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To Promote PADICO Holding’s Future Capability of Distributing Growing Dividends
General Assembly of PADICO Holding Endorses the Company’s Vision and Prospects over the Upcoming Phase

Amman – Nablus, 16 May 2010:The General Assembly (GA) of Palestine Development and Investment Ltd. (PADICO Holding) held its 15th regular annual meeting today in Amman. A videoconference was equally arranged in the city of Nablus in order to facilitate the participation of all shareholders.

Following the Board of Directors’ presentation on the 2009 major activities and financial report, the GA approved PADICO Holding’s vision and prospects for the upcoming phase, including the non-distribution of dividends to shareholders for the year 2009. PADICO Holding GA also reviewed the Company’s future short-term plan, which aims at gradually reducing the company’s indebtedness and controlling general and administrative expenses. The plan also calls for concentrating the Company’s efforts on completing restructuring and merger operations, which PADICO Holding is currently implementing in the real estate, tourism, industry and financial market sectors as well as targeting new projects and investments. All these measures have the objective of alleviating the burden on the Company’s financial position over the upcoming years, reducing financial risks and upscaling performance of subsidiary and affiliate companies. To reflect positively on PADICO Holding’s share and on capital gains, this short-term plan will help promote PADICO Holding’s capability of distributing growing annual dividends in the future.

In his opening remark, Mr. Munib R. Masri, Chairman of PADICO Holding, welcomed shareholders and talked about PADICO Holding’s 2009 major achievements and future prospects. Mr. Masri announced that PADICO Holding made a net after-tax profit of USD 42.2 million in 2009 compared to USD 22.5 million in 2008, marking a growth rate of 87%.

Mr. Masri also made clear that PADICO Holding managed to reduce the amount of its financial portfolios to approximately 3% of the Company’s total assets, thereby avoiding any losses throughout 2009.

Mr. Masri stated that PADICO Holding made great strides throughout 2009 in restructuring its investments in the tourism, real estate, industry and financial sectors. Initiated in late 2008, this process aimed to focus investments into specialised companies and improve their performance, positively reflecting on their profits. Most companies in which PADICO Holding invests witnessed a growth in the level of operations and profits during the past year. For instance, operating revenues of these companies rose to USD 31 million in 2009 compared to USD 26 million in 2008 – a rise of 18%, Mr. Masri emphasized that this is an obvious indicator of the recovery of PADICO Holding as well as its subsidiaries and affiliates. He also articulated his trust and confidence that PADICO Holding companies will achieve more profits in the future. According to Mr. Masri, PADICO Holding will continue to implement its three-year plan, which the Board of Directors approved for investing in Palestine in different vital economic sectors including infrastructure; water and wastewater; recycling solid waste; agriculture; and tourism and real estate sectors in the city of Jerusalem.

Mr. Masri highlighted that the registration of PADICO Holding as a foreign company operating in Palestine, was amongst the most prominent achievements that have materialised in 2009. The registration of PADICO Holding at the Palestinian Ministry of National Economy was finally made possible after the appropriate amendments were introduced to the Palestinian Income Tax Law in relation to double taxation. For many years, double taxation had been a challenge to the registration of PADICO Holding. In addition to attracting more foreign investments to Palestine, this step is a strong incentive that will consolidate PADICO Holding’s position, promote public trust and confidence in its performance, and prove that the Company runs long-term investments.

“Another major achievement was realised in early 2010: the Ministry of National Economy approved the conversion of the Palestine Securities Exchange (PSE) from a private company into a public shareholding company. The conversion was a reflection of transparency and governance principles applied by PADICO Holding in its operation. It is anticipated that procedures leading to the separation of the Clearing, Depository and Settlement Centre (CDS) from PSE would soon be announced.” Mr. Masri went on.

In relation to investments in the Gaza Strip, Mr. Masri affirmed that PADICO Holding is working towards putting an end to operating losses incurred by subsidiary companies, including Palestine Industrial Estates Development and Management Company (PIEDCO), as a result of the Israeli siege. In this context, PADICO Holding is working diligently to capitalise loans granted by Palestine Industrial Estate Development Company (PIEDCO Holding) and to lease a considerable portion of the available area at the Al Muntar Industrial Estate as warehouses to be used by international organisations, which store the humanitarian aid provided to Gaza residents. To create new sources of income for the Company under current harsh conditions, Mr. Masri also announced that the Board of Directors of Palestine Real Estate Investment Company (PRICO) made a decision to complete the construction of chalets in the vicinity of the Al Mashtal Hotel, which is owned and managed by Al-Mashtal Tourism Investment Company (MTI).

