EGYPT | HYDROCARBONS & RELATED SERVICES | OFFSHORE OIL & GAS

Noran Ali Senior Analyst Noran.Ali@cich.com.eg Tel: +(202) 333 862 59

16 December 2010 | (Extract from CICR Egypt Book 2010)

52-Week Sector Performance

9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500

EGX 30

Hydrocarbons (W)

Hydrocarbons (UW)

Offshore Oil & Gas

Exploration business diving deep for profits
Improving deepwater investment by National Oil Companies Offshore capex to rebound in 2011 Bulk of 2011 oil demand to come from developing world Given its global nature, the Offshore Oil & Gas industry is vulnerable to a number of economic, geopolitical & environmental risks. In 20092010, the economic risk manifested itself in the form aftershocks from the global financial crisis, causing economic contractions in key oil consuming countries namely the US and Europe depressing demand for oil. The bear market further reduced petroleum exploration and production companies appetite for exploration activities. In 2009, offshore capex and discoveries fell 9% to USD140bn and 17% to 24bn barrels of oil equivalent (boe), respectively. The following year saw the explosion of BP deepwater rig in the Gulf of Mexico (GOM), which killed 11 workers and caused the worst environmental disaster in US history, further hurting sentiment. Offshore capex is estimated to fall an additional 1% to USD138bn in 2010, though the industry should begin to recover at the end of 2011. Strengthening oil prices - grounded in rising demand from China and other developing countries - and the economic feasibility of tapping large deep and ultra-deepwater reserves should drive the recovery in E&P activity. As such, offshore capex is to rebound 14% to USD158bn in 2011; afterwards capex are expected to grow by a CAGR of 10% till 2014. Review: In 2010, offshore exploration performance continued to trundle out of the lower reaches of the trough created by the 2009 financial crisis. The industry initially began to suffer following the onset of the global financial crisis, which caused offshore capex to fall 9% to USD140bn in 2009. Due to the fixed nature of most offshore contrasts, the full impact of the global financial crisis was not readily apparent until sometime after it had shaken the rest of the world economy. The BP oil spill in the Gulf of Mexico and subsequent six-month drilling ban negatively impacted the industry. As such, renowned energy consultancy Douglas Westwood estimated offshore capex to trend downward more gradually, by 1%. This stands in contrast to deepwater exploration, the capex for which is expected to record a quicker rebound of 11% in 2010 to USD28bn, compared to a 17% contraction, a year earlier. The profitable nature of these activities has already driven National Oil Companies (NOC) to allocate hefty investment. Preview: As 2010 draws to a close the early signs of improved business sentiment have begun to materialize, namely stable oil prices, a pick-up in the global economy and healthy deepwater investments by NOC. Offshore capex is to rebound 14% to USD158bn, while deepwater capex is to continue trending upward, by 18% to USD33bn in 2011. In terms of our coverage universe, MOIL is currently our key stock. Despite being the sole Hydrocarbons player currently under coverage, we remain bullish, giving it a Buy recommendation with a Target Price (TP) of USD3.7/share.

W = Weighted, UW = Unweighted **Calculated on a weekly basis, sector constituents weighted by market cap and re-based to EGX 30.

Growth Drivers
Fixed contracts serve as a temporary hedge against shocks. Low cost of production per barrel secured considerable margin with rising oil prices. Technological advances in deep and ultra-deepwater E&P. A quicker rebound in deepwater capital expenditure (capex), driven by NoC investments.

Risks
Financial crisis negatively impacted Capex expenditure and offshore discoveries, down 9% and 17% in 2009, respectively. Oil price volatility. BP oil spill proved safety risks remain. Over 2005-2009, dwindling numbers of shallow water discoveries have reduced exploration activities in these relatively accessible areas.

