Palestine Development and Investment Ltd. Foreign, limited, Public shareholding limited

liability company، registered in the Republic of Liberia under the Liberian Business Law of 1977.

Annual Report 2018

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Table of Contents

About PADICO Holding

PADICO Holding

Chairman’s MessageBoard Members

Shareholders and Share Performance

Shareholders

Performance of PADICO Holding Share

Our Investments

Sectors and Investments

Classification of investments for the financial reports

Investment Performance

Future Vision

Social Responsibility

Financial Performance

Financial Performance in 2018

Key Finincial Indicators

Consolidated Financial Statements

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About PADICO Holding

• PADICO Holding

• Chairman’s Message

• Board Members

RAMALLAH

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About PADICO HoldingUnder an initiative of Palestinian and Arab businessmen, Palestine Development and Investment, Ltd. (PADICO Holding) was founded in 1993 as a registered foreign public shareholding limited Liability company. The company is listed on the Palestine Exchange (PEX) with paid in capital of USD 250 million. It was established to contribute to the building and development of the Palestinian economy through the execution of development projects in vital economic sectors.Over a history of 24 years, PADICO Holding’s investments grew and expanded to include essential and vital sectors that form the cornerstone in building a Palestinian economy which would serve as a lever of the independent Palestinian state. The company’s investments cover a range of sectors, and are managed by a number of subsidiary and affiliate companies. The most prominent of these sectors are: Communications and services, tourism, real estate, infrastructure, environment and industry. Over the past years, the company has made significant achievements in these sectors, and was able to become a pioneer of the Palestinian private sector with its diverse investments, major achievements, solid contributions to the building and development process, development of infrastructure and revival of Palestine’s economy. In addition, it supplied local, regional and international markets with distinguished products and services. It has also helped create thousands of jobs for Palestinians, and still confidently

moves towards more expansion and growth.

Our Vision:PADICO holding looks forward to remaining the first choice and destination for investors in Palestine. This is through its investment strategy which is based on diverse investments in vital economic sectors and geographical expansion across Palestine. Its aim is to meet its long-standing commitments towards the development of the Palestinian economy and to help create thousands of job opportunities for the local community.

Our Values and Mission:PADICO Holding, its group of companies, founders and shareholders are committed to its pioneering role in stimulating economic development in Palestine and launching and implementing creative economic initiatives in partnership with the public and private sectors. It also seeks to attract local and international investors to invest in Palestine.

PADICO Holding is also committed to its moral and community role towards both the company’s family and local community. As an international company, it abides by a set of values, principles, governance standards, and best management practices that govern its internal operations and relationships with the surrounding environment. As a national company, it abides by an ethical code of conduct throughout its professional practices and activities, and is keen on spreading good corporate citizenship standards and dedication in workplace. Additionally, the company continuously endeavours to enhance its internal work environment and adopts socially responsible projects. It is also proceeding with its commitment of supporting community and development initiatives.

Our Distinctive Features:PADICO Holding is characterised by its long-term development investment trend, positioning it as a leader on the economic map of Palestine. Over the past years, the company has demonstrated its ability to take on leading, large-scale, investment projects with guaranteed returns. The company takes pride in its board members who have international experience in a range of economic sectors and entrepreneurship. This has helped consolidate the company’s vision and trends, and draw a flexible strategy based on diverse investments to ensure returns are made to support both the sustainability goals and effective participation in development. Its wise management also has major experience in dealing with the Palestinian investment environment which is characterised by complexity, ambiguity and sudden dramatic developments. The board’s wise plans have helped maintain the company’s investments trend despite all challenges. This is thanks to the company’s diverse investments strategy, which has enabled it to generate continuous revenues over the past years despite the tough circumstances. This is in addition to its diversification of risks. Today, PADICO Holding owns one of the most diverse investments portfolios on the regional level.

Our Strategy:PADICO Holding is forging ahead with the realisation of its mission. It is proceeding with its commitment to develop the Palestinian economy through a group of subsidiary and affiliate companies which work in key investment sectors that are in line with the company’s general strategy. These include the real estate, communications, tourism, industry, agriculture, environment and financial services sectors. PADICO Holding’s financial performance is mainly dependent on the performance of subsidiary and affiliate companies. PADICO Holding’s strategy which is based on the diversification of investments in several sectors and geographical areas has enabled it to become a pioneering investment company in Palestine and to strongly contribute to the enrichment of different economic sectors in Palestine with high-level investments that would stimulate economic growth.

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Chairman’s MessageDear Shareholders,I cordially welcome you to the 24th Annual Report of the Palestine Development and Investment Company (PADICO Holding). In the name of the board, I’m pleased to submit to you the annual report on PADICO Holding’s activities in 2018, which includes a detailed presentation of the company’s achievements last year and its financial statements, together with an look on its future trends over the coming years.Since its establishment 24 years ago, PADICO Holding has charted its road with a strategic vision based on investments in vital sectors that have helped establish the structure of the Palestinian economy.In its first years, the company invested in important and vital projects in Palestine, such as Palestinian Telecommunications (Paltel), PEX, industrial zones, and 5-star hotels.PADICO Holding’s investments weren’t restricted to those projects, but included many other sectors, including the infrastructure and renewable energy sector. The company has been a pioneer in this sector all over Palestine. It has also invested in the agricultural, industrial, and real estate development sectors.PADICO Holding has had the privilege of establishing large projects that are the first of their type in Palestine, the most important of which being industrial zones and associated projects. The company has also been a pioneer in renewable energy projects in Palestine.In this regard, we cite the signing of an agreement to produce electricity from solar energy in Gaza Industrial City with major electric power that fully feeds the industrial zone, which is an expandable project.Gaza has always had a place in PADICO Holding’s strategy, and you would always see it in our past and future plans. In the past years, many of our projects were executed in Gaza, starting with expanding, modifying and operating the Industrial Zone, to signing the agreement of producing electricity from solar energy. That project is one of the top-priority projects at PADICO Holding due to its human and investment value which will be reflected on factories and workers at Gaza Industrial City Zone. The project also has the potential of expanding its productivity to supply areas adjacent to the Industrial City with electric power.

Dear Shareholders,The message that PADICO Holding has drawn for itself ever since its establishment at the hands of a group of Palestinian and Arab investors who were motivated by their belonging to Palestinians and their absolute support to their just cause is that it didn’t only focus on injecting direct investments, but also gave major attention to attracting Arab and foreign investors to Palestine. This was the goal which the founders focused on, and as a result, they made solid success in this regard despite the difficulties and unfavourable circumstances.Together, we have recently seen the change that followed the

decision of PADICO Holding board on our subsidiaries, in terms of unifying corporate policy, controlling administrative costs and expenses, and making the necessary administrative changes. This has led to gradual and dramatic revival, as these measures achieved tangible results.PADICO Holding, therefore, which adopted the principle of reconstruction and building in Palestine in the last few years, has applied the same internally at our companies.The mission was never easy, and the road wasn’t without difficulties. Yet, PADICO Holding, together with its affiliates and subsidiaries, has proven again that it is a solid investment edifice capable of changing towards the better.

Dear Shareholders,Over more than two decades, PADICO Holding has established, participated and invested in about 33 companies in different economic sectors. The total company’s assets as at the end of 2018 stood at USD 838.02 million.PADICO Holding achieved solid growth of 213.0% in its results of operations in 2018, with consolidated net profit of USD 15.54 million, as compared to USD 4.96 million in previous year. This was the result of improved performance of a number of subsidiaries, especially PADICO Tourism (JEDICO), which achieved growth of 40.8%, Palestine Real Estate Investment Co. (PRICO), which cut its net losses by 71.1%. Meanwhile, the performance of Palestine Industrial Investment Co. declined by 36.5% as a result of declining performance of Palestine Poultry Co. whose profits were substantially affected by market conditions and drop of poultry prices.Growth in PADICO Holding performance in 2018 was supported by cuts of administrative expenses of its companies as a direct result to the restructure which PADICO Holding and its subsidiaries implemented in 2017. Consolidated administrative and general expenses in 2018 dropped by 21.6%.

Dear Shareholders,PADICO Holding’s achievements and successes, made over twenty-four years, couldn’t have seen light if it hadn’t been for the total commitment of its founders and early investors, who led investments in the most difficult circumstances, their full confidence and belief in its future and its effective contribution to the building and revival of the national economy and reconstruction which it helped achieve across our homeland.These achievements couldn’t have also been achieved hadn’t it been for the sincere efforts of general managers, executive chiefs, all employees and administrative department staff members who have over the years worked for PADICO Holding.In conclusion, permit me to thank you for your continuous support and trust which makes us more determined to forge ahead with the process of development and building, which has always been dedicated to Palestine and its great people.

