benefited from a rebound in local cement prices and robust demand for cement exports in the Middle
East, Africa and the United States. During the year, Egyptian Cement Company maintained an EBITDA margin of 53% and
successfully exported 2.1 million tons of cement to 24 different countries. Algerian Cement Company dispatched its first
bag of cement in September marking the successful launch of its early cement program. Construction work on the kiln is
well ahead of schedule and is expected to be completed in February 2004.

02 Orascom Construction Industries Annual Report 2003

 Nassef Sawiris
Chief Executive Officer

Revenue from our Concessions Group and other building materials businesses grew by 25% and reached LE 507 million,
contributing 10% of total revenue. Egyptian Container Handling Company transferred the majority of its stevedoring
operations from the Adabiya port to the new Sokhna port which resulted in an 72% increase in revenue over last year. The
Sokhna port received a total of 176 vessels and handled more than 148 thousand container TEUs and 1.2 million tons of
bulk cargo. National Steel Fabrication produced a record 30,507 tons of fabricated steel products, 44% of which was
exported to customers in six different countries. National Bag Company increased net income by 80% due to strong
demand, higher production and improved margins. During the year, OCI acquired a 50% stake in Algerian bag producer
Groupe Mehsas through a Euro 2.15 million capital increase. The investment is expected to help ensure a stable supply of
cement bags to Algerian Cement Company at a competitive cost.

Business Strategies
Reflecting on the past year, it is clear that our strategic decision to pursue regional growth opportunities has had the
greatest financial impact on our company. Our managers and employees have proven that our successful business model in
Egypt can be replicated in new markets. Our entry into the construction and cement markets in Algeria has been timely and
rewarding. Algerian Cement Company should generate 25% of corporate earnings next year and income from our
construction activities in Algeria may well exceed those from Egypt. Contrack International has also demonstrated their
ability to undertake a diverse range of large scale projects in multiple foreign markets under difficult conditions while
maintaining their standards for safety, quality and timely performance.

It is also clear that our Cement Group will be the foundation of future earnings growth and provide significant and
consistent cash flows for new corporate investments and dividends to shareholders. Our cement subsidiaries are widely
recognized as efficient, low cost producers of high quality cement. By utilizing our construction capabilities to quickly
develop new cement ventures at a significantly reduced investment cost, we have transformed our Cement Group into a
leading regional producer and a respected global market competitor. We will continue to pursue a business strategy which
focuses on expanding the productive capacity and geographical diversity of our cement operations.

While all our business lines performed well during the year, the earnings growth from our infrastructure concessions and
other building materials operations has become marginalized in comparison with our construction and cement operations.
Although each of our concessions and other building materials operations has strategic value to the company as whole, this
value has diminished as our operations have become more regional. Moving forward, our intention is to consolidate our
business activities and divest these existing operations on favorable terms as market conditions may permit.

Financial Condition
To purse regional growth opportunities in the construction and cement markets, however, we must have a solid financial
base. Our strong balance sheet and investment grade credit rating have enabled us to access lines of credit through regional
and multinational financial institutions and obtain bid and performance bonding critical to our construction operations. Our

Orascom Construction Industries Annual Report 2003 03

 our strategic decision to pursue
regional growth opportunities has had the
greatest financial impact
on our company

financial strength has enabled us to move quickly in response to market opportunities and marshal the resources necessary
to undertake large, complex and demanding projects. And our strong cash position provides us with ample resources to
fund internal growth, make selective acquisitions and pay dividends to shareholders.

Our creditors have expressed their confidence in our business model and continue to support our growth. During the year,
Algerian Cement Company finalized a US$ 156 million syndicated loan package arranged by Citigroup with participation
from the International Finance Corporation (IFC), the European Investment Bank (EIB), Eksport Kredit Fonden (EkF) and
Deutsche Investitions-und Entwicklungsgellschaft (DEG). Egyptian Cement Company completed its first corporate bond
issuance totaling LE 1 billion and used the proceeds to retire its existing portfolio of medium and long-term bank loans.
OCI also received shareholder approval for an LE 400 million corporate bond issuance which should be completed early
next year. At year end, cash and cash equivalents stood at LE 917 million and the EBITDA interest cover ratio was 16.

Corporate Governance
In response to the managerial and accounting scandals in the United States and Europe, new standards for corporate governance
and financial disclosure have been introduced by legislators and regulators to help restore investor confidence in the publicly
traded companies listed on stock exchanges around the world. The Cairo and Alexandria Stock Exchanges have set new
standards which affect our company and we have adopted new guidelines to ensure our continued compliance with all
applicable laws and regulations. Under our new corporate governance guidelines, the Board of Directors has established three
committees to provide oversight of audit, compensation, nominating and corporate governance issues. The Board of Directors
has also published a code of business conduct and ethics which applies to all company employees including executive officers
and senior financial managers. By taking these actions, the Board of Directors hopes to not only meet the corporate governance
standards established by Egyptian regulators, but also those set by officials in the United States and the United Kingdom.

We have always demanded that our auditors be independent, that our executives provide accurate and timely disclosure of
material information to our shareholders, and that all our employees conduct their affairs professionally and ethically. As our
company has grown, we have strengthened our internal controls and risk management systems to safeguard company assets
and assure transparency in our financial accounts and transactions. During the year, the Board of Directors also chose to alter
its composition in an effort to improve its performance. The Board of Directors accepted the resignation of Naguib Sawiris
and Samih Sawiris and welcomed the appointment of three new independent non-executive members – Tarek Hatem, Alaa
Sabaa and Mohamed Farouk Abdel Moneim. Dr. Tarek Hatem is a Professor of Strategic Management, International Business
and Public Administration at the American University in Cairo. Mr. Alaa Sabaa is the Managing Director of Beltone Asset
Management and was formerly the Managing Director of Asset Management at EFG-Hermes. Mr. Mohamed Abdel Moneim
is the Chief Executive Officer of Mobica. The Board of Directors also welcomed the appointment of Karim Camel-Toueg,
President of Contrack International, as an executive member. Our new members have demonstrated outstanding leadership
skills in their respective fields and bring a broad range of experience and financial expertise to our Board.

04 Orascom Construction Industries Annual Report 2003

our strong cash position provides us
with ample resources to fund
internal growth, make selective
acquisitions and pay dividends
to shareholders

Future Outlook
Based on an improved outlook for the local Algerian cement market, we intend to move forward with our plan to construct
a second production line at Algerian Cement Company increasing total plant production capacity to 4.4 million tons of
cement annually. The total investment cost of the second production line is estimated at US$ 187 million. The Algerian
Investment Authority has already approved an incentive package for the second production line which includes a 10 year
tax holiday from the start of operations.

We are closely monitoring events in the region and looking for opportunities where we can put our technical, financial and
human resources to work. In addition to our existing operations in Egypt, Algeria and Qatar, we believe that the economic
and political environment in Iraq will ultimately improve over time and present our company with tremendous opportunities
both as a contractor and cement producer. Preparations have been made to position manpower and equipment resources
in Iraq in expectation of a lengthy reconstruction program.

We intend to utilize the proceeds of our LE 400 million corporate bond issuance in the coming months to strengthen our
position as a leading contractor and cement manufacturer in the region. We believe our financial strength will enable us to
react quickly to new opportunities, better serve the needs of our customers and safeguard our competitive advantage in our
markets. By working with our customers to build a better future, we expect to deliver sustainable long-term growth and
generate attractive returns for shareholders.

Onsi Sawiris Nassef Sawiris

Chairman Chief Executive Officer

Orascom Construction Industries Annual Report 2003 05

 Union Fenosa LNG Storage Tanks, Damietta, Egypt

06 Orascom Construction Industries Annual Report 2003

 construction
operating with the highest
service standards
The OCI Construction Group provides engineering,
procurement and construction services on industrial,
commercial, infrastructure and railway projects for public and
private customers in the Middle East and North Africa. Our
Construction Group targets large, complex and demanding
projects which require internationally accepted quality and
safety standards. During the year, our Construction Group
secured a record LE 3.3 billion in new work principally in
Algeria and Afghanistan. At year end, our Construction Group
was involved in 42 projects located in 11 countries worth a
total value of LE 10 billion and the value of unbilled work in
backlog was LE 2.4 billion, a 4% increase over last year.
Our Construction Group continued to receive repeat orders
from satisfied customers and secure large contracts
working in partnership with other leading regional and
multinational contractors.
During the year, Orascom Construction Industries (OCI)
completed work on the five-star JW Marriott Hotel Mirage
City, a new call centre and headquarters building for Egypt
Telecom, the liquefied natural gas storage tanks and offshore
jetty for the Union Fenosa LNG plant, a cement production
line for Cimpor, and a new passenger terminal for the Cairo
Airport Authority. OCI and its consortium partners made
progress on the construction of the Nagaa Hamadi barrage
and hydropower plant for the Egyptian Ministry of Water
Resources and Irrigation. OCI was awarded several new
projects including offsite utilities work for the Nubaria power
plant in Egypt and the civil work on a 1200MW power
plant in Kuwait.
Contrack International (CII) completed construction work on the
Weill Cornell Medical College in Qatar, infrastructure and utilities
work on the Education City in Qatar, upgrade work on the
American Embassy in Algeria, a water supply project in Palestine,
as well as construction work on various government projects in
Egypt, Qatar, Bahrain and Uzbekistan. CII was awarded a large
multi year contract by the US Government to provide design-
build construction services for a variety of humanitarian related
projects in Afghanistan. CII also received several contracts for
construction services in Qatar, Bahrain and Iraq.
Cementech Limited provided procurement and engineering
services to the F.L.Smidth/OCI consortium undertaking the
construction of the first production line at Algerian Cement
Company as well as procurement and erection work for a
new cement plant in Libya. Working together with OCI,
Cementech has built ten cement production lines in the last
eight years making it one of the most experienced cement
plant contractors in the world.
Orascom Construction Industries Annual Report 2003 07
 case study:

Weill Cornell Medical College

In April 2002, a Contrack International/Darwish joint venture signed a contract
valued at US$ 71 million to perform the civil and electro-mechanical work as
well as medical equipment procurement for the new Weill Cornell Medical
College facilities in Doha, Qatar. The new medical college is a joint
development between Cornell University of the Untied States and the Qatar
Foundation for Education, Science and Community Development, a charitable
foundation established by Shiekh Hamad Bin Khalfia Al-Thani, Qatar’s Emir and
head of state. The Weill Cornell Medical College in Qatar is the first branch of
an American medical school ever established overseas and is the centrepiece of
the Qatar Foundation’s Education City, an integrated educational community
providing academic excellence for the region.

The new college was designed by renowned Japanese architect Arata Isozaki
and consists of a two-story building split into two wings with connecting
bridges at the mezzanine level. The building itself is huge, covering 33,000
square meters and spanning the length of two football fields. The north wing
accommodates extensive teaching space while the south wing houses
administration and faculty offices as well as research laboratories. In a central
courtyard, four geodesic lecture halls rise above the ground on stilts and give
the building its unique character. In the shape of an icosahedron (20 sides), a
dodecahedron (12 sides) and two artistic ovoids, the lecture halls are truly an
architectural marvel. All the exterior and interior walls of the building
incorporate modern interpretations of Arab-Islamic geometric patterns, and
the building structure includes double wall and double roof systems to insulate
against the heat.

To completed the project, the Contrack International team employed 2,700

workers, used 4 tower cranes and poured a total of 55,000 cubic meters of
concrete, the equivalent of a 60-story high rise building. Contrack
International Vice President, Imad Arrabi commented “our client wanted the
building complete in just 14 months. Bearing in mind that most of the
equipment and material had to be imported and that the work had to be
performed to the highest quality standards, the scale of the challenge
becomes clear. Our team worked around the clock to ensure the completion
of this prestigious project on time.”

08 Orascom Construction Industries Annual Report 2003

“My first impression is that it’s really breathtaking.
It’s so gigantic and spectacular in its architectural
design and its structure that it’s impossible to
appreciate it from the photographs I’ve seen.”

Dr Antonio M Grotto
Dean of Weill Cornell Medical College, New York

Orascom Construction Industries Annual Report 2003 09

 cement
investment in state-of-the-art technology
produces quality products
The OCI Cement Group owns and operates cement
manufacturing plants in Egypt and Algeria with a combined
regional production capacity of 9.5 million tons of cement
annually. Our cement subsidiaries are widely recognized as
efficient, low cost and environmentally friendly producers of
high quality cement. During the year, our cement operations
benefited from a rebound in product prices and higher regional
demand due to increased construction activity in the Middle
East, positive economic trends in Algeria, and generally higher
shipping rates and commodity prices worldwide.
Egyptian Cement Company (ECC) operates four dry process
production lines which have a total plant production capacity
of 7.3 million tons of cement annually. ECC is the single largest
cement producer in the Egyptian market and the third largest
cement plant in the world. During the year, total cement
consumption in Egypt decreased by 6% to 25.7 million tons,
total cement dispatches from local producers increased by 3%
to 29.1 million tons, and cement exports increased by 94% to
7.9 million tons. During the year, ECC sold 4.8 million tons of
cement locally, a decrease of 3% from last year, and captured
a 19% share of the market. ECC exported 2.1 million tons of
cement, an increase of 202% over last year, to 24 different
countries including the United States. While maintaining its
10 Orascom Construction Industries Annual Report 2003
position as a dominant market player and the lowest cost
producer in Egypt, ECC has emerged as a leading cement
exporter and preferred supplier in the region.
Algerian Cement Company (ACC) is the first privately owned
cement company in Algeria and is the single largest foreign
investment in the country outside the petrochemical industry.
Construction work on its first production line capable of
producing 2.2 million tons of cement annually is nearly five
months ahead of schedule and is now expected to be
completed in February 2004, only 22 months from the start of
construction. The construction work is being undertaken at a
world record pace by an F.L.Smidth/OCI consortium which has
mobilized nearly 3,000 Algerian and Egyptian workers on site.
Under its early cement program, ACC began producing cement
by grinding imported clinker and dispatched its first bag of
cement on 17 September 2003. By year end, ACC had sold
192,830 tons of cement and had captured a 10% average daily
market share. ACC has established relationships with 37
distributors covering 11 out the 48 provinces in Algeria. During
the year, total cement consumption in Algeria increased by
1% to 10.6 million tons, total cement dispatches from local
producers decreased by 6% to 8.2 million tons, and cement
imports increased by 32% to 2.4 million tons.
Egyptian Cement Company, Suez, Egypt

Orascom Construction Industries Annual Report 2003 11

 case study:
Algerian Cement Company
“This investment will benefit Algeria’s
infrastructure development and
construction efforts, which are critical to
the overall development of the country.”
Sami Haddad
IFC Regional Director
In 1998, the Algerian Government began restructuring its
cement industry in preparation for a privatization program by
transferring ownership of all 12 existing cement plants to 4
regional state-owned cement companies. The Algerian
cement plants had a combined production capacity of 11.5
million tons annually, but dispatched only 8 million tons
during the year due to chronic plant inefficiencies. Demand
for cement in Algeria rose to 9 million tons in 1999, a 12%
increase over 1998, with the 1 million ton deficit filled by
cement imports.
Having witnessed a similar progression of events in Egypt,
OCI seized the opportunity to become the first private sector
participant in the Algerian cement market and began
negotiations with Algerian Government officials to form
Algerian Cement Company (ACC) in early 2000. Realizing
the uncertainties of open competition against other global
cement companies in the privatization program, OCI
proposed that ACC would simultaneously develop a
12 Orascom Construction Industries Annual Report 2003
greenfield cement plant with a production capacity designed
to reduce Algeria’s need for imported cement. OCI managers
met regularly with Algerian Government officials over the
next 18 months to finalize an initial framework of concessions
from the Algerian Government and agree on an appropriate
location for the greenfield plant.
In late 2001, OCI received its final regulatory approval to
proceed with the construction of the new ACC plant in
M’sila, located 250 km southeast of Algiers. Within weeks, an
ACC management team was formed, local contractors were
hired to begin the necessary infrastructure work to deliver
power, water and natural gas to the site, quotations were
requested from plant equipment manufacturers, and Citibank
was retained as the lead arranger for a US$ 156 million
syndicated loan package needed to finance the planned US$
260 million total investment cost. In March 2002, ACC signed
contracts with an F.L.Smidth/OCI consortium to supply and
construct a cement plant with a production capacity of 2.2
million tons. Construction work began immediately and
progressed smoothly throughout the year. In December 2002,
ACC signed a loan agreement with local and multinational
lenders including the International Finance Corporation (IFC)
and European Investment Bank (EIB).

On 17 September 2003, ACC celebrated the successful launch

of its early cement program and dispatched its first bag of
cement produced from grinding imported clinker. The early
cement program allows ACC to establish its product in the local
market at the earliest possible date and generates positive cash
flow for the company prior to the completion of the main
production line. By year end, ACC had sold 192,830 tons of
cement and captured a 10% average daily market share.
Construction work on the main production line is expected to
be completed in February 2004, nearly five months ahead of
schedule and only 22 months from the start of construction.