Valuation & Recommendation

Com pany MOIL Curr. Price USD 3.47 Target Price 3.70 +/6.6% Recom m endation Buy

Key Performance Indicators

USDbn 180 160 140 120 100 80 60 40 20 0 2005 2006 2007 2008 2009
Global offshore Capex Oil prices Annual

USD/b 120 100 80 60 40 20 0

Source: Douglas Westwood & Bloomberg

CI Capital | Egypt Book 2010 Disclosures and details pertaining to stock ratings on last page

16-Dec-2010 | Egypt | Offshore Oil & Gas

Background & Market Structure

Financial crisis & GOM oil spill plague offshore exploration in 2010
In 2010, aside from the lingering impact of the financial crisis (which drove offshore capex down by 9% YoY in 2009), the offshore exploration industry encountered the largest accidental marine oil spill in history. In April BPs Deepwater Horizon rig exploded in the Gulf of Mexico. The Gulf has long been a strategic location for deepwater drilling. North America attracted a 32% share of deepwater capex in 2009, and estimates indicate it may have fallen to 21% in the wake of the accident. As a result of the spill the Obama administration imposed a six-month moratorium on the issue of new offshore drilling licenses. The ban did not end till November 30th. Energy consultancy Douglas Westwood projects offshore capex to slide a bit further in 2010, falling 1% from last year.

Figure 10.1 | Global Offshore Capex & Annual Growth Rate

USD bn 180 160 140 120 100 10% 80 5% 60 40 20 0 2006 2007 2008 2009 2010 0% -5% -10% -15% Offshore Capex Capex YoY GR 35% 30% 25% 20% 15%

Source: Douglas Westwood

Market Drivers
Given its global footprint, the offshore exploration industry is influenced by a diverse set of drivers ranging from oil demand to potential offshore discoveries, depicted in the diagram below:

Figure 10.2 | Industry Drivers

Global Offshore Oil & Gas Industry Drivers

Oil Demand

Oil Prices

Offshore Potential

Economic growth

Geopolitical factors Oil demand & economic growth Derivatives & future contracts

Escalating offshore vs. onshore discoveries Rising deepwater discoveries Rig market

Source: CICR

CI Capital | Egypt Book 2010


Oil Demand

16-Dec-2010 | Egypt | Offshore Oil & Gas

Stimulus-led economic growth gives oil demand a mild boost In 2009, the global financial crisis continued to cast a long shadow over global energy demand, which fell 1%. Consequently, demand for oil the worlds primary source of energy, accounting for 35% of global energy demand in 2009 declined by 1.6% (1.4mb/d). This was exacerbated by weak performances from leading world economies. In the US GDP declined 2.6% and in Europe 4.1%, triggering 4.2% and 5.8% retreats in oil demand, respectively. Demand from China, on the other hand, continued to rise, increasing 4% year-on-year on the back of a resilient GDP 9.1% GDP growth. Overall, however, global demand for oil fell, and as a result global offshore capex declined 9%in 2009. In 1H10, demand improved only incrementally on the back of stimulus-driven growth in the US and Europe and stable growth in China. It increased 0.47% to 84.9mn b/d, up from 84.5mn b/d in 2009.

Figure 10.3 | Global Oil Demand vs. US & China GDP growth
mnb/d 87 87 15% 86 86 85 85 0% 84 84 2006 2007 2008 2009 2Q10 -5% 10%
World oil demand China GDP GR US GDP GR

Figure 10.4 | Global Oil Demand vs. Offshore Capex

mn b/d 87 87 86 86 85 Global oil demand Offshore capex USD bn 180 160 140 120 100 80 60 40 20 0 2005 2006 2007 2008 2009

20%

5%

85 84 84 83 83

Source: OPEC; IMF

Source: OPEC; Douglas Westwood

Oil Prices
Offshore fixed contracts hedge producers margins from the turbulent oil prices Oil prices fluctuated wildly in 2008, reaching an all-time high of USD140 per barrel in 2Q08 before plunging to USD44/b with the onset of the global economic crisis in 4Q08. Geopolitical tensions in key oil producing countries such as Nigeria and US hurricanes also disrupted the supply side. By the end of 2008, the financial crisis began impacting the demand side as well. This was not immediately apparent on the offshore industry, however, due to both the fact that the business is built largely around fixed costs and that the production cost of an offshore barrel stands at a maximum USD20, thus ensuring oil producers maintain significant margins. Oil exploration activity did not slow in 2008 capex rose 8% to USD154bn that year. When the impact of the economic crisis finally hit the following year, offshore capex fell 9% to USD140bn. Thus far in 2010, the speedy economic recovery in the US and Europe, combined with resilient growth in China and other emerging economies, have driven oil prices up. In 3Q10, oil prices rose by 13% YoY, reaching almost USD80/b. This price increase will not be reflected in offshore industry performance till 2011.

