ANNUAL REPORT 2 20 01 02 03 04 Introduction Group Overview Operational Review Management Discussion and Analysis 06 At a Glance 18 Our History 40 MEA 86 Financial Performance 08 Note from the CEO 20 Our Strategy 62 USA 12 Highlights of 2020 22 Our Footprint 74 BESIX 24 Our Brands 32 Construction Materials & Investments 05 Our People 94 Our People 06 07 08 Corporate Governance Sustainable Development Consolidated Financial Statements 108 Board of Directors 130 Corporate Social 112 Corporate Governance Structure Responsibility 116 Risk Management and Controls 124 Risk Management Approach 126 Statement of the Director’s Responsibility TABLE OF CONTENTS 01 INTRODUCTION Orascom Construction PLC is a leading global engineering and construction contractor with operations covering the infrastructure, industrial and commercial sectors and a footprint primarily spanning the Middle East, Africa, and the United States. East Port Said Seawater Treatment Plant Annual Report 2020 | Orascom Construction PLC | 5 Introduction At a Glance Orascom Construction PLC is a leading global engineering and construction contractor with a footprint covering the Middle East, Africa and the United States and operations encompassing the infrastructure, industrial, and commercial sectors. The Group develops and invests in infrastructure opportunities and holds a building materials and facilities management portfolio. Orascom Construction PLC (Orascom or “the Orascom also owns a 50% stake in the Bel- Group”) was launched in 1950 as a local con- gium-based BESIX Group and has investments tractor based in Upper Egypt. Since then, it has in infrastructure and concession projects. Ad- 70 10 Years of contracting Countries where Orascom is grown into a leading global engineering and con- ditionally, it maintains a portfolio of subsidiaries experience currently executing projects struction group with a reputation for excellence and affiliates operating in industries adjacent across its footprint. Its core operations include in- to construction. The Group is dual-listed on frastructure, industrial, and high-end commercial NASDAQ Dubai and the EGX, and as of 31 De- projects. The Group operates through Orascom cember 2020 holds a total pro forma backlog of Construction in the MEA region, while in the US it USD 8.04 billion. 64K 8.04 USD/BN works through two subsidiaries – Contrack Watts Employees Pro forma backlog as of FY 2020 and The Weitz Company, which were consolidat- ed under a single management arm in 2018. 3.37 USD/BN 4.24 USD/BN Revenues for FY 2020 Pro forma new awards FY 2020 6 | Orascom Construction PLC | Annual Report 2020 Central Bank of Egypt Rennovation - New Cairo Annual Report 2020 | Orascom Construction PLC | 7 Introduction Note from the CEO Dear shareholders and partners, Orascom Construction FY 2020 brought unprecedented challenges not only to our Com- to maintain our backlog at USD 5.4 billion as of pany, but also to the entire industry and the world. Our priority has 31 December 2020. Key new awards included continued to demonstrate always been the health and safety of our people, and I would like to the Cairo Metro Line 4 and new data center work leadership in its markets, thank our employees for their tireless efforts throughout this year. both in Egypt and the US. It is important to note Our success and ability to traverse this challenging year is a direct that our backlog quality and size allows us to as evidenced by several result of their strength and commitment. continue to implement our strategy of selective- new high-quality ly pursuing projects in sectors in which we have At the onset of COVID-19, a taskforce was immediately estab- a competitive edge. contracts and our ability lished to assess the impact and create a proactive plan to tackle to maintain our backlog at the pandemic. This task force continuously evaluated develop- We are excited to make progress on our ments and adapted to them, with health and safety as the top growing recurring income business. This year USD 5.4 billion as of priority. These initiatives proved effective, and despite initial marks the first full year of operation for our 250 stoppage to ensure adequate safety measures were in place, our MW wind farm in Ras Ghareb. This project is 31 December 2020.” sites operated on a full-fledged basis. We also reached multiple Egypt’s first renewable energy project of its HSE achievements, including low Lost Time Injury (LTI) rates at kind, and complements our existing wastewa- several projects, including our mega water projects in Egypt and ter treatment plant investment in New Cairo. Osama Bishai commercial projects in the US. We continue to evaluate new, similar opportu- Chief Executive Officer nities that allow us to build, operate and own Our operations teams managed to maintain full execution on our assets, while our efforts to grow our operation project sites and adapt to additional safety measures. We also and maintenance business remain on track. accomplished a number of key milestones, such as handing over This encompasses