Orascom Construction Industries Annual Report 2003 13

 concessions
opening doors to a
better way of life
The OCI Concessions Group participates as an equity investor in
long-term infrastructure concessions including port operations,
industrial parks and natural gas distribution systems. Our
Concessions Group seeks to participate in ventures throughout
the region which have the potential to utilize construction
services and building materials from other OCI companies.
During the year, our Concessions Group did not participate in
any new ventures, but continues to pursue the development of
a new fertilizer project in the Sokhna area.
Egyptian Container Handling Company (ECHCO) operates the
Adabiya port and newly built Sokhna port facilities located
along the northwestern coast of the Gulf of Suez. During the
year, ECHCO completed the transfer of the stevedoring
operations for the Adabiya port to the Sokhna port. Since the
Sokhna port has better facilities and infrastructure, ECHCO
management choose to consolidate its operations and reoute
all vessels to the new port. The Sokhna port offers four
dedicated terminals for handling containers, general and roll-on
roll-off (RORO) cargo, dry bulk cargo and fertilizer. During the
year, ECHCO received 176 vessels and handled more than
148 thousand container TEUs and 1.2 million tons of bulk
cargo, an increase of 72% and 262% over last year.
14 Orascom Construction Industries Annual Report 2003
The Suez Industrial Development Company (SIDC) owns and
operates an industrial park on 8.5 million square meters of land
in the northwest Gulf of Suez special economic zone. SIDC
currently has an inventory of approximately 4.2 million square
meters of developed industrial land ready for occupancy. During
the year, SIDC completed only one sale for a 25,000 square
meter plot for LE 1.75 million to an Egyptian tenant which
intends construct a plant for manufacturing high-voltage
transmission cables. SIDC also received a LE 1.2 million contract
from Egyptian Fertilizer Company to upgrade utilities and other
infrastructure on its plot in preparation for their planned
expansion program.
The Nile Valley Gas Company (NVGC) operates natural gas
transportation and distribution infrastructure in the southern
half of Egypt under an exclusive 25 year franchise agreement
with the Egyptian General Petroleum Company. During the
year, NVGC sold a record 290 million cubic meters of natural
gas, a 100% increase over last year. NVGC also connected
1,243 new households and 26 commercial users to its
distribution network during the year and now has a total
customer base of 17,493 households, 146 commercial users,
and 9 industrial users primarily in the Beni Suef area.
 other businesses
innovative partnering with the
right businesses
OCI has several other investments in building materials
manufacturers which produce basic and specialised products for
contractors and industrial users, such as ready mix concrete,
concrete blocks, paper bags, fabricated steel, gypsum, plaster,
construction chemicals, architectural glass, concrete pipes, and
paint. OCI works with the management of each of its building
materials businesses to develop a sustainable competitive advantage
in their markets by creating strong brand identities, efficient
channels of distribution and manufacturing economies of scale.
During the year, OCI acquired a 50% stake in Algerian bag
producer Groupe Mehsas through a Euro 2.15 million capital
increase. The investment is expected to help ensure a stable
supply of cement bags to Algerian Cement Company (ACC)
at a competitive cost. After a review of possible options
including the establishment of a greenfield bag producer,
formation of an Algerian subsidiary of National Bag Company
(NBC), and captive in-house bag production at ACC, the
investment decision was made to form a strategic partnership
with Groupe Mehsas. In addition to their modern production
equipment, Groupe Mehsas has a skilled labour force, a strong
management team and a track record of profitability. The
partnership is expected to not only generate tangible financial
results, but also improve relations with the local community.
The star performer of 2003 was National Steel Fabrication (NSF).
The devaluation of the Egyptian Pound early in the year reduced
local production costs at NSF allowing them to be more
competitive on export orders throughout the region. Higher
shipping rates globally and higher demand for fabricated steel
products in Asia also improved the competitiveness of NSF in
the region. NSF provides a complete range of steel fabrication
services including cutting, drilling, bending, welding, sand
blasting and painting primarily for customers in the petroleum
and construction industries. During the year, NSF produced a
record 30,507 tons of fabricated steel products, 44% of which
was exported to customers in six different countries.
All of our other building materials businesses performed well
during the year. Ready Mix Egypt sold 240,456 cubic meters of
concrete, a 18% increase over last year, and supplied several
major projects including the Nagaa Hammadi dam and Union
Fenosa LNG plant. National Bag Company produced a record
156.2 millions bags, a 13% increase over last year. United
Paints & Chemicals returned to profitability due to the
outstanding performance at Egyptian Gypsum Company.
National Pipe Company delivered a record quantity of concrete
water and sewage pipes during the year and has a strong
backlog of orders.
Orascom Construction Industries Annual Report 2003 15
 Corporate Governance

Orascom Construction Industries SAE is committed

to the principles of good corporate governance and
has adopted corporate governance guidelines in
compliance with applicable laws and stock exchange
regulations. The Board of Directors (“Board”) believes
that good corporate governance practices align the
interests of management and shareholders thereby
maximizing the profitability and long-term value of
the company for shareholders.

16 Orascom Construction Industries Annual Report 2003

 Corporate Governance

Orascom Construction Industries SAE is committed

to the principles of good corporate governance and
has adopted corporate governance guidelines in
compliance with applicable laws and stock exchange
regulations. The Board of Directors (“Board”) believes
that good corporate governance practices align the
interests of management and shareholders thereby
maximizing the profitability and long-term value of
the company for shareholders.

16 Orascom Construction Industries Annual Report 2003

Corporate Governance
Orascom Construction Industries SAE is subject to the disclosure
rules and the new listing rules set by the Cairo and Alexandria
Stock Exchanges (“CASE”) and approved by the Egyptian Capital
Markets Authority on 18 June 2002. The Company has been in
compliance with the corporate governance, financial reporting
and disclosure provisions of the CASE listing rules throughout the
year ended 31 December 2003. The US Securities and Exchange
Commission (“SEC”) approved CASE as “designated offshore
securities markets” within the meaning of rule 902(b) under
Regulation S of the US Securities Act of 1933 on 16 April 2003.
The Global Depositary Receipts of the Company are listed on the
London Stock Exchange (“LSE”) and the Company is therefore
subject to the rules of the LSE as well as the rules of the United
Kingdom Listing Authority (“UKLA”) and the Financial Services
Authority (“FSA”). The Company has been in compliance with its
continuing obligations under the UKLA Listing Rules throughout
the year ended 31 December 2003.
In July 2003, the revised Combined Code on Corporate
Governance (“Combined Code”) was issued and the FSA and the
UKLA have determined that the revised Combined Code will
apply for reporting years beginning on or after 1 November
2003. UKLA listing rules require that companies incorporated in
the United Kingdom include in their annual report and accounts
an additional disclosure statement in relation to how the
company applies the principles in Section 1 of the Combined
Code and an explanation of any non-compliance. As an overseas
company with a secondary listing by the UKLA, the Company is
not required to present this additional disclosure statement.
The shares and global depositary receipts of the Company are
not registered under the US Securities Act of 1933 and the
Company is not subject to US securities laws or the rules and
listing standards of the SEC or the New York Stock Exchange
(“NYSE”). In July 2002, the US Government passed the Sarbanes-
Oxley Act which has introduced a number of changes to the
corporate governance, disclosure and reporting requirements of
US domestic and non-US registered issuers. The Sarbanes-Oxley
Act codifies the view that company management should be
aware of material information that is filed with regulatory
authorities and released to investors, and should be held
accountable for the fairness, thoroughness and accuracy of that
information. In November 2003, the NYSE issued new corporate
governance rules for listed companies which were approved by
the SEC. The corporate governance rules issued by the NYSE
allow certain exemptions for foreign private issuers and
controlled companies. The Company is not required to comply
with the provisions of the Sarbanes-Oxley Act or the NYSE
corporate governance rules.
The Board continues to monitor developments in corporate
governance and the actions taken by regulators worldwide to
improve financial reporting and disclosure. The Board has
reviewed the recent changes in applicable securities laws and
stock exchange regulations and has concluded that the Company
is in compliance with all those provisions which are currently in
force. In addition, the Board has chosen to make the following
voluntary disclosure to assist shareholders in their evaluation of
the corporate governance practices of the Company.
Board of Directors
At the Annual General Meeting held on 29 April 2003,
shareholders approved the appointment of four new directors
and accepted the resignation of two existing directors. Naguib
Sawiris and Samih Sawiris resigned as non-executive directors.
Karim Camel-Toueg, President of Contrack International, was
appointed as an executive director, and Alaa Sabaa, Tarek Hatem
and Mohamed Farouk Abdel Moneim were appointed as non-
executive directors. The Board now consists of nine directors.
Three of the directors are non-executive.
The Board maintains an orientation program for new directors.
The new directors have attended the orientation program which
included briefings by senior management to familiarize them
with the Company’s strategic plans, financial statements and key
policies and practices. The Board maintains a continuing
education program for all directors to assist them in carrying out
their duties and responsibilities.
The Board has reviewed the status of all the non-executive
directors and has determined that they are to be regarded as
independent. The Board has adopted a definition of
“independent” which complies with the provisions set out in the
Combined Code and Section 303A.02 of the NYSE listing rules.
The process and criteria used by the Board to determine the
independence of each director is detailed in the Corporate
Governance Guidelines of the Company. The non-executive
directors are encouraged to meet privately in regular executive
sessions without management participation during the year. The
non-executive directors have elected Alaa Sabaa to serve as the
senior independent director and lead non-management director.
The Board met six times during the year. The Board has a formal
schedule of matters reserved to them for decision which includes
approval of the long-term strategic objectives and business
plans of management, major corporate transactions including
significant capital allocations and expenditures, and
compensation of the chief executive officer and executive officers
of Company. All board meetings during the year were attended
by the full board. The directors were given appropriate
documentation in advance of each board meeting. All directors
have had access to the services of the company secretary and
have been empowered to seek independent professional advice
at the Company’s expense.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines
(“Guidelines”) to provide a framework for the effective
governance of the Company in an effort to enhance long-term
shareholder value. The Guidelines address several key governance
issues and principles including board responsibilities, director
qualifications, director responsibilities, board structure and
operations, board committees, executive sessions, access to
management and independent advisors, director compensation,
director orientation and continuing education, management
evaluation and succession, board performance evaluation, and
relations with shareholders. The Guidelines are publicly available
from the Company’s website www.orascomci.com and a copy
may be requested by shareholders from the Company’s investor
relations officers. The Board believes the Guidelines adopted
generally comply with the provisions set out in the Combined
Code and Section 303A of the NYSE listing rules.
Board Committees
The Board has established three committees to assist it in
discharging its oversight responsibilities: Audit, Compensation,
and Nominating and Corporate Governance. The purpose and
Orascom Construction Industries Annual Report 2003 17
Corporate Governance
responsibilities of each committee are described in their
respective charters. Members of the committees meet the
independence and experience requirements to the extent
required under applicable securities laws and stock exchange
regulations. Committee members have access to the services of
the company secretary and have been empowered to seek
independent professional advice at the Company’s expense.
The Audit Committee consists of three independent non-
executive directors and is chaired by Alaa Sabaa. The Board has
determined that Alaa Sabaa has recent and relevant financial
experience and shall be regarded as the audit committee
financial expert. The Audit Committee met six times during the
year. The primary purpose of the Audit Committee is to (a) to
assist the Board in its oversight of (i) the integrity of the
Company’s financial statements, (ii) the Company’s compliance
with legal and regulatory requirements, (iii) the independent
auditor’s qualifications and independence, and (iv) the
performance of the Company’s internal audit function and
independent auditors, and (b) to prepare and publish an annual
Committee report and such other reports to the extent required
under any applicable securities laws and stock exchange
regulations. The role and responsibilities of the Audit Committee
are set out in written terms of reference, the Audit Committee
Charter, and includes the appointment, compensation and
retention of the independent auditor, review of the Company’s
interim and annual financial statements with management and
the independent auditor, and review of the Company’s internal
control and risk management systems.
The Compensation Committee consists of three directors and is
chaired by Onsi Sawiris. The Compensation Committee met four
times during the year. The primary purpose of the Compensation
Committee is (a) to assist the Board in its oversight of all matters
relating to director and executive officer compensation and (b) to
prepare and publish an annual Committee report on director and
executive compensation and such other reports to the extent
required under any applicable securities laws and stock exchange
regulations. The role and responsibilities of the Compensation
Committee are set out in written terms of reference, the
Compensation Committee Charter, and includes the review,
evaluation and approval of director and executive officer
compensation, incentive-compensation plans and equity-based
plans. In determining the compensation of the directors and
executive officers of the Company, the Compensation Committee
considers the Company’s performance and relative shareholder
return, the compensation level of directors and executive officers
at comparable companies, and the compensation of the directors
and executive officers in past years. No director is solely involved
in deciding their own compensation. Executive officers do not
receive additional compensation for their service as an executive
director. Non-executive directors receive an annual stipend. There
is no potential dilution from stock options outstanding or
available for grant under the employee stock ownership plan of
the Company.
The Nominating and Corporate Governance Committee consists
of three directors and is chaired by Onsi Sawiris. The Nominating
and Corporate Governance Committee met four times during
the year. The primary purpose of the Nominating and Corporate
Governance Committee is to assist the Board in (a) identifying
individuals qualified to become Board members and
recommending to the Board the director nominees for the next
annual meeting of shareholders, (b) recommending to the Board
director nominees for each committee of the Board, (c)
18 Orascom Construction Industries Annual Report 2003
developing and recommending to the Board a set of corporate
governance guidelines applicable to the Company, (d) overseeing
the evaluation of the Board and management, and (e) preparing
and publishing an annual Committee report on corporate
governance and such other reports to the extent required under
any applicable securities laws and stock exchange regulations.
The role and responsibilities of the Nominating and Corporate
Governance Committee are set out in written terms of reference,
the Nominating and Corporate Governance Committee Charter,
and includes determining on an annual basis the independence
of each director as may be required under any applicable
securities laws and stock exchange regulations, the compliance
of each director and executive officer with the Company’s code
of business conduct and ethics, and such other activities as the
Board may assign to the committee from time to time.
Internal Control and Risk Management
The Board confirms that there is an ongoing process for
identifying, evaluating and managing the significant risks faced
by the Company, that the process has been in place for the year
under review and up to the date of approval of the annual report
and accounts, that the process is regularly reviewed by the Board
and accords with the Turnbell Guidance on internal control
contained in the Combined Code.
The Company maintains a sound system of internal controls and
risk management which is embedded in its operations, is capable
of responding quickly to evolving risks to the business arising
from factors with the company and to changes in the business
environment, and includes procedures for reporting immediately
to appropriate levels of management any significant control
weaknesses that are identified together with corrective action
being undertaken. The Company’s system is designed to manage
rather than eliminate the risk of failure to achieve business
objectives and can only provide reasonable and not absolute
assurance against material misstatement or loss.
The business of the Company is conducted by its employees,
managers and executive officers, under the direction of the chief
executive officer and the oversight of the Board, to enhance the
long-term value of the Company for its shareholders. The Board
is elected by shareholders to oversee and counsel management.
The Board acknowledges that it is responsible for the Company’s
system of internal controls and for reviewing its effectiveness to
safeguard shareholders’ investment and the Company’s assets.
The Audit Committee of the Board reviews the Company’s
internal control and risk management systems, monitors the
effectiveness of the Company’s internal audit function, identifies
matters in respect of which it considers that action or
improvement is needed, and makes recommendations to the
Board as to the steps to be taken. The Audit Committee relies on
periodic reports from the Company’s executive officers, senior
financial managers, internal audit staff, and external auditors to
obtain reasonable assurance that appropriate controls are in
place and functioning effectively.
The Chief Executive Officer and Chief Financial Officer are
responsible for the day-to-day control of the Company’s
operations and for the design of internal control and risk
management systems. These executive officers are held
responsible for the disclosure of all significant deficiencies and
materials weaknesses in the internal control over financial
reporting and any fraud, whether or not material, which involves
management to the Audit Committee and external auditors.
Corporate Governance

These executive officers also are held responsible for the director at the principal office of the Company. The senior
preparation and integrity of the Company’s published financial independent director will notify the Board or the chairperson of
statements which shall fairly present in all materials respects the the relevant committee of the Board regarding those matters that
financial condition and results of operations of the Company. are appropriate for further action or discussion.

Code of Business Conduct and Ethics Going Concern

The Board has adopted a Code of Business Conduct and Ethics
which contains the policies that relate to the legal and ethical
standards of conduct that the directors, executive officers and
employees of the Company are expected to comply with while
carrying out their duties and responsibilities on behalf of the
Company.
After making enquires, the directors have formed a judgment, at
the time of approving the accounts, that there is a reasonable
expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. For
this reason, the directors continue to adopt the going concern
basis in preparing the accounts.

This Code is intended to focus the Board and management on

areas of ethical risk, provide guidance to personnel to help them
recognize and deal with ethical issues, provide mechanisms to
report unethical conduct, and help to foster a culture of honesty
and accountability.

No code or policy can anticipate every situation that may arise.

The Company expects each director, executive officer and
employee to act with honesty and integrity, to exercise
independent professional judgement and to deter wrongdoing in
the conduct of all duties and responsibilities on behalf of the
Company.

Relations with Shareholders

The Board believes that communication with shareholders,
institutional investors, the financial community, the media, and
other third parties is best handled by the Chief Executive Officer
and designated management representatives of the Company.
The Company operates a structured program of investor
relations, based on formal announcements and publications
relating to significant events and financial results, in compliance
with applicable securities laws and stock exchange regulations.
To ensure fair disclosure to all stakeholders at the same time, the
Company refrains from disclosing any information specifically
designated to financial analysts, financial institutions or other
parties before disclosing the information to the market as a
whole. Directors, executive officers and employees are required
to maintain the confidentiality of information entrusted to them
by the Company or its customers, except when disclosure is
authorized or legally mandated.

The Company has appointed Ashraf Abdel Momen and Hassan

Badrawi as its main Investor Relations Officers whose
responsibility is to provide information and answer queries of
stock exchange officials, shareholders and institutional investors.
Information about the Company including interim and full year
financial results and other major announcements is also
published on the Company’s website www.orascomci.com.