CI Capital | Egypt Book 2010

16-Dec-2010 | Egypt | Offshore Oil & Gas

Figure 10.5 | Quarterly Oil Prices

USD/b 160 140 120 100 80 60 40 20 0 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
Out break of the financial crisis USD depreciaton Bombing of oil facilities in Nigeria

Source: Bloomberg

Figure 10.6 | Oil Prices vs. Offshore Expenditure

USDbn 180 160 140 120 100 80 60 40 20 0 2005

Global offshore Capex

Oil prices Annual

USD/b 120 100 80 60 40 20 0

2006

2007

2008

2009

Source: Bloomberg & Douglas Westwood

Offshore Potential
Accelerating growth falters during crisis Despite a long history dating back to the late 1890s, large scale of offshore exploration did not really kick off until after the end of the Second World War. Dwindling numbers of onshore discoveries, advanced technologies and rising oil prices have all accelerated the pace at which offshore discoveries are made over the past 20 years. In the past five years, offshore discoveries share of global discoveries rose from 48% in 2005 to 66% in 2009, to 16,000mn barrels of oil equivalent (boe). Over the same period, onshore discoveries share fell from 52 to 34%, to 8,000mn boe. In 2009 the cuts in offshore capex triggered by the financial crisis drove offshore discoveries down 17% on the year.

CI Capital | Egypt Book 2010


Figure 10.7 | Global Discovery Volume by Terrain Type
MM boe 30,000 25,000 20,000 15,000 Offshore YoY Offshore GR Onshore

16-Dec-2010 | Egypt | Offshore Oil & Gas

100% 80% 60% 40% 20%

10,000 5,000 2005 2006 2007 2008 2009

0% -20% -40%

Source: Offshore Magazine Economic crisis took a toll on deepwater exploration The lack of new onshore opportunities, dwindling numbers of shallow water discoveries and technological advances have driven E&P companies to explore at ever greater depths, even 1 in deep and ultra-deep water. The number of wells drilled in ultra-deepwater grew 29.8% from 2005-2009, compared to a 25.5% growth for shallow water wells. During the abovementioned period, major deepwater discoveries were made off Brazil, the US, Angola, Nigeria, Ghana, India, Malaysia and Australia. As a result, between 2005-2009 the largest share (35%) of total deepwater expenditure was directed at Africa, followed by North America (31%) and Latin America (20%). Due to the impact of the financial crisis, deepwater expenditure fell 17% in 2009.

Figure 10.8 | Global Offshore Drilling Count

No. of wells 3000 2500 2000 Ultra deepwater Deepwater

Figure 10.9 | Deepwater Expenditure

USDbn 35 30 25 20 Expenditure YoY GR 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% 2005 2006 2007 2008 2009

1500 1000 500 0 2005 2006 2007 2008 2009

15 10 5 0

Source: Offshore Oil Magazine

Source: Douglas Westwood

< 400 m Deepwater (DW) <=1,500 m Ultra deepwater: UDW > 1,500 m

CI Capital | Egypt Book 2010

16-Dec-2010 | Egypt | Offshore Oil & Gas

Rig Market
Economic turmoil ends rig boom From 2005-2008, the global market for offshore rigs saw booming construction activity and demand, evidenced by an 85%+ utilization rate. The outbreak of the global financial crisis put a damper on the trend in 2009 (again, due to the fixed nature of most contracts), which culminated in reduced demand for rigs and depressed utilization rates below 80%. As a result, offshore daily rates tumbled in 2009. The average rate for jack-up, for example, was USD132,330 in 2009, compared to USD145,273, a year earlier. In 2010, persistent uncertainty regarding the global financial and oil markets challenged the availability of new contracts for rigs, thus applying further downward pressure on both utilization and daily rates.

Figure 10.10 | Global Offshore Rig Market

Rigs 900 800 700 600 500 50% 400 40% 300 200 100 0 2006 2007 2008 2009 Nov-10 Available rigs Active rigs Utilization rate 100%

Figure 10.11 | Daily Rates - Active Rigs vs. Jack-up Drilling Rigs
Units 620
90%

Active rigs

Jack Up

USD 160,000 140,000 120,000 100,000

600
80%

580
70%

560
60%

540 80,000 520 60,000 500

30% 20% 10% 0%

480 460 440 2005 2006 2007 2008 2009 Oct-10

40,000 20,000 0

Source: World Oil Magazine; ODS Petrodata

Source: World Oil Magazine; Offshore Oil Magazine

Outlook
2011 to be breakout year for offshore capex
It its recent publications, energy consultancy Douglas Westwood projected offshore capex to rebound in 2011, increasing 14% on the back of positive business sentiment. Evidence of a more optimistic atmosphere has already appeared in the form of rising oil demand from developing countries; strengthening oil prices; and a short-lived drilling ban in the GoM. In October 2010, the Obama administration lifted its six-month drilling moratorium, just prior to the November elections in the US Senate.