Mr. Nabil G. Sarraf, Vice-Chairman of PADICO Holding, stated that Palestinian companies face considerable challenges under the siege imposed on the Gaza Strip. The blockade has effectively deprived PADICO Holding of approximately one third of the Palestinian market. Mr. Sarraf expressed his hope that the Israeli siege would come to an end and that Palestinian reconciliation be accomplished. Responding to a question raised by a shareholder about the Mövenpick Hotel project in Ramallah, Mr. Sarraf explained that PRICO has completed the construction of the Hotel and is currently in the process of handing over to the hotel’s operation to the Mövenpick International Group which has started to recruit staff. The Mövenpick Hotel Ramallah will be inaugurated in late July 2010.

Dr. Farouq A. Zu’eiter, a PADICO Holding Board Member, explained that the global economic crisis has not come to an end yet and that some challenges still remain on the way. In Palestine, PADICO Holding is operating under an exceptional investment environment which witnesses more fluctuating economic conditions than the majority of other countries. Despite the fact that some investments of PADICO Holding do not currently generate income, these investments entail considerable value and high potential. In his answer to a question on its investment policy, Dr. Zu’eiter asserted that the PADICO Holding Board permanently reviews and follows up on the implementation of the Company’s investment policy.

2009 Major Achievements
Addressing the GA, Mr. Samir Hulileh, CEO of PADICO Holding, affirmed that 2009 marked a noticeable progress in all areas. In light of the increasing revenues of PADICO Holding, revenues rose from USD 59.8 million in 2008 to USD 85.5 in 2009, scoring a growth rate of 43%. Comprising the majority of PADICO Holding’s revenues, a total of USD 60.9 million (or 71%) of revenues was from by subsidiary and affiliate companies. A focus on the operational performance of subsidiaries and affiliates positively affected performance indicators. Mr. Hulileh also overviewed financial results achieved by a number of subsidiary and affiliate companies, which overcame the respective operational crisis, made profits and attained positive outcomes throughout 2009 and during the first quarter (1Q) of 2010. Of these, Palestine Poultry Company (PPC) made a net profit of USD 1.7 million in 1Q 2010. Compared to USD 52,000 in 1Q 2009, National Carton Industries (NCI) Ltd made a net profit of USD 93,000 during 1Q 2010. Palestine Mortgage and Housing Corp. (PMHC) financed a total of 44 loans in 1Q 2010 in comparison to only 8 loans throughout 1Q 2009. Having raised its capital to JD 18.5 million, the largest portion of debts due by Palestine Tourism Investment Company (PTIC) was setteled. In a striking contrast with a USD 2.4 million in losses in 2008, Al Rafah Microfinance Bank made a net profit of USD 2.2 million during 2009. Additionally, other companies achieved positive results and grew profits.

The CEO of PADICO Holding elaborated that the growing profits and total financial indicators of 2009 and 1Q 2010 mark the start of a new phase in the lifecycle of PADICO Holding. With finalising the restructuring process and maturing new investments, results of this new phase will manifest gradually and will continue throughout the years to come. These also reiterate PADICO Holding’s primary mission and commitment to investing in Palestine, particularly in promising economic sectors.

Prospects of the Upcoming Phase and New Investments
Mr. Hulileh reviewed PADICO Holding’s plan of next years, including the reduction of debts, control of general and administrative expenses, improvement of the operational performance of subsidiaries and affiliates, finalisation of the restructuring process, and focus on rewarding economic sectors. In this regard, restructuring PADICO Holding’s investments in the real estate, tourism, industry and financial sectors is progressing as planned. In relation to its investments in the real estate and tourism sectors, PADICO Holding purchased the whole share of the Kuwaiti Global Investment House in Palestine Real Estate Investment Company (PRICO), thereby raising PADICO Holding’s share in PRICO from 37% to 71%. Also, PADICO Holding finalised restructuring of Palestine Tourism Investment Company (MTI) by writing off all accumulated losses and raising its capital to JD 18.5 million over two phases.

