Orascom Construction Plc · EGX:ORAS
Orascom Construction — Investor Presentation (February 2015)
60 slides from Orascom Construction's investor presentation, Feb 16, 2015
Slide 1: Investor Presentation: Orascom Construction
Investor Presentation: Orascom Construction 16 February 2015
Slide 2: Disclaimer– Important Information
Disclaimer– Important Information This document has been prepared by Orascom Construction Limited (the “Company”) and is the responsibility of the Company and comprises the written materials for a presentation concerning the Demerger and the proposed Admission of the Company's shares (the "Shares")
Slide 3: Transaction Structure Summary
Transaction Structure Summary Structural Overview Commentary Demerger of Orascom Construction (OC) from OCI N.V. Sawiris Family Free Float USD 1.4 billion repayment of capital to OCI N.V. shareholders 54% 46% OCI N.V. remains listed on Euronext Amsterdam and does not retain a shareholding in OC
Slide 4: Demerger Highlights
Demerger Highlights The spin-off creates two separately-listed pure play companies offering distinct investment propositions: – Orascom Construction: global engineering and construction group – OCI N.V.: global producer of natural gas-based fertilizers and chemicals Timing coincides with record
Slide 5: Investment Highlights
Investment Highlights Global contractor with a major position in MENA and US infrastructure and industrial projects – Record backlog of US$ 5.6 billion using equity consolidation and pro forma US$ 7.7 billion including our share in BESIX & other JVs as of 30 Sept 2014 – Track record of growth and
Slide 6: Strong Track Record of Growth and International Expansion
Strong Track Record of Growth and International Expansion 2005 - 2012 - 1950 1985 1999 2002 2004 2009 2011 2008 2014 Acquires Weitz in 2012 Significant backlog to establish strategic OCI and BESIX growth with major Formed Orascom foothold in USA management awards in Algeria, Awarded Egypt’s Saudi Lt
Slide 7: Strategic Geographic and Sector Diversification
Strategic Geographic and Sector Diversification United States 43% of Backlog Egypt 27% of Backlog Saudi Arabia 21% of Backlog ENR Ranking: 69 on International ENR Ranking: 67 on International ENR Ranking: 142 on Top 400 US ENR Ranking: 120 on Top 400 US Contractors list; 99 on Global Contrac
Slide 8: Recent Developments
Recent Developments Announced on 5 Nov 2014 along with International Petroleum Investment Company (IPIC) the intention to jointly commence studies to develop, construct, and operate a 2,000-3,000 MW coal-fired power plant in Egypt MoU signed on 12 November 2014 by the partners and the Egyptian gov
Slide 9: Board of Directors
Board of Directors Chairman CEO Non-Executive Nassef Sawiris Osama Bishai Salman Butt Non-Executive Board Non-Executive Executive Board Member Member CEO CFO CEO of OCI N.V. Orascom Construction OCI N.V. Non-Executive Independent Non-Executive Arif Naqvi Sami Haddad Khaled Bichara Azmi Mikati Non-Ex
Slide 10: Management Team
Management Team Joined the Group in 1985 Osama Bishai Played a key role in developing the business of the CEO Group, particularly in the oil & gas sector and OCI N.V.’s infrastructure and industrial investments in Egypt, Algeria and USA Dalia Khorshid Mark Littel EVP & Group Corporate CFO Treasu
Slide 11: Commercial Strategy
Commercial Strategy Strategic Market and Geographic Expansion Establish and Leverage Strategic Partnerships and Joint Ventures Expand market presence in our core markets in MENA and USA Work in partnership with industry leaders to increase success rate in obtaining new project work Further str
Slide 12: New Awards Accelerating and Record Level Backlog
New Awards Accelerating and Record Level Backlog Strong momentum led by $3.9 billion in new awards during 9M 2014 compared to $1.2 billion in FY 2013 5.6 4.9 Momentum accelerating since beginning of 2014 4.0 – 30 Sept 2014 backlog reached record level of $5.6bn, up 39% y-o-y 3.8 3.9 3.3 – US$ 3.9
Slide 13: Significant potential pipeline of new awards 2015 - 2020
Significant potential pipeline of new awards 2015 - 2020 2014 Key Turning Point Looking Ahead Significant progress in core markets Egypt, Saudi Arabia and USA Benefitting from post-financial crisis and post-Arab Spring resurgence in core construction markets – Egypt: US$ 450+ million of road and
Slide 14: MENA: Capitalize on Market Opportunities