The Chairman of the Board, Chief Executive Officer, senior

independent director and other authorized directors and investor
relations personnel do maintain a dialogue with representatives
of institutional and other shareholders regarding long-term
business strategies, financial performance and corporate
governance in order to establish a mutual understanding of
objectives. The annual general meeting also provides an
opportunity for individual shareholders to meet and
communicate with the Board to develop a better understanding
of the Company’s operations and prospects. All directors are
expected to attend the annual general meeting absent
exceptional cause. Shareholders who wish to communicate with
the Board may correspond in writing with the senior independent

Orascom Construction Industries Annual Report 2003 19

 Management’s Discussion and
Analysis of Financial Condition
and Results of Operations

The following discussion and analysis should be read

in conjunction with the audited consolidated financial
statements of Orascom Construction Industries SAE
(OCI) for the years ended 31 December 2003, 2002
and 2001. These consolidated financial statements
have been prepared in accordance with Egyptian
Accounting Standards (EAS), which are not materially
different from International Accounting Standards
(IAS), except as indicated.

20 Orascom Construction Industries Annual Report 2003

Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Orascom Construction Industries (OCI) ranks among Egypt’s
largest private-sector businesses and is active in construction
services, cement manufacturing and infrastructure concessions.
The Company operates primarily as a construction company with
the production and sale of cement as a significant segment of
operations. The Company is organized into three operating
groups: the Construction Group, the Cement Group, and the
Concessions and Other Building Materials Group.
The Company generates revenue primarily from the sale of
construction services and cement. The primary expenses of the
Company include direct materials used in construction, raw
materials, power and fuel consumed in cement production, and
labor costs. The major factors which have had, and are expected
to continue to have, a significant impact on the results of
operations and financial condition of the Company are:
(i) the demand for construction services on large commercial,
industrial and infrastructure projects in the geographical
markets served;
(ii) local and international cement prices;
(iii) foreign currency exchange rates; and
(iv) the amount of tax liability.
Demand for construction services on large projects is affected by
changes in the general state of economic activities, foreign direct
investment flows, foreign aid flows, and government investment
incentives. The timing of awards of major construction projects
can result in significant fluctuations in the Company’s revenues
and earnings between periods.
Cement is essentially a commodity product with variable market
prices affected by local and international changes in consumption
and production levels as well as the degree of competitive rivalry
among producers. Since the Company has and expects to continue
to derive a substantial portion of its revenues and earnings
from the sale of cement, higher market prices will significantly
improve the financial performance of the Company.
A significant proportion of the Company’s revenue is denominated
in foreign currency while the majority of its operating expenses
are in local currency. To a lesser extent, a proportion of the
Company’s debt is in foreign currency. Significant decreases in
the exchange rate of the Egyptian Pound against other currencies
therefore can have a materially positive effect on the reported
and actual financial performance of the Company. The Company
is subject to foreign currency exchange rate risk relating to the
timing of receipts from customers and payments to suppliers and
lenders in foreign currencies. The Company manages its foreign
exchange risk on a consolidated basis by matching its foreign
currency-denominated liabilities (primarily facilities granted to
OCI and ACC) with continuing sources of foreign currencies
(primarily customer payments on construction contracts
undertaken by OCI and its subsidiaries).
The Company has been and expects to continue to be entitled to
certain tax benefits under Egyptian tax law. As a benefit of listing
on the Cairo & Alexandria Stock Exchange (CASE), the Company
is entitled to receive a tax deduction equivalent to the average
discount rate of the Central Bank of Egypt (CBE) in a given year
multiplied by its paid-in capital. Other significant deductions from
taxable income include 90% of interest income on Egyptian Pound
deposits, 100% of investment income received from a tax-exempt
entity, and 90% of investment income received from a taxable
entity. In addition, substantially all of the Company’s subsidiaries
in Egypt and Algeria have received a tax holiday ranging from five
to ten years, most notably the ten-year tax holiday received by
ECC and ACC.
The expansion plans of the Construction Group and the Cement
Group are likely to have important implications for the operations
of the Company. The Construction Group continues to expand
into new regional markets and secured LE 3.3 billion in new
work during 2003, principally in Algeria and Afghanistan. The
Cement Group intends to construct a second production line at
Algerian Cement Company which is expected to have a total
investment cost of approximately US$187 million. Both Algeria
and Afghanistan have been affected by violent civil strife,
political instability and a volitile economy in the past and the
reoccurrence of any of these evente in the future could have a
materially adverse effect on the Company’s financial condition,
results of operations and business.
Principal Accounting Policies
Revenue Recognition
Revenue from construction contracts is recognized in the
statement of income under the percentage of completion
method of accounting. Under the percentage of completion
method of accounting, an estimated percentage of completion
of each contract, determined by the percentage of cost incurred
at the end of each accounting period (including interim
accounting periods), as compared to estimated total cost of the
contract, as determined by the Company’s engineers, is applied
to the estimated total revenue. As compared to the completed
contract method, the percentage of completion method of
accounting allows for a better matching of contract costs and
revenues and a more accurate allocation of revenues to the
accounting periods in which they are earned. In applying the
percentage of completion method, the Company does not
recognize the value of contract change orders until these have
been formally agreed to in writing with the customer, even if the
actual work requested is commenced prior to the execution of
such written change order.
Revenues from non-construction activities are recorded using the
accrual basis of accounting.
Construction Costs
Construction project costs include all direct material, equipment,
labor, subcontract and indirect costs related to contract
performance, such as indirect labor, maintenance, and applicable
administrative costs. Materials, labor and equipment provided by
subcontractors or joint ventures are included in revenues and
costs when management believes that the Company is
responsible for the ultimate acceptability of the project.
Changes in job performance, conditions, estimated profitability
and final contract settlements may result in revisions to costs and
revenue and are recognized in the period in which the facts
requiring such revisions become known. Provisions for estimated
losses on incomplete contracts are made in the period in which
such losses are determined. Claims for additional contract
revenue are recognized when realization is assured and the
amount can reasonably be determined. Costs and estimated
earnings in excess of billings on incomplete contracts are
presented as construction projects in progress in the consolidated
balance sheet.
Orascom Construction Industries Annual Report 2003 21
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Construction Joint Ventures
Construction projects, which are performed by joint ventures, are
accounted for under the proportionate consolidation method.
Under this method, the Company’s separate financial statements
include its pro rata interest in the assets, liabilities, revenues and
expenses of joint ventures through consolidation of these items
on an item-by-item basis in the financial statements of the
Company. Agreements concluded between the Company and
the other partner in every joint venture stipulate that each party
should be jointly responsible for the activities of that venture.
Acquisition of Subsidiaries
The Company acquired a majority of its investments in
subsidiaries and associated companies in August and September
1998, and accounts for the acquisition of subsidiaries in
accordance with the purchase method of accounting.
Elimination of Profit on Intra-group Construction
The Company and its subsidiaries provide construction services for
other subsidiaries within the Group. In accordance with EAS and
IAS, the unrealized profit in constructing the fixed assets of the
subsidiaries is deducted from income and from gross fixed assets
upon consolidation in the financial statements of the Company.
The cumulative profit deduction is added back to income in the
form of a reduction in depreciation expense over the useful life
of these assets as determined by their depreciation rates.
Impact of Inflation and Interest Rate Fluctuations
During the periods under review, the consolidated results of
operations and financial position of the Company have not been
materially affected by inflation or interest rate fluctuations.
Seasonality
The Construction Group’s activities consist principally of major
construction projects, which are not generally affected by
seasonal demand fluctuations. In addition, because of Egypt’s
generally warm and dry climate, the Group’s activity levels are not
significantly affected by weather conditions. The timing of major
religious holidays, including principally Ramadan, can have a
material impact on activity levels and, consequently, the allocation
of revenues and earnings between accounting periods. The time
of year in which religious holidays take place will vary from year
to year in accordance with the lunar calendar.
The Cement Group’s activity levels are driven by seasonal demand
fluctuations in the general construction and residential housing
sectors. As a result, the Group’s sales are normally higher in the
second and third quarter of each year.
Demand for the other building materials may be subject to
fluctuation, while the infrastructure concessions activities are not
generally affected by seasonal fluctuations.
22 Orascom Construction Industries Annual Report 2003
Differences Between EAS and IAS
Finance Leases
“EAS 20” requires that, with some exceptions, all leases should
be accounted for as operating leases, and therefore annual lease
payments by the lessee are charged to the income statement as
rent expense. “IAS 17” requires that leases which transfer
substantially the benefits and risks of ownership related to the
leased properties from the lessor to the lessee should be accounted
for as capital leases and therefore recorded as assets of the
lessee, with the lease obligations included as a liability in the
balance sheet. The application of IAS 17 instead of EAS 20 by
one of the Company’s subsidiaries (ECC) resulted in the increase
of the consolidated net income for the year ended 31 December
2003 by LE 10.0 million, compared to LE 7.5 million in 2002.
Years Ended 31 December 2003 and 2002
Revenue
The Company’s consolidated operating revenue is comprised of
sales by its Construction, Cement, and Concessions and Other
Building Materials Groups. In 2003, the Company’s consolidated
operating revenue increased by 51.3% to LE 4,403.1 million, as
compared to LE 2,910.8 million in 2002.
The table below sets forth the contribution to revenue by each of
the Company’s operating groups. The “adjustments” below
include the elimination of intra-group transactions, of which sales
of building materials to the Construction Group and the Cement
Group are the most significant transactions.
Year ended Year ended
31 Dec 2003 31 Dec 2002 2003 vs.
LE millions % LE millions % 2002 (%)
Revenue
Construction 3,208.8 64.7% 1,784.2 56.9% 79.8%
Cement 1,242.1 25.1% 946.5 30.2% 31.2%
Other 506.5 10.2% 405.5 12.9% 24.9%
Adjustments (554.3) (225.4)
Total 4,403.1 100% 2,910.8 100% 51.3%
Revenue from the Construction Group increased by 79.8% to LE
3,208.8 million in 2003, as compared to LE 1,784.2 million in
2002. This substantial growth in sales is attributable to the
expansion of international construction activities by OCI Algeria,
Contrack International and Cementech. Changes in the foreign
exchange rates had a positive impact on revenue received from
international contracts. Revenue during the year was primarily
from the following major construction contracts: Union Fenosa
LNG storage tanks and marine facilities, Amreyah (Cimpor)
cement plant, Nagaa Hammadi dam, ACC Line 1, Fayed airbase,
Weill Cornell Medical College, Education City infrastructure
works, and various reconstruction projects in Afganistan. In
2003, OCI itself contributed LE 1,108.8 million to total
consolidated revenue, as compared to LE 984.9 million in 2002,
representing 34.6% of the Construction Group’s revenue for the
year, as compared to 56.7% in 2002.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Revenue from the Cement Group increased by 31.2% to LE
1,242.1 million in 2003, as compared to LE 946.5 million in
2002. This increase is attributable to sales growth at ECC
resulting from higher export sales volumes and initial sales at
ACC resulting from the successful launch of its early cement
program. Growth in cement sales volumes at ECC offset a
decrease in local market prices during the period. ECC
represented 92.7% of the Cement Group’s revenue for the
year, as compared to 100% in 2002.
Revenue from the Concessions and Other Building Materials
Group increased by 24.9% to LE 506.5 million in 2003, as
compared to LE 405.5 million in 2002. The increase is
attributable to higher stevedoring revenue at ECHCO resulting
from increased traffic at the Sokhna Port as well as higher sales
revenue and production volumes at NSF and NBC.
Cost of Services and Goods Sold
In 2003, the Company’s consolidated cost of services and goods
sold increased by 48.4% to LE 3,193.5 million, as compared to
LE 2,151.4 million in 2002. The cost of services and goods sold
as a percentage of revenue decreased to 72.5% in 2003, as
compared to 73.9% in 2002. Depreciation and amortization
expenses are a significant component of the cost of services and
goods sold. In 2003, depreciation and amortization expenses
increased by 25.7% to LE 254.3 million, as compared to
LE 202.3 million in 2002.
The table below sets forth the cost of services and goods sold by
each of the Company’s operating groups. The “adjustments”
below include the elimination of intra-group transactions, of
which building materials supplied to the Construction Group and
the Cement Group are the most significant transactions.
Year ended Year ended
31 Dec 2003 31 Dec 2002 2003 vs.
LE millions % LE millions % 2002 (%)
Cost of Services
& Goods Sold
Construction 2,661.6 70.3% 1,507.8 64.2% 76.5%
Cement 737.6 19.5% 539.4 23.0% 36.7%
Other 386.0 10.2% 299.9 12.8% 28.7%
Adjustments (591.7) (195.7)
Total 3,193.5 100% 2,151.4 100% 48.4%
The cost of services for the Construction Group increased by 76.5%
to LE 2,661.6 million in 2003, as compared to LE 1,507.8 million
in 2002. The cost of services as a percentage of revenue decreased
to 82.9% for the year, as compared to 84.5% during 2002. This
decrease is due principally to the mix of projects undertaken
during the year which included a higher proportion of industrial
and infrastructure contracts that have higher gross profit margins.
In 2003, depreciation and amortization expenses increased to LE
76.8 million, as compared to LE 55.0 million in 2002.
The cost of cement sold for the Cement Group increased by 36.7%
to LE 737.6 million in 2003, as compared to LE 539.4 million in
2002. The cost of cement sold as a percentage of revenue
increased to 59.4% for the year, as compared to 57.0% during
2002. This increase was attributable principally to lower average
sales prices at ECC on cement products sold locally during the
year. In 2003, depreciation and amortization expenses increased
to LE 154.5 million, as compared to LE 130.6 million in 2002.
The cost of goods sold and services for the Concessions and Other
Building Materials Group increased by 28.7% to LE 386.0 million
in 2003, as compared to LE 299.9 million in 2002. The cost of
goods sold and services as a percentage of revenue increased to
76.2% for the year, as compared to 74.0% during 2002. The
increase was attributable principally to the increase in raw material
costs for several building materials subsidiaries. In 2003,
depreciation and amortization expenses decreased to LE 21.7
million, as compared to LE 26.7 million in 2002.
Selling, General and Administrative Expenses
In 2003, selling, general and administrative expenses increased
by 56.3% to LE 225.9 million, as compared to LE 144.5 million
in 2002. Selling, general and administrative expenses as a
percentage of revenue increased to 5.1% in 2003, as compared
to 5.0% in 2002. Selling, general and administrative expenses
increased in proportion with revenue during the year.
Income from Operations
In 2003, the Company’s consolidated income from operations
increased by 60.3% to LE 945.2 million, as compared to LE
589.7 million in 2002. The Company’s operating margin
increased to 21.5% in 2003, as compared to 20.3% in 2002.
The table below sets forth the contribution to income from
operations by each of the Company’s operating groups and the
operating margin for each of the operating groups.
Year ended Year ended
31 Dec 2003 31 Dec 2002 2003 vs.
LE millions % LE millions % 2002 (%)
Income from Operations
Construction 500.0 52.9% 180.1 30.5% 177.6%
– Operating margin 15.6% 10.2%
Cement 384.6 40.7% 385.5 65.4% -0.2%
– Operating margin 31.0% 40.7%
Other 60.6 6.4% 24.1 4.1% 151.5%
– Operating margin 12.0% 5.9%
Total 945.2 100% 589.7 100% 60.3%
Income from operations for the Construction Group increased by
177.6% to LE 500.0 million in 2003, as compared to LE 180.1
million in 2002. The operating margin for the Construction Group
increased to 15.6% in 2003, as compared to 10.2% in 2002. This
increase is due principally to the mix of projects undertaken during
the year which included a higher proportion of industrial and
infrastructure contracts that have higher gross profit margins.
Income from operations for the Cement Group decreased by 0.2%
to LE 384.6 million in 2003, as compared to LE 385.5 million in
2002. The operating margin for the Cement Group decreased to
31.0% in 2003, as compared to 40.7% in 2002. This decrease
was attributable principally to lower cement sales prices at ECC,
increased depreciation expenses at ECC resulting from the first full
year of operations for their fourth production line, and pre-operating
expenses at ACC associated with the start-up of operations.
Income from operations for the Concessions and Other Building
Materials Group increased by 151.5% to LE 60.6 million in 2003,
as compared to LE 24.1 million in 2002. The operating margin
for the Group increased to 12.0% in 2003, as compared to
5.9% in 2002. This increase was attributable principally to the
growth of stevedoring operations at the Sokhna port by ECHCO.
Orascom Construction Industries Annual Report 2003 23
Management’s Discussion and Analysis of Financial Condition and Results of Operations

