Orascom Construction : Q1 2024 Reviewed Financial Statements

ORASCOM CONSTRUCTION PLC

Consolidated Financial Statements

For the three month period ended 31 March 2024

Orascom Construction PLC

TABLE OF CONTENTS

Independent Auditors' Report on Review of Interim Consolidated Financial Statements

Consolidated statement of financial position

Consolidated statement of profit or loss and other comprehensive income

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the interim consolidated financial statements

1-2

3

4

5

6

7 - 29

Orascom Construction PLC

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the three month period ended

		31 March	31 March
		2024	2023
$ millions	Note	(reviewed)	(reviewed)
Revenue	(24)	766.3	804.9
Cost of sales	(20)	(698.8)	(735.5)
Gross profit		67.5	69.4
Other income / (expenses)	(21)	1.7	(0.5)
Selling, general and administrative expenses	(20)	(46.3)	(41.9)
Operating profit		22.9	27.0
Finance income	(22)	84.9	36.2
Finance cost	(22)	(39.1)	(15.6)
Net finance income		45.8	20.6
Income from equity accounted investees	(9)	2.7	2.7
Profit before income tax		71.4	50.3
Income tax	(10)	(21.6)	(10.2)
Net profit		49.8	40.1
Other comprehensive loss:
Items that are or may be reclassified to profit	or loss
Foreign currency translation differences		(50.6)	(54.5)
Other comprehensive loss, net of tax		(50.6)	(54.5)
Total comprehensive loss		(0.8)	(14.4)
Net profit attributable to:
Owners of the Company		46.1	36.1
Non-controlling interests	(16)	3.7	4.0
Net profit		49.8	40.1
Total comprehensive loss attributable to:
Owners of the Company		1.5	(10.7)
Non-controlling interests	(16)	(2.3)	(3.7)
Total comprehensive loss		(0.8)	(14.4)
Earnings per share (in USD)
Basic and diluted earnings per share	(23)	0.42	0.31

The notes on pages 7 to 29 are an integral part of these interim consolidated financial statements.

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Orascom Construction PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the three month period ended

	Share				Equity	Non-
	Share	Reserves	Retained earnings	attributable to	controlling	Total
	capital
	premium			owners of the	interest	equity
$ millions					Company
Balance at 1 January 2023 (audited)	116.8	480.2	(377.5)	432.2	651.7	39.6	691.3
Net profit	-	-	-	36.1	36.1	4.0	40.1
Other comprehensive loss	-	-	(46.8)	-	(46.8)	(7.7)	(54.5)
Total comprehensive loss	-	-	(46.8)	36.1	(10.7)	(3.7)	(14.4)
Dividends (refer note 30)	-	-	-	(21.6)	(21.6)	-	(21.6)
Other	-	-	-	(0.2)	(0.2)	-	(0.2)
Balance at 31 March 2023 (reviewed)	116.8	480.2	(424.3)	446.5	619.2	35.9	655.1
Balance at 1 January 2024 (audited)	110.2	467.3	(421.7)	533.3	689.1	22.3	711.4
Net profit	-	-		46.1	46.1	3.7	49.8
Other comprehensive loss	-	-	(44.6)	-	(44.6)	(6.0)	(50.6)
Total comprehensive loss	-	-	(44.6)	46.1	1.5	(2.3)	(0.8)
Dividends (refer note 30)	-	-	-	(20.9)	(20.9)	(0.8)	(21.7)
Other	-	-	-	0.3	0.3	-	0.3
Balance at 31 March 2024 (reviewed)	110.2	467.3	(466.3)	558.8	670.0	19.2	689.2

The notes on pages 7 to 29 are an integral part of these interim consolidated financial statements.

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Orascom Construction PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

for the three month period ended

		31 March	31 March
		2024	2023
$ millions	Note	(reviewed)	(reviewed)
Net profit		49.8	40.1
Adjustments for:
Depreciation and amortization	(6)	7.4	8.4
Interest income	(22)	(4.5)	(2.6)
Interest expense	(22)	17.5	10.4
Foreign exchange gain and others	(22)	(58.8)	(28.4)
Income from equity accounted investees	(9)	(2.7)	(2.7)
Gain on sale of property, plant and equipment	(21)	(0.4)	-
Income tax expense	(10)	21.6	10.2
Changes in:
Inventories	(11)	(16.0)	33.8
Trade and other receivables	(8)	(229.9)	(47.3)
Contract work in progress	(12)	9.2	(20.2)
Trade and other payables	(18)	178.5	(10.7)
Advanced payments construction contracts		278.4	31.2
Billing in excess of construction contracts	(12)	62.1	(80.0)
Provisions	(19)	2.9	(0.3)
Cash flows:
Interest paid	(22)	(17.5)	(10.4)
Interest received	(22)	4.5	2.6
Cash flow from / (used in) operating activities		302.1	(65.9)
Acquisition of property, plant and equipment	(6)	(10.6)	(6.6)
Proceeds from sale of property, plant and equipment		0.6	-
Cash flow (used in) investing activities		(10.0)	(6.6)
Proceeds from borrowings	(17)	2.8	100.4
Repayment of borrowings	(17)	(39.0)	(10.3)
Dividends paid to shareholders	(30)	(20.9)	(21.6)
Dividends paid to non-controlling interest		(0.8)	-
Other		0.6	(2.0)
Cash flow (used in) / from financing activities		(57.3)	66.5
Net change in cash and cash equivalents		234.8	(6.0)
Cash and cash equivalents at 1 January	(13)	696.6	537.7
Currency translation adjustments		(240.2)	(70.5)
Cash and cash equivalents at 31 March	(13)	691.2	461.2