MENA: Capitalize on Market Opportunities Core OC Markets: Middle East & North Africa Summary Outlook Core markets: Egypt, Saudi Arabia, United Arab Emirates, Algeria: Egypt: Iraq: Algeria and Iraq Project pipeline 2015 – Project pipeline 2015 – Project pipeline 2015 – US$ 1.4 trillion of planned
Slide 15: USA: Growing US Business and Track Record
USA: Growing US Business and Track Record United States: Construction Spending (US$ bn) United States: Construction Spending (US$ bn) Construction spending has returned to pre-economic crisis levels and is expected to return to near 1.5 Total Non-Residential Residential record levels by 2018 - con
Slide 16: Strategic Investment in BESIX: 55% of Backlog in MENA
Strategic Investment in BESIX: 55% of Backlog in MENA Founded in 1909 Company Highlights Acquired 50% of the Key strategic player that allows OCI to access particular projects BESIX Group in a joint leverage buyout in Global Presence: operates in 6 continents with a key focus on Europe, EUR
Slide 17: Pursuing Value Accretive Investments
Pursuing Value Accretive Investments Construction business was integral to OCI’s value creation story: – developed and incubated businesses both independently and with partners for nearly 20 years … – … successfully translated into shareholder value creation Key executives have been with the Com
Slide 18: Strategic Investments and Self-Generated Work
Strategic Investments and Self-Generated Work Develop New Opportunities – Infrastructure Investments Power Sector: OC-IPIC Partnership Partnership with the Abu Dhabi-based IPIC to jointly develop a 2,000 – 3,000 Megawatt coal fired power plant initiative in Egypt The MENA region is encouraging p
Slide 19: Strong Financing Capabilities
Strong Financing Capabilities Developed, structured and financed over US$ 10 billion in corporate and project financing debt over the last decade Leveraged our expertise to secure debt for complex industrial and infrastructure projects worldwide across several industries Strong relationship wi
Slide 20: Financial Section
Financial Section
Slide 21: Significant Rebound in Revenue and Healthy Backlog Coverage
Significant Rebound in Revenue and Healthy Backlog Coverage Total Revenue (US$ Million) Backlog / Revenue (US$ Million) 2,350 3.3x 2,157 1,811 1,624 1,457 1,178 329 1,192 1.9x 1.8x 1.9x 313 1.6x 869 1,482 1,144 1,172 965 756 2011 2012 2013 9M 2013 9M 2014 2011 2012 2013 9M 2013 9M 2014 MENA USA Note
Slide 22: Deleveraging Strategy: Net Debt Down 58% From Dec 2013 to 30 Sept 2014
Deleveraging Strategy: Net Debt Down 58% From 31 Dec 2013 to 30 Sept 2014 Net Debt Overview USD million 2011 2012 2013 9M 2014 Loans & borrowings Cash Net debt Loans and borrowings 588.7 795.6 806.8 585.5 796 807 Less: cash 448.1 428.0 419.7 421.2 Net debt 140.6 367.6 387.1 164.3 Total equity 1,111.
Slide 23: Deleveraging Strategy: Capitalisation and Indebtedness as of 31 Dec 2014
Deleveraging Strategy: Capitalisation and Indebtedness as of 31 Dec 2014 The demerger allows OC to pursue a capital structure appropriate for its own business strategy and capital needs The Company continues to pursue its deleveraging strategy The tables below set out the OC’s capitalisation a
Slide 24: Revenue & Backlog Key Highlights – BESIX Pro Forma Consolidation
Revenue & Backlog Key Highlights – BESIX Pro Forma Consolidation Total Revenue (US$ Million) Backlog / Revenue (US$ Million) OC BESIX 2.4x 3,887 1.9x 3,013 2,848 1,537 1.5x 1,201 1,390 2,350 1,811 1,457 2011 2012 2013 2011 2012 2013 Backlog, split (US$ Million)1 Net Debt (US$ Million) OC BESIX OC BE
Slide 25: EBITDA Bridge Analysis
EBITDA Bridge Analysis USD million 2011 2012 2013 9M 2013 9M 2014 Net profit / (loss) 208.5 -600.7 -0.3 66.8 -79.5 Profit / (loss) attributable to: Owners of the Company 199.9 -609.3 -14.7 56.3 -89.9 Non-controlling interests 8.6 8.6 14.4 10.5 10.4 Income tax -56.4 -555.8 -0.7 -10.7 288.7 Profit / (
Slide 26: CAPEX and Investments
CAPEX and Investments CAPEX (US$ Million) 97 53 54 43 2011 2012 2013 2014 Historical Capex Review Capital expenditures include: – Acquisition of property, plant and equipment related to projects under construction. For example; construction cranes, bulldozers, excavators, diggers, trucks, and othe
Slide 27: Appendix
Appendix
Slide 28: Longstanding Position as Global Contractor of Choice
Longstanding Position as Global Contractor of Choice Track Record and Competitive Strengths Tradition: construction has been the core business since inception in 1950 – Orascom Construction is now a leading global company employing c 53,000 people, with over 60 years of experience in MENA markets