In the industry sector, PADICO Holding sold its share in the Golden Wheat Mills Company (GMC) and National Carton Industries (NCI) to Palestine Industrial Investment Company (PIIC). Accordingly, PADICO Holding has concentrated its industrial investments into a holding company, which specialises in this area of activity. With respect to investments in the financial sector, PADICO Holding also purchased the Kuwaiti Global Investment House’s share in PSE, increasing the Company’s share in PSE from 68% to 78%.

Mr. Hulileh admitted that PADICO Holding’s restructuring process has resulted in a major rise in the volume of the Company’s debt. Though it will overburden the Company on the short run, shareholder equities will benefit from a considerable financial return.

In addition to launching new investments, Mr. Hulileh confirmed that PADICO Holding will attempt to create new and diversified sources of income by promoting its current investments and strengthening its financial position and performance. To this avail, PADICO Holding will gradually reduce the level of debts, whereby debts will comprise 25% of total equity compared to the current 38% level. The Company will also decrease administrative and operating expenses throughout 2010. Additionally, PADICO Holding will discuss with relevant bodies the prospect of issuing corporate bonds under a conducive, legal, investment enabling environment to help finalise this process.

With reference to new investments, Mr. Hulileh announced that PADICO Holding has recently started working on establishing an electricity generation enterprise in the northern West Bank at an estimated total cost of USD 300 million. With a preliminary output of 200 megawatts, this project will be implemented in partnership with the Palestine Electricity Company as well as a number of Palestinian and regional corporations. In addition, PADICO Holding has incorporated the Palestinian Solid Waste Recycling Company (TADWEER) [Arabic of recycling] as the first regulated, integrated Palestinian enterprise, which specialises in processing, sorting and utilising solid waste as well as recycling organic materials. Mr. Hulileh also stated that PADICO Holding signed a memorandum of understanding with the Jenin Municipality for construction of a wastewater treatment plant for irrigation and agricultural purposes.

In relation to investment in Jerusalem, Mr. Hulileh said that PADICO Holding is presently implementing a project for restoration of St. George Hotel. To accommodate more than 140 rooms, total cost of the project is USD 6 million. Over an area 30,000 square metres, PADICO Holding is also constructing a large housing project in Beit Safafa. Investment in the project amounts to USD 37 million. Furthermore, PADICO Holding has launched other investments in the tourism sector in the city of Jerusalem.

Through its subsidiary companies, the CEO of PADICO Holding announced that PADICO Holding is constructing a student hostel and service compound on campus at the Al Quds University. Additionally, work is underway for construction of a commercial complex on campus at Birzeit University.

Shareholder’s Questions In the ensuing discussion, shareholders commended PADICO Holding’s achievements and articulated their trust and confidence in its Board of Directors and Executive Management. On the other hand, shareholders raised several inquires about PADICO Holding’s investment trends, general and administrative expenses, and status of VTEL Holding.

Responding to shareholders’ questions, Mr. Hulileh highlighted the rewarding profits made by PADICO Holding during 1Q 2010 (a total of USD 10.6 million). He was also confident that this year will generate better profits in light of continuing enhancement of the quality of these profits, which are mostly generated from operations implemented by both PADICO Holding and subsidiary and affiliate companies.

Mr. Hulileh explained that general and administrative expenses increased throughout 2009 as a result of combining and consolidating accounts and expenses of both PRICO and Palestine Industrial Estate Development Company (PIEDCO Holding). However, Mr. Hulileh confirmed that the actual rise of these general and administrative expenses did not exceed 2%.

Replying to a question on PADICO Holding’s share in VTEL’s losses, Mr. Hulileh elaborated that VTEL accessed hard markets. Nonetheless, he expressed confidence that VTEL will resume making profits over next years. In this context, corporations operating in the telecommunications market need some time, which usually lasts for years, to generate profits.

Incorporated in 1993 as a foreign, limited public shareholding company in Liberia through an initiative by prominent Palestinian and Arab businessmen, the Palestine Development and Investment Ltd. (PADICO Holding) has effectively contributed to promoting and developing the Palestinian economy by investing in pioneering developmental projects in vital economic sectors.

PADICO Holding brings about its mission and commitment to developing the Palestinian economy through a group of subsidiary and affiliate companies, which invest in major economic sectors that are consistent with PADICO Holding’s overall strategy, including in real estate, telecommunications, tourism, industry, and financial services.

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