Other Income and Expenses Year ended Year ended

The Company’s consolidated net other income and expenses 31 Dec 2002 31 Dec 2001 2002 vs.
LE millions % LE millions % 2001 (%)
consists of income from investments, interest income, gain on
foreign exchange, interest expense, eliminated profit on
Revenue
intra-group construction, and other income and expenses. In
Construction 1,784.2 56.9% 1,421.3 54.8% 25.5%
2003, consolidated net other expenses decreased by 19.6% to
Cement 946.5 30.2% 822.0 31.6% 15.1%
LE 92.3 million, as compared to LE 114.8 million in 2002. Interest
Other 405.5 12.9% 352.1 13.6% 15.2%
income decreased by 85.0% to LE 10.0 million (2002, LE 66.7
Adjustments (225.4) (180.7)
million). Interest expense decreased by 6.7% to LE 263.4 million
(2002, LE 282.4 million). Some of the Company’s interest income
Total 2,910.8 100% 2,414.7 100% 20.5%
and interest expense result from matching borrowings and time
deposits, a practice that allows OCI to lower its effective tax
rate.The gain on foreign currency exchange increased by 138.0%
Revenue from the Construction Group increased by 25.5% to
to LE 245.1 million, as compared to LE 103.0 million in 2002.
LE 1,784.2 million in 2002, as compared to LE 1,421.3 million
The increase is principally due to the depreciation in the Egyptian
in 2001. The growth in sales was partially attributable to changes
Pound, as a significant portion of revenue is in foreign currencies.
in the foreign exchange rate which had a positive impact on
In accordance with EAS and IAS, deductions totaling LE 97.9 million
revenue received from contracts denominated in foreign currency.
have been made from income for the year to eliminate the
Revenue during the year was primarily from the following major
intra-group profit from construction services rendered to ACC
construction contracts: Golden Pyramids complex (Heliopolis
by OCI Algeria (2002, LE 0.4 million).
Citystars), Nile City complex, Electricite de France’s Suez and Port
Said power plants projects, ACC’s cement plant in Algeria, Fayed
Income Taxes
airbase, Weill Cornell Medical College project in Qatar, and the
The Company’s consolidated income tax expenses in 2003
West Bank water supply project in Palestine. In 2002, OCI itself
amounted to LE 28.6 million, as compared to LE 9.0 million in
contributed LE 984.9 million to total consolidated revenue, as
2002. The increase is attributed to higher taxable income
compared to LE 1,034.3 million in 2001. OCI represented
resulting from the growth of OCI and CII construction activities.
56.7% of the Group’s revenue for the year, as compared to
74.1% in 2001.
Minority Interests
In 2003, net income of consolidated subsidiaries allocated to
Revenue from the Cement Group increased by 15.1% to LE
minority interests amounted to LE 266.0 million, as compared
946.5 million in 2002, as compared to LE 822.0 million in 2001.
to LE 102.1 million in 2002. The increase is attributable
This increase was attributable to sales growth at ECC reflecting a
principally to the minority interests allocated on two construction
full year of operations for the fourth production line. Growth in
projects fully consolidated by CII during the period.
cement sales volumes at ECC offset a decrease in local market
prices. ECC represented 100.0% of the Cement Group’s revenue
Net Income
during the years 2002 and 2001.
As a result of the foregoing, the Company’s consolidated net
income increased by 53.4% to LE 558.3 million in 2003, as
Revenue from the Concessions and Other Building Materials
compared to LE 363.9 million in 2002.
Group increased by 15.2% to LE 405.5 million in 2002, as
compared to LE 352.1 million in 2001. This increase was
Years Ended 31 December 2002 and 2001 attributable to increased revenues at most of the companies
within the Group. The divestiture of SCIB operations did not
Revenue
have a significant impact on the Group’s activities.
The Company’s consolidated operating revenue is comprised of
sales by its Construction, Cement, and Concessions and Other
Cost of Services and Goods Sold
Building Materials Groups. In 2002, consolidated operating
In 2002, the Company’s consolidated cost of services and goods
revenue increased by 20.5% to LE 2,910.8 million, as compared
sold increased by 29.8% to LE 2,151.4 million, as compared to
to LE 2,414.7 million in 2001.
LE 1,657.2 million in 2001. The cost of services and goods sold
as a percentage of revenue increased to 73.9% in 2002, as
The table below sets forth the contribution to revenue by each of
compared to 68.6% in 2001. Depreciation and amortization
the Company’s operating groups. The “adjustments” below
expenses are a significant component of the cost of services and
include the elimination of intra-group transactions, of which sales
goods sold. In 2002, depreciation and amortization expenses
of building materials to the Construction Group and the Cement
increased by 16.2% to LE 202.3 million, as compared to
Group are the most significant transactions.
LE 174.1 million in 2001.

The table below sets forth the cost of services and goods sold
by each of the Company’s operating groups. The “adjustments”
below include the elimination of intra-group transactions, of
which building materials supplied to the Construction Group and
the Cement Group are the most significant transactions.

24 Orascom Construction Industries Annual Report 2003

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Year ended Year ended Year ended Year ended

31 Dec 2002 31 Dec 2001 2002 vs. 31 Dec 2002 31 Dec 2001 2002 vs.
LE millions % LE millions % 2001 (%) LE millions % LE millions % 2001 (%)

Cost of Services Income from Operations

& Goods Sold Construction 180.1 30.5% 199.8 33.2% -9.9%
Construction 1,507.8 64.2% 1,127.3 61.8% 33.7% – Operating margin 10.2% 14.3%
Cement 539.4 23.0% 433.8 23.8% 24.3% Cement 385.5 65.4% 365.8 60.8% 5.4%
Other 299.9 12.8% 262.7 14.4% 14.2% – Operating margin 40.7% 44.5%
Adjustments (195.7) (166.6) Other 24.1 4.1% 36.3 6.0% -33.6%
– Operating margin 5.9% 28.10.1%
Total 2,151.4 100% 1,657.2 100% 29.8%
Total 589.7 100% 601.9 100% -2.0%

The cost of services for the Construction Group increased by 33.7%

to LE1,507.8 million in 2002, as compared to LE 1,127.3 million
in 2001. The cost of services as a percentage of revenue
increased to 84.5% for the year, as compared to 79.3% during
2001. The increase was due principally to a lower proportion of
industrial projects executed during the year. In 2002, depreciation
and amortization expenses decreased to LE 55.0 million, as
compared to LE 56.5 million in 2001.
The cost of goods sold for the Cement Group increased by 24.3%
to LE 539.4 million in 2002, as compared to LE 433.8 million in
2001. The cost of cement sold as a percentage of revenue
increased to 57.0% for the year, as compared to 52.8% during
2001. The increase was attributable principally to higher
depreciation during the year. In 2003, depreciation and
amortization expenses increased to LE 130.6 million, as compared
to LE 98.2 million in 2001. The increase was attributable
principally to the start of depreciation on the fourth production
line at ECC.
The cost of goods sold and services for the Concessions and
Other Building Materials Group increased by 14.2% to LE 299.9
million in 2002, as compared to LE 262.7 million in 2001. The
cost of goods sold and services as a percentage of revenue
decreased to 74.0% for the year, as compared to 74.6% during
2001. In 2002, depreciation and amortization expenses increased
to LE 26.7 million, as compared to LE 16.0 million in 2001.
Selling, General and Administrative Expenses
In 2002, selling, general and administrative expenses increased by
46.4% to LE 144.5 million, as compared to LE 98.7 million in
2001. The increase was attributable primarily to additional
corporate staff and overhead needed to support the Company’s
growth in revenue and assets. Selling, general and administrative
expenses as a percentage of revenue increased to 5.0% in 2002,
as compared to 4.1% in 2001.
Income from Operations
In 2002, the Company’s consolidated income from operations
decreased by 2.0% to LE 589.7million, as compared to LE 601.9
million in 2001. The Company’s operating margin decreased to
20.3% in 2002, as compared to 24.9% in 2001. The table below
sets forth the contribution to income from operations by each of
the Company’s operating groups and the operating margin for
each of the operating groups.
Income from operations for the Construction Group decreased by
9.9% to LE 180.1 million in 2002, as compared to LE 199.8 million
in 2001. The operating margin for the Construction Group
decreased to 10.2% in 2002, as compared to 14.3% in 2001. The
decrease was due principally to a lower proportion of industrial
projects executed during the year.
Income from operations for the Cement Group increased by
5.4% to LE 385.5 million in 2002, as compared to LE 365.8 million
in 2001. The operating margin for the Cement Group decreased
to 40.7% in 2002, as compared to 44.5% in 2001. The decrease
was attributable principally to increased depreciation reflecting
start of depreciation on the fourth production line at ECC.
Income from operations for the Concessions and Other Building
Materials Group decreased by 33.6% to LE 24.1 million in 2002,
as compared to LE 36.3 million in 2001. The operating margin
for the Group decreased to 5.9% in 2002, as compared to
10.1% in 2001. The decrease was attributable principally to
pre-operating expenses at ECHCO associated with the start-up
of the Sokhna port.
Other Income and Expenses
In 2002, the Company’s financial expenses, investment income,
foreign exchange gain and other income and expenses resulted
in a consolidated net expense of LE 114.8 million, as compared
to LE 145.3 million in 2001. Interest income increased to
LE 66.7 million (2001, LE 30.7 million), and interest expense
increased to LE 282.4 million (2001, LE 178.6 million). Most of
the Company’s interest income and interest expense results from
matching borrowings and time deposits, a practice that allows OCI
to lower its effective tax rate. Foreign exchange gains increased
significantly to LE 103.0 million (2001, LE 31.6 million). Other
expenses include a loss on the sale of shares of Messer Egypt and
SCIB Chemicals, which amounted to LE 17.3 million (2001, gain
of 10.4 million). In accordance with EAS and IAS, deductions
totaling LE 0.4 million have been made from income for the year
to eliminate intra-group profit from construction services
rendered to ACC by OCI Algeria (2001, LE 53.2 million profit by
OCI on construction performed for ECC, ECHCO and SIDC).

Orascom Construction Industries Annual Report 2003 25

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Provision for Income Taxes At and for the year end 31 December

The Company’s consolidated provision for income taxes in 2002 2003 2002 2001
amounted to LE 9.0 million, as compared to LE 10.6 million in LE millions LE millions LE Millions
2001.
Cash & Cash Equivalents
Minority Interests Beginning of year 787.5 1,072.3 615.7
In 2002, income allocated to minority interests amounted to LE End of year 917.4 787.5 1,072.3
102.1 million, as compared to LE 142.2 million in 2001. The
minority interest in profits of the subsidiaries was attributable Net increase (decrease) 129.9 (284.8) 456.6
principally to the financial performance of ECC.
Net Cash Provided
Net Income by (Used in)
As a result of the foregoing, the Company’s net income increased Operating activities 551.8 677.0 256.4
by 19.8% to LE 363.9 million in 2002, as compared to Investing activities (1,473.6) (656.5) (440.4)
LE 303.8 million in 2001. Financing activities 1,051.7 (305.3) 640.6

Net provided (used) 129.9 (284.8) 456.6

Construction Backlog
The Company considers as “backlog” the revenues that the
Company expects to receive under contracts that have been
awarded and signed. Backlog consists of uncompleted portions of
engineering and construction contracts, including the Company’s
proportionate share of construction joint-venture contracts.
As at 31 December 2003, the Construction Group was involved
in 42 projects in Eygpt, Afghanistan, Qatar, Bahrain, Kuwait,
Libya, Algeria and Iraq worth a total value of LE 10.0 billion. The
value of the Construction Group’s portion of the contracts under
execution was LE 7.0 billion and the value of the unbilled work in
backlog was LE 2.4 billion.
The Construction Group secured a record LE 3.3 billion in new
work during the year and their backlog at year end was 4%
higher than the previous year. Construction work in backlog
which will be undertaken outside of Egypt reached 60% at the
end of 2003, as compared to 35% in 2002. Industrial
construction work represented only 5% of total backlog at year
end, with commercial construction work representing 13%,
infrastructure construction work representing 42% and
government construction work representing 40%.
Financial Liquidity and Condition
The Company has three principal sources of short-term liquidity:
(i) existing cash and cash equivalents which at 31 December
2003 totaled LE 917.4 million (of which LE 453.5 was in
foreign currencies), as compared to LE 787.5 million at
31 December 2002 (of which LE 117.1 million was in foreign
currencies);
(ii) cash generated by operations; and
(iii) short-term borrowings under credit facilities.
The following table sets forth certain consolidated financial data
concerning the liquidity and capital resources as at and for the
years indicated.
Cash provided by operating activities in 2003 was LE 551.8 million,
as compared to LE 677.0 million in 2002. Cash provided by
operating activities was principally generated from income from
operations and from increases in receivables, inventories and
decrease in payables.
Cash used in investing activities in 2003 was LE 1,473.6 million,
as compared to LE 656.5 million in 2002. This increase was
attributable principally to higher investment in plant and
equipment in Algeria.
Cash provided by financing activities in 2003 was LE 1,051.7
million, as compared to LE 305.3 million cash used in 2002. The
increase was attributable principally to increased bank borrowing
to finance the investment in the cement plant in Algeria.
On 2 February 1999, the Company issued LE 280 million
non-convertible bonds at an annual interest rate of 11% with a
maturity date in 2006. The Company issued the bond in order to
achieve a better matching of long term investments with long
term liabilities. In January 2004, OCI invited the public to
subscribe in the issuance of LE 400 million second bond to
finance the growth of the Company in Egypt and internationally.
The second bond is payable over a six year period ending in
December 2010, at the annual interest rates of 13% fixed on
60% of the bonds and variable at 2% above Central Bank rate
on the remaining 40%. The bond has been fully underwritten
by a consortium of four Egyptian banks.
In December 2002, ECC issued LE 1 billion non-convertible
bonds, payable over a period ending in December 2008, at the
annual interest rates of 13% fixed on 60% of the bonds and
variable at 2% above the Central Bank of Egypt’s discount rate on
the remaining 40%. The proceeds were used to refinance the
company’s production lines.

26 Orascom Construction Industries Annual Report 2003

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company’s cash flow from operations has been supplemented The Investment Guarantees and Incentives Law further provides
by borrowings to enable the Company to implement its growth that all listed joint-stock companies are entitled to an elevated
strategy and finance the construction of its cement plant in threshold for their taxable revenues, according to a formula
Algeria. The Company’s borrowings include: based on an amount equivalent to the percentage of the paid in
capital determined at the CBE lending and discount rate for the
(i) US$ 55 million medium term loan from the International year subject to accountability, and to three years’ exemption from
Finance Corporation (IFC), the date of registration in the Commercial Registry from stamp
(ii) 6 million Euro from European Investment Bank, taxes and notarization and registration fees due on articles of
(iii) US$ 11.5 million from DEG bank, and incorporation of companies (required for the organization of the
(iv) US$ 156 million syndicated loan from a consortium of companies) loans and mortgage contracts. Moreover, the
financial institutions registration of land contracts required for establishing the
companies and their activities are also exempted from the taxes
The local affiliate of Fitch Ratings reaffirmed the A+ credit rating and fees described above. Interest on bonds and financing
of OCI for the fourth consecutive year, and maintained the debentures and other income from similar securities issued by
outlook on the Company as ‘Positive’ since last year. joint stock companies are exempted from the revenues on
moveable capital tax, provided the securities are sold in a public
In January 2003, the Egyptian Government allowed market forces offering and they are listed on the CSE. Companies operating, or
to revalue the Egyptian Pound against foreign currencies. The projects established, in Egypt’s “free zones” (the industrial areas
balances of the Company’s monetary assets and liabilities in around Alexandria, Suez, Port Said, Cairo, Damietta and Ismailia)
foreign currencies, and the exchange rates used to revaluate are exempt from import/export laws and regulations, custom
these balances were as follows: duties, sales taxes and other fees. Finally, the Investment
Guarantees and Incentives Law provides that establishments
At 31 December operating under the law cannot be nationalized, have their assets
confiscated or placed under custody and no administrative
2003 2002 2001
LE millions LE millions LE Millions authority can interfere in their pricing or profit margin policies.
Companies have the right to own the land on which they
Monetary Assets operate, apart from in free zones, regardless of the nationality or
& Liabilities residence of their owners. Such tax holidays, exemptions and
Assets 986.5 935.2 236.1 other benefits are designed to encourage the formation of
Liabilities (1,660.0) (962.5) (183.0) industries in Egypt generally and in the designated development
zones in particular.
Net assets (liabilities) (673.5) (27.3) 53.1
All joint-stock companies with a year-end taxable profit in excess
of LE 18,000 are also subject to a further 2% “Development of
Foreign Exchange Rates State Resources Duty” on such taxable profit. OCI and its
US Dollar LE 6.18 LE 5.00 LE 4.55 subsidiaries and affiliates are also subject to certain other taxes
Euro LE 7.76 LE 5.24 LE 4.02 and duties, including social security subscriptions, import and
customs duties, stamp duties and sales tax.

Applicable Taxes and Investment Incentives

The Company is subject to an annual corporate profit tax at a
rate of 40% applicable to all construction companies. Other
companies in the OCI Group are subject to an annual corporate
profit tax rate of 32% for industrial projects and 42% for other
commercial activities. All joint stock companies incorporated
under the Egyptian Investment Guarantees and Incentives Law,
however, are entitled to substantial tax benefits and investment
incentives. Most of the OCI Group’s major subsidiaries, whether
directly held or held through Orascom Building Materials Holding
Company S.A.E. (“OBMHC”), are incorporated under the
Investment Guarantees and Incentives Law and are located in
designated new communities. The combination of these two
factors provides these entities with tax holidays of between five
and ten years, depending on the circumstances, starting from the
first day of the first full calendar year in which operations
commenced. The benefits of these tax holidays are not passed
directly on to the parent corporation.
Dividends
The declaration or payment of dividends by OCI is dependant in
part on OCI’s financial condition, results of operations, prospects,
cash flow, capital requirements and reserves, the level of dividends
received from the subsidiaries, and the effect of any such
dividend on OCI’s tax position.
In May 2003, the Company paid dividends totaling LE 95.3 million
(LE 1.00 per share) based on 2002 results, compared to LE 82.9
million in 2002 (LE1.05 per share). For 2003, the Board of
Directors is proposing to make a cash dividend distribution of
LE 142.9 million (LE 1.50 per share).
Share Capital
On 1 October 2002, shareholders at an extraordinary general
meeting approved a capital increase from LE 866.250 million
to LE 952.875 million. OCI shares are listed on the Cairo &
Alexandria Stock Exchange. OCI shares are also listed in the
form of global depository receipts (GDRs) on the London Stock
Exchange since September 2002. Each GDR represents two
shares. At 31 December 2003, 53% of the issued and paid share
capital was held by shareholders in the form of GDRs.