Yours RespectfullyMunib Rashid Al Masri

Chairman

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Board Members

Munib R. Al Masri - Chairman

Nidal M. Sukhtian - Vice-Chairman

Bashar F. Masri - Board Member

Sabih T. Masri - Board Member

Zahi W. Khouri - Board Member

Ammar A. Aker - Board Member

Nabil G. Sarraf - Board Member

Kamil A. Saad Edeen - Board Member

Yazid A. Mufti - Board Member

Omar A. Bitar - Board Member

Jamal S. Hourani - Board Member

Iyad N.“Darwish Hajji” - Board Member

Hesham D. Masri - Board Member

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Governance

PADICO Holding is one of the prominent Palestinian companies that have taken important steps in governance and the subsequent solid establishment of the rules of good governance, transparency and best practices. PADICO Holding looks at the concept of governance as an essential part of its management principles which govern its work and as a strategic necessity that would ensure the company move at the right direction. It will also help it look ahead, ideally exploit resources, and distribute missions and powers among board members, on the one hand, and between the administration and executive management on the other. Through its compliance with the rules of governance, PADICO Holding aims to boost competency of work and realise profits and sustainable development, which would increase shareholders’ confidence in the board and executive management, and help attract more investments in assets. Based on this confidence, PADICO Holding realises the enormity of responsibility on its shoulders to serve the community and voluntarily take on community initiatives and make non-profit, qualitative contributions that reflect strong and principled commitment towards it. On the other hand, PADICO Holding looks at the concept of governance as an essential principle that would ensure its compliance with global standards, including: Sound workspace and code of conduct governing the workspace and relations between the company and its external environment which constitutes its social extension. The restructure of investments which PADICO Holding implemented has helped enhance best practices and good governance, and improve the efficiency and efficacy of its governing systems.

The company regularly issues its financial reports and quarterly and annual disclosures, as well as press releases showing its latest events, such as community responsibility, sustainability and environment protection programmes. The company also issues annual reports as per the requirements of the Palestine

Capital Market Authority and Palestine Exchange.

Role of Board and its Committees, its Mechanism of Work

About the Board Missions:

PADICO Holding board consists of 13 members. Its missions are to follow up on the progress of the company’s work, strategy and future plans, and to anticipate the political and economic circumstances and changes that will influence the upcoming period. This is in addition to approving budgets, by-laws, financial and investment policies, and financial statements. These tasks are implemented through the board’s different committees.

The company complies with the principles of governance by taking decisions with majority of votes. The minimum qualifying level for board membership is 100,000 shares. None of the board chairman or members assume executive positions, whether in the company or its subsidiaries. Over the past years, the board has formed a number of internal committees, including permanent and temporary committees, which were assigned specific tasks and powers tied to specific time schedule.In 2018, the board held a total of 6 official sessions and several meetings and workshops to discuss the company’s business.

Board Committees:The board has two committees:

Sanad Law Group association with Eversheds - International

Haytham AlZubi, Palestine

Bashar F. Masri

Nabil G. Sarraf

Ammar A. Akar

Yazid A. Mufti

Kamil A. Saad Edin

Ziad M. Turk

Chairman

Member

Member

Chairman

Member

Member

Ernst & Young

Executive Committee

Audit Committee

Legal Advisors

External Auditors

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Nehad T. Kamal, Deputy General-Manager

Amjad Y. Hassoun, Chief, Financial Department

Nemr Abdul Wahed, Chief, Real Estate Department

Saeed Y. Duwikat, Chief, Project Development Department

Jihad A. Zamari, Manager, Internal Audit Department

Rasha A. Metwalli, Administrative Manager

Samer M. al-Safadi, Head, Shareholders’ Affairs Unit

Ziyad Y. Tafesh, Head, Technical Support Unit

Sustainability and Responsible Investments

PADICO Holding maintains its national, moral and social commitments towards all segments of community.

Through this voluntary commitment and responsible administrative practices, the company wants to

realise conformity between its business practices and activities and human rights standards, workers’

rights, and the environment, and to implement sound business practices and professional ethics. We can

say that PADICO Holding is one of the strongest Palestinian companies in terms of compliance with good

governance and best practices in management.

Arab Bank

Cairo Amman Bank

Ziad M. Turk

Investor Relations and Communication with Shareholders

PADICO Holding exerts great efforts in effective communication and continuous co-ordination with all of its investors and shareholders to keep them informed of all details of concern to them. It helps them understand the future outlook of their investments, and learn about the company’s achievements and activities in a timely manner through the Investors’ Relations Unit. The company also uses different means of communication, including phone calls, corporate website, email, annual reports, mass media and social media networks.

PADICO Holding holds its annual General Assemply between April and May. The meeting is a platform for discussing the company’s position, results of operations and future plans. During it, items on the agenda, including approval of financial statements of the ending fiscal year, discharge of the board, and election of external auditors, are discussed. The company sends out invitations to its shareholders to attend the meeting one month before its date. Invitations

are made via mail, ads in local newspapers, and the company’s website.

Financial Disclosures

PADICO Holding discloses its financial statements through quarterly audited reports, its annual report and during meetings of its General Assemply. The financial statements are submitted to the Capital Market Authority and Palestine Exchange in implementation of laws now in force in Palestine. The statements and reports are also posted to the company’s website.

Internal Audit

PADICO Holding attaches great attention to internal control systems, where its internal audit department enjoys complete independence. That department reports directly to the board’s audit committee and submits its reports to it.

The department audits PADICO Holding and all of its subsidiaries in accordance with internationally-recognized standards. The department’s relations with companies are governed by the board’s resolutions and are based on the Internal Audit Charter which was approved by the board.

Main Banks

Secretary-General

Executive Management

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NABLUS

• Shareholders

• Performance of PADICO Holding

Share

Shareholders andShare Performance

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ShareholdersThe base of PADICO Holding’s shareholders includes 7,266 shareholders as at the end of 2018. They are

distributed as follows:

Type of Contribution Number of Shares Percentage Number of Shareholders

Companies 154,873,509 61.95% 102

Individuals 95,126,491 38.05% 7164

Total 250,000,000 100.00% 7266

Breakout of shareholders as per nationality Number of Shareholders Number of Shares

Percentage of share ownership as to capital

Palestine 6,257 144,068,176 57.63%

Jordan 702 50,268,744 20.11%

Rest of world 307 55,663,080 22.27%

Total 7,266 250,000,000 100.00%

ShareholdersStructure

38.05% Individuals

61.95% Companies

Nationalityof Shareholders 22.27%

57.63% Palestine

Rest of World

20.11% Jordan

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Shareholder Percentage of Ownership

Paltel Group 16.91%

Sabih Masri and related parties 12.63%

Massar International Investments Group 10.51%

Siraj Palestine Fund I 6.53%

Munib Masri and related parties 5.23%

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Major Shareholders

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Performance of PADICO Holding Share

1.55

1.5

1.45

1.4

1.35

1.3

1.25

1.2

02/01/2018 08/04/2018 12/07/2018 14/10/2018 31/12/2018

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Most important share and market indicators 2018 2017

Percentage of Change

Paid-in capital (million shares) 250.00 250.00 -

Year-end Book Value per share (USD) 1.53 1.69 (9.1)

P/B 0.84 0.89 (5.7)

Closing Price (USD) 1.28 1.50 (14.7)

P E 21.28 55.13 (61.4)

Trading volume (million shares) 21.53 79.48 (72.9)

Trading value (million USD) 28.55 111.70 (74.4)

Turnover ratio 8.61% 31.79% (72.9)

52 week high (USD) 1.53 1.64 (6.7)

52 week low (USD) 1.21 1.01 19.8

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Our Investments

• Sectors and Investments

• Classification of investments for the

purposes of financial reports

• Summary of Investment Performance

JERUSALEM

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Investment SectorsThe total volume of PADICO Holding’s direct investments as at the end of 2018 at book value stood at USD 597.0 million distributed in several economic sectors. The following figure shows the relative distribution of those sectors at the end of 2018.

The financial and service sector represents 70.7% of the total direct investments by mainly investing in Paltel. This is the least affected economic sector by political and economic volatility.

Investment in real estate development comes second after the financial and service sector. PADICO Holding’s investments in this sector represent 12.0% of its total direct investments, by mainly investing in Palestine Real Estate Investment (PRICO), Jericho Gate and Rabiyat Alquds.