Slide 29: Entrepreneurial Track Record
Entrepreneurial Track Record Creating Shareholder Value Shareholder return: IRR of c.40% on US$ basis for OCI S.A.E. / OCI N.V. since 1999 IPO – Shareholder return driven by strong longstanding leadership along with investment vision of principal shareholders Focus on infrastructure investments
Slide 30: Wide Range of Core Construction Competencies
Appendix Wide Range of Core Construction Competencies
Slide 31: Global Contractor of Choice – Infrastructure (53.8% of Backlog)
Global Contractor of Choice – Infrastructure (53.8% of Backlog) Infrastructure Social & Federal Power Generation Water / Wastewater Transportation Infrastructure Leader in energy projects in Alliance with water, Over 15 airports constructed in Top contractor for the United Egypt and Algeria
Slide 32: Global Contractor of Choice – Industrial (34.6% of Backlog)
Global Contractor of Choice – Industrial (34.6% of Backlog) Industrial Petrochemicals / Oil & Gas Manufacturing & Pharmaceuticals Heavy Industrials Over 12 million metric tons per annum of Repeat business / direct negotiation Over 40 million metric tons per annum of nitrogen fertilizer capacit
Slide 33: Global Contractor of Choice – Commercial (11.6% of Backlog)
Global Contractor of Choice – Commercial (11.6% of Backlog) Commercial Hotels & Resorts High-Rise Leisure / Commercial Residential Leading contractor for hotels in World’s tallest building: Burj Largest archaeological museum Leading contractor for Egypt Khalifa in the world: Grand Egyptian r
Slide 34: Case Study: Construction of the First PPP Project in Egypt
Case Study: Construction of the First PPP Project in Egypt PPP Wastewater Treatment Plant – Egypt Client: New Urban Communities authority ( NUCA) Contract Structure: EPC Joint Venture Member Technology provider: Aqualia Duration: 2 years construction + 18 O& M Capacity: 250,000 m³/ day S
Slide 35: Case Study: Iowa Fertilizer Company (Industrial)
Case Study: Iowa Fertilizer Company (Industrial) Nitrogen fertilizer & industrial chemical complex currently under construction – first greenfield plant to be built in USA in 25 years Plant Expected to produce up to approximately 2 million metric tons of nitrogen fertilizers (ammonia, granular u
Slide 36: Case Study: Cairo Festival City (Commercial)
Case Study: Cairo Festival City (Commercial) Constructed one of Cairo’s largest retail centers comprising 400 shopping units Project Located in the Cairo suburb of New Cairo. Overview Contract size: over $ 340 million OCI’s share: 35% Awarded the main contractor role for this project in 20
Slide 37: Construction Materials & Property Management
Appendix Construction Materials & Property Management
Slide 38: Construction Materials and Property Management
Construction Materials and Property Management Founded in 1995, manufactures fabricated steel products primarily for energy, petroleum, industrial and construction clients Operates two plants in Egypt, supplying clients primarily in North Africa, the Middle East and Europe 100% Established in
Slide 39: Additional Backlog Information
Appendix Additional Backlog Information
Slide 40: Evolution of Backlog
Evolution of Backlog Backlog by Sector Backlog by Client 1% 100% 100% 14% 15% 15% 12% 22% 25% 25% 27% 80% 8% 80% 28% 30% 35% 18% 22% 23% 60% 60% 40% 78% 40% 76% 57% 56% 54% 57% 54% 51% 20% 20% 0% 0% 2011 2012 2013 9M 2014 2011 2012 2013 9M 2014 Commercial Industrial Infrastructure OCI N.V. F&C Priva
Slide 41: Top 20 Projects in the Backlog – 30 September 2014
Top 20 Projects in the Backlog – 30 September 2014 Top 20 Largest Projects Represented 64% of the Total Backlog as of 30 Sept 2014 By Geography By Sector By Client Rest of Commercial World 4.2% 3.4% Egypt 19.8% OCI N.V. F&C 40.0% Infrastructure 46.7% USA Public 42.7% Industrial 43.8% 49.1% Saudi Ara
Slide 42: Pro Forma Snapshot Including BESIX
Pro Forma Snapshot Including BESIX Proforma Backlog Including 50% of BESIX1 USD million 2011 2012 2013 9M 2013 9M 2014 % 8.0 OC ex. BESIX 7.0 Backlog 3,321.3 4,869.3 3,839.9 4,015.6 5,566.2 39% 6.0 5.0 USD billion New awards 2,659.7 2,618.9 1,233.3 646.2 3,869.6 499% 4.0 Proforma incl. BESIX 3.0 Bac
Slide 43: Additional Financial Information
Appendix Additional Financial Information
Slide 44: Key Revenue Drivers
Key Revenue Drivers Record backlog levels as at September 2014 Existing – Provides revenue visibility for 18-24 months Backlog – Since September 2014 we have received additional new awards on a direct order basis totalling US$ 642 million in Egypt, amongst other awards totalling c. US$1.0 billion