Orascom Construction Industries Annual Report 2003 27

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Corporate Social Responsibility Future Outlook

In fulfillment of its social responsibility, the following are examples
of the Company’s activities as a responsible corporate citizen.
OCI Foundation
The OCI Foundation was formed in 2000 to invest company
resources in educational programs that improve the communities
in which the Company operates. Through the Onsi Sawiris
Scholarship Program, the OCI Foundation has provided
scholarships to 16 extraordinary Egyptian graduate and
undergraduate students for studying at prestigious international
universities in fields that will enhance the economic prosperity of
Egypt. The cost for the year 2003 amounted to LE 1.8 million, as
compared to LE 1.8 million in 2002.
Management believes that the Company’s financial results for
the year ended 31 December 2003 continue to demonstrate
the OCI Group’s ability to achieve sustainable growth in a
challenging market environment. Management believes it is
better placed than most of its competitors to capitalize on
growth opportunities in the region and that it will continue
to outperform its peers. By forging strategic partnerships
with industry leaders, investing in modern technologies, and
developing the Company’s human resources, management
believes the Company will be able to maintain its competitive
advantage in its core businesses and continue to record positive
financial results.

Community Service
During the year, OCI continued performing the civil work
portion on a new US$ 70 million children’s cancer hospital in
Cairo without profit.

United Nations Global Compact

In December 2002, OCI joined the Global Compact at the
invitation of United Nations Secretary General Kofi Annan. The
Global Compact is an international initiative to bring companies
together with UN agencies, labour and civil society to support
nine principles in the areas of human rights, labour and the
environment. Through the power of collective action, the Global
Compact seeks to advance responsible corporate citizenship so
that business can be part of the solution to the challenges of
globalization. In this way, the private sector – in partnership with
other social actors – can help realize a more sustainable and
inclusive global economy. Today, hundreds of companies from all
regions of the world as well as international labour and civil
society organizations are engaged in the Global Compact. OCI is
among seven companies in Egypt to join in this global initiative.
OCI will participate in Global Policy Dialogues, prepare
submissions to the ‘Learning Forum’, participate in regional
Global Compact networks, and initiate ‘Partnership Projects’.

The nine principles of the Global Compact which OCI has agreed
to follow are:

1 Support and respect the protection of international human

rights within our sphere of influence
2 Make sure that our corporation is not complicit in human
rights abuses
3 Uphold the freedom of association and the effective
recognition of the right to collective bargaining
4 The elimination of all forms of forced and compulsory labour
5 The effective abolition of child labour
6 The elimination of discrimination in respect of employment
and occupation
7 Support a precautionary approach to environmental challenges
8 Undertake initiatives to promote greater environmental
responsibility
9 Encourage the development and diffusion of environmentally
friendly technologies

28 Orascom Construction Industries Annual Report 2003

Report of the Audit Committee of the Board of Directors

The Audit Committee assists the Board in fulfilling its

responsibilities for general oversight of the integrity of the
Company’s consolidated financial statements, compliance with
legal and regulatory requirements, the independent auditors’
qualifications and independence, the performance of the
Company’s internal audit function and independent auditors, and
risk assessment and management. The Audit Committee
manages the Company’s relationship with its independent
auditors (who report directly to the Audit Committee). The Audit
Committee acts under a written charter adopted and approved
by the Board, and has authority to obtain advice and assistance
from outside legal, accounting or other advisors as the Audit
Committee deems necessary to carry out its duties.

The Company’s management has primary responsibility for

preparing the consolidated financial statements and financial
reporting process, including the system of internal control. The
Company’s independent auditors, KPMG (Hazem Hassan), are
responsible for expressing an opinion as to whether those
financial statements present fairly, in all material respects, the
financial position, results of operations and cash flows of the
Company in accordance with Egyptian Accounting Standards,
which are not materially different from International Accounting
Standards.

In this context, the Audit Committee hereby reports as follows:

1 The Audit Committee has reviewed and discussed the audited

consolidated financial statements for the year ended 31
December 2003 with the Company’s management.
2 The Audit Committee discussed with the independent auditors
the conduct of their audit in accordance with Egyptian
Auditing Standards, and compliance with legal and regulatory
requirements.
3 The Audit Committee has received written confirmation of the
independent auditors’ independence.
4 Based on the review and discussions referred to above, the
Audit Committee recommended to the Board, and the Board
has approved, that the audited consolidated financial
statements be included in the 2003 Annual Report for filing
with the Capital Market Authority.

Audit Committee
Mr Alaa Saba
Dr Tarek Hatem
Mr Mohamed Abdel Moneim

Orascom Construction Industries Annual Report 2003 29

 Consolidated Financial Statements
and Auditor’s Report

30 Orascom Construction Industries Annual Report 2003

Auditor’s Report

To the Shareholders of Orascom Construction

Industries Company

We have audited the accompanying consolidated Balance Sheets of
Orascom Construction Industries company (OCI) as of 31 December
2003, and the related consolidated Statements of Income,
Changes in Shareholders’ Equity, and Cash Flows for the year
then ended. The comparative financial information presented
for the years 2002 and 2001 are based on the audited financial
statements for those years, on which we have issued qualified
audit opinion on 10 May 2003, and on 29 April 2002,
respectively. These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility
is to express an opinion on these consolidated financial
statements based on our audits. We did not audit the financial
statements of some of the Company’s subsidiaries, which
statements reflect total assets constituting 46 percent and total
revenues constituting 38 percent, of the related consolidated
totals. Those statements were audited by other auditors whose
reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for the said subsidiaries, is based
solely on the reports of those auditors.
In our opinion, based on our audit and the reports of the other
auditors, the consolidated financial statements referred to above
together with the notes attached thereto present fairly, in all
material respects, the consolidated financial position of Orascom
Construction Industries company as of 31 December 2003 and
the consolidated results of its operations and its cash flows for the
year then ended in conformity with Egyptian accounting standards
and comply with applicable Egyptian laws and regulations.
Without qualifying our opinion, we draw attention to Note (9)
of the notes to the financial statements. One of the Company’s
subsidiaries applied International Accounting Standard No. (17) –
Accounting for Capital Leases – to record its capital leases
transactions, which concluded during the years 2001, 2002 and
2003 for some fixed assets, instead of applying the Egyptian
Accounting Standard No. (20) to record such transactions.

We conducted our audit in accordance with Egyptian Auditing

Standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit and the reports of the other auditors KPMG Hazem Hassan Cairo, 22 April 2004
provide a reasonable basis for our opinion. Public Accountants & Consultants

Orascom Construction Industries Annual Report 2003 31

Report of Management

Responsibility for Financial Reporting

Management is responsible for the preparation and integrity of
the consolidated financial statements of Orascom Construction
Industries. The consolidated financial statements and notes have
been prepared in accordance with Egyptian Accounting Standards,
which are not materially different from International Accounting
Standards. As such, the consolidated financial statements include
certain amounts that are estimates based upon currently available
information and management’s judgment of current conditions
and circumstances. Management also prepared the other
information included in the annual and interim reports and is
responsible for their accuracy and consistency with the consolidated
financial statements.
The annual consolidated financial statements have been audited
by the independent accounting firm, KPMG (Hazem Hassan),
which was given unrestricted access to all financial records and
recorded data, including minutes of all the meetings of the Board
of Directors and committees of the Board.
The Company maintains a system of internal control over financial
reporting, which is intended to provide reasonable assurance to
the Company’s management and Board of Directors regarding the
preparation of the consolidated financial statements. The system
includes a documented organizational structure and division of
responsibility, established policies and procedures, and the careful
selection and development of staff. Internal auditors monitor the
operation of the internal control system and report findings and
recommendations to management and the Audit Committee of
the Board of Directors. Corrective actions are taken to control
deficiencies and other opportunities for improving the system as
they are identified.
The Audit Committee, which is composed of independent
directors, meets periodically with management, the internal
auditors and the independent auditors to review the manner in
which these groups are performing their responsibilities and to
carry out the Audit Committee’s oversight role with respect to
auditing, internal controls and financial reporting matters.
There are inherent limitations in the effectiveness of any system
of internal control, including the possibility of human error and
the circumvention or overriding of controls. Accordingly, even an
effective internal control system can provide only reasonable
assurance with respect to financial statement preparation.
Furthermore, the effectiveness of an internal control system may
change over time.
Management assessed the Company’s internal control system in
relation to criteria for effective internal control over financial
statement preparation. Based upon that assessment, management
believes that, as of 31 December 2003, its system of internal
control over financial statement preparation met those criteria.
Nassef Sawiris Adel Bishai
Chief Executive Officer Chief Financial Officer

32 Orascom Construction Industries Annual Report 2003

Consolidated Income Statement
years ended 31 December

2003 2002 2001

Notes LE ’000 LE ’000 LE ’000

Revenue
Construction revenue 3,208,807 1,784,254 1,421,315
Cement revenue 1,242,102 946,475 821,961
Concessions and other building materials revenue 506,559 405,503 352,088

4,957,468 3,136,232 2,595,364

Elimination of Intra-group revenue (544,324) (225,397) (180,660)

Total revenue 4,403,144 2,910,835 2,414,704

Costs
Construction cost 2,661,612 1,507,811 1,127,275
Cement cost 737,584 539,418 433,839
Concessions and other building materials cost 386,007 299,873 262,670

3,785,203 2,347,102 1,823,784

Elimination of Intra-group cost (591,721) (195,715) (166,616)

Total cost of construction and goods sold 3,193,482 2,151,387 1,657,168

Gross profit 1,209,662 759,448 757,536

Expenses
Selling, general and administrative expenses 225,929 144,539 98,661
Provision for claims and doubtful debts 38,581 25,229 57,016

Income from operations 945,152 589,680 601,859

Other income (expenses)

Interest income 9,971 66,723 30,670
Foreign exchange gain 245,117 102,954 31,617
Gain (loss) on sale of investments 1,975 (17,267) 10,386
Income from investments 9,043 3,469 9,781
Other income 6,088 10,045 6,862
Interest expense (263,382) (282,361) (178,606)
Gain (loss) on sale of property and equipment (3,187) 2,062 (2,770)
Elimination of unrealized profits on intra-group construction (97,895) (425) (53,213)

Net other income (expenses) (92,270) (114,800) (145,273)

Income before taxes and minority interest 852,882 474,880 456,586

Income taxes expense (28,637) (8,966) (10,611)

Minority interest (265,959) (102,062) (142,209)

Net income 558,286 363,852 303,766

Earnings per share LE (18) 5.56 3.60 2.84

The accompanying notes form an integral part of the financial statements and are to be read therewith.

Orascom Construction Industries Annual Report 2003 33

Consolidated Balance Sheet
as of 31 December

2003 2002 2001

Notes LE ‘000 LE ‘000 LE ‘000

Assets
Current assets
Cash and cash equivalents (3) 917,421 787,494 1,072,340
Accounts receivable – customers (net) (4) 585,456 480,413 374,147
– customers holdback 137,348 113,864 37,387
– other (net) (5) 470,303 416,696 312,603
– due from affiliated companies (21) 32,990 47,319 132,750
Marketable securities 8,077 – –
Construction contracts in progress 159,904 188,968 145,204
Inventories (6) 501,789 350,552 209,229
Property held for resale 68,151 67,545 70,944

Total current assets 2,881,439 2,452,851 2,354,604

Long-term assets
Investment in associated companies (7) 86,589 81,960 88,166
Investments available for sale 404 412 452
Property, plant and equipment (net) (8) 3,610,567 2,862,359 2,349,758
Projects under construction 1,378,012 842,661 762,723
Long-term receivables 4,952 6,494 5,211
Other assets (net) (11) 149,536 80,696 72,343

Total long-term assets 5,230,060 3,874,582 3,278,653

Total assets 8,111,499 6,327,433 5,633,257

34 Orascom Construction Industries Annual Report 2003

Consolidated Balance Sheet continued

2003 2002 2001

Notes LE ‘000 LE ‘000 LE ‘000

Liabilities
Current liabilities
Bank overdraft and current portion of long-term loans (12) 714,442 757,958 1,122,264
Accounts payable – suppliers and sub-contractors 204,627 317,948 163,687
– creditors, accrued liabilities and provisions (13) 697,434 696,027 498,285
– advances from customers 231,455 287,205 216,715
– due to affiliated companies (21) 37,139 2,602 26,859
Billings in excess of cost and estimated earnings on incomplete contracts 192,854 203,090 103,732
Income taxes payable 28,637 8,966 10,611

Total current liabilities 2,106,588 2,273,796 2,142,153

Long-term liabilities
Long-term loans (12) 2,562,979 1,655,902 1,395,364
Other long-term liabilities (14) 138,150 81,971 66,166

Total long-term liabilities 2,701,129 1,737,873 1,461,530

Total liabilities 4,807,717 4,011,669 3,603,683

Minority interest in subsidiary companies 1,145,553 876,293 783,069

Shareholders’ equity
Share capital (15) 952,875 952,875 825,000
Legal reserve (16) 38,737 34,493 23,381
Retained earnings 981,344 535,017 403,436
Cumulative gain on translation of foreign companies 195,564 4,874 4,661
Treasury stock (17) (10,291) (87,788) (9,973)

Total shareholders’ equity 2,158,229 1,439,471 1,246,505

Total liabilities and shareholders’ equity 8,111,499 6,327,433 5,633,257

The accompanying notes form an integral part of the financial statements and are to be read therewith.

Chairman Chief Executive Officer Chief Financial Officer

Orascom Construction Industries Annual Report 2003 35

Consolidated Statement of Changes in Equity
years ended 31 December

Share Treasury Legal

capital stock reserve
Notes LE ‘000 LE ‘000 LE ‘000

Balance at 31/12/2000 750,000 (12,441) 14,226

Net income for the year 2001

Employees share of subsidiaries profit distribution
Minorities share of subsidiaries profit distribution
Transfer to legal reserve 2000 4,061
Transfer to legal reserve 2001 5,094
Transfer to general reserve
Distribution of cash dividends
Issue of share dividends 75,000
Employees share of profits 2000
Employees share of profits 2001
Transactions of treasury stock by OCI ESOP Limited 2,468
Cumulative gain on translation of foreign companies

Balance at 31/12/2001 825,000 (9,973) 23,381

Net income for the year 2002

Employees share of subsidiaries profit distribution
Minorities share of subsidiaries profit distribution
Transfer to legal reserve 11,112
Transfer to general reserve
Issue of share dividends 127,875
Distribution of cash dividends
Employees share of profits 2001
Reduction in retained earnings of SCIB (sold during the year)
Transactions of treasury stock by OCI ESOP Limited (246)
OCI shares purchased by OCI International Limited (17) (90,020)
Write down of treasury stock to market value (OCI International Limited) 12,451
Cumulative gain on translation of foreign companies

Balance at 31/12/2002 952,875 (87,788) 34,493

Net income for the year 2003

Employees share of subsidiaries profit distribution
Minorities share of subsidiaries profit distribution
Transfer to legal reserve 4,244
Distribution of cash dividends
Employees share of profits 2002
OCI shares sold by OCI International Limited (17) 77,569
Transactions of treasury stock by OCI ESOP Limited (72)
Cumulative gain on translation of foreign companies

Balance at 31/12/2003 952,875 (10,291) 38,737

The accompanying notes form an integral part of the financial statements and are to be read therewith.

36 Orascom Construction Industries Annual Report 2003

Consolidated Statement of Changes in Equity continued

Cumulative gain
General Retained on translation of
reserve earnings foreign companies Total
LE ’000 LE ’000 LE ’000 LE ’000

– 256,692 1,706 1,010,183

303,767 303,767
(11,882) (11,882)
5,505 5,505
(4,061) –
(5,094) –
15,000 (15,000) –
(37,500) (37,500)
(15,000) (60,000) –
(16,667) (16,667)
(12,324) (12,324)
2,468
2,955 2,955

– 403,436 4,661 1,246,505

363,852 363,852
(18,257) (18,257)
7,955 7,955
(11,112) –
127,875 (127,875) –
(127,875) –
(45,375) (45,375)
(22,761) (22,761)
(2,395) (2,395)
(246)
(90,020)
(12,451) –
213 213

– 535,017 4,874 1,439,471

558,286 558,286
(25,465) (25,465)
11,071 11,071
(4,244) –
(95,288) (95,288)
(10,588) (10,588)
12,451 90,020
(896) (968)
190,690 190,690

– 981,344 195,564 2,158,229

Orascom Construction Industries Annual Report 2003 37

Consolidated Cash Flow Statement
years ended 31 December

2003 2002 2001

Notes LE ’000 LE ’000 LE ’000

Cash flows from operating activities

Net income 558,286 363,852 303,766

Adjustments to reconcile net income to net cash

provided by operating activities
Increase in cumulative gain on translation of foreign companies 190,690 4,874 4,661
Income taxes payable 28,637 8,966 10,611
Property, plant and equipment depreciation (8) 236,565 190,298 159,628
Other assets amortization 17,709 12,059 14,458
Provisions for claims and doubtful debts 26,194 25,489 53,504
Loss (gain) on sale of investments (1,975) 17,267 (17,578)
Loss (gain) on sale of property and equipment 3,187 (2,062) 179
Share in associated companies results (14,755) (11,606) 672
Goodwill amortization 4,403 8,964 6,498
Prior year adjustment – – 5,290
Foreign exchange gain (loss) 74,927 (8,929) (2,542)
Accrued distribution incentives – – 26,397
Interest expense incurred 263,382 282,361 168,821
Interest income earned (9,971) (66,723) (26,713)

Income from operating activities before changes in working capital 1,377,279 824,810 707,652

Changes in working capital

Increase in accounts receivable (204,117) (162,989) (287,960)
Decrease (increase) in due from affiliated companies 10,520 278,172 (115,933)
Increase in inventories (146,594) (111,478) (50,436)
Decrease in cost of construction in progress 31,233 31,835 4,521
Decrease (increase) in property held for resale (6,112) 3,749 6,303
Increase (decrease) in accounts payable (316,592) 96,319 61,106
Increase (decrease) in due to affiliated companies 34,537 (63,769) 62,719
Increase (decrease) in billings in excess of cost and estimated earnings (9,650) 35,470 (15,663)
Interest expense paid (229,244) (322,484) (137,965)
Interest income collected 10,506 67,400 22,072

Net cash provided by operating activities 551,766 677,036 256,416

38 Orascom Construction Industries Annual Report 2003

Consolidated Cash Flow Statement continued

2003 2002 2001

Notes LE ’000 LE ’000 LE ’000

Cash flows from investing activities

Payments for the purchase of property, equipment and projects in progress (1,407,365) (691,285) (464,534)
Proceeds (payments) for capital leasing of fixed assets (545) (728) 36,978
Payments for purchase of investments (9,223) (10,836) (47,305)
Payments for purchase of other assets (76,681) (44,018) (337)
Proceeds from sale of fixed assets 7,390 31,091 3,651
Proceeds from sale of long-term investments 1,586 46,096 18,186
Dividend income 11,250 13,151 13,006

Net cash used in investing activities (1,473,588) (656,529) (440,395)

Cash flows from financing activities

Increase (decrease) in bank overdraft and
current portion of long-term loans (43,516) (1,088,008) 336,530
Increase in long-term loans 830,910 1,032,394 184,635
Increase (decrease) in long-term liabilities 2,123 (234,350) 14,573
Sale (purchase) of treasury stock 89,073 (77,816) 2,468
Increase in minority interest 269,260 107,802 139,951
Cash dividends to shareholders (94,878) (45,375) (37,500)
Parent’s share of employee profit distribution in subsidiaries (1,223) – –

Net cash provided by (used in) financing activities 1,051,749 (305,353) 640,657

Net increase (decrease) in cash and cash equivalents 129,927 (284,846) 456,678
Cash and cash equivalents at beginning of year 787,494 1,072,340 615,662

Cash and cash equivalents at end of year (3) 917,421 787,494 1,072,340

The accompanying notes form an integral part of the financial statements and are to be read therewith.