As to investments in the tourist sector, they represent 7.4% of the company’s total investments, through investment in Jerusalem Development and Investment Company PADICO Tourism (JEDICO), which is the investment arm of PADICO Holding in the tourist sector.

As to investments in the industrial and agricultural sectors, they account for 6.9% of PADICO Holding’s total direct investments. The infrastructure and environment sector, meanwhile, accounts for 1.3% of the company’s total direct investments, and the industrial cities sector accounts for 1.7% of the company’s total direct investments. The company pays attention to increasing investments in these sectors as part of its plan for the coming years.

InvestmentSectors

7.4%

70.7% The financial and service sector

Tourist Sector

6.9% Industrial AgriculturalSector

1.7% Industrial zonesSector

12.0%Real EstateDevelopment Sector

1.3% Renewable Energy andInfrastructure Sector

Classification of Investments for Financial ReportsThe direct investments are classified into three main groups for the purposes of financial reports: subsidiary companies, affiliate companies and other companies. The following table shows the breakdown of PADICO Holding’s direct investments portfolio based on its accounting classification as at the end of

2018:

Subsidiaries are the companies which PADICO Holding owns more than 50% of their capital or voting rights. This gives it the right to have active participation in drawing up the financial and operating strategies and polices at those companies. As to affiliate companies, they are the companies which PADICO Holding has the ability to substantially influence their financial and operating policies. PADiCO’s stake at those companies usually ranges between 20 and 50%. As to the other companies, they are the companies at which PADICO Holding has no sufficient representation that would enable it to substantially influence their financial and operating policies. PADICO’s stake at those companies is usually less than 20%.

Classification USD million

Subsidiary Companies 178.1

Affiliate Companies 348.0

Other Companies 70.9

Total 597.0

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Summary of Investment PerformanceFinancial and Service Sector

PADICO Holding’s investment at the financial and services sector was about USD 422.0 million, of 70.7%

of the company’s total investments as at the end of 2018.

Paltel Group

Paltel Group is the pioneer of telecommunications sector in Palestine. The company started its operations

in 1997 as a public shareholding company with the aim of providing telecommunications and internet

services in Palestine. This was through the establishment and development of infrastructure that is

necessary for operations and capable of providing the best and latest services to subscribers and of

leading the communications and information technology sector in Palestine. In this way, the company

became the largest operator in Palestine and the largest company in terms of market value in relation to

the total market value of the Palestine Exchange, amounting to 21.8% as at the end of 2018.

Paltel

It provides fixed line phone, high-speed internet, and business sector services, as well as other added services. Paltel, the pioneer of the communications and information technology sector in Palestine, has over the past years committed to using the latest global technologies to ensure its subscribers receive the best communications services.

In 2018, Paltel changed from a company providing communications and infrastructure services to a company providing integrated information and technology services. Paltel network extends from Rafah to Jenin, and the company continues to invest in its network and expand it every year to provide services to every home and facility in Palestine. Today, Paltel network covers more than 36,000 kilometres, serves more than 470,000 subscribers and connects more than 7 million devices to the world at any given moment.

It is the main provider of high-speed internet, fixed line, business sector, connection and data transmission services which enable different business sectors in Palestine to connect to the world and clients. It provides wholesale services to top telecommunications companies and supplies high-tech products.As part of its transitional strategy to provide integrated information services to the business sector, Paltel has set up advanced data centres in al-Bireh and Nablus, with high-quality equipment. All servers provided by Nablus Data Centre were sold and reserved before the Centre was even opened.In 2018, Paltel launched the Paltel app and website. Through these two platforms, subscribers can select and purchase high-tech products available at the Paltel Store. It also launched the Paltel.app, the first platform to use the App. domain, where all Paltel apps are available. This is in addition to a Palestinian business sector app, the Paltel Business Services, which enables business sector subscribers to manage their accounts. It also launched the “Distributors App” which enables them to easily submit subscription applications for all Paltel campaigns and services.

Paltel has established several strategic partnerships to promote its services by signing several agreements in 2018. The most important of these agreements were with the Palestinian Investment Bank, the National Bank, Cairo Amman Bank, al-Ahli Bank and Bank of Jordan, to provide data centre and interconnection services, and connect branches to headquarters via a fibre optics network. This is in addition to signing an agreement with PALPAY to approve it as a channel for subscription to all Paltel services.Paltel continued to expand its network by executing several projects on the copper and fibre optic networks. Examples include projects to shorten distances which were executed in 100 sites, and the installation of solar cell stations in Gaza Strip.

As it highly values its subscribers, Paltel has made major efforts since the beginning of the year to enrich the subscriber experience as part of the “Customer Experience” project. This project is aimed at developing customer support in different aspects, the most important of which are meeting subscriber’s request at the shortest time possible, following up on the request after execution, and improving methods of dealing with subscribers.

And as Paltel always welcomes the young talents and works hard to attract them with unique ways, it has introduced a new feature in the field of recruitment - the Video CV. This feature enables university

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graduates to apply for various jobs at Paltel by filming a video of no more than 90 seconds in which they show the skills and capabilities that would enable them to compete. This demonstrates the company’s ingenuity and innovation in keeping abreast with and adopting the digital technology.Paltel has capped its achievements on social media websites by having its Instagram account verified, thus becoming the first company in Palestine to receive verifications for its three main accounts (Facebook, Twitter and Instagram).

Palestine Cellular Communications Company (Jawwal), the first mobile network operator in Palestine.

Jawwal is the first provider of mobile communications services in Palestine. It provides telecommunication services using the most advanced equipment despite the difficult political, economic and social circumstances facing it.Jawwal seeks to maintain its place on the top of pioneering companies in the Palestinian market, providing highly competent, efficient and professional mobile services to all of its subscribers and overcoming all difficulties and barriers.It also seeks to have a greater role in getting all people closer, unifying them and facilitating their business, and to continue to grow alongside the national economy.Despite the tough political and economic circumstances, Jawwal has been able to achieve solid successes on the ground since its establishment in 1999. It has overcome the obstacles that hindered its progress and established itself as the first mobile network operator in Palestine. It has embodied a Palestinian dream aimed at excellence and innovation by continuously working to efficiently provide the latest mobile services and apps at the Palestinian market at this dynamic and continuously changing sector and to develop a strong and secure network throughout the homeland.It kept pace with modern technology, becoming a provider of 3G services for its subscribers in the West Bank, and is trying to provide the same in Gaza.2018 was nicknamed “3G” as Jawwal launched 3G services in the West Bank at the beginning of the year through varied internet bundles that suit all categories and include all pre-paid, Mix, current and new bill subscribers who have internet-supported devices. The aim is to encourage subscribers to use the internet service which Jawwal provides. Jawwal has already launched many promotions and offers in this regard.In an endeavour to keep up with the latest technology, Jawwal has updated myaccount.jawwal.ps and the MyAccount app, which has witnessed a 40% increase in downloads. It was launched with a new look and a modern design to help subscribers benefit from many services easily. The Enjaz app, launched for high school students, had 40,000 downloads and was used 800,000 times on the day the high school results were announced. This is in addition to the Jawwal platform for games, and Jawwal platform for free browsing apps (JAS). Jawwal Cash, an electronic wallet that enables subscribers to pay their bills at Jawwal, Hadara and Paltel, was also launched. This is because the company always seeks to offer the best services to its subscribers, and provide the latest means for facilitating the provision of these services.In 2018, Jawwal consolidated its presence via the media and the internet, and managed to top the social media presence in Palestine as shown from different statistics and reports. It launched its new service, Chat Bot, via Messenger where it communicates with subscribers, answers their questions and provides different services.

The most important thing that distinguished 2018 was the provision of customer care services via the social media websites. With this, Jawwal became the first company in Palestine to pay attention to this field; something that would reflect on the improvement of its service and quality of its performance.In 2018, the company continued to sponsor different types of Palestinian sports. It launched the World Cup video which had 7 million views and whose news featured prominently on world channels. It continued to sponsor the Palestinian national football team, by renewing the sponsorship agreement, as well as the handball, basketball, volleyball, and car teams. This is in addition to karate, softball, and baseball in Gaza. It also sponsored a variety of sports events and activities in Palestine in association with the relevant associations. At the end of the year, a campaign called the ‘Origin is Palestinian’ was launched to shed light on our ancient history which is the origin of our present and the basis of future development which we aspire to achieve.

Hadara For Technological Investment (Hadara) is the largest internet service provider in Palestine.