Figure 10.12 | Global Offshore Capex (2010-2014)

USD bn 250 200 150 100 50 0 2010 2011 2012 2013 2014 Offshore capex

Source: Douglas Westwood

CI Capital | Egypt Book 2010


Deepwater Capex

16-Dec-2010 | Egypt | Offshore Oil & Gas

A quicker rebound driven by hefty national oil companies investments Deepwater capex expenditure is forecasted to grow at a slow rate of 11% to USD28bn in 2010, below the pre-crisis level of 17%. Between 2010-2014 the majority of investment is to remain within the golden triangle of Africa, the Gulf of Mexico and Brazil. Africa is to attract 37% of total estimated deepwater capex, followed by Latin America with a 24% share, then North America with 14%. We attribute the quick rebound in capex to major national oil companies disclosure of intent to maintain their deepwater investments, even with low oil prices. Latin Americas Petrobas, for example, announced a plan for hefty investment outlays over the next decade. Deepwater exploration is now economically viable even with oil prices ranging from USD37-USD42/b.

Figure 10.13 | Deepwater Capex (2010-2014)

Offshore capex 250 200 150 100 50 0 2010 2011 2012 2013 2014 Expend. YoY GR 16% 14% 12% 10% 8% 6% 4% 2% 0% -2% -4%

Figure 10.14 | Deepwater Capex by Region (2010-2014)

W. Europe, 2.6% Others, 12.2% North America, 14.3%

Africa, 36.9%

Latin America , 23.8%

Australasia, 3.8% Asia , 6.4%

Source: Douglas Westwood

Global Oil Demand

Developing countries to take the lead in 2011 In 2010, various government stimulus packages in developed countries, particularly in the US and Europe, aided in driving global economic recovery. The International Monetary Fund (IMF) has estimated the world economy will grow 7.1% in 2010, a marked improvement over the 5% contraction the year before. This has already translated into elevated demand for oil during the first three quarters of 2010. By year-end, oil demand is to grow 1.3% to 85.6mb/d. In 2011, weak private consumption & high unemployment in the US and Europe are likely to put the brakes on global recovery. Europes GDP growth will be lower, which will drive a decrease in energy use. The Organization of Petroleum Exporting Countries (OPEC) forecasts oil demand to grow at a slightly reduced rate of 1.2% to 86.6m b/d in 2011. The bulk of 2011 growth in oil demand will occur in non-OECD countries, including China, India, the Middle East and Latin America, where nearly 90% of total anticipated growth in energy use is to occur.

CI Capital | Egypt Book 2010

16-Dec-2010 | Egypt | Offshore Oil & Gas

Figure 10.15 | Global GDP (Current Price) & vs. Oil Demand
USD bn 90 80 70 60 50 40 30 20 10 0 2010 2011 2012 2013 2014 Global GDP Oil demand mb/d 91 90 89 88 87 86 85 84 83

Source: IMF, OPEC, CICRe Strengthening oil prices on the horizon We expect oil prices to hover near USD84/b in 4Q10, above the previous three quarters average of USD80/b; given the upcoming winter season and the fact that oil prices remain highly correlated to seasonal factors. Overall in 2010, we estimate oil prices to leap by 20% YoY to reach USD81/b in 2010. We then estimate a rise in prices to USD85/b in 2011 driven by increasing non-OECD demand and movements in WTI NYMEX future contracts. Since the onset of the global economic crisis, oil price movements have been closely correlated with equities, highlighting the continuing impact of the wider financial markets on crude prices.

Figure 10.16 | Oil Prices vs. Global Oil Demand

mb/d 91 90 95 89 90 88 87 86 80 85 75 84 83 2010 2011 2012 2013 2014 70 85 Global oil consumption WTI oil prices USD/d 100

Source: OPEC, CICRe

CI Capital | Egypt Book 2010


Offshore Oil & Gas - SWOT Analysis Strengths
The fixed contract nature of offshore exploration acts as a temporary buffer against sudden shocks.