Orascom Construction Industries Annual Report 2003 39

Notes to the Consolidated Financial Statements
years ended 31 December 2003, 2002 and 2001

1 General

The Companies Authority approved the amendment of the legal form of Orascom Company (Eng. Naguib Onsi Sawiris & Co.) – a
limited partnership – to become an Egyptian joint stock company under the provisions of Companies’ law No. 159/1981 and the
change of its legal name to “Orascom Construction Industries Company” – hereunder referred to as the “Company” or “OCI”.
Annotation of the aforementioned changes has been effected in the Commercial Registry on 30 March 1998. The Company’s
formation contract and its articles of association have been published in the Companies Gazette issue No. 658 in April 1998. The
Company’s purpose is general contracting, the manufacture, supply and installation of machinery, equipment, tools, materials and
supplies required for construction activities, the undertaking of infrastructure works and the engineering and technical
consultation required for projects being implemented by the Company as well as the import of necessary equipment and
instruments. The Company’s purpose also includes the undertaking of commercial agencies and import and export activities.

As at 31December, OCI owns the following consolidated subsidiaries:

Subsidiary 2003 2002 2001

% of ownership % of ownership % of ownership

Contrack International, Inc. (CII) 45% 45% 45%

Orascom Construction Industries Algeria (OCIA) 99.4% 99.4% 99.4%
Orascom Building Materials Holding Company (OBMH) 99.9% 99.9% 99.9%
Suez Industrial Development Company (SIDC) 59% 59% 59%
Egyptian Container Handling Company (ECHCO) 50% 50% 50%

2 Significant Accounting Policies

The consolidated financial statements are prepared according to Egyptian Accounting Standards. The significant accounting
policies adopted in the preparation of these consolidated financial statements are set out below:

2.1 Basis of Preparing the Financial Statements

The Company’s financial statements include the balances of its assets and liabilities as at 31 December 2003 (with comparative
figures for 2002 and 2001) as well as its revenues and expenses for the year ended 31 December 2003 (with comparative figures
for 2002 and 2001).

OCI’s financial statements also include its pro-rata interest in the assets, liabilities, revenues and expenses of its Joint Ventures (JVs)
through full or proportionate consolidation – depending on the level of control over the JV – of these items, into corresponding
accounts in the Company’s financial statements on item-by-item basis, for a period of twelve months except Nagga Hammadi
Project for which the financial statements were prepared for a period of 19 months starting 3 June 2002. The Company’s direct
participations in the Joint Ventures and its pro-rata interest therein are as follows:

Name of the Joint Venture Pro-rata Interest

Al Ferdan Bridge Civil Works (Besix – OCI) 50%

Le Royal Meridien Hotel Project (Besix – OCI) 40%
Conrad Hotel Project (Besix – OCI) 40%
Nile City Project (Besix – OCI) 50%
Marriott Mirage Hotel Project (C.C.C. – OCI) 50%
Golden Pyramids Project (C.C.C. – OCI) 50%
Hanging Church Project (Arab Contractors – OCI) 40%
Gianaclis Project (Contrack – OCI) 40%
AUC Project (OCI – Air et Chaleur) 55%
Iemsa Project (Iemsa – OCI) 50%
Thermal Power Plant Project in Suez Gulf (S.A.E. – OCI) 50%
Thermal Power Plant Project in East Port Said (S.A.E. – OCI) 50%
Fayed Project (Contrack – OCI) 49%
Luxor Wastewater Facilities Project (Allam – OCI) 50%
Damietta LNG Project (Besix – OCI) 71%
Nagaa Hammadi Project (Vinci – Bilfinger – OCI) 33.33%

Agreements concluded between the Company and its partner in each joint venture stipulate that both parties are jointly
responsible. The agreements also stipulate that the tax declaration by each partner should include each partner’s share of the
taxable profits realized from the joint venture.

The financial statements also include the assets, liabilities, revenues and expenses of the Company’s Yemen Branch and Jordan Branch
for the periods of 1 January 2003 to 30 June 2003 and 31 March 2003 respectively, as these branches were closed at these dates.

40 Orascom Construction Industries Annual Report 2003

Notes to the Consolidated Financial Statements continued

2 Significant Accounting Policies continued

2.2 Principles of Consolidation

The consolidated financial statements include all subsidiaries that are controlled by the Company. The bases of consolidation are
as follows:

• All material intra-group balances, transactions and unrealized profits are eliminated.
• Minority interest in the equity and results of the entities that are controlled by the Company is shown as a separate item in
the consolidated financial statements and calculated as the minority’s proportion of the carrying amounts of the assets,
liabilities and equity of the subsidiary.
• The cost of acquisition is allocated as follows:
a) The fair value of the assets and liabilities acquired as of the date of the acquisition to the extent of the Company’s interest
obtained in the acquisition.
b) The excess of the cost of acquisition over the Company’s interest in the fair value of the identifiable assets and liabilities
acquired as of the date of acquisition is recognized as goodwill and amortized over a period of 5 years, except for ECHCO
(50% owned by OCI) and Egyptian Gypsum Company (50% owned by United Paints and Chemicals (UPC)) which are
amortized over 20 years. The managements of OCI and these subsidiaries have determined that there are adequate
reasons to extend the amortization of these goodwill to 20 years as allowed under Egyptian Accounting Standards.
c) The excess of the Company’s interest in the fair value of the identifiable assets and liabilities at the date of acquisition over
the acquisition cost is recognized as negative goodwill and amortized over a period of 5 years.

2.3 Foreign Currency Transactions

OCI and some of its subsidiaries maintain their accounts in Egyptian Pounds. Transactions performed in foreign currencies are
translated during the financial year at the exchange rates prevailing at the date of the transaction. The balances of monetary
assets and liabilities denominated in foreign currencies are revalued at the balance sheet date at the exchange rates prevailing at
that date. The revaluation differences are recorded in the income statement. Foreign exchange differences resulting from
revaluation of loans in foreign currencies, which are used to finance the purchase of recently acquired machinery and equipment,
are capitalized.

2.4 Translation of Foreign Entities’ Financial Statements

The accounts of some of the Company’s subsidiaries are maintained in US Dollars, British Pounds and Algerian Dinars. The assets
and liabilities of these entities are translated into Egyptian Pounds at the exchange rates prevailing as of the balance sheet date,
and the equity accounts are translated at the historical exchange rates. The income statements’ items are translated using the
average exchange rate during the period. The cumulative translation difference of the foreign consolidated companies is reported
in a separate line item under the equity section.

2.5 Foreign Currency Swap Agreements

Assets and liabilities resulting from foreign currency swap agreements are recognized in the balance sheet at the date of the
contract. Costs of these contracts, including bank commissions and expenses, are charged to the income statement during the
period in which the contract is concluded. At the balance sheet date, the related assets and liabilities in foreign currencies are
revalued at the prevailing exchange rates on that date, and the revaluation differences are recorded in the income statement. The
net value of the outstanding swaps is presented under other receivables or payables, as the case may be, in the balance sheet.

2.6 Revenue and Cost Recognition

Revenue from construction contracts is recognized in the income statement under the percentage of completion method of
accounting. Under this method, an estimated percentage of completion of each contract, determined by the percentage of cost
incurred to date as compared to estimated total cost of the contract, as determined by the Company’s engineers, is applied to the
estimated total revenue. Construction project costs include all direct material, equipment depreciation, labor, subcontracting and
indirect costs related to contract performance, such as indirect labor, maintenance and applicable administrative costs. Materials,
labor and equipment provided by subcontractors or joint ventures are included in revenue and costs when management believes
that the company is responsible for the ultimate acceptability of the project. Changes in job performance, conditions, estimated
profitability and final contract settlements may result in revisions to cost and revenue and are recognized in the period in which
the facts requiring such revisions become known. Provisions for estimated losses on incomplete contracts are made in the period
in which such losses are determined. Claims for additional contract revenue are recognized when realization is assured and the
amount can reasonably be determined. Costs and estimated earnings in excess of billing on incomplete contracts are presented
as construction contracts in progress in the consolidated balance sheet. Billings in excess of costs and estimated earnings on
incomplete contracts are included under current liabilities in the consolidated balance sheet.

Cement and other building materials revenue is recognized upon delivery and acceptance of the sold products to the related
customers.

Concessions revenue is recognized upon signing the property’s selling contract and, in the case of services, when the service is
delivered and the invoice is issued.

Income from investments is recorded when the general meeting of the related company approves its profit appropriations.

Orascom Construction Industries Annual Report 2003 41

Notes to the Consolidated Financial Statements continued

2 Significant Accounting Policies continued

2.7 Inventories
Inventories of raw materials, spare parts and supplies are valued at cost on the moving average basis. Work in progress is valued at
accumulated cost of production. Inventories of finished goods are stated at the lower of cost and net realization value. Cost is
determined by using the average cost method.

2.8 Property, Plant and Equipment

Property, plant and equipment are recorded at historical cost and are depreciated by the straight line method over the estimated
productive life for each type of asset as follows:

Type of Asset Years

Buildings and Construction 2 – 40

Machinery and Equipment 3 – 35
Vehicles 4 – 10
Tools and Supplies 2 – 15
Furniture and Office Equipment 3 – 10
Information Systems 3 – 20

2.9 Capital Leases

Capital leases entered into by the Company or its subsidiaries are accounted for as operating leases in accordance with Egyptian
Accounting Standards, except for Egyptian Cement Company (ECC) which adopted the International Accounting Standard in this
regard, as explained in note 9.

2.10 Borrowing Costs

The borrowing costs are charged as expenses to the income statement for the period in which the Company incurs such costs.
Financing interest and charges related to bank facilities and long-term loans that are used to finance the cost of purchasing fixed
assets are capitalized by charging these borrowing costs to the cost of the related fixed assets until these assets become ready
for its use.

2.11 Investment in Associated Companies

Investment in associated companies, classified as long-term assets in the consolidated balance sheet, over which the Company
does not have control but has significant influence, are recorded using the equity method. When there is impairment in its value,
the carrying amount of the investment is reduced and the impairment loss is charged to the income statement.

2.12 Investments Available for Sale

Investments available for sale are recorded initially at cost. When there is impairment in value, the carrying amount of the
investment is reduced and the impairment loss is charged to the income statement.

2.13 Marketable Securities

Marketable securities are recorded at cost at the date of acquisiton. Such investments are revaluated at the end of each financial
period at the market value. The differences in value are charged to the income statement.

2.14 Taxation
Each financial period is charged by its fair share of the corporate income tax liability. Due to the nature if the Eygptian tax law and
legislation, applying the principles of deferred taxes according to the International Accounting Standards “taxes on income” will
not usually result in material deferred tax liabilities. However, if the application results in deferred tax assets, they will be recognized
in the financial statements whenever there is a sufficient assurance that these assets will be realized in the foreseeable future.

2.15 Other Assets

Goodwill and negative goodwill arising on consolidation are amortized over 5 years, except for ECHCO which is amortized over
20 years. Deferred costs of the OCI’s issued bonds were amortized over the period from the closing date of the bonds’
subscription on 2 March 1999 to 31 December 2003. Deferred costs of the ECC’s issued bonds are amortized over a period of 6
years as from the closing date of the bonds subscription on 1 December 2002. Deferred pre-operating expenses as of 1 January
2002 are amortized over the lesser of 3 years and its remaining useful life. However, starting from 1 January 2002 pre-operating
expenses are expensed in the period in which they are incurred.

2.16 Treasury Stock

OCI shares held by OCI ESOP Limited and other consolidated companies are recorded as treasury stock in the consolidated
balance sheet at the acquisition cost less any write down to market value. Transactions relating to the treasury stock are recorded
in shareholders’ equity.

42 Orascom Construction Industries Annual Report 2003

Notes to the Consolidated Financial Statements continued

2.17 Impairment of Long – Lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of
an asset to future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated
futurre cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair
value of the asset. Assets to be diposed of are reported at the lower of the carrying amount or fair value less costs to sell.

2.18 Cash Flow Statement

The Cash Flow Statement is prepared according to the indirect method. Cash and cash equivalents are represented in cash on hand,
cheques under collection, balances of banks current accounts, cash margin for letters of guarantee and time deposits with banks.

3 Cash and Cash Equivalents

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Cash on hand 874 1,579 782

Cheques under collection 14,569 14,322 46,928
Banks – current accounts * 398,313 240,664 126,578
Letters of guarantee margins 56,050 35,235 45,323
Banks – time deposits ** 447,615 495,694 852,729

Total 917,421 787,494 1,072,340

* Banks – current accounts include blocked amounts of LE 23.4 million (2002, LE 3.1 million) (2001, LE 5.7 million) held as
collateral against letters of credit and letters of guarantee related to subsidiary companies.
** Banks – time deposits include blocked deposits of LE 149.5 million held as collateral against letters of credit and short-term
loans of OCI and its subsidiaries (2002, LE 205.8 million) (2001, LE 738.1 million).

4 Accounts Receivable – Customers (Net)

The provision for doubtful debts amounting to LE 16.8 million is deducted from the accounts receivable – customers in the
consolidated balance sheet (2002, LE 19.3 million) (2001, LE 13.5 million).

5 Accounts Receivable – Other (Net)

This item, which is presented net of a provision for doubtful debts of LE 11.1 million (2002, LE 4.2 million) (2001, LE 3.3 million),
consists of the following:

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Joint Ventures receivables and

other debit balances 152,271 202,108 199,018
Suppliers debit balances 81,794 77,719 1,100
Deposits with others 90,868 48,324 49,506
Taxes deducted at source 79,351 30,982 29,203
Prepaid expenses 29,132 16,853 15,222
Net receivable from currency swap agreements 3,498 9,241 –
Deferred revenue 33,389 31,469 18,554

Total 470,303 416,696 312,603

Orascom Construction Industries Annual Report 2003 43

Notes to the Consolidated Financial Statements continued

6 Inventories

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Raw materials 238,505 112,506 102,374

Spare parts and fuel 123,472 129,187 62,176
Packing materials 8,775 12,931 8,591
Work in progress 65,027 49,841 7,995
Finished goods 8,695 6,370 5,311
Letters of credit 57,315 39,717 22,782

Total 501,789 350,552 209,229

7 Investment in Associated Companies

This item represents the long-term investment in associated companies. All these companies are incorporated under the
Egyptian laws, except Mehsas National Bag Company which is incorporated under Algerian laws.

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Nile Valley Gas Company (20% owned by OCI) 12,311 8,646 8,328
National Pipes Company (40% owned by OBMH) 6,868 19,108 22,915
Egyptian Gypsum Company (50% owned by UPC)* 46,151 43,534 45,676
SCIB Chemicals (13.3% owned by UPC) 4,134 10,420 –
Mehas National Bag Company (50% owned by OCIA) 16,873 – –
Others (net) 252 252 11,247

Total 86,589 81,960 88,166

* Includes a goodwill balance of LE 15.1 million, which is net of the related amortization for the year of LE 0.9 million.

44 Orascom Construction Industries Annual Report 2003

 Description Furniture
Buildings and Machinery and and office Information Tools and
Land construction* equipment** equipment Vehicles** systems supplies Total
LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000

Cost
Balance at 1/1/2003 43,719 124,414 3,138,444 63,247 94,120 21,842 25,994 3,511,780
Additions – 282,502 521,546 18,385 45,368 22,036 9,224 899,061
Disposals (6,643) (2,013) (25,749) (5,115) 4,205 74 (15,140) (50,381)

Balance at 31/12/2003 37,076 404,903 3,634,241 76,517 143,693 43,952 20,078 4,360,460

Accumulated depreciation
Balance at 1/1/2003 33,491 435,599 21,454 37,283 7,572 12,993 548,392
Depreciation 12,155 185,458 12,381 17,082 6,241 3,248 236,565
Disposals accumulated depreciation (920) (23,321) (2,012) (823) 59 (8,047) (35,064)
8 Property, Plant and Equipment (Net)

Balance at 31/12/2003 – 44,726 597,736 31,823 53,542 13,872 8,194 749,893

Net book value at 31/12/2003 37,076 360,177 3,036,505 44,694 90,151 30,080 11,884 3,610,567

Net book value at 31/12/2002 43,719 91,328 2,590,365 38,299 54,448 38,143 6,057 2,862,359

Net book value at 31/12/2001 47,253 87,554 2,139,801 17,202 46,040 6,164 5,744 2,349,758

* Additions of buildings and construction includes LE 112.9 million representing the cost of buying units in Nile City tower from Nile City Investment Company
according to a contract signed on 21/12/2003. As of 31 December 2003, LE 40.1 million were paid and the remaining balance of $13.6 million of which 50% will
be paid in USD and the other 50% in Egyptian Pounds at the maximum rate LE 4.5 per US Dollar. The equivalent to the first installment due on 1/1/2004
amounting to LE 18.7 million is shown in the “creditors, accured liabilities and provisions” item in the current liabilities and the equivalent of the second installment
due on 1/1/2005 amounting to LE 54.0 million is shown in “other long term liabilities” item.