Hadara aspires to continue to implement the vision and slogan of “New World” out of its belief that reaching that world would be through its continuous communication with subscribers, by providing the best internet and technical support services and creating a unique digital experience using interactive television and interesting applications.In 2018, Hadara made solid achievements through which it became a pioneer in providing the latest and best internet and technology services and products.In that year, the company launched a number of unique campaigns that provided customers with its services and products through competitive offers aimed at increasing communication with subscribers and meeting their renewed needs in a manner that fulfills their expectations and guarantees their satisfaction. Today, more than 150,000 Hadara subscribers enjoy the company’s services through 11 main centres and more than 300 authorized distributors throughout the country.At the same time, the company has shown its distinguished achievements through the development of the “myhadara” app, a smart solution that represented a unique leap forward for Hadara. This is because it provided privacy to subscribers and gave them direct control over their services and information.It is an integrated system providing a broad and innovative range of services, such as:Controlling the internet through the Super Box Router, and requesting many of the internet services and products which the company and many others provide. My Hadara App was a landmark in the company’s achievements and its major leaps towards digitalization in 2018.Hadara also made community achievements in 2018 through its participation in many local conferences and seminars. It also provided support to various institutions that sponsor and focus on youth, children, students and people with special needs across the country.The company adopted a huge operational plan to continue to provide the strongest products in the Palestinian market, such as the Super Box Router which is known for its strength, durability and stability. It

also provided Hadara TV, which is characterised by diversity and quality of content applications.

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Reach Communications Services, the first specialised communications centre in Palestine.

Reach is the first and largest Palestinian communications center for outsource telecommunications.

Established in 2009, Reach is a member of Paltel group, offering the highest quality performance-driven

services through multi-communication channels.

Reach handles 45,000 calls per day using Cisco IPCC technology, distributed across 260 office units. Our

multi-lingual agents, who make and receive calls around the world, are experts in a variety of industries.

Palestine Exchange

Last year marked a new chapter in the rapid evolutionary approach of the Palestine Exchange’s business

and services at all levels. The agreement which the Exchange signed with NASDAQ earlier that year to

supply the next generation of Xtreme trading platforms was one of the most important events at that

time as it will have an impact on the near future.

Xtreme is the most widely used transactions matching engine across the world, as it combines between

exceptional performance and broad functions to meet the current and future performance requirements.

It is cost effective, especially for small and medium stock exchanges. It can execute more than 100,000

transactions per second. It is expected to go into operation in 2019, and this will enable the Exchange to

provide more products and services to investors. It will also expand options for member companies, by

providing a number of distinguished services to their clients.

The step comes in the framework of continuous endeavours of the Palestine Exchange to keep abreast

with the latest trading applications out of its desire to develop the Palestinian securities sector and

enhance services provided to its members and investors. Palestine Exchange was one of the first Arab

stock exchanges to operate as per the NASDAQ platforms.

Since its establishment, the stock exchange has tried to maintain a distinguished place among regional

and international stock markets. The new systems will have a great effect towards achievement of the

desired goals and vision.

It’s worth-mentioning that investments in these platforms amounted to about USD 3 million as per

the supply agreement. In June 2018, Palestine Exchange announced the launch of services for opening

and managing accounts through the electronic system “BPM” for securities companies as of that date.

These services include opening new trading accounts and updating and changing the status of existing

accounts. This step is part of the automation process of deposit and transfer systems at the Palestine

Exchange to change it to work on the general electronic system “BPM”. The aim is to move from the

traditional work phase to the automated work phase in order to facilitate the implementation of

operations and make them more flexible.

Palestine Real Estate Investment Company (PRICO)

Palestine Real Estate Investment Company (PRICO) is the PADICO Holding’s investment arms in the real estate sector. Since its foundation, the company has completed many huge and distinguished real estate projects, and has consolidated its presence and demonstrated the quality of its real estate business. PRICO has also invested in the renewable and environment-friendly energy sector and has executed many projects in this field both inside and outside Palestine. It has developed its expertise in this field within a short period of time until it became one of the pioneering companies in the field of alternative energy and infrastructure.

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Partnership with the Public Sector

PRICO now runs many projects that are considered to be partnerships with the public sector in Palestine

and outside it, including:

• Awqaf building

• Al-Bireh Central Station

• Scout building

• Park Plaza, Jordan

Residential and commercial projects

PRICO is forging ahead with the development of its real estate plans on all levels, including

administrative and logistical aspects. Now, it’s trying to develop the general concept of residential

complexes (suburbs) and their management. PRICO has invested in many projects, including:

• Al-Ghadir Suburb Project

• Al-Masayef Project

• PRICO House II

Jericho Gate Company for Real Estate Investment

2018 was full of achievements for Jericho Gate Company, as the company made significant developments in the infrastructure of the land of phase I of Jericho Gate Project.There was noticeable development in the third package work which is related to water networks. The same applies to the fourth package work, which is represented in building the electric transformer rooms.During all this, Jericho Gate Company kicked off the fifth package work which is related to building higher and lower water tanks for the project.As to the sixth package work, 14.4% of work related to roads, communications and street lights has been completed.Thus, the infrastructure work of the first phase of project is expected to be completed in the fourth quarter of 2019.As to real estate development of the first phase land of Jericho Gate Project, major progress was made in building residential villas on land sold to developers. Work started on building many of those villas as per modern designs. The building and development work of those villas is expected to be completed in the second quarter of 2020.

Rabiyat al-Quds Project:

Rabiyat al-Quds is a luxurious residential project carried out by PADICO Holding in Beit Sfafa area at the heart of Jerusalem, and more precisely at al-Sharfat neighbourhood. The project consists of 22 residential blocs. It is characterised by its innovative design, and includes an integrated neighbourhood featuring a shared green area enabling residents to live at a community which encourages them to socialise. At the same time, residents’ privacy is maintained by providing full independence for each building. The project provides recreational environment for kids that enables families to observe and watch over them as they play at the green areas between the blocs which are fully protected to ensure children’s safety.As to the categories targeted by the project, the main goal is to reach the largest number of residents who are native to al-Quds, especially as they suffer greatly of a severe shortage of licensed apartments that conform to the conditions and specifications specified by Jerusalem Municipality. As to the other

targeted category, they are Palestinians inside the country who work in al-Quds or wish to invest in it.

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34 35

Industrial Cities Sector

One of the important sectors which PADICO Holding is working on increasing investments at is the industrial cities. Through its PRICO investment arm, PADICO Holding tries to identify the urgent market needs and find effective solutions for problems facing the industrial cities. That is why it has executed

many projects which affect the Palestinian economy as far as the industrial aspect is concerned, including:

Jericho Industrial Agricultural City

Jericho For development, Management and Operation of Industrial Agricultural Zone has been working on establishing the second phase of industrial buildings, which includes twelve industrial buildings in Jericho Industrial Agricultural City, by signing several agreements with a number of construction companies. The number of factories that started operation in the Industrial Agricultural City as at the end of 2018 was 14. The basic services, including electricity, water and communications, were provided to industrial buildings, which were handed over to renters. In addition, 115,000 metres of the site were prepared as a first part of “Phase A” of Stage II of Jericho Industrial Agricultural City.Infrastructure work will be kicked off in mid-2019. The future strategy of marketing and sales is based on opening the door of investments in all industrial sectors while focusing on serious investors and distinguished and promising industries in Palestine. This is in addition to boosting and developing the level of services provided by Jericho Industrial Agricultural City to customers and investors, and enhancing the efficiency of its services to meet the needs and requirements of national and global markets.Efforts are underway to attract foreign strategic partners with major experience in this field, and to expand the scope of co-operation and joint work with different internal and external entities. This would boost development in Jericho Industrial Agricultural City, enhance the level of national industrial products and serve the interests of the Palestinian industrial sector. Jericho Industrial Agricultural City attracts major attention from local and international organisations. Based on the strategic agenda of the aspiring vision of Jericho Industrial Agricultural City to build a solid base of Palestinian products that can compete both regionally and globally, Jericho for Development, Management and Operation of Industrial Agricultural Zone received a number of delegations that visited the agricultural industrial city

to get acquainted with it and with its industries given their effect on the Palestinian economy.

Gaza Industrial City (al-Mantar)

In 2018, an agreement to produce electricity from solar energy was signed to supply Gaza Industrial City

with 7 megawatts of electricity that can be increased and developed. This is considered to be the first of

its type project in Palestine.

Many construction and restoration projects were also executed. The infrastructure of the industrial city

was developed and maintained, and eight electricity rooms, converters, and a project for lighting the

industrial area were completed. A number of wells were also constructed and repaired in the area.