The notes on pages 7 to 29 are an integral part of these interim consolidated financial statements.

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Orascom Construction PLC

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

1. General

Orascom Construction PLC ('OC PLC') is a Public Company, incorporated with registered number 1752 in the Dubai International Financial Center (DIFC) with its head office located at Gate Village-Building 1, DIFC, Dubai, UAE. OC PLC is dual listed on the NASDAQ Dubai and the Egyptian Stock Exchange. The interim consolidated financial statements for the three month period ended 31 March 2024 comprise the financial statements of OC PLC, its subsidiaries and joint operations (together referred to as the 'Group') and the Group's interests in associates and joint ventures.

OC PLC was incorporated on 18 January 2015 as Orascom Construction Limited, a company limited by shares and converted to a Public Company under the Law, DIFC Law No. 5 of 2018.

OC PLC is primarily engaged as an international engineering and construction contractor focused on large-scale infrastructure, complex industrial and high-end commercial projects in the United States,Middle East, Africa and Central Asia for public and private clients.

2. Basis of preparation

2.1 General

The consolidated interim financial statements for the three month period ended 31 March 2024 have been prepared in accordance with IAS 34 'Interim Financial Reporting' and do not include all the information and disclosures required in the annual financial statements. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in the Group's financial position and performance since 1 January 2024.

The interim consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended 31 December 2023. The accounting principles used are the same as those used in the consolidated financial statements for the year ended 31 December 2023.

The interim consolidated financial statements have been prepared on the historical cost basis, except when otherwise indicated.

The financial year of OC PLC commences on 1 January and ends on 31 December.

These interim consolidated financial statements are presented in US dollars ('USD'), which is OC PLC's presentation currency. All values are rounded to the nearest million (in millions of USD), except when stated otherwise.

The interim consolidated financial statements have been authorised for issue by the Company's Board of Directors on 20 May 2024.

3. New accounting standards and policies

The accounting policies applied in these interim financial statements are the same as those applied in the Group's consolidated financial statements as at and for the year ended 31 December 2023.

4. Critical accounting judgement, estimates and assumptions

There were no significant changes in critical accounting judgement, estimates and assumptions compared to the interim consolidated financial statements for the year ended 31 December 2023.

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Orascom Construction PLC

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

5. Financial risk and capital management

Overview

The Group has exposure to the following risks arising from financial instruments:

• Credit risk
• Liquidity risk
• Market risk

These risks arise from exposures that occur in the normal course of business and are managed on a consolidated company basis. This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital.

Risk management framework

Senior management has an overall responsibility for the establishment and oversight of the Group's risk management framework. The Board is responsible for developing and monitoring the Group's risk management policies.

The Group's risk management policies are established to identify and analyze the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Audit Committee is assisted in its oversight role by the Internal Audit Department. The Internal Audit Department undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee.

5.1 Exposure to credit risk

The Group establishes an allowance for impairment that represents its estimate of expected losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures. The carrying amount of financial assets represents the maximum credit exposure. With respect to transactions with financial institutions, the group sets limits to the credit worthiness rating of the counterparty. The maximum credit risk is the carrying amount of financial instruments, for an overview reference is made to the tables financial instruments by category.

The major exposure to credit risk at the reporting date was as follows:

$ millions	Note	31 March	31 December
2024	2023
Trade and other receivables (excluding prepayments and supplier advance payments)	(8)	972.2	1,040.2
Contract work in progress	(12)	548.9	737.8
Cash and cash equivalents (excluding cash on hand)	(13)	689.4	694.9
Total		2,210.5	2,472.9

The major exposure to credit risk for trade and other receivables by geographic region was as follows:

$ millions	31 March	31 December
2024	2023
Middle East and Africa	503.9	591.9
Asia and Oceania	80.5	84.9
Europe and United States	387.8	363.4
Total	972.2	1,040.2

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