16-Dec-2010 | Egypt | Offshore Oil & Gas

Weakness
Offshore exploration was negatively impacted by the financial crisis,depressing capex & discoveries by 9% & 17% in 2009.

Technological advancement prompted E&P companies to explore at greater depth, conquering deep & ultra deepwater.

Dwindling shallow water discoveries reduce exploration in such accessible relatively cheap areas.

Lower production cost of per barrel (USD20) secures a considerable profit margin for producers in the context of rising oil prices.

Opportunities
Strengthening oil prices are expected to boost E&P companies' appetite for further discoveries.

Threat
The inherent volatility of oil prices increases the industrys vulnerability to uncontrolled geopolitical factors over the long run.

Huge potential resides in the deepwater segment, whose capex is expected to rebound by the end of 2010, driven by resilient investment from major national oil companies. Technological advancement is expected to enlarge the area of exploration to new utlra-deepwater areas. The short-lived Obama moratorium will have a negligible impact on future discoveries from the Gulf of Mexico.

BP oil spill proved that despite technological advancement, offshore exploration is still vulnerable to high risks that can have wider environmental & geopolitical consequences. Oversupply in the rig market will impose pressure on rigs' utilization & daily rates.

CI Capital | Egypt Book 2010

EGYPT | EQUITIES | HYDROCARBONS

Noran Ali Senior Analyst Noran.Ali@cich.com.eg Tel: +(202) 333 862 59

16 December 2010 | Egypt Book | MOIL

BUY | MODERATE RISK LTFV | USD4.3 TARGET PRICE | USD3.7 Key Themes
Global player with a diverse market portfolio. Fixed contracts act as a temporary buffer against market shocks. Vulnerable to fluctuations in oil prices. Cyclical operations in countries, such as India, due to weather conditions.

Maridive & Oil Services

A rush of wind to the sails...
Buy Moderate Risk | 7% upside potential Operating against the backdrop of a thriving global offshore exploration business, MOIL has cornered a 31% share of the local market. It is considered a regional pioneer, a key provider of both offshore support and construction services. MOIL owns an integrated fleet of 51 vessels and 10 barges, though it plans to expand this to a total of 76 marine units by 2012. The onset of the global financial crisis in 2008 proved a major hurdle for MOIL, which had already been suffering from adverse weather conditions and delays in vessel deliveries. Nonetheless, given MOILs USD750.9mn contract backlog (through 2012) and positive sentiment regarding the global offshore industry, we believe the company will reach calmer waters in 2011. 2010 Review: In 1H10, MOIL was engaged in the engineering & procurement (E&P) phase of its USD380mn ARAMCO contract, which pushed the segments COGS/Sales to 69% in 1H10 from 44% in 1H09. The situation began to improve in 2H10, however, as the contract entered the profitable construction phase and MOIL resumed operations in India following the Monsoon. Hence, offshore construction service (OCS) revenues doubled YoY to USD188.7mn, stimulating a 27% surge in OCS earnings to USD47.3mn in 9M10. The offshore support vessels (OSV) segment, on the other hand, continues to suffer as a result of aftershocks from the financial crisis, evidenced primarily by lower daily and utilization rates. In 9M10, the segments revenues fell 12% on the year to USD55mn; its earnings 80% to USD4.6mn. 2011 Preview: We believe MOIL will deliver a breakout operational performance over the coming year on the back of two major developments: (i) the execution of part of its USD750.9mn contract backlog, and (ii) the delivery of new vessels with higher capacities and daily rates, such as construction barge DLB1600. Valuation and Recommendation: Our updated DCF model yielded an LTFV of USD4.3/share. We calculated our TP by assigning equal weights to (i) the relative value of USD3.1 and (ii) our LTFV of USD4.3/share. We set our TP at EGP3.7, making MOIL a Buy with Moderate Risk.