The above mentioned administrative units are pledged in Bank Misr, the seller (Nile City Investment Company) is committed to cancel the pledge as soon as the
above installments are settled otherwise OCI has the right for a compensation claim equal to 50% of the total amount paid.

** Machinery and equipment item, and vehicles item include the following assets, which have been acquired and accounted for under capital lease transactions:
Notes to the Consolidated Financial Statements continued

Description Cost Accumulated Net

Depreciation
31/12/2003 31/12/2003 31/12/2003
LE ‘000 LE ‘000 LE ‘000

Machinery and equipment 40,097 (4,559) 35,538

Orascom Construction Industries Annual Report 2003

Vehicles 24,994 (3,301) 21,693

Total 65,091 (7,860) 57,231

45
Notes to the Consolidated Financial Statements continued

9 Capital Leases

9.1 ECC Capital Leases

In January and December 2001 and March 2002, the Company’s subsidiary, (ECC), sold some of its machinery, equipment and
trucks to two finance leasing companies and leased back these assets under the following conditions:

LE ‘000

Purchase price of machinery, equipment and trucks 65,091

Total lease payments 87,045
Lease terms: 5 years
Selling price at end of the lease terms: LE 6

As the leases transfer substantially all of the benefits and risks of ownership related to the leased properties from the lessors to
ECC, they have been accounted for as capital leases in accordance with International Accounting Standards (IAS 17). The total
amounts of the leased assets are included in property, plant and equipment in the balance sheet. The lease obligations are
included in long-term liabilities in the balance sheet, with the current portion shown under current liabilities.

Egyptian Accounting Standards (EAS 20) require that all leases should be accounted for as operating leases. Accordingly, the
effect of applying IAS 17 instead of EAS 20 is overstating consolidated net income by LE 10.1 million as follows:

2003 2002 2001

LE ‘000 LE ‘000 LE ‘000

Amounts charged to income statement

according to IAS 17:
Interest charges 7,305 5,369 1,104
Depreciation expense 3,864 2,707 1,370

Total 11,169 8,076 2,474

Amount chargeable to income statement
according to EAS 20:
Rent expense 29,928 22,337 4,667

Overstatement of ECC net income due to

application of IAS 17 18,759 14,261 2,193
Less: Minority interest (46.33%) 8,691 6,767 1,106

Overstatement of consolidated net income

due to application of IAS 17 10,068 7,494 1,177

9.2 Other Leases

During 2002 and 2003, OCI and other subsidiaries leased some equipment under the following conditions:

LE ‘000

Total lease payments payable over 60 months at annual rent of LE 6.1 million 23,918
Lease term: 20 to 60 months
Estimated useful life of leased equipment: 5 years
Selling price at end of lease term: LE 0.9 million
Payments during 2003 to other lessors amounted to LE 5.6 million

46 Orascom Construction Industries Annual Report 2003

Notes to the Consolidated Financial Statements continued

10 Joint Ventures

A summary of OCI and CII’s pro rata share in the assets, liabilities, revenues and expenses of the Joint Ventures, based on the
financial statements of those Joint Ventures, are as follows:

31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Share in Net Assets

Assets 521,161 614,502 539,613
Liabilities (384,624) (530,821) (365,762)

Companies Share in Net Assets 136,537 83,681 173,851

Share in Operating Results

Revenue 1,013,594 812,030 832,766
Cost (929,124) (776,187) (804,619)

Companies Share in Net Profit 84,470 35,843 28,147

There is a dispute between the management of a Joint Venture and the owner of its assigned project concerning the project’s
final handing over date. This dispute resulted in differences in the final account of the project. A provision was made by
management of the Joint Venture to cover the difference in case of settlement of the dispute in favor of the owner.

11 Other Assets (Net)

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Goodwill (net)* 14,581 18,985 50,882

Deferred interest expenses 104,275 17,603 –
Deferred cost of bond issues 19,381 24,377 3,668
Pre-operating and organization expenses 11,299 19,731 17,793

Total 149,536 80,696 72,343

*The goodwill item consists of the follwing:

Description Net Net Net

Goodwill** Amortization Disposals 31/12/2003 31/12/2002 31/12/2001
LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000

CII 6,253 (6,253) – – 834 2,084

ECC (3,541) 3,541 – – – (1,152)
ECHCO 22,320 (7,567) – 14,753 17,323 19,894
OBMH 50 (50) – – – 20
NSF 12,167 (12,167) – – 1,624 4,057
NBC (2,081) 2,081 – – (278) (694)
UPC (2,471) 2,299 – (172) (518) (986)
SCIB 34,755 (7,096) (27,659) – – 27,659

Total 67,452 (25,212) (27,659) 14,581 18,985 50,882

**Goodwill and negative goodwill at dates of acquisition

Orascom Construction Industries Annual Report 2003 47

Notes to the Consolidated Financial Statements continued

12 Loans

The Company and its subsidiaries have obtained loan facilities from various lending institutions. As of 31 December 2003,
the outstanding balances were as follows:

Company responsible for loan Lending institution Interest rate

Orascom Construction Industries Company Bond (due 2 March 2006) 11%

Citibank 0%
Credit Lyonnais 1% over libor
Cairo Barclays International 12.4%
Different banks – overdraft Variable (average 12.3%) for the LE portion and
1% over libor for the US $ portion
EIB (due 30 October 2012) Variable
DEG (due 15 June 2011) 3.3% over DEG rate
IFC (due 15 July 2007) 2.375% over libor
IFC (due 15 July 2009) 2.625% over libor
Bank facilities Variable

Egyptian Container Handling Company CIB loan (due 31 December 2006) 0.5% over rate of the CIB
CIB overdraft 0.5% over rate of the CIB

Egyptian Cement Company Bonds (due December 2008) 13% fixed on 60% of the bonds and variable 2%
over the Central Bank rate on the remaining 40%
Shareholders’ financing Interest free
Different banks – overdraft 12%

National Bags Company Different banks – overdraft 13%

National Steel Fabrication Different banks – overdraft 13%

United Paint & Chemicals Company KFW 14%

NSGB (due 15 April 2005)
Bank overdraft Variable

Algerian Cement Company (ACC)
IFC (first installment 15 September 2005) 4.55 - 4.82%
EIB-A (first installment 15 September 2005) 3.37 - 4.07%
EIB-B (first installment 15 September 2005) 3.08 - 3.80%
CNEP (first installment 15 September 2005) 8.50%
Citibank (first installment 15 September 2005) 8.50%

Alico Egypt National Bank of Oman (due19 September 2004) 13.95%

Different banks – overdraft 13.5%
Bank facilities Variable

Total 31/12/2003

Total 31/12/2002

Total 31/12/2001

48 Orascom Construction Industries Annual Report 2003

Notes to the Consolidated Financial Statements continued

Outstanding Long-term Bank overdraft &

amount portion current portion
31/12/2003 31/12/2003 31/12/2003
LE ‘000 LE ‘000 LE ‘000 Collateral given

280,000 280,000
12,629 12,629 Promissory notes
12,923 12,923 Promissory notes
106,796 106,796 Time deposit LE 77.5 million
165,540 165,540 Time deposit LE 165.5 million
and LE 120 million promissory notes
46,585 46,585
71,106 71,106
188,585 141,438 47,147
154,577 154,577
1,782 1,782

138,667 119,667 19,000 Commercial lien on the company’s assets

13,611 13,611 Commercial lien on the company’s assets

1,000,000 900,000 100,000 Real estate and commercial lien on the

company’s assets
2,763 2,763
157,413 157,413

30,042 30,042

15,700 15,700 Blocked deposits of LE 1.8 million

2,205 1,600 605

15,391 14,091 1,300
23,385 23,385

216,409 216,409 Pledge of ACC shares

278,240 278,240 Pledge of ACC shares
61,830 61,830 Pledge of ACC shares
204,364 204,364 Pledge of ACC shares
68,121 68,121 Pledge of ACC shares

4,223 3,169 1,054 Commercial lien on the company’s assets

1,668 1,668
2,866 2,866

3,277,421 2,562,979 714,442

2,413,860 1,655,902 757,958

2,517,628 1,395,364 1,122,264

Orascom Construction Industries Annual Report 2003 49

Notes to the Consolidated Financial Statements continued

13 Creditors, Accrued Liabilities and Provisions

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Joint Ventures payables and other credit balances 153,297 256,227 189,172
Sundry creditors 183,111 211,574 117,731
Provisions for claims and probable contingent
liabilities 143,259 93,403 72,444
Accrued expenses and interest 128,754 101,614 104,858
Taxes withheld (employees and suppliers) 89,013 33,209 14,080

Total 697,434 696,027 498,285

14 Other Long-term Liabilities

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

OCI (Purchases of fixed assets – Note 8) 56,413 3,782 3,639

ECC* 35,434 51,575 59,975
OBMH subsidiaries** 32,822 26,614 2,552
CII 13,481 – –

Total 138,150 81,971 66,166

* Includes LE 21.3 million value of sales tax installments due on imported machinery, equipments and purchases of fixed assets.
In addition, this balance also includes LE 14.1 million represents the long-term installments related to capital lease agreements.
** Includes LE 24.5 million loan to National Steel Fabrication Company from one of its shareholders.

15 Share Capital

15.1 Authorized Capital

The parent Company’s authorized capital is LE 2 billion.

15.2 Issued and Paid-in Capital

As at 31 December 2003, the issued and fully paid in share capital amounted to LE 952.9 million (2002, LE 952.9 million)
(2001, LE 825.0 million).

OCI’s shares have been listed on the Cairo & Alexandria Stock Exchange since March 1999. In September 2002, the Company also
listed part of its shares (53% as at 31 December 2003) on the London Stock Exchange in the form of Global Depository Receipts
(GDRs), each representing two shares. The Bank of New York was appointed to act as the depository bank.

16 Legal Reserve

OCI is legally required to establish and maintain a legal reserve to which an amount equal to 5% of the annual net profits after
taxation should be transferred to. However, this transfer may be discontinued if the carrying balance of this legal reserve reaches
50% – at least – of the Company’s issued capital.

50 Orascom Construction Industries Annual Report 2003

Notes to the Consolidated Financial Statements continued

17 Treasury Stock

As of 31 December 2003, the treasury stock item amounting to LE 10.3 million represents the carrying cost of 449,637 OCI
shares owned by OCI ESOP Limited and OCI Asia Telecommunication.

OCI has a plan to provide some of its employees with stock options on its shares. According to this plan, OCI ESOP Limited, a
British Virgin Island Company, purchases OCI shares equivalent to the value of options issued to the employees. The purchase is
made from the stock market at the stock option price to the employees. This purchase is financed by an interest free loan granted
by OCI, when the options vest, the employee has the right to exercise the options through a cashless exercise by which the
employee receives the appreciation on the share value between the stock option price and the actual sale price. The remainder of
the proceeds of the sale is used by OCI ESOP Limited to repay the loan due to OCI or to finance other options.

On 27 June 2002, the Company purchased 3 million of its own shares, representing 3.15% of the total Company’s shares, from
Egyptian Investment and Development Co. (formerly, Orascom for Investment & Development Co. – affiliated company) at a total
cost of LE 90.0 million at the market value of LE 30 per share. The purchase price was deducted from the balance due from this
affiliated company. On 17 July 2002, the Company sold these shares to OCI International Limited – OCII (a subsidiary company) –
at the same cost.

In September 2002, these shares were converted to 1.5 million Global Depository Receipts (GDRs), each representing two shares.

On 27 December 2002, OCII entered into an agreement with an international financial institution to sell these GDRs for US$ 15.7
million. Pursuant to this agreement, the financial institution had 180 days to market the shares and any profits earned from the
sale of these GDRs are to be split evenly between OCII and the institution. If the shares remain unsold, OCII has agreed to
repurchase these shares for US$ 15.7 million. In 2002, this liability was recorded under the “Creditors, Accrued Liabilities and
Provisions” item in the consolidated balance sheet. Since the Company had not surrendered the rights or lost the control over
these GDRs, they were not eliminated from the financial statements.

On 28 June 2003, the agreement with the international financial institution was extended to end at 28 December 2003. During
the period ending 28 December 2003, the sale of all GDRs in the London Stock Exchange was completed, realizing net proceeds
of the equivalent of LE 124.0 million after deducting all expenses and commissions, which were transferred by OCII to OCI. In
accordance with the agreements in 2002 to settle the amounts due to OCI by the Egyptian Investment and Development
Company from the proceeds of sale of the OCI shares, the balance of sale of the GDRs amounting LE 34.0 million remaining after
reducing the debt by LE 90.0 million on 27 June 2002, was used to further reduce such debt.

18 Earnings Per Share

Earnings per share is calculated by dividing the net income available for shareholders’ dividends, after deducting the employees’
profits share, by the weighted average number of shares outstanding during the period, as follows:

Date Means of Number of

share issuance issued shares

1 April 1998 Initial share capital at incorporation 20,000,000

15 October 1998 Capital increase 8,000,000
25 March 1999 Capital increase 20,000,000
5 December 1999 1 for 4 stock dividend 12,000,000
31 December 2000 1 for 4 stock dividend 15,000,000
11 December 2001 1 for 10 stock dividend 7,500,000
11 April 2002 1 for 20 stock dividend 4,125,000
1 October 2002 1 for 10 stock dividend 8,662,500

Accordingly, the weighted average number of shares, adjusted for the share dividends retroactively to 1/1/2001 and the
outstanding treasury stocks at year-end, is 94,837,863 shares (2002, 91,935,561 shares) (2001, 94,941,208 shares).

Orascom Construction Industries Annual Report 2003 51

Notes to the Consolidated Financial Statements continued

19 Commitments and Contingent Liabilities

Letters of guarantee issued by banks for OCI and subsidiaries’ accounts in favor of others as at 31 December 2003 were as follows:

Description Total L/G’s Cash margin Total L/G’s Total L/G’s

31/12/2003 31/12/2003 31/12/2002 31/12/2001
LE ‘000 LE ‘000 LE ‘000 LE ‘000

OCI 539,000 30,700 506,071 538,585

CII 21,888 – 25,721 –
OBMH subsidiaries 32,729 16,439 24,454 5,762
ECHCO – – 838 823

Total 593,617 47,139 557,084 545,170

Outstanding letters of credit as at 31 December 2003 (uncovered portion) were as follows:

Description Total L/C’s Total L/C’s Total L/C’s

31/12/2003 31/12/2002 31/12/2001
LE ‘000 LE ‘000 LE ‘000

OCI 15,000 15,908 66,318

CII 51,048 41,470 31,294
OBMH subsidiaries 30,155 123,483 13,257

Total 96,203 180,861 110,869

ECC issued bonds at a total value of LE 1 billion. OCI is committed to the bonds’ holders to maintain its ownership interest, together
with any multinational company specialized in the production and marketing of cement – directly or indirectly, at not less than 51%
of ECC’s issued capital. This bonds’ condition also requires that the ownership interest of the multinational company should not be
less than 40% of ECC’s issued capital. As of the balance sheet date, OCI owns, directly and indirectly, 53.66% of ECC’s issued capital.
As of 31 December 2003, the unpaid portion of the cost of aquisition of ECC’s new offices in Nile City towers amounted to
LE 9.1 million.

The Company has a commitment to cover any deficit pertaining to the financing of construction of the Algerian Cement
Company’s (ACC) plant – an indirectly owned subsidiary – to a maximum of US$ 52 million. The Company also guarantees this
subsidiary for US$ 4.8 million until 20 April 2006 to the benefit of a lending bank. The Company is also committed to maintain –
directly or indirectly – an ownership interest of 51% at least in ACC’s capital.

CII has US$ 30 million in credit facilities with US$ 3.5 million overdraft coverage available from two banks. The outstanding
balances of these facilities reduce the amounts available in the credit facilities at 31 December 2003. A Shareholder of the
Company personally guarantees the credit facilities.

The major portion of the business of the Company’s US subsidiary (Contrack International, Inc. (CII)) involves contracting with
departments and agencies of the U.S. Government. Such contracts are subject to audit and possible adjustments by the respective
agencies. The U.S. Government is currently investigating the nature of the relationship between a Joint Venture, in which CII has a
40% share, and one of the contractors with whom the Joint Venture has subcontracted work in a number of projects in Egypt.
Management believes that the ultimate resolution of any such audits and investigations will not have a negative impact on
reported results.

According to the agreement signed on 24 October 2002 between UPC (a subsidiary company) and a company purchased some of
SCIB shares’ (affiliated company), UPC undertakes to bear all of taxes liabilities that may arise concerning SCIB for the period from
1 January 1997 until 30 June 2002.