our existing facilities man- critical projects including the Cairo Metro Line 3 Phase 4B, East agement business, Contrack FM, and the start Port Said Desalination Plant and Walideya Power Plant in Egypt, of the Operation & Maintenance (O&M) scope and consecutive phases of data center projects in the US. Ad- on water projects in Egypt. ditionally, we initiated work on large infrastructure projects such as the world’s longest monorail system in Egypt and additional We continue to partner with BESIX on existing scopes in the data center sector in the US. projects such as the Grand Egyptian Museum, the largest archaeological museum in the world, 2020 also marked another year during which Orascom Con- and on new potential opportunities. Including struction continued to demonstrate leadership in its markets, as our 50% share in BESIX, our pro forma backlog evidenced by several new high-quality contracts and our ability stood at USD 8.0 billion. 8 | Orascom Construction PLC | Annual Report 2020 Annual Report 2020 | Orascom Construction PLC | 9 Introduction || Note from the CEO Financials The Group’s steady performance is reflected in positive operational and financial health of the our 2020 financial results. Group. We elected to take a prudent approach by distributing the dividend in two tranches, Revenues increased 5.9% y-o-y in FY 2020, as at the beginning and end of the year once the our projects operated on a full-fledged basis de- board and management confirmed the positive spite additional challenges on the health, safety, trajectory of our profitability and cash flow. and business fronts. The Middle East and Africa segment accounted for 63% of total revenues, Looking ahead while the US business comprised the balance. While we are pleased with our performance, The Group also generated positive operating operational excellence, and results this year, we cash flow and maintained a net cash position, remain vigilant and focused on key elements of reflecting healthy operations and our successful our business such as HSE, project execution and collection and working capital efforts. controls, cash preservation and collection, and cost optimization. We also continue to pursue Net income attributable to shareholders stood an active bidding pipeline in existing and new at USD 90.9 million in FY 2020. Excluding con- markets, and remain focused on growing our tribution from BESIX, net income stood at USD recurring income business. 97.1 million, in line with the level generated in FY 2019. BESIX ended FY 2020 with a profitable second half and a solid backlog of EUR 4.2 bil- lion, indicating its ability to overcome challenges encountered across certain projects during H1 2020. It is also worth noting that BESIX distrib- Osama Bishai uted to OC a dividend of EUR 10 million in June Chief Executive Officer 2020 for our 50% share. Dividend In 2020, we reiterated our commitment to gen- erating returns for our shareholders, distributing a total dividend of USD 0.42 per share on FY 2019 earnings in two equal installments in August 2020 and January 2021, representing a 40% payout ratio. This is a testament to the 10 | Orascom Construction PLC | Annual Report 2020 International Shooting Club - New Capital Annual Report 2020 | Orascom Construction PLC | 11 Introduction Highlights of 2020 Despite the unprecedented circumstances of 2020, Orascom Construction PLC continued to cement its leading market position, expand its geographic footprint, and grow its infrastructure investments and Operation & Maintenance (O&M) business. Health and Safety Operational Excellence Orascom Construction PLC has always priori- tized the health and safety of all employees. This Strong Execution was amplified during the COVID-19 pandemic, The Group maintained its upward trajectory, which brought about a new set of challenges. The with infrastructure projects making up the lion’s Company took immediate proactive measures, share of the Company’s portfolio. Orascom Con- establishing a taskforce as the virus became a struction PLC continued its work on a number of more imminent threat to assess the impact of and large-scale projects in the water and wastewater, create a proactive plan. This task force continu- transportation, and energy fields, as well as ously evaluates developments and takes relevant construction of new cities throughout Egypt. In action, with health and safety as its top priority. the US, new project awards and work at ongoing projects continued during 2020. Throughout the The Company’s HSE statistics were also success- year, the Group placed significant emphasis on ful this year, with almost all the measured parame- project execution and controls, cash preservation ters showing a positive trend. Several of Orascom and collection, and cost optimization. Most of Construction PLC’s projects reached millions the Group’s sites continued works uninterrupted, of hours without LTI, such as the Abu Rawash with additional precautionary measures in place Wastewater Treatment Plant and the Grand in light of the pandemic.