Key Share Data

Bloomberg: MOIL EY, Reuters: MOIL.CA Egypt/ Hydrocarbons & Related Services Share Price (USD) 52 Week High (USD) 52 Week Low (USD) Number of Shares (mn) Market Capitalisation (USDmn) 100-day Average Volume ('000 shares/day) Fiscal Year End Prices as at close on 12th December 2010. ISIN: EGS44012C010 3.47 4.00 2.48 307.2 1,066.0 283.57 December
All sources: Bloomberg & CICR

Company Synopsis
Maridive & Oil Services [MOIL] is a free zone joint stock company established in 1978, operating under Investment Law No. 8/1997. The company is located in Port Said with offices in Cairo, Alexandria, and Abu Dhabi. MOIL's operations are executed through the mother company as well as its subsidiaries: Maritide Offshore Oil Services, Valentine Maritime, and Maridive Offshore Projects (MOP). The company has an authorized capital of USD200mn and a paid-in capital of USD122.8mn distributed over 307.2mn shares at a par value of USD0.40/share. It is a highly-integrated marine and offshore oil services company serving E&P clients through two business segments: (i) Offshore Construction Services (OCS) and (2) Offshore Support Vessels (OSV). MOIL has over 30 years experience and is currently the largest Egyptian marine and offshore oil services company and one of the largest players in terms of its fleet size. The group has won a number of contracts in the Gulf region, the Caspian Sea, the Gulf of Mexico, West and East Africa and the Far East.

52-week stock performance (weekly)

USD 4.5 4.0 3.5 3.0 2.5 2.0 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Volume MOIL EGX 30 rebased Shrs ('000) 5,000 4,000

Shareholder Structure
3,000 2,000 1,000 Dec-10
10
Free Float Offshore Oil Projects Eleish Family Zeid F amily Nadim Family CIB EFG Private Equity 28.0% 22.0% 14.0% 14.0% 13.0% 5.0% 4.0%

CI Capital | Egypt Book 2010 Disclosures and details pertaining to stock ratings on last page


Key Financial Data
Balance Sheet (USDmn)
FY End: De cember Assets Cash & Cash Equivalent Net Receivables Total Inve ntory Advance Payment Other Trading Assets Other Current Assets Total Current Assets Net Plant Long-Term Inves tments Other Trading Non-Current Assets Other Non-curre nt Assets Intangibles Total Assets Liabilitie s & Equity Short-Term Debt Current Portion of Long Term Debt Accounts Payable Accrued E xpe nses Dow n Payments Taxes Payable Dividends Payable Other Spontaneous Finance Other Current Liabilities Total Current Liabilities Total Long-Term Debt Other Non-Curre nt Liabilitie s Long-Term Spontaneous Finance Total Liabilities Deferred Taxes Other Provisions Minority Interest Shareholder Equity Total Liabilities & Equity 2009a 23.0 123.7 5.8 0.3 0.4 153.2 370.5 8.7 9.9 15.8 558.1 2010e 59.8 150.3 7.4 0.4 0.4 218.2 446.2 8.7 9.9 15.8 698.9 2011e 33.2 261.8 12.7 0.8 0.4 308.9 491.7 8.7 9.9 15.8 835.1 2012e 39.8 330.0 14.5 0.9 0.4 385.5 500.6 8.7 9.9 15.8 920.6

16-Dec-10 | Egypt | Maridive & Oil Services

Income Statement (USDmn)

FY End: Decembe r Revenue Cost of Sale s Gross Profit SG&A EBITDA Depreciation Amortization EBIT Interest Expense Interest Income Net Provisions Imputed Inte rest Investment Income Other Income /(Expense) EBT Taxes NPAT Minority Intere st Extraordinary Items Net Income Employee/BoD Remuneration CICR Adjusted Ne t Income Dividends Distributed 2009a 247.0 (122.2) 124.8 (24.4) 100.4 (19.5) (0.1) 80.8 (3.8) 0.2 0.0 4.5 81.7 (1.5) 80.2 (8.3) 0.1 71.9 71.9 (42.1) 2010e 287.9 (154.3) 133.6 ( 29.0) 104.7 ( 22.8) 81.9 (4.6) 0.0 (0.4) 76.9 (1.2) 75.8 ( 10.5) 65.3 65.3 ( 49.0) 2011e 491.5 (265.5) 226.0 (48.6) 177.4 (30.7) 146.7 (5.7) 0.0 (0.4) 140.6 (2.1) 138.5 (21.6) 116.9 116.9 (87.7) 2012e 588.2 (303.9) 284.3 (59.1) 225.2 (35.3) 189.9 (6.0) 0.0 (0.4) 183.6 (2.8) 180.8 (24.5) 156.4 156.4 (117.3)