Gaza Industrial City is the first industrial city in Palestine. It is one of the most important environmental

and developmental landmarks given its main role in ending violations related to building industry

facilities within residential areas, on the one hand, and realising the possibility of building small and

medium-sized enterprises, which are the arteries for large industries, on the other hand.

Many delegations and international envoys visited Gaza Industrial City in 2018 to see that major

achievement and discuss ways of enhancing co-operation, investments and development. Such

delegations include:

The French Consulate, the EU Commission and Ambassador, Japan’s Ambassador, Japan’s Special Envoy

for Peace in the Middle East.

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Renewable Energy and Infrastructure Sector

PADICO Holding has paid special attention to the renewable energy and infrastructure sector, and seeks to substantially increase investments in that sector. This is due to its clear effect and benefits on all levels, the most being the environmental and humanitarian aspects. The sector is also expected to generate good revenues in the near future.

Produce electricity from solar energy Project in Gaza Industrial City, Gaza

After signing the financing agreement for the project to produce electricity from solar energy with the World Bank Group and its affiliate institutions last year, PRICO in 2018 had all the necessary licenses issued for the execution of the project to produce up to 7 megawatts which can be increased by about 10 megawatts in the future. All necessary contracts and agreements for starting the implementation of the project were completed after technical and financial studies were conducted to make sure it meets the needs of investors within the city. The aim of the project is to stop the power outages at factories in Gaza Industrial City.

Produce electricity from solar energy Project in Blue Beach Resort, Gaza

Investments were made in the project to produce electricity from solar energy through a connection system that would automatically operate the system via electric generators in case of a power outage. In this way, the system would continue to store solar energy and convert it into electricity. The system supplies electricity to the resort in case electricity supply from the electricity company is cut off. Surplus is transferred to the general company in return for a tariff approved by them. The production capacity of the system is 467 KW.

Waste Water Treatment Project, Jenin

The Wastewater Treatment Project in Jenin aims to enhance and expand the existing wastewater treatment plant by establishing a triple treatment unit to improve water quality and boost processing capacity to recycle water for agricultural use.

After the end of phase I of the project, which included measurements, monitoring and preparation of design for new expansion, the new processing system was installed and the factory productivity was

increased in 2018.

Tourist Sector

PADICO Holding’s investment at the tourist sector was about USD 44.1 million of 7.4% the company’s total investments as at the end of 2018. This is through Jerusalem Development and Investment Company (JEDICO) (PADICO Tourism), the PADICO Holding’s investment arms in the tourist sector.

Jerusalem Development and Investment Company (JEDICO) (PADICO Tourism)

JEDICO was founded in 1997 in the British Virgin Islands as a limited international company with a capital of USD 100 million. It is wholly owned by PADICO Holding.

As part of the process of restructuring PADICO Holding’s investments in the tourist sector, JEDICO was formed to be a holding company to run PADICO Holding’s investments in the tourist sector. The following investments were combined under the company’s investment portfolio: Jerusalem Tourism Investment, Palestine Tourism Investment, al-Mashtal Tourism Investment, in addition to the First Specialized Leisure

Company. Following is a review of JEDICO’s investments in the tourist sector:

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38 39

Palestine Tourism Investment, Jacir Palace Hotel, Bethlehem

Jacir Palace Hotel is one of the most important hotels in Palestine with its own distinguished place in the tourist sector across the country. The hotel is a unique historical landmark that provides the highest levels of services.

In 2018, the hotel was awarded the prize for the best historical hotel in the Middle East and the best classical hotel in the Middle East. It also won the award for best honey moon hotel in Palestine, and was classified as the best hotel in Palestine in terms of design by Haute Grandeur Global Awards.The hotel also contacted the Guinness World Records so as to be included, together with its features, in their world book. In 2018, there was a rise in hotel occupancy rate compared to the previous year. The demand on halls also arose significantly in terms of the number of conferences and special events. This rise in demand may be due to renovation and maintenance work done at the hotel, where a large number of rooms were fully renewed, and work is underway to renew double of that number. A Turkish bath was also added to the health club, and the sports equipment was renewed. The necessary kitchen equipment was also changed in the business club.

Jerusalem Tourism Investment - St. George, JerusalemSt. George Hotel has recently witnessed a steady increase of the number of tourists visiting the Holy Land. There was an increase in the occupancy rate, and more tourist groups chose the hotel for lunch because of its distinguished service and strategic location at the heart of Jerusalem. The hotel received tourist groups from both Western and Arab countries.The hotel received several global and local awards, and in 2017, it added Palestine Exporter Award to its list of achievements in the field of tourism.Work is underway to repair, upgrade and improve the hotel rooms and facilities in terms of maintenance, modernisation of furniture, and decoration. This is in addition to adopting a new reservation programme featuring several benefits and upgrades that would accelerate and modernise the reservation and verification processes.The decoration of Mijana Restaurant was replaced by a new design. This restaurant is characterised by its unique view overlooking the landmarks of Jerusalem and the Church of the Resurrection.It is also characterised by its calm sitting areas and warm atmosphere.It was redesigned to receive guests with a new look and a modern feel. The hotel concluded 2018 with a special celebration, a quiet Christmas atmosphere that attracted a large number of dignitaries, businessmen, directors of tourist companies and hotels. During the event, Mijana Restaurant was inaugurated, and the Christmas tree was lit. The event also featured many classical musicals, and a direct show by musicians on saxophone, organ and drums. Meanwhile, the staff excelled in offering a variety of elegant dishes that suit the splendour of the event.

Al-Mashtal Tourism Investment, Al-Mashtal Hotel, Gaza

The deteriorating economic situation in Gaza Strip is casting a shadow on the performance of the tourist sector. The sector suffered a major decline in 2018 due to the continued closure of crossings and long power outages. Domestic tourism also declined because of closure, high prices and cuts of salaries of public sector and university and college employees in Gaza, leading to a drop in the number of guests.Despite these unfavourable circumstances, al-Mashtal Hotel continued to provide most of the basic

40 41

services while maintaining a good level of revenues covering most of the operating costs.By the end of 2018, the hotel signed an agreement to provide catering services to Jawwal employees in Gaza; something that would boost the hotel’s operation.Al-Mashtal is the only 5-star hotel in Gaza.It has 222 rooms and suites, a large banquet hall, six halls for the service of businessmen, institutions and organisations, a large swimming pool, cafes and restaurants. It is one of the largest tourist projects in Palestine and was built as per the latest international standards.

Executive Club

As part of changes in the business club identity, a new name was adopted to reflect the new identity EC Health Club and SPA. It was promoted via social media websites, correspondence, ads and promotions.2018 aimed to bring every member of the family under one roof.An evening women-only hall was added, together with a sports gym for children, and a number of physical fitness classes were expanded. Meanwhile, elite standards in terms of current facilities and services were maintained.The club offers a unique physical fitness experience with professional trainers providing guidance, motivation and support to trainees so they can realise their sports goals, including losing weight, as per

the latest physical fitness techniques.

Industrial Agricultural Sector

PADICO Holding’s investment at this sector was about USD 41.3 million of 6.9% the company’s total investments at the end of 2018.

Palestine Industrial Investment Company

Palestine Industrial Investment Company was founded in 1995 at an initiative from PADICO Holding as

a public shareholding company with a capital of JD 15 million. Over time, the capital was raised to JD

18.75 million through the capitalization of profits to keep up with progress in the company’s operations.

The company’s head office is located in Nablus where the company engages in business through a

number of subsidiary and affiliate companies in different provinces.

The company’s closing statements for the 2018 fiscal year indicate that the company’s consolidated net

profits amounted to JD 3.5 million from all of its investments in subsidiary and affiliate companies, as

compared to JD 5.5 million in 2017 a drop of 36%.

The company’s consolidated revenues in 2018 amounted to JD 41.05 million, as compared to JD 46.49

million in 2017. The company’s revenues were affected by the drop of revenues of Palestine Poultry

Company as a result of the poultry market turbulence during the year.

Following is a review of the most important investments of Palestine Industrial Investment Company:

Palestine Poultry Company “Aziza”:

Palestine Poultry Company is a pioneer in the poultry industry in Palestine. It is distinguished for being the only integrated company in the poultry sector, as it owns the largest and most advanced projects across the entire chain of production as follows:

Fodder factory, broiler breeder chicken farms, egg-laying chickens, broiler chickens, chicken slaughterhouse, and Aziza chicken selling points.

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Investments in the company’s projects amounted to about JD 35 million, while the number of employees

was 269. The company’s investments are distributed in Tulkarm, Jenin, Jericho, and Qalqilya. Its products

are sold across the country through shops and selling points.

