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Name | Symbol | Market | Type |
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Madinet Masr For Housing and Development | LSE:MNHD | London | Depository Receipt |
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TIDMMNHD
RNS Number : 7916J
Madinet Nasr for Housing & Develop.
21 August 2019
Nasr City 6-2019E
Madinet Nasr for Housing and Development S.A.E.
SUMMARIZED SEPARATE
Interim FINANCIAL STATEMENTS
and limited review report thereon
AT 30 June 2019
LIMITED REVIEW REPORT ON THE SUMMARY INTERIM
SEPARATE FINANCIAL STATEMENTS
TO THE BOARD OF DIRECTORS OF
Madinet Nasr for Housing and Development S.A.E.
We have reviewed the interim separate financial statements of Madinet Nasr for Housing and Development S.A.E. for the period from 1 January 2019 to 30 June 2019, from which the attached summary interim separate financial statements are derived, in accordance with the Egyptian Standards on Auditing and the relevant laws and regulations. As stated in our Arabic review report dated 18 August 2019, we expressed an unqualified review conclusion on the separate financial statements for the period then ended, from which the attached summary interim separate financial statements are derived.
In our opinion, the attached summary interim separate financial statements are consistent in all material respects, with the interim separate financial statements for the period then ended.
In order to obtain a comprehensive understanding of the company's separate financial position as of 30 June 2019, the results of its operations for the period then ended and our scope of limited review, you should refer to the Arabic interim separate financial statements for the period then ended and our review report thereon.
Mohanad T. Khaled
Fellow of ACCA
Fellow of ESAA
R.A.A. 22444
FRA No. 375
Cairo, 21 August 2019
Madinet Nasr for Housing and Development S.A.E.
SEPARATE STATEMENT OF FINANCIAL POSITION
At 30 June 2019
30/6/2019 31/12/2018 Note L.E. L.E. Non-current Assets Fixed assets (Net) 4/1 40,915,195 42,801,213 Projects under construction 4/2 17,063,206 17,482,227 Investment in subsidiaries 5/1 69,428,513 75,428,513 Held to maturity investments 5/2 121,962 121,962 Available for sale investments 5/3 4,514,110 4,514,110 Investment properties 5/4 4,252,966 4,282,547 Long term notes receivables (Net) 7 6,368,785,613 6,149,282,308 Deferred tax assets 20 2,441,465 1,878,565 Total non-current assets 6,507,523,030 6,295,791,445 --------------- --------------- Current Assets Housing and development projects - WIP 6 1,829,246,532 1,455,180,109 Housing and development projects - Finished properties 6 78,545,714 78,545,714 Inventory - materials 1,419,959 657,387 Short term notes receivable 7 2,455,587,808 2,239,238,936 Trade receivables (Net) 7 362,140,813 401,120,522 Trade payables - debit balances (Net) 8/1 309,968,274 138,214,653 Debtors and other debit balances 9 317,554,244 264,803,270 Investments at fair value through profit or loss 5/5 12,697,753 12,169,504 Held to maturity investments - Treasury bills 5/6 - 115,893,797 Bank deposits for projects maintenance 19 372,364,497 338,488,109 Cash and bank balances 10 695,854,636 394,278,740 Total current assets 6,435,380,230 5,438,590,741 --------------- --------------- Total assets 12,942,903,260 11,734,382,186 =============== =============== Equity Issued and paid up capital 16 1,440,000,000 1,200,000,000 Legal reserve 223,961,329 170,478,648 Retained earnings 1,566,086,623 894,645,685 Net profit for the period/year 511,268,237 1,069,653,619 Total shareholders' equity 3,741,316,189 3,334,777,952 --------------- --------------- Non-current Liabilities Unearned revenue 11 7,285,304,789 6,694,922,866 Term loans 17 227,091,983 238,780,101 Long term notes payable 15 19,627,962 39,255,924 Total non-current liabilities 7,532,024,734 6,972,958,891 --------------- --------------- Current Liabilities Provisions 12 78,954,518 79,954,518 Project infrastructure completion liabilities 13 112,189,904 116,553,019 Creditors and other credit balances 15 221,161,813 201,521,850 Current portion of long term loans 17 97,196,776 137,768,093 Short term loans 18 366,666,119 111,666,664 Bank's overdraft (credit facilities) 119,509,890 12,231,854 Creditors of deposits for projects maintenance 19 373,293,427 340,312,213 Trade payables 8/2 109,788,186 103,619,136 Tax Authority 160,003,546 311,058,047 Dividends payable 30,798,158 11,959,949 Total current liabilities 1,669,562,337 1,426,645,343 --------------- --------------- Total liabilities 9,201,587,071 8,399,604,234 --------------- --------------- Total Equity and Liabilities 12,942,903,260 11,734,382,186 =============== ===============
Limited review' report "attached".