8.6 40.6 42.5 16.8 8.3 1.9 42.1 5.2 165.8 119.2 14.3 299.3 3.1 25.9 229.8 558.1

5.4 38.3 53.7 21.2 9.5 1.9 49.0 5.2 184.0 206.8 9.9 400.7 3.1 28.5 266.6 698.9

38.8 43.6 92.4 36.4 16.2 1.9 87.7 5.2 322.1 174.6 5.6 502.3 3.1 33.9 295.8 835.1

76.1 37.7 105.5 41.6 19.3 1.9 117.3 5.2 404.3 136.9 1.3 542.5 3.1 40.0 334.9 920.6

Cash Flow Stat ement (USD mn)

FY End: Decembe r NOPAT Depreciation & Amortization Gross Cash Flow (COPAT) Change in W orking Investment Change in Other Current Items Cash Af ter Current O perations Financing Payments Cash Before Long Term Use Change in Net Plant FCFF Other Items Cash Before Financing Change in Short/Long-term Debt Change in Shareholder Equity Change in Provisions Change in Minority Intere st Dividends Paid Cha nge in Cash 2009a 69.9 19.6 89.6 (15.8) (1.9) 71.9 (42.3) 29.6 (85.6) (13.7) 23.4 (32.5) 73.9 (11.7) 0.6 (58.1) (27.8) 2010e 70.2 22.8 93.1 ( 11.5) 81.6 ( 45.1) 36.4 ( 98.5) ( 17.0) (3.6) ( 65.7) 122.7 23.1 ( 42.1) 37.9 2011e 123.0 30.7 153.7 (56.5) 97.2 (44.0) 53.2 (76.3) 20.9 (6.3) (29.4) 44.9 5.4 (49.0) (28.1) 2012e 162.7 35.3 198.0 (48.7) 149.3 (49.6) 99.7 (44.2) 105.1 (5.4) 50.1 37.3 6.1 (87.7) 5.8

Performance Multiples
FY End: De cember ROE ROS ROA ROIC Gross Profit Margin EBIT DA Margin Re venue Growth EBIT DA Growth Asset Turnover WI/ Sales Revenues 2009a 31.3% 29.1% 12.9% 17.0% 50.5% 40.7% -4.2% -8.3% 0.4x 28.8% 2010e 24.5% 22.7% 9.3% 13.2% 46.4% 36.4% 16.6% 4.3% 0.4x 28.7% 2011e 39.5% 23.8% 14.0% 21.4% 46.0% 36.1% 70.7% 69.4% 0.6x 28.3% 2012e 46.7% 26.6% 17.0% 26.5% 48.3% 38.3% 19.7% 27.0% 0.6x 31.9%

Per-Sh are Data

FY End: Decembe r Share Price No. of Shares (m n) New No. of Shares (mn) EPS Diluted EPS Normalised EPS Book Value per share FCFF/Share EBITDA/ Share EV/Share 2009a 3.5 256.0 0.3 0.3 0.9 -0.1 0.4 4.1 2010e 3.5 307.2 0.2 0.2 0.9 -0.1 0.3 4.2 2011e 3.5 307.2 0.4 0.4 1.0 0.1 0.6 4.3 2012e 3.5 307.2 0.5 0.5 1.1 0.3 0.7 4.3

Valuation Multiples
FY End: De cember PER Diluted PER Price/Re venue PBV Dividend Y ield Earnings Yield FCF Yie ld Enterprise Value (EGPmn) EV/FCFF Price/EBITDA EV/EBITDA Source: Company data, CICR. Notes : 2009a 12.3x 12.3x 3.6x 3.9x 4.7% 8.1% -1.5% 1,060 -77.3x 8.8x 10.6x 2010e 16.3x 16.3x 3.7x 4.0x 4.6% 6.1% -1.6% 1,285 -75.8x 10.2x 12.3x 2011e 9.1x 9.1x 2.2x 3.6x 8.2% 11.0% 2.0% 1,324 63.4x 6.0x 7.5x 2012e 6.8x 6.8x 1.8x 3.2x 11.0% 14.7% 9.9% 1,317 12.5x 4.7x 5.8x

Liquidity & Solvency Mu ltiples

FY End: Decembe r Total Debt (E GPmn) Net debt (EGPmn) Total debt to total assets Net debt to equity Net debt to EBIT DA Current ratio Interest Coverage 2009a 168.3 145.4 30.2% 63.3% 144.8% 0.9x 21.5x 2010e 250.4 190.6 35.8% 71.5% 182.1% 1.2x 17.9x 2011e 257.0 223.7 30.8% 75.6% 126.1% 1.0x 25.8x 2012e 250.7 210.9 27.2% 63.0% 93.6% 1.0x 31.7x