The company’s business evolved to include other investments in the animal wealth sector. In 2018, the

company established its first investments in the cow sector, which will enter into production in the

first quarter of 2019 as part of the company’s strategy to diversify its sources of income and expand its

activities.

In 2018, the poultry sector faced a severe collapse in prices resulting from dumping the Palestinian

market with the surplus of production of the 1948 land market, which mostly entered the Palestinian

market illegally.

The closing financial statements for the year 2018 indicate that the company’s sales during the year

amounted to JD 30.27 million, as compared to JD 35.08 million in 2017. The net profit for the year after

tax, meanwhile, amounted to JD 0.84 million, as compared to JD 3.18 million in 2017.

National Carton Industry Company (NCIC):

NCIC was established in 1989 as a private shareholding company with a capital of JD 600,000. By 1993,

it was transformed into a public shareholding company, and its capital was raised to USD 5 million by

attracting new investors.

The company is one of the leading manufacturers of processed carton in Palestine. It produces cartons

of different shapes and sizes and markets its products in the local Palestinian market. It is the first

Palestinian company to obtain a license in the field of cardboard industry. It has many elements that

enable it to improve its performance and to look for new investment opportunities in the packaging

industry which is characterised by renovation and rapid development.

In 2018, the company invested in a line for the production of corrugated cartonboard, which is mainly

used in making cartons. This is expected to enhance the company’s competitiveness by ensuring integrated

production and reducing production costs. This line will start commercial production in January 2019.

The company’s closing statements for 2018 indicate that its net losses amounted to $163,000, as compared

to net profits after tax of $158,000 in 2017.

Al-Pinar General Trading Company (PGTC):

PGTC is a pioneering shareholding Palestinian company in the field of dairy products. It is located in

Al-Bireh industrial zone. It was established in 1999 as a company specialising in milk, cheese, yoghurt,

and sweetener production. During the past years, the company realised growth in all operational and

financial performance indicators, with its revenues arising by a rate of 10% in each of the last three

years. It also achieved a major leap in its net profits in the last three years which followed the acquisition.

The company started implementing a plan for administrative and institutional development. This is

in addition to developing its products, as funds are injected to finance the development plan, which

includes establishing a new factory that would enable it to become one of the most important dairy

products companies in Palestine.

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Vegetable Oils Industries Company (VOIC)

VOIC, established in 1953 in Nablus, is the first factory for refining vegetable oil in the Middle East. Its

work is focused on producing margarine and vegetable oils after refining and processing them so they

become fit for human consumption. The company also owns a 25% stake in the National Beverages

Company.

In 2018, its net income after tax was JD 6.39 million.

Golden Wheat Mills Company (GWMC)

GWMC, established in 1995, has the latest equipment, installations and facilities in the Middle East. It

has a daily production capacity of about 450 tonnes.

The company produces various types of flour, as well as other products such as semolina and bran. The

company is currently exploring many opportunities and projects, such as a corn flour production unit,

noodle manufacturing unit, and a biscuit project. In all of these projects, flour is the main component,

and the aim here is to ensure the integration of these industries and market them in the local market

and Arab markets.

The company has achieved remarkable growth in its sales in recent years, with its 2018 closing financial

statements indicating that its sales amounted to JD 8.91 million, and that its net income after taxes was

JD 74,000.

Jordan Vegetable Oil:

The Jordan Vegetable Oil Company is specialised in the production of 100% vegetable margarine from

non-hydrogenated palm oil, refined corn oil, soybean oil and sunflower oil.

Established in 1953 as a public shareholding company with a capital of JD 500,000, which was raised to JD

3 million in 1998, and later to JD 4 million, the company is one of the oldest vegetable oil manufacturers

in the Arab world.

In 2018, the total production was 3,866 tonnes of margarine, as compared with 3,828 tonnes of margarine

and oils in 2017. The company froze the oil production due to the current market conditions.

Sales in the last year amounted to about 3,781 tonnes of margarine and oils, mostly at the Jordanian

local market. In 2018, the value of sales was JD 5.23 million.

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Nakheel Palestinian for Agricultural Investment:

In 2018, there was a noticeable growth in the turnover of Nakheel Palestine for Agricultural Investment

after completing the acquisition of al-Sultan for Fresh Fruits, and boosting the productivity of packing

and storage capacity.

The company was able to complete agricultural, packing and marketing work for 2018-2019 season at

record time and high quality, thus introducing Palestinian Medjool dates to global markets.

The company is still successfully marketing its products in more than 20 countries, including:

New Zealand, Malaysia, Indonesia, Qatar, UAE, Kuwait, Lebanon, Turkey, Italy, Norway, Sweden, UK,

Mauritius, US, Canada, Argentina and Brazil.

The company developed marketing at those markets through effective participations in global food

exhibitions, such as SIAL Paris, SIAL Abu Dhabi, and Gulfood which is held annually in Dubai.

With the rise of production capacity and increase of storage capacity to accommodate for up to 2,000

tonnes in 2019, the general meeting of Nakheel Palestine for Agricultural Investment raised the

company’s capital by USD 4 million, to USD 19 million.

The company also attracted local expertise in the field of agricultural investment and operation

management, thus raising the number of permanent staff members to 80 male and female employees.

In co-operation with Palestinian educational institutions and universities, the company also sponsors a

number of students through scholarships, and encourages education in the fields of agriculture, food

safety and manufacturing.

There are about 42,000 palm trees on an area of 3.5 million square metres. The company uses the latest

technology in agriculture, irrigation, and scientific research to enhance product quality.

The company is the biggest employer at the agricultural sector, with about 500 male and female seasonal

workers.

It’s worth mentioning that the company has been awarded several local and global certificates, including

al-Halal certificates which are given by the Palestinian Standards Institution. It also won the Global G.A.P

certificate, and the Food Safety System 22000 because it adopts the global food safety system as it

successfully passes verification every year.

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Future Vision

HEBRON

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Future VisionFollowing is the general framework of PADICO Holding trends and future plans for the next few years:

• Focusing on improving operational processes at all companies and projects where PADICO Holding

and its subsidiaries have investment. This is through raising competency and enhancing efficiency at

all operation and production centres by rationalising administrative expenses, controlling operating

costs and enhancing revenues and diversifying their sources.

• Paying more attention to projects and companies operating at vital sectors where PADICO Holding is

currently investing, especially the real estate, construction, industrial cities, and alternative energy

sectors whereby these investments become a main driving force for medium and long-term profits.

This is through expanding the base of those investments by entering in new projects and ideally

using the assets and potential of current projects.

• Focusing efforts on the investments which are still putting burdens on the group’s annual profits,

especially the tourist sector companies, and turning them from losing companies to profitable

companies on the short and medium term.

• Investing in new development projects at promising sectors and focusing on infrastructure and

clean energy sectors.

• Reducing the indebtedness of PADICO Holding so as to be restricted to supporting loans over the

next five years. 

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Social Responsibility

GAZA

54 55

Our Community Commitments and Intellectual LeadershipPADICO Holding continues to develop its sustainable, established development and community programmes as part of its annual plans and strategy in co-operation with stakeholders at all sectors. This is to realise the community goal of PADICO Holding and its subsidiaries and affiliates, and to promote the Palestinian society.Since its launch more than two decades ago as a national investment company, PADICO HOLDING has been distinguished for its exceptional community and development roles. The company has committed to implementing and supporting outstanding community programmes that made it one of the pioneering Palestinian institutions in the field. Over the past twenty-four years, the company has been keen on developing its community programmes and diversifying them to include all vital fields to realise sustainable development, including economic, social, educational, artistic, cultural and pioneering fields. This is in addition to paying special attention to youth as the cornerstone and driving force for any real revival.PADICO Holding’s strategy is characterised by four main features:• Proactive study of community conditions• Sustainability and strategic course• Deliberate support to vital and effective fields• Partnership and institutionalisation of community workPADICO Holding and its group of companies continued with their strenuous efforts in 2018 as part of their organised community development orientation through the programmes and projects they adopt and target. Education:PADICO Holding believes that education is the cornerstone for achieving the desired development goals. Therefore, the educational sector has always been an area of interest for PADICO Holding, whether by supporting educational funds, offering scholarships, networking and communicating with universities or sponsoring various educational activities.In 2018, PADICO Holding diversified its activities in the field of education. The company continued to provide direct annual support to university students through its special scholarship programme which aims to help students in need cover their tuition fees for their various programs at local universities. Hundreds of university students across Palestine have benefited from this programme since its launch.PADICO Holding also continued to support the activities and educational programmes of INJAZ Palestine, an independent Palestinian organization managed and sponsored by a number of Palestinian companies. It aims to promote economic opportunities for Palestinian youth by offering a series of economic educational courses characterised by a practical nature at schools and universities and delivered through male and female volunteers from the private sector.Over the past years, PADICO Holding continued to provide support for the Physics and Mathematics Scholarship Fund at Palestinian universities, which is managed by the Palestinian Economic Council for Development and Reconstruction (PECDAR).PADICO Holding also provided support to Palestinian students at Swarthmore University as part of educational and cultural exchanges for the purpose of shedding light on Palestine and Palestinians and

offering university scholarships for Palestinian students.PADICO Holding is also keen on supporting and qualifying fresh graduates and providing them with the necessary skills and experience required for the labour market through cooperation with Massark Programme, which is concerned with enabling graduates to find jobs.In 2018, PADICO Holding trained and employed a large number of graduates at its main office and offices of its subsidiaries.