52 Orascom Construction Industries Annual Report 2003

Notes to the Consolidated Financial Statements continued

19 Commitments and Contingent Liabilities continued

During 2003, OCI entered into currency swap agreements with certain local banks. The swap transactions outstanding at
31 December 2003 are as follows:

Settlement
Date Amount Currency Exchange rate Period

14/1/2004 9.7 million Euro 7.4035 3 months

As at 31 December 2003, the total value of this currency swap agreement was LE 75.31 million, and OCI’s obligation to close the
agreement was LE 71.81 million. The net value of this agreement amounting to LE 3.5 million is included in “Accounts receivable-
other” (note 5) in the consolidated balance sheet in accordance with International Accounting Standard (39).

20 Financial Instruments and Related Risk Management

The financial instruments of OCI and its subsidiaries are represented in the financial assets (cash, banks, investments in securities,
accounts receivable and some debtors and debit accounts) and financial liabilities (banks-overdraft, short-term loans, long-term
loans, suppliers and subcontractors, notes payable and some creditors and credit accounts) in the consolidated balance sheet.

20.1 Interest Rate Risk

Interest rate risk is the negative effect of interest rate fluctuations on the group’s results of operations. The interest rates on the
company’s borrowings are shown in note 12.

20.2 Credit Risk

Credit risk is represented in the ability of customers to pay their debts. To limit this risk, OCI and its subsidiaries provide credit only
to government entities, associated companies, and a large number of credit worthy private sector customers.

20.3 Foreign Exchange Risk

The foreign currency risk is the risk that the value of the financial assets and liabilities and the related cash in and out flows will
fluctuate due to changes in foreign currency exchange rates.

The group manages this risk by matching its liabilities in foreign currencies (mainly credit facilities granted to the group) with its
sources of funds in foreign currencies (mainly customer payments).

As of 31 December 2003, the group has monetary assets denominated in foreign currencies amounting to LE 987 million, and
liabilities in foreign currencies amounting to LE 1,660 million.

The group’s net exposure in foreign currencies is as follows:

Surplus (Deficit) 31/12/2003 31/12/2002 31/12/2001

Million Million Million

Foreign currency:
US Dollar (120.4) (27.8) 53.1
Euro 9.2 22.9 –

20.4 Fair Value

Based on the valuation methods adopted by OCI and its subsidiaries for the financial assets and liabilities, the fair values of these
financial instruments do not materially differ from the book values as of the date of the consolidated balance sheet.

Orascom Construction Industries Annual Report 2003 53

Notes to the Consolidated Financial Statements continued

21 Related Party Transactions

OCI and its subsidiaries have entered into various commercial transactions with affiliated companies. The material intra-group
transactions, balances and unrealized profits have been eliminated, while balances with non-consolidated companies and joint
ventures are reported in the consolidated balance sheet under Due from and Due to affiliated companies, as follow:

21.1 Due from Affiliated Companies

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Egyptian Company for Investment & Development 4,634 7,507 91,230

Orascom Technologies – 21,795 21,928
National Equipment 1,719 2,319 2,328
Nile City Investment 10,363 13,721 11,615
Joint Ventures 8,969 1,072 1,955
Other companies 7,305 905 3,694

Total 32,990 47,319 132,750

21.2 Due to Affiliated Companies

Description 31/12/2003 31/12/2002 31/12/2001

LE ‘000 LE ‘000 LE ‘000

Joint Ventures 30,085 1,548 19,559

Other companies 7,054 1,054 7,300

Total 37,139 2,602 26,859

22 Comparative Figures

Comparative figures have been reclassified to conform to current year presentation.

23 Subsequent Event

On 12 January 2004, OCI made a public offering of LE 400 million six-year non-convertible bonds, issued at the face value of LE
100 per bond, which had been approved at the extraordinary general meeting of the Shareholders on 14 October 2003. The
bonds are issued in two tranches; the first constituting 60% of the total bonds issued (LE 240 million) yielding a fixed semi-annual
coupon rate of 13%, and the second constituting the remaining 40% (LE 160 million) yielding a variable semi-annual coupon rate
of 2% over the Egyptian Central Bank’s discount rate. This second bond issue by OCI was fully subscribed on 15 February 2004.

54 Orascom Construction Industries Annual Report 2003

Segmental Analysis unaudited
years ended 31 December

Operating segments Construction Cement Other Elimination Consolidated

LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000

Revenue
2003 External revenue 2,945,011 1,147,502 310,631 – 4,403,144
2003 Intra-group revenue 263,796 94,600 195,928 (554,324) –

Total 2003 3,208,807 1,242,102 506,559 (554,324) 4,403,144

2002 External revenue 1,758,551 908,067 244,217 – 2,910,835

2002 Intra-group revenue 25,703 38,408 161,286 (225,397) –

Total 2002 1,784,254 946,476 405,503 (225,397) 2,910,835

2001 External revenue 1,391,517 795,998 227,189 – 2,414,704

2001 Intra-group revenue 29,798 25,963 124,899 (180,660) –

Total 2001 1,421,316 821,961 352,088 (180,660) 2,414,704

Operating profit
2003 455,522 384,626 60,531 44.473 945,152
2002 181,335 382,275 35,040 (8,970) 589,680
2001 233,811 339,689 38,990 (10,631) 601,859
Interest and dividend income
2003 8,940 497 609 – 10,046
2002 56,954 1,943 7,826 – 66,723
2001 24,580 4,306 1,784 – 30,670
Interest expense
2003 70,424 174,528 18,430 – 263,382
2002 124,795 135,281 22,285 – 282,361
2001 97,989 70,831 9,786 – 178,606
Total assets (net)
2003 4,070,801 7,388,765 1,148,660 (4,496,727) 8,111,499
2002 3,209,510 4,743,796 1,038,027 (2,663,900) 6,327,433
2001 2,888,046 2,986,847 807,912 (1,112,548) 5,633,257
Liabilities
2003 2,330,418 4,973,041 447,301 (2,973,043) 4,807,717
2002 1,944,297 2,949,027 532,313 (1,413,968) 4,011,669
2001 1,872,872 1,737,267 347,104 (353,560) 3,603,683
Depreciation and amortization
2003 76,787 162,917 21,709 (7,139) 254,274
2002 54,956 130,195 26,696 (9,490) 202,357
2001 56,142 104,905 15,985 (2,946) 174,086

Geographic segments Egypt Africa* Asia** Other Elimination Consolidated

LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000 LE ‘000

Revenue
2003 2,658,071 1,047,175 1,221,801 30,421 (554,324) 4,403,144
2002 2,552,050 298,925 274,323 10,933 (225,397) 2,910,835
2001 2,477,343 742 117,279 – (180,660) 2,414,704
Total assets (net)
2003 7,504,648 4,781,099 168,007 154,472 (4,496,727) 8,111,499
2002 7,254,291 1,445,634 165,583 125,825 (2,663,900) 6,327,433
2001 6,679,752 6,524 5,538 53,994 (1,112,548) 5,633,257

* Africa includes primarily Algeria, Eritrea, Guinea, Libya, Nigeria, and Sudan.
** Asia includes primarily Afghanistan, Bahrain, Iraq, Kuwait, Qatar, and Yemen.

Orascom Construction Industries Annual Report 2003 55

Management and Corporate Information

Board of Directors Corporate Officers Subsidiaries

Eng Onsi Sawiris Mr Nassef Onsi Sawiris Mr Karim Camel-Toueg

Chairman Director and Chief Executive Officer President, CII

Mr Nassef Sawiris Mr Adel Bishai Ahmad Heshmat

Director and Chief Executive Officer Chief Financial Officer Commercial Director, ECC

Eng Mohamed Youssef Mr Sameh Loza Eng Milad Bishay

Director Human Resources Director General Manager, ACC

Eng Maged Abadir Eng Mohamed Youssef Mr Ali Abdel Naby

Director Director and Operations Director - Managing Director, NBC
Railway Projects
Eng Osama Bishai Mr Ali Moussa
Director Eng Maged Abadir President, UPC
Director and Operations Director -
Mr Karim Camel-Toueg Civil Engineering Projects Eng Mohab Messiha Gabriel
Director General Manager, NSF
Eng Osama Bishai
Mr Alaa Sabaa1 Director and Managing Director - Capt Ossama Al Sharif
Non-executive Director Construction Group President, ECHCO

Dr Tarek Hatem1 Eng Philip Megally Dr Amr Hassaballah

Non-executive Director Operations Director - Managing Director, SIDC
Electro Mechanical Projects
Eng Mohamed Farouk Abdel Moneim1
Non-executive Director Eng Sameh Muhtadi
Technical Director - Shareholder Information
Engineering and Quality Systems
1
Members of the Audit Committee Corporate Office
Mr Sobhi Naguib 160 26th July Street
Procurement Director PO Box 1911
Agouza, Cairo
Ms Dania Badawi Egypt
Corporate Treasurer
Tel (202) 3026930
Mr Ashraf Abdel Momen Fax (202) 3030506 / 3440201
Corporate Legal Affairs Manager

Mr Ahmed Ismail www.orascomci.com

Head of Internal Audit

Mr Kevin Struve Full Listing: Cairo & Alexandria Stock Exchange

Strategic Planning Manager Reuters / Bloomberg: OCIC.CA / ORCI EY

GDRs Listed: London Stock Exchange

Reuters / Bloomberg: OCICq.L / ORSD LI

Investor Relations
Mr Hassan Badrawi
Tel (202) 3015477
hassan.badrawi@orascomci.com

56 Orascom Construction Industries Annual Report 2003

contents
Business Segments and Activities

Construction Group Cement Group

OCI Construction Activities Egyptian Cement Company (53.7%)

Regional engineering, procurement and construction services Cement manufacturer

Contrack International Inc. (45%) Algerian Cement Company (100%)

Construction services on US government-financed projects Cement manufacturer
Highlights 1 Auditor’s Report 31
OCI Algeria (100%)
Letter to Shareholders 2 Consolidated Income Statement 33
Engineering, procurement and construction services in Algeria
Construction 6 Consolidated Balance Sheet 34
Cementech Limited (100%)
Cement 10 Consolidated Statement of Changes in Equity 36
Specialized engineering, procurement and construction services
Concessions 14 Consolidated Cash Flow Statement 38 on cement plants
Other businesses 15 Notes to the Consolidated Financial Statements 40 Orascom Road Construction (90%)
Corporate Governance 16 Management and Corporate Information 55 Asphalt and concrete paving

Management’s Discussion and Analysis 20 Business Segments and Activities 57

Concessions Group Other Building Materials

Suez Industrial Development Company (59%) Ready Mix Egypt (100%)

Industrial park developer Ready-to-use concrete

Orascom Construction Industries (OCI) focuses on Egyptian Container Handling Company (50%)
Stevedoring services at Adabiya port
National Bag Company (75%)
Cement, building materials and agriculture bags

three high growth business activities – construction – Sokhna Port Development Company (70%)
Stevedoring services at Sokhna port Mehsas National Bag Company (50%)
– Egyptian Maritime Services (90%) Cement, building materials and foodstuff bags
services, cement manufacturing and infrastructure Inland and intermodal transportation services
National Steel Fabrication (50%)
concessions. Our Construction Group provides Nile Valley Gas Company (20%) Steel cutting, bending, welding, and painting services
Natural gas distribution in southern half of Egypt
engineering, procurement and construction services United Paints & Chemicals (50%)
Auto Gas Company (20%) Pre-blended dry plaster, putty, and tile adhesives
on industrial, commercial, infrastructure and railway Natural gas vehicle refueling stations – Egyptian Gypsum Company (45%)
Gypsum manufacturer
projects for public and private customers in the Egyptian Company for Tunnels (12%) – MBT Egypt (50%)
Maintenance of subway systems Construction chemicals
Middle East and North Africa. Our Cement Group – Den Braven Egypt (87.5%)
Silicone and acrylic sealants
owns and operates cement production plants in – A-Build Egypt (50.1%)
Waterproofing contractor
Egypt and Algeria. Our Concessions Group Alico Egypt (50%)
participates as an equity investor in long-term Building facade, curtain walling, and window systems

infrastructure concessions including port operations, National Pipe Company (40%)

Concrete pipe

industrial parks and natural gas distribution systems. SCIB Chemical (15%)
Paints and building chemicals
contents
Business Segments and Activities

Construction Group Cement Group

OCI Construction Activities Egyptian Cement Company (53.7%)

Regional engineering, procurement and construction services Cement manufacturer

Contrack International Inc. (45%) Algerian Cement Company (100%)

Construction services on US government-financed projects Cement manufacturer
Highlights 1 Auditor’s Report 31
OCI Algeria (100%)
Letter to Shareholders 2 Consolidated Income Statement 33
Engineering, procurement and construction services in Algeria
Construction 6 Consolidated Balance Sheet 34
Cementech Limited (100%)
Cement 10 Consolidated Statement of Changes in Equity 36
Specialized engineering, procurement and construction services
Concessions 14 Consolidated Cash Flow Statement 38 on cement plants
Other businesses 15 Notes to the Consolidated Financial Statements 40 Orascom Road Construction (90%)
Corporate Governance 16 Management and Corporate Information 55 Asphalt and concrete paving

Management’s Discussion and Analysis 20 Business Segments and Activities 57

Concessions Group Other Building Materials

Suez Industrial Development Company (59%) Ready Mix Egypt (100%)

Industrial park developer Ready-to-use concrete

Orascom Construction Industries (OCI) focuses on Egyptian Container Handling Company (50%)
Stevedoring services at Adabiya port
National Bag Company (75%)
Cement, building materials and agriculture bags

three high growth business activities – construction – Sokhna Port Development Company (70%)
Stevedoring services at Sokhna port Mehsas National Bag Company (50%)
– Egyptian Maritime Services (90%) Cement, building materials and foodstuff bags
services, cement manufacturing and infrastructure Inland and intermodal transportation services
National Steel Fabrication (50%)
concessions. Our Construction Group provides Nile Valley Gas Company (20%) Steel cutting, bending, welding, and painting services
Natural gas distribution in southern half of Egypt
engineering, procurement and construction services United Paints & Chemicals (50%)
Auto Gas Company (20%) Pre-blended dry plaster, putty, and tile adhesives
on industrial, commercial, infrastructure and railway Natural gas vehicle refueling stations – Egyptian Gypsum Company (45%)
Gypsum manufacturer
projects for public and private customers in the Egyptian Company for Tunnels (12%) – MBT Egypt (50%)
Maintenance of subway systems Construction chemicals
Middle East and North Africa. Our Cement Group – Den Braven Egypt (87.5%)
Silicone and acrylic sealants
owns and operates cement production plants in – A-Build Egypt (50.1%)
Waterproofing contractor
Egypt and Algeria. Our Concessions Group Alico Egypt (50%)
participates as an equity investor in long-term Building facade, curtain walling, and window systems

infrastructure concessions including port operations, National Pipe Company (40%)

Concrete pipe

industrial parks and natural gas distribution systems. SCIB Chemical (15%)
Paints and building chemicals
 Orascom Construction Industries
Annual Report 2003

Weill Cornell Medical College, Doha, Qatar

Orascom Construction Industries

160 26th July Street
PO Box 1911
Agouza, Cairo
Annual Report 2003 solid expansion in a
Egypt

T (202) 3026930
F (202) 3030506 / 3440201
dynamic region
www.orascomci.com
contents
Business Segments and Activities

Construction Group Cement Group

OCI Construction Activities Egyptian Cement Company (53.7%)

Regional engineering, procurement and construction services Cement manufacturer

Contrack International Inc. (45%) Algerian Cement Company (100%)

Construction services on US government-financed projects Cement manufacturer
Highlights 1 Auditor’s Report 31
OCI Algeria (100%)
Letter to Shareholders 2 Consolidated Income Statement 33
Engineering, procurement and construction services in Algeria
Construction 6 Consolidated Balance Sheet 34
Cementech Limited (100%)
Cement 10 Consolidated Statement of Changes in Equity 36
Specialized engineering, procurement and construction services
Concessions 14 Consolidated Cash Flow Statement 38 on cement plants
Other businesses 15 Notes to the Consolidated Financial Statements 40 Orascom Road Construction (90%)
Corporate Governance 16 Management and Corporate Information 55 Asphalt and concrete paving

Management’s Discussion and Analysis 20 Business Segments and Activities 57

Concessions Group Other Building Materials

Suez Industrial Development Company (59%) Ready Mix Egypt (100%)

Industrial park developer Ready-to-use concrete

Orascom Construction Industries (OCI) focuses on Egyptian Container Handling Company (50%)
Stevedoring services at Adabiya port
National Bag Company (75%)
Cement, building materials and agriculture bags

three high growth business activities – construction – Sokhna Port Development Company (70%)
Stevedoring services at Sokhna port Mehsas National Bag Company (50%)
– Egyptian Maritime Services (90%) Cement, building materials and foodstuff bags
services, cement manufacturing and infrastructure Inland and intermodal transportation services
National Steel Fabrication (50%)
concessions. Our Construction Group provides Nile Valley Gas Company (20%) Steel cutting, bending, welding, and painting services
Natural gas distribution in southern half of Egypt
engineering, procurement and construction services United Paints & Chemicals (50%)
Auto Gas Company (20%) Pre-blended dry plaster, putty, and tile adhesives
on industrial, commercial, infrastructure and railway Natural gas vehicle refueling stations – Egyptian Gypsum Company (45%)
Gypsum manufacturer
projects for public and private customers in the Egyptian Company for Tunnels (12%) – MBT Egypt (50%)
Maintenance of subway systems Construction chemicals
Middle East and North Africa. Our Cement Group – Den Braven Egypt (87.5%)
Silicone and acrylic sealants
owns and operates cement production plants in – A-Build Egypt (50.1%)
Waterproofing contractor
Egypt and Algeria. Our Concessions Group Alico Egypt (50%)
participates as an equity investor in long-term Building facade, curtain walling, and window systems

infrastructure concessions including port operations, National Pipe Company (40%)

Concrete pipe

industrial parks and natural gas distribution systems. SCIB Chemical (15%)
Paints and building chemicals