A = Actual; E = Estimate Share price at 12-Dec-10

CI Capital | Egypt Book 2010

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CI Capital | Research Team

Strategy Mark Rorison Mona Mansour* James Kostoris Economy Mona Mansour* Alia Mamdouh Banking Alia Abdoun Cables & Green Muhammad El Ebrashi | Head of Research mark.rorison@cich.com.eg | mona.mansour@cich.com.eg | james.kostoris@cich.com.eg Construction & Building Materials Basma Shebeta* | basma.shebeta@cich.com.eg Hany Samy | hany.samy@cich.com.eg Ghada Refky | ghada.refky@cich.com.eg Consumer Goods Ingy El Diwany Ahmed Abdelghani Yasmin Ghanem Mayan El Menshawy* Contracting & Fertilisers Muhammad El Ebrashi Mills Ahmed Abdelghani Mirette Ghozzi

| mona.mansour@cich.com.eg | alia.mamdouh@cich.com.eg

| | | |

ingy.eldiwany@cich.com.eg ahmed.abdelghani@cich.com.eg yasmin.ghanem@cich.com.eg mayan.elmenshaway@cich.com.eg

| alia.abdoun@cich.com.eg

| muhammad.elebrashi@cich.com.eg

| muhammad.elebrashi@cich.com.eg

Hydrocarbons & Related Service Noran Ali | noran.ali@cich.com.eg Food & Beverage Basma Shebeta* Mirette Ghozzi Pharmceuticals Ahmed Abdelghani Transport & Logistics Sherif Helmy Administration Mary Talat Rania Hana

| ahmed.abdelghani@cich.com.eg | mirette.ghozzi@cich.com.eg

Housing & Touristic Real Estate Hany Samy | hany.samy@cich.com.eg | basma.shebeta@cich.com.eg | mirette.ghozzi@cich.com.eg Telecom Services Amr Hussein Elalfy, CFA Mohamed Hamdy Yehia Elsherbiny Editorial & Translation Nick Lewandowksi Safwan Zahran Shehab Fawzy

| ahmed.abdelghani@cich.com.eg

| amr.elalfy@cich.com.eg | mohamed.hamdy@cich.com.eg | yehia.elsherbiny@cich.com.eg

| sherif.helmy@cich.com.eg

| nick.lewandowski@cich.com.eg | safwan.zahran@cich.com.eg | shehab.fawzy@cich.com.eg

| mary.talat@cich.com.eg | rania.hana@cich.com.eg

*Industry & thematic analysts with roving brief.

Disclaimer The information used to produce this market commentary is based on sources that CI Capital Research (CICR) believes to be reliable and accurate. This information has not been independently verified and may be condensed or incomplete. CICR does not make any guarantee, representation or warranty and accepts no responsibility or liability to the accuracy and completeness of such information. Expression of opinion contained herein is based on certain assumptions and with the use of specific financial techniques that reflect the personal opinion of the authors of the commentary and is subject to change without notice. It is acknowledged that different assumptions can always be made and that there is a wide choice of techniques that can be adopted each of which can lead to a different conclusion. Therefore, all that is stated herein is of an indicative and informative nature as forward-looking statements, projections, and fair values quoted may not be realized. Accordingly, CICR does not take any responsibility for decisions made on the basis on the content of this commentary. This commentary is made for the sole use of CICRs customers and no part or excerpt of its content may be redistributed, reproduced or conveyed in any form, written or oral, to any third party without the prior written consent of CICR. This commentary does not constitute a solicitation or an offer to buy or sell securities. Rating System In February 2009, CI Capital Research (CICR) launched a new rating system to give analysts more freedom to be market responsive. This is to make one element of our research more dynamic, namely the advertising of target prices and recommendations. What we did not change is our assessment of the Long Term Fair Value (LTFV), nor have we stopped our detailed industry and company research. What we did is changing the target price to trade in the balance of where a share should trade and where we think it will trade. Rating Strong Buy Buy Hold Underweight Sell Potential Upside/Downside >30% (High conviction) >20% <30% >10% <20% >0% <10% <0%

CI Capital Holding rd 8, Nadi El-Seid Street, 3 Floor Dokki, Giza Egypt Tel: + 00 2 (02) 333 862 59 research@cich.com.eg www.cich.com.eg