Support to civil society organisations:As part of its efforts to provide knowledge and a broad database to serve the community, PADICO Holding sponsored development of the Palestine Trade Centre (PALTRADE).It also provided major support to civil society and community organisations in Jericho.

Sports Sector:Out of its belief in the importance of promoting sports for youngsters and youth, and with the growing need to support and encourage young people to engage in local sports, and to enable them to participate and raise the name of Palestine in regional and international events, PADICO Holding sponsored and supported several clubs and sports events. Through those clubs, it sponsored 5 athletic children and met their needs to enable them to take part in two international championships. The sponsored team won 2 silver medals and 4 bronze medals. The team also won the best player award in honour of their outstanding performance in the tournament.

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BETHLEHEM

Financial Performance in 2018

• Financial Performance in 2018

• Key Financial Indicators

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Financial Performance in 2018Summary of Financial Results

In 2018, PADICO Holding achieved solid growth in its results amounted to 213%, with consolidated

net profit of USD 15.54 million in 2018, as compared to USD 4.96 million in the previous year. This was

resulted of improvment performance of a number of subsidiaries, especially PADICO Tourism, which

achieved growth in its results of operations amounting to 40.8%, and Palestine Real Estate Investment

(PRICO), which cut its net losses by 71.1%. On the other hand, the performance of Palestine Industrial

Investment Company (PIIC) declined by 36.5% as a result of the decline of performance of Palestine

Poultry Company (PPC) which substantially affected by market conditions and decrease of poultry prices.

Growth in performance of PADICO Holding in 2018 was supported by a cut in administrative expenses

of group’s companies as a direct result of the restructuring process which PADICO Holding and its

subsidiaries implemented in 2017.

Consolidated Revenues

In 2018, Consolidated Revenues amounted to USD 121.18 million, as compared to USD 142.20 million

in 2017, a decrease of 14.8%. This was the result of a decrease in Operating Revenues by 20.1%,

from USD 108.28 million in 2017 to USD 86.53 million in 2018. PADICO share of associates result of

operation decreased slightly by 2.9%, from USD 33.89 million in 2017 to USD 32.91 million in 2018. This

is due to drop of Paltel profits, from USD 99.47 million in 2017 to USD 94.63 million in 2018. However,

The Gains of Financial Assets Portfolio and Others was increased to USD 1.74 million from USD 0.03

million in 2018. Encompass represents cash dividends from investments in financial assets and unrealized

revaluation gains generated from them in 2018.

Table (1) Consolidated Revenues

Item 2018 2017 % Change

Operating Income of Subsidiaries 86.53 108.28 (20.1)

Padico Share of Associates Result of Operation 32.91 33.89 (2.9)

Gains of Financial Assets Portfolio and Others 1.74 0.03 5020.6

Total Consolidated Revenues 121.18 142.20 (14.8)

USD million

USD million

Consolidated Expenses

Consolidated Expenses decreased by 14.6%, from USD 121.80 million in 2017 to USD 103.97 million in

2018. This is mainly due to a decrease in Operating Expenses of Subsidiaries by 18.6%, which were

USD 64.13 million in 2018, as compared to USD 78.77 million in 2017. Meanwhile, operating revenues

decreased by 20.1% as mentioned earlier.

Consolidated General and Administrative Expenses decreased by 21.6%, from USD 19.17 million

in 2017 to USD 15.02 million in 2018. This was the result of the cost cutting and control policy which

PADICO implemented as mentioned earlier.

Table (2) Consolidated Expenses

As to the Consolidated Finance Cost, they increased by 6.4%, from USD 13.79 million in 2017 to USD

14.67 million in 2018 due to the increase in the average consolidated debt by 8.7%, from USD 248.14

million in 2017 to USD 269.79 million in 2018. This was in addition to the rise of international interest

rates (LIBOR).

Consolidated Depreciation and Amortization expenses increased slightly, from USD 10.08 million in

2017 to USD 10.15 million by 0.7%.

Item 2018 2017 % Change

Operating Expenses 64.13 78.77 (18.6)

General, Administrative, Sale and Marketing Expenses 15.02 19.17 (21.6)

Finance Cost 14.67 13.79 6.4

Depreciation and Amortization 10.15 10.08 0.7

Total Consolidated Expenses 103.97 121.80 (14.6)

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Item 31/12/2018 % of total 31/12/2017 % of total % Change

Cash and Financial Assets at Fair ValueThrough Profit or Loss

18.85 2.2 24.71 2.9 (23.7)

Accounts Receivables and Other CurrentAssets

47.78 5.7 66.79 7.9 (28.5)

Inventories and Ready for SalesProperties

32.19 3.8 32.48 3.8 (0.9)

Financial Assets at Fair Value ThroughOther Comprehensive Income

82.09 9.8 31.38 3.7 161.6

Investments in Associates Companies 367.85 43.9 400.19 47.2 (8.0)

Investment Properties 94.72 11.3 94.23 11.1 0.5

PPE, Projects In Progress, and IntangibleAssets 194.56 23.2 197.75 23.3 (1.6)

Total Assets 838.02 100.0 847.53 100.0 (1.1)

Summary of Consolidated Financial Position

Consolidated Assets

The Consolidated Assets amounted to USD 838.02 million as at the end of 2018, including 10.7% current assets and 89.3% non-current assets. The following table shows the allocation of the company’s assets and investments as at the end of 2018, as compared to the end of 2017.

Table (3) Assets Allocation

Cash and Financial Assets at Fair Value Through the Profits or Loss amounted to USD 18.85

million as at the end of 2018, representing 2.2% of total assets. Accounts Receivables and Other

Assets decreased from USD 66.79 million in 2017 to USD 47.78 million in 2018.

Inventories and Ready-for-Sale Properties represented 3.8% of total assets, as it was USD 32.19

million at the end of 2018. It mainly represents the inventories in both PRICO and PIIC. Meanwhile,

The Financial Assets Portfolio at Fair Value Through Other Comprehensive Income amounted

to USD 82.09 million as at the end of 2018, as compared to USD 31.38 million in 2017, an increase of

161.6%. This is because PADICO raised its investment portfolio during the third quarter of 2018 by

purchasing shares listed in the Amman Stock Exchange. This will help boost the group’s profitability and

diversify its sources of profit.

As far as Investments In Associates Companies are concerned, they amounted to USD 367.85 million

as at the end of 2018, representing 43.9% of total assets. The larger part of this represents PADICO

Holding’s investment in Paltel.

As to Properties Investments, they represented 11.3% of total assets, and amounted to USD 94.72

million as at the end of 2018. This item includes all the investments of the group and subsidiaries

companies in land and properties, especially with Jericho Gate and PRICO. The value of these investments

appears at their historical cost in the consolidated financial statements, and unrealized gains from them

are not recorded, neither in the statement of income or shareholders’ equity.

PPE, Projects in Progress, and Intangible Assets was USD 194.56 million as at the end of 2018,

representing 23.2% of total assets.

Allocation of Assets andInvestments

10%44%Investments in

Associates Companies Financial Assets at Fair Value ThroughOther Comprehensive Income

11% Current Assets

1% Other Assets

23%PPE, Projects in Progress,and Intangible Assets

11% Investment Properties

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USD million

62 63

Consolidated Liabilities

Total Consolidated Liabilities amounted to USD 361.51 million as at the end of 2018, as compared to

USD 327.51 million at the end of 2017, an increase of USD 33.99 million by 10.4%.

Total Debt (Bonds, Loans and Credit Facilities) represented about 81% of total consolidated

liabilities. Consolidated debt increased by 17.9%, from USD 247.66 million at the end of 2017 to USD

291.92 million at the end of 2018. Due to new borrowing to finance expansion of investments portfolio,

as mentioned earlier. The total consolidated borrowing represents 34.8% and 61.3% of the total

consolidated assets and consolidated shareholders’ equity, respectively.