Slide 45: Profitability Drivers
Profitability Drivers Profitability Our consolidated margins are a function of the profitability profile of the main contributing markets in which we operate Profile of Our – Generally, developed markets (e.g. US) yield lower margins vis-à-vis emerging markets (e.g. MENA) Core Markets – Cost reimb
Slide 46: Income Statement
Income Statement USD million 2011 2012 2013 9M 2013 9M 2014 Commentary Revenue 1,811.3 1,457.3 2,349.7 1,624.3 2,157.4 Gross profit decreased during 9M 2014 due to: % growth -19.5% 61.2% 32.8% Construction cost and cost of sales -1,512.1 -1,373.6 -2,257.4 -1529.4 -2138.4 – New projects typically r
Slide 47: Other P&L Line Items
Other P&L Line Items USD million 2011 2012 2013 9M 2013 9M 2014 Financing income & expenses Finance income 10.2 29.3 81.9 52.9 26.0 Finance Cost -43.6 -75.2 -109.2 -64.9 -19.5 Net finance cost -33.4 -45.9 -27.3 -12.0 6.5 Associates 109.1 79.7 58.4 71.5 -174.9 Profit / (loss) before income tax 264.9
Slide 48: Balance Sheet - Assets
Balance Sheet - Assets USD million 2011 2012 2013 30-Sep-14 Assets Non-current assets Property and equipment 379.8 331.4 269.4 239.2 1 Goodwill and other intangible assets - 9.8 13.2 13.1 2 Trade and other receivables 4.1 130.5 368.9 49.7 3 Associates 408.3 437.0 494.8 377.6 Deferred tax assets 1.8
Slide 49: Balance Sheet – Liabilities & Shareholders’ Equity
Balance Sheet – Liabilities & Shareholders’ Equity USD million 2011 2012 2013 30-Sep-14 Net investment Owner’s net investment 1,058.7 380.1 815.6 726.1 Non-controlling interest 52.5 51.2 58.9 70.8 Total net investment 1,111.2 431.3 874.5 796.9 Liabilities Non-current liabilities Loans and borrowing
Slide 50: Board of Directors and Management Bios
Appendix Board of Directors and Management Bios
Slide 51: Board of Directors
Board of Directors Executive Directors Joined OCI in 1985 and held the position of Managing Director of the Construction Business since 1998 Played a key role in developing the business of the Group, particularly in the oil & gas sector, and OCI N.V.’s infrastructure and industrial Osama Bishai
Slide 52: Board of Directors
Board of Directors Independent Non-Executive Directors Mr. Haddad has decades of experience in both the private and public sectors, specifically in finance, politics and academia Most recently he was also General Manager of Byblos Bank from 2008 to 2014 Previously at the International Finance
Slide 53: Senior Management
Senior Management Joined OCI N.V. in 2014 and brings extensive financial and audit experience and leadership Mark Littel Previously at KPMG which he joined in 1985 and became a partner at in 2000. Audited and advised global clients at corporate and divisional CFO levels and advised in the develo
Slide 54: Health, Safety and Environment
Appendix Health, Safety and Environment
Slide 55: Continued Excellence in Health, Safety, Environment & Quality
Continued Excellence in Health, Safety, Environment & Quality LTIR Average 2011 2012 2013 Low Lost Time Injury Rates (LTIR) compared to global average Orascom Construction 0.014 0.016 0.014 Low Lost Time Quality and safety audits are conducted often, at all sites, and for Contrack 0.025 0.081 0.
Slide 56: Industry Overview
Appendix Industry Overview
Slide 57: Market Size – Total Historical Value of Contracts Awarded in MENA
Market Size – Total Historical Value of Contracts Awarded in MENA The Company’s core Market Size – Value of Core Markets Contracts Awarded (US$ bn)(1) markets in MENA have historically exhibited Egypt Saudi Arabia UAE Algeria Iraq strong construction levels with the value of contracts awarded aver
Slide 58: Growth Opportunities in Orascom Construction’s Core Markets
Growth Opportunities in Orascom Construction’s Core Markets Overview Planned pipeline 2015 – 2020E currently estimated at US$ 1.4 trillion OC’s principal construction markets in the MENA region are supported 1,433.3 primarily by strong underlying demographic, macroeconomic and infrastructure relat
Slide 59: Growth Opportunities in Orascom Construction’s Core Markets (Cont’d)
Growth Opportunities in Orascom Construction’s Core Markets (Cont’d) Egypt’s infrastructure announcements focus on power and transport development at an Egypt has a pipeline of US$157 investment cost of approximately US$27 billion and US$39 billion, respectively billion worth of construction The
Slide 60: ORASCOM
ORASCOM:.
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