CFO & Head of Investors Relationships Managing Director Chairman --------------------------------------- ------------------------- ---------------------------- Mr. Mohamed Abdelsalam Eng. Ahmed Ali Elhitamy Eng. Mohamed Hazem Barakat
Madinet Nasr for Housing and Development S.A.E.
SEPARATE STATEMENT OF INCOME
For the period from 1 January to 30 June 2019
From 1/1/2019 to From 1/1/2018 to From 1/4/2019 to From 1/4/2018 to 30/6/2019 30/6/2018 30/6/2019 30/6/2018 Note L.E. L.E. L.E. L.E. Net revenue 22-a 937,387,919 1,022,542,154 367,017,860 477,238,966 Less: Cost of revenue 22-b (164,624,597) (103,123,789) (60,759,805) (43,045,659) -------------------- -------------------- --------------------- --------------------- Gross Profit 772,763,322 919,418,365 306,258,055 434,193,307 Less: Selling & marketing expenses 23 (102,929,037) (120,366,161) (55,426,859) (83,651,778) General & administrative expenses 24 (57,857,097) (35,341,889) (31,705,861) (14,344,103) Provisions - (3,453,944) - - Finance cost (34,518,282) (56,968,824) (23,136,973) (29,722,770) Add: Finance income 25 38,119,347 11,587,485 19,156,639 6,203,222 Relevant to activity income 26 51,378,334 23,994,446 23,594,379 12,906,805 -------------------- -------------------- --------------------- --------------------- Profit from operations 666,956,587 738,869,478 238,739,380 325,584,683 Return on 1,920,006 - - - investments in subsidiaries Return on investments held to maturity 623,663 41,715 497,663 - Impairment in investments in subsidiaries 5/1 (6,000,000) (16,250,000) (6,000,000) (8,125,000) Reverse of impairment in investments in subsidiaries 5/1 - 19,518,646 - -
Other expenses 27 (2,939,003) (664,099) (1,024,905) (210,194) -------------------- -------------------- --------------------- --------------------- Net profit for the period before tax 660,561,253 741,515,740 232,212,138 317,249,489 Income tax 21 (149,855,916) (167,260,790) (50,924,410) (71,880,285) Deferred tax 20 562,900 133,892 (2,149,178) 123,972 Net profit for the period 511,268,237 574,388,842 179,138,550 245,493,176 ==================== ==================== ===================== ===================== Earnings per share for the period 28 0.32 0.37 0.11 0.16 ==================== ==================== ===================== ===================== CFO & Head of Investors Relationships Managing Director Chairman --------------------------------------- ------------------------- ---------------------------- Mr. Mohamed Abdelsalam Eng. Ahmed Ali Elhitamy Eng. Mohamed Hazem Barakat
Madinet Nasr for Housing and Development S.A.E.
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
For the period from 1 January to 30 June 2019
From 1/1/2019 to From 1/1/2018 to From 1/4/2019 to From 1/4/2018 to 30/6/2019 30/6/2018 30/6/2019 30/6/2018 L.E. L.E. L.E. L.E. Net profit for the period 511,268,237 574,388,842 179,138,550 245,493,176 Other comprehensive income - - - - Total comprehensive income for the period 511,268,237 574,388,842 179,138,550 245,493,176 ====================== ====================== ====================== ====================== CFO & Head of Investors Relationships Managing Director Chairman --------------------------------------- ------------------------- ---------------------------- Mr. Mohamed Abdelsalam Eng. Ahmed Ali Elhitamy Eng. Mohamed Hazem Barakat
Madinet Nasr for Housing and Development S.A.E.
SEPARATE STATEMENT OF CHANGES IN EQUITY
For the period from 1 January to 30 June 2019
Issued and paid up Legal Net profit for the capital reserve Retained earnings period Total L.E. L.E. L.E. L.E. L.E. Balance at 1 January 2018 997,100,389 123,313,788 296,577,953 943,297,203 2,360,289,333 Transferred to retained earnings - - 943,297,203 (943,297,203) - Dividends for 2017 - - (95,165,000) - (95,165,000) Transfer to legal reserve - 47,164,860 (47,164,860) - - Comprehensive income for the period - - - 574,388,842 574,388,842 Balance at 30 June 2018 997,100,389 170,478,648 1,097,545,296 574,388,842 2,839,513,175 ===================== ============ ================== ===================== ============== Balance at 1 January 2019 1,200,000,000 170,478,648 894,645,685 1,069,653,619 3,334,777,952 Transferred to retained earnings - - 1,069,653,619 (1,069,653,619) - Dividends for 2018 - - (104,730,000) - (104,730,000) Transfer to legal reserve - 53,482,681 (53,482,681) - - Amount paid under capital increase according to AGM held on 25 March 2019 240,000,000 - (240,000,000) - - Comprehensive income for the period - - - 511,268,237 511,268,237 Balance at 30 June 2019 1,440,000,000 223,961,329 1,566,086,623 511,268,237 3,741,316,189 ===================== ============ ================== ===================== ============== CFO CEO Chairman ------------------------ ------------------------ ---------------------------- Mr. Mohamed Abdelsalam Eng. Ahmed Ali ElHetmy Eng. Mohamed Hazem Barakat
Madinet Nasr for Housing and Development S.A.E.
SEPARATE STATEMENT OF CASH FLOWS
For the period from 1 January to 30 June 2019
30/6/2019 30/6/2018 Note L.E. L.E. OPERATING ACTIVITIES Net profit for the period before tax 660,561,253 741,515,740 Adjustments for: Depreciation of fixed assets and investment properties 4/1, 5/4 6,145,185 2,886,552 Capital loss 27 - 13,260 Provisions - 3,453,944 Impairment of investments in subsidiaries 5/1 6,000,000 16,250,000 Reverse of impairment of investments in subsidiaries 5/1 - (19,518,646) Return on investments held to maturity & available for sale (623,663) (41,715) Deferred profits and interests on outstanding installments during the period (Net) 14 (20,321,778) (25,553,254) Return on Treasury bills (7,715,293) - Loss/(gain) on foreign currencies exchange 26,27 259,340 (16,295) -------------- ---------------- Operating profit before working capital changes 644,305,044 718,989,586 Housing and development projects and inventory material (374,828,995) (244,170,934) Trade receivables, customers, trade payables and notes receivables (622,272,237) (1,021,097,857) Trade payables - unearned revenue, creditors, and projects' infrastructure completion liabilities 612,521,637 903,881,902 Used provisions (1,000,000) (588,984) Dividends paid to Board of Directors and employees (85,891,791) (82,581,701) Held to maturity investments-treasury bills 109,009,090 - Income tax paid (300,910,417) (270,969,861) Net cash (used in) /from operating activities (19,067,669) 3,462,151 -------------- ---------------- INVESTING ACTIVITIES: Payments for purchase of fixed assets & Projects under construction (3,810,565) (9,543,157) Proceeds from investments held to maturity & available for sale 623,663 41,715 Proceeds from amounts due from related parties - 4,488,713 Net cash used in investing activities (3,186,902) (5,012,729) -------------- ---------------- FINANCING ACTIVITIES: Payments for long term loans 17 (69,129,777) (73,107,988) Proceeds from long term loans 16,870,342 - Payments for short term loans 18 (145,000,545) (112,709,081) Proceeds from short term loans 18 400,000,000 335,000,000 Net cash from financing activities 202,740,020 149,182,931 -------------- ---------------- Change in cash and cash equivalents 180,485,449 147,632,353
Cash and cash equivalents at the beginning of the period 408,816,390 123,514,275 (Loss)/gain on foreign exchange 26,27 (259,340) 16,295 -------------- ---------------- Total cash and cash equivalents at the end of the period 589,042,499 271,162,923 Less: Pledged time deposits against letters of guarantee 18 (4,592,268) (4,592,268) Pledged investment certificates against letters of guarantee 18 (9,837,327) (8,297,708) Cash and cash equivalents at the end of the period 18 574,612,904 258,272,947 ============== ================
NON-CASH TRANSACTIONS:
The statement of cash flows does not include the following non-cash transactions:
-- An amount of L.E. 1,012,063 represents transfer from Projects under construction to fixed assets.
-- An amount of L.E. 372,364,497 represents bank accounts and deposits against management, operation, and maintenance projects' creditors.
-- An amount of L.E. 240,000,000 represents Amounts paid under capital increase against issuance for free shares funded from retained earnings.
CFO CEO Chairman ------------------------ ------------------------ ---------------------------- Mr. Mohamed Abdelsalam Eng. Ahmed Ali ElHetmy Eng. Mohamed Hazem Barakat 1. COMPANY BACKGROUND 1.1 Legal form of the company
Madinet Nasr for Housing and Development S.A.E. was incorporated in accordance with the Presidential Decree No. 815/1959 then changed to Joint Stock Company according to Presidential Decree No 2908/1964 under the umbrella of the Public Sector Authority for Housing by Presidential Decree No. 469/1983.
The company transferred to an Egyptian joint stock company under the provisions of Law No. 203 for 1991 issued on 19/06/1991 under the umbrella of the Holding Company for Housing under the name of Madinet Nasr Housing and Development. The Extraordinary General Assembly of the company held on 30/6/1996 approved the change to the provisions of Law No. 159 for 1981 and its executive regulations and published in company's journal on January 1997 rather than the provisions of Law No. 203 for 1991.
The company was registered in the Commercial Register No. 300874 on 23 December 1996 under tax card No. 095-009-200.
1.2 Activity
The company is engaged in all activities related to real estate development for lands, buildings and facilities including acquisition of land and real estate sale and rental, dividing it and providing all types of facilities necessary for reconstruction and connected to it in Nasr City and other areas nationwide, the purchase and development, utilization, leasing and sale of all buildings and land. The company can establish, manage and invest all residential, administrative, tourists, recreational and all projects necessary to achieve these purposes, and all real estate, financial, commercial and entertainment operations related to these purposes, as well as carrying out designs, and engineering consultancy and supervision of the execution to others.
BIG Investment Group Limited - Britain - is considered the main shareholder of the company.
1.3 Duration
The company's term is 50 years starting from the date of the registration in the commercial register and has been renewed for another 25 started from 23/12/1996 to 22/12/2021.
1.4 Location
The company's head office is located at 4, Youssef Abbass St., 2(nd) Area, Nasr City, Cairo, Egypt.
The Chairman is Eng. Mohamed Hazem Barakat.
The company is listed on Egyptian Stock Exchange and London Stock Exchange on GDR admission system.
The company's Board of Directors has approved the interim separate financial statements for the period ended 30 June 2019 on 7 August 2019.
2. USE OF ESTIMATES AND JUDGMENTS
The preparation of separate financial statements in accordance with Egyptian Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumption are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying values of assets and liabilities. Actual results may differ from those estimates.
The estimates and underlying assumptions are reviewed on a continuous basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised and the future periods if it affects future periods.
The following estimates and judgments that is affect on financial statements are as follows:
- Depreciation of fixed assets and Investment properties. - Provisions - Impairment of assets values - Taxation - Liabilities for utilities completion - Amortization of the discount of present value for notes receivable 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a) Basis of preparation of the summarized separate financial statements
The separate financial statements are prepared in accordance with the Egyptian Accounting Standards and relevant local laws and regulations.
The separate financial statements are prepared by complying the same accounting policies for the current year, except the implementation of the new Egyptian Accounting Standard no. (34)- Investment Property- issued during 2019 which is applied starting from or after the financial period January 2019 concerned with applying the cost model with fair value disclosure-investment property, but the company couldn't measure its fair value reliably.
The separate financial statements are prepared under the historical cost convention modified for measurement of available for sale investments, held to maturity investments and investment at fair value through profit and loss.
The separate financial statements are presented in Egyptian Pounds.
According to the Egyptian Accounting Standard No. 42 (Consolidated Financial Statements) and Article 188 of the Executive Regulations of the Companies Law No. 159 of 1981, the company prepares consolidated financial statements.
b) Fixed assets and depreciation
Fixed assets are recorded on purchase at cost and are presented in the statement of financial position net of accumulated depreciation and impairment losses. Historical costs include costs associated with the purchase of the asset. For assets constructed internally, the cost of the asset includes the cost of raw materials, direct labor and other direct costs incurred in bringing each asset to its location and the purpose for which it was acquired, as well as the costs of removal and rearrangement of the site, where the assets are located.
Components are accounted for on an item of fixed assets that have different useful lives as separate items within those fixed assets.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
The carrying amount of fixed assets includes the cost of replacing a part or component of such assets when it is expected to obtain future economic benefits as a result of spending that cost. Other costs allocated to the separate income statement as an expense when incurred.
Depreciation is provided on a straight line basis to write off the cost less estimated residual value of each asset - other than land - over its expected useful life.
Based on the periodic review, the aging and depreciations rates of fixed assets are as follows:
Useful life Buildings 40 Improvements- Building owned 8 Improvements- Leasehold building 5 or the duration of the lease whichever is lower Machinery and equipment for production 5 Motor vehicles 5 Computers and servers 5-8 Programs 3 Tools and equipment 2 Furniture and office equipment 2-8 c) Projects under construction
Projects under construction are recorded at cost which includes all the direct costs incurred on the assets to reach its final position. These are transferred to fixed assets or investment properties when the asset is complete and ready for its intended use. Projects under construction are recorded at cost less impairment, if any.
d) Investment in subsidiaries
A subsidiary is a company in which the company owns more than 50% of the share capital and the company exercises the right to control the investee when the company is exposed or entitled to variable returns through the company's contribution to the investee company and has the ability to affect those returns through its authority over the company. Therefore the company controls the investee company when the company has all the following:
-- Power over the investee. -- Exposure or right to variable returns by contributing to the investee company.
-- The ability to use the authority on the investee company to influence the amount of proceeds obtained from it.
Investments in subsidiaries are carried at cost less impairment losses, if any.
In case of impairment, the carrying amount of the impairment loss is reduced and charged to the separate statement of income for each investment. The impairment loss is reversed in prior periods so that the carrying amount of the investment does not exceed its original net worth before the impairment loss is recognized in value.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued e) Available for sales investments
Available for sale investments are initially recorded at cost and are subsequently measured at fair value. Changes in fair value are reported as a separate component of other comprehensive income. Where available for sale investments could not be measured reliably, as the market for an investment is not active (and for unlisted securities), these are stated at cost less impairment losses, if any. Impairment loss is charged to the separate statement of income.
f) Held to maturity investments
Held to maturity investments are carried at amortized cost using the effective interest method. Premiums or discounts (if any) are amortized using the effective interest rate. When the investment is impaired, the impairment loss is adjusted against book value and included in the separate statement of income.
g) Investment properties
Investment properties are measured at cost model and depreciation expense charged to the separate statement of income according to the straight-line method over the estimated useful life of all investment property except the land. In case of such assets are impaired, the loss is included in the separate income statement.
h) Investments at fair value through profit and loss
Investments at fair value through profit and loss are initially recorded at cost and revaluated at the date of separate financial statements at fair value which represents the market price at the valuation date. Changes in fair value are charged to the separate statement of income.
i) Housing and Development projects
All cost incurred on housing and development projects are included in this account. At point of sale, this account is adjusted based on actual per meter cost of land or units sold. Housing and development projects are measured at the lower of cost and net realizable value. In case of decrease the net realizable value under the cost, the decrease is charged to the separate statement of income.
j) Separate statement of cash flows
The separate statement of cash flow is prepared according to the indirect method.
k) Cash and cash equivalents
Cash and cash equivalents include cash on hand, time deposits and treasury bills (due within 3 months), bank current accounts, and short term highly liquid investments, which can be easily converted to cash, less credit banks and pledged time deposits against letters of guarantee.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued l) Receivables and other debtors
Trade accounts receivable stated at cost net of allowance for doubtful debts, which is estimated for amounts not expected to be collected in full. Other debtors stated at cost less any impairment. (If any)
The notes receivable are the value of post-dated checks (PDCs) obtained from the customers in payment of the remaining contractual values of the contracted real estate units. The initial recognition of the notes receivable is at fair value at the time the contract is entered into with the customers. At the date of preparation of the separate financial statements; notes receivable are re-measured at amortized cost; which is determined by discounting the future cash flows of the notes using the rate of return that discounts the nominal value of the instruments to the current cash price for selling the real estate units.
m) Assets impairment
Non-Financial Assets
At the separate financial statements date, the company reviews the carrying amounts of its owned non financial assets to determine whether there is any indication that those assets may be impaired. If any such indication exists, the company estimates the recoverable amount for each asset separately in order to estimate the impairment losses. In case the recoverable amount of the asset cannot be properly estimated, the company estimates the recoverable amounts for the cash-generating unit which is related to the asset.
In case of using a reasonable and consistent basis for allocating of the assets to the cash generating units, the company's general assets would be also allocated to these units. If this is unattainable, the general assets of the company shall be allocated to the smallest group of the cash-generating units, which the company determined using logical and fixed bases.
The asset recoverable amount or the cash-generating unit is represented by the higher of the fair value (less the estimated selling costs) or the estimated amount from the usage of the asset (or the cash generating unit).
The estimated future cash flow from the usage of the assets, or the cash generating unit using a discount rate before tax is discounted in order to reach the present value for these flows which represents the estimated amount from using the asset (or the cash generating unit).
This rate reflects current market assessments of the time value of money and the risks specific to the asset, which were not taken into consideration when estimating the future cash flow generated from it. When the recoverable amount of the asset (cash generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable amount with the impairment loss recognized immediately in the separate income statement.
In case the impairment on asset (or cash generating unit) decreases subsequently, and this decrease is related in a logical manner to one event or more taking place after the initial recognition of the impairment at the profit or losses, a reversal is done for the revised amount of losses (or a part of it)- which had been recognized previously- in the separate income statement, and the carrying amount for the asset is increased (or the cash generating unit) with the new estimated recoverable amount provided that the revised carrying amount of the asset after revising (or the cash generating unit) does not exceed the carrying amount determined for the asset, had the recognized losses resulting from impairment, not been recognized in previous years
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Financial Assets
At the end of the reporting period, the company determines whether there is any indication that its financial assets may be impaired.
Financial assets are exposed to impairment when an objective evidence that the estimated future cash flow have been affected by the event or more established at a date subsequent to the initial recognition of the financial asset.
The carrying value of all financial assets is reduced directly with the impairment losses except those related to the reduction in the expected value of the collections from the customers debts and other debit balances, where a formed allowances for impairment loss is done on its value. When the debt of the clients or the owner of the debit balance is uncollectible, a written off discount is applied upon this account. All the changes in the book value relating to this account are recognized in the separate income statement.
n) Provisions
Provisions are recognized when there is a present legal or constructive obligation as a result of a past event, it is probable an outflow of resources embodying economic benefits will be required to settle this obligation and a reliable estimate can be made for the obligation.
Provisions are reviewed at the separate financial position date and adjusted (if necessary) to present the best current estimate.
o) Unearned revenue, payables and other creditors
The value of unearned revenues on real estate units (villas, townhouses, twin houses, apartments and garages) contracted for sale and were not delivered to customers on the date of the separate financial position is recorded as a liability at the cash price of those units (after discounting the future contractual value of these units to reach the cash sale price). These balances are recognized as sales income in the separate statement of income on the date of delivery.
Liabilities are recognized for amounts to be paid in the future for goods received or services rendered to the company, whether billed or not billed by the supplier.
p) Treasury shares
Treasury shares are recorded at cost and deducted from shareholders equity. Gain or loss from sale of shares is included in retained earnings.
q) Dividends
Dividends are recorded as liability during the year when declared.
r) Revenue recognition 1. Cash sales
Sales of land and property is recoded after collection of the agreed upon price and delivery to the customer in accordance with the terms of the contract.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued 2. Installment Sales
Revenue on sales during the year are recorded when the related land and property is actually received by the customers or, where delay in receiving by customer is due to circumstances out of the company's control, according to the contractual terms as follows:
- Total sale of value of land and property is recorded as sales during the year after deduction of profit relating to deferred installments on those sales. Such deduction is recorded as a liability (profit from deferred installments) when all the following terms for sales are met as:
-- The risk and rewards of ownership of units sold is not transferred to the buyer until settlement of all installments due from the buyers and the transfer of ownership to buyer.
-- The company has the right of managerial intervention and supervision on units sold to guarantee that the buyer is a biding by the contractual terms.
-- According to the signed contracts with the customers, the company has the right to cancel the contracts if all installments due were not paid.
- Interest on installments is recorded directly in credit balances (Deferred interests on installments) at the time of sale.
- Deferred installments profit and deferred interests on installments which related to sale of land and properties in prior years are recognized on the actual basis when the installments full due adjusting the profit margin by cost incurred on projects during the year.
3. Revenue from real estate contracts
The company is performing the activity of real estate and marketing to this activity through customers' contracts which give them the right to have real estate villa, ton house and unit over the year of the contract. Revenue recognized from sales agreements according to the stages included in the sales agreements according to the following:
-- Development of land to construction of real estate -- Construction of the building -- Finishing of units 4. Joint arrangement
A joint arrangement is an arrangement in which two or more parties have joint control. It is either a joint operation or a joint venture. A joint arrangement is that the parties are bound by a contractual agreement granting joint control to two or more parties of the arrangement.
The classification of a joint arrangement as a joint operation or a joint venture depends on the rights and obligations (undertakings) of the parties to the arrangement. The joint operation becomes a joint arrangement when its parties have joint control over the rights over the assets and the obligations associated with the arrangement. These parties are called joint operators. A joint venture is a joint arrangement when its parties have joint control over the rights over the net assets associated with the arrangement. These parties are called shareholders in joint ventures. The entity shall apply the judgment in assessing whether the joint arrangement is a joint venture or a joint venture.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
The joint operator shall account for assets, liabilities, income and expenses related to its share in the joint operation in accordance with the Egyptian Accounting Standards applicable to such assets, liabilities, revenues and expenses.
On 31 December 2015, the Company adopted a new strategy to execute a joint operation development contract based on a share in the revenue of the sales. The Company receives its share against the land provided for development by the other co-developer who will receive the rest of the sale revenue against incurring the development cost.
5. Other revenues
-- Rental income is recognized on a time-apportioned basis. Interest income on deposits and bonds is recognized on a time basis and using the target rate of return on the financial asset.
-- Dividend income is recognized in the separate statement of income when the right to receive dividends from the investee is established and is recognized after the date of acquisition.
s) Direct and indirect cost
Direct and indirect costs incurred for the constructions of the real estate are accumulated in the inventor account for constructions. Cost of the completed contracts are comprises of land cost, cost of building constructed and other indirect costs.
t) Employees' benefits
The company contributes to the social insurance scheme for the benefit of its employees in accordance with the Social Insurance Law. Contributions of workers and employers are calculated at a fixed rate of wages. The company's commitment is represented in value of its contribution. The company's contributions are charged to the separate statement of income. The company gives employees who have reached retirement age, end of service gratuity up to a maximum of 50 thousand Egyptian pounds. The Company also applies an optional early retirement scheme. End of service benefits for employees benefiting from this system are charged to the separate income statement in the year in which they are approved for early retirement.
u) Taxation
Income tax
Taxation is accounted according to Egyptian laws and regulations.
Income tax expense that is calculated on the profits of the company represents the sum of the tax currently payable (calculated according to the applied laws and regulations and using the tax rates prevailing as of the separate financial statements date) and deferred tax. Current and deferred taxes are recognized as income or expenses and included in the profits or losses of the year except for instances that taxes are established from:
-- A transaction or event recognized