The following table shows the consolidated debt distributed to group companies:

Other Liabilities represent 19% of total liabilities amounting to USD 69.58 million as at the end of 2018. Most of these accounts are trade payables related to the operations of subsidiaries. The rest represent provisions allowances and other liabilities, Including dividends provisions, provisions for income tax and provision for employees’ indemnity.

ConsolidatedLiabilities

Destribution

48% Loans

19% Other Liabilities

33% Bonds

Item Debt % Debt/Shareholders’ equity % Debt/total assets

PADICO Holding 209.95 54.8 34.1

PRICO 26.96 39.1 20.8

PIIC 26.18 40.7 25.0

JEDICO 11.55 20.4 16.0

Other Subsidiaries 17.28 29.6 18.0

Total Consolidated Debt 291.92 61.3 34.8

Equity

The Equity Attributable to Equity Holders of Parent was USD 382.82 million at the end of 2018. It

consists of Paid in Capital of USD 250 million, and Retained Earnings of USD 129.91 million, as well

as Reserves and Other Items of USD 2.91 million. Hens, the book value per share was amounted to

USD 1.53 at the end of 2018, which exceeds the share market price by 19.8% (USD 1.28 per share). As to

Non-Controlling Interest, it amounted to USD 93.70 million at the end of 2018. It represents 19.7% of

the total equity, which amounted to USD 476.51 million at the end of 2018, as shown in the following

table.

Table (4) Owners Equity

Liabilities and Equity

Distribution93.70

382.82 Equity Attributable toEquity Holdersof Parent

Non-ControllingInterest

361.51 Liabilities

Item 31/12/2018 % of total 31/12/2017 % of total % Change

Paid-in Capital 250.00 52.5 250.00 48.1 0.00

Reserves and Other Items 2.91 0.6 8.13 1.6 (64.2)

Retained Earnings 129.91 27.3 162.83 31.3 (20.2)

Equity Attributable to Equity Holders of Parent

382.82 80.3 420.96 81.0 )9.0(

Non-Controlling Interest 93.70 19.7 99.06 19.0 (5.4)

Total Equity 476.51 100.0 520.01 100.0 (8.4)

USD million

USD million

64 65

Key Financial Indicators

Key Items of Consolidated IncomeStatement and Indicators

2018 2017 % Change

Total Consolidated Revenues 121.18 142.20 (14.8)

Profits Before Income Tax 16.22 6.27 158.6

Profit Attributable to Equity Holders of The Parent Company

15.01 6.79 121.0

Consolidated Profit 15.54 4.96 213.0

EPS (cent) 6.01 2.72 121.0

ROE 3.12% 0.94% 232.0

ROA 1.84% 0.59% 212.6

Key items of consolidatedstatement of financial position

31/12/2018 31/12/2017 % Change

Total Assets 838.02 847.53 (1.1)

Total Liabilities 361.51 327.51 10.4

Shareholders’ Equity 476.51 520.01 (8.4)

Debt 291.92 247.66 17.9

Debt Service Ratio 2.80 2.19 27.9

Current Ratio 0.83 1.15 (27.9)

vv

Difference Between Final and PreliminaryDisclosure There was no difference in the consolidated net profit between the final and preliminary disclosures. As noted in the consolidated financial statements, the consolidated net profit amounted to USD 15.5 million, which is not different from the disclosed profit in the preliminary financial statements, which were disclosed on February 17th, 2019. However, there are some minor differences in the items of revenues and expenses that resulted mainly from reclassification. The same applies to the items of the consolidated financial position as there were certain differences in many items of assets and liabilities as a result of reclassification as required by international accounting standards (IAS) and international financial report standards (IFRS).The reclassification resulted in a decrease in total assets of USD 2.6 million offset by a decrease in total liabilities and equity in the same value.

Compensation of Key Management Personnel and Board of DirectorsThe compensation of PADICO Holding board members and its subsidiaries companies amounted to USD 592 thousand in 2018, of which USD 360 thousand belonged to PADICO Holding board. The salaries and benefits of top managment at PADICO Holding and its subsidiaries amounted to USD 2,933 thousand,

of which USD 675 thousand related to the top management of PADICO Holding.

USD million

USD million

66 67

Consolidated Financial Statements31 December 2018

Palestine Development and Investment Limited(PADICO HOLDING)

JERICHO

68 69

70 71

72 73

74 75

The attached notes 1 to 42 form part of these consolidated financial statements 1

Palestine Development and Investment Limited (PADICO)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at December 31, 2018 (U.S. $ 000’s) 2018 2017 Notes U.S. $ U.S. $ Assets Non-current assets Property, plant and equipment 6 148,261 154,247 Intangible assets 7 34,287 33,591 Investment properties 8 94,715 94,225 Projects in progress 9 12,007 9,915 Investment in associates 10 367,850 400,187 Financial assets at fair value through other

comprehensive income 11

82,085 31,381 Long term accounts receivable 13 8,939 11,113 748,144 734,659 Current assets Inventories and ready for sale properties 12 32,192 32,481 Accounts receivable and other current assets 13 38,840 55,680 Financial assets at fair value through profit or loss 14 11,678 5,209 Cash and short-term deposits 15 7,167 19,497 89,877 112,867 Total assets 838,021 847,526 Equity and liabilities Equity Paid-in share capital 16 250,000 250,000 Share premium 16,932 16,932 Treasury shares 17 (361) (361) Statutory reserve 18,3 28,158 31,934 Voluntarily reserve 18 1,594 1,594 Fair value reserve 11,3 (45,084) (46,443) Foreign currency translation reserve 1,674 4,470 Retained earnings 3 129,905 162,829 Equity attributable to equity holders of the parent 382,818 420,955 Non-controlling interests 5 93,696 99,057 Total equity 476,514 520,012 Non - current liabilities Long-term loans and borrowings 20 116,060 89,644 Debt bonds 21 120,000 120,000 Provision for employees’ indemnity 22 6,201 6,452 Other non-current liabilities 23 10,877 13,281 253,138 229,377 Current liabilities Credit facilities, Islamic financing and short-term portion

of long-term loans and borrowings 20

55,864 38,019 Accounts and notes payable 24 15,569 20,116 Other current liabilities 25 35,958 38,971 Provision for income tax 26 978 1,031 108,369 98,137 Total liabilities 361,507 327,514 Total equity and liabilities 838,021 847,526

The attached notes 1 to 42 form part of these consolidated financial statements 2

Palestine Development and Investment Limited (PADICO)

CONSOLIDATED INCOME STATEMENT For the Year Ended December 31, 2018 (U.S. $ 000’s)

2018 2017 Notes U.S. $ U.S. $

Revenues Revenues from contracts with customers 27 80,424 102,224

Share of associates’ results of operations 10 32,913 33,889 Rent Revenues 6,106 6,052 Gains (Losses) from financial assets portfolio 28 1,741 (33) Gain from sale of investment properties 8 - 67 121,184 142,199 Expenses Operating expenses and costs 29 (64,132) (78,767) General and administrative expenses 30 (15,016) (19,165) Finance costs (14,669) (13,787) Depreciation and amortization 31 (10,150) (10,078) 17,217 20,402 Other expenses and provisions, net 32 (1,001) (14,132) Profit before income tax 16,216 6,270 Income tax expense 26 (677) (1,306) Profit for the year 15,539 4,964 Attributable to:

Equity holders of the parent 15,013 6,792 Non-controlling interests 526 (1,828)

15,539 4,964 Basic and diluted earnings per share attributable to

equity holders of the parent 33

0.06 0.03

76 77

The attached notes 1 to 42 form part of these consolidated financial statements 3

Palestine Development and Investment Limited (PADICO)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the Year Ended December 31, 2018 (U.S. $ 000’s)

2018 2017 U.S. $ U.S. $ Profit for the year 15,539 4,964 Other comprehensive income items Items not to be reclassified to consolidated income

statement in subsequent periods:

Net loss of financial assets at fair value through

comprehensive income

(2,053) (7,111) Share of associates’ other comprehensive income

items

2,401 (8,009) 348 (15,120) Items to be reclassified to consolidated income

statement in subsequent periods:

Foreign currency translation differences (3,799) 5,440 Share of associates’ other comprehensive income

items

(945) 771 (4,744) 6,211 Total other comprehensive income items for the

year

(4,396) (8,909) Net comprehensive income for the year 11,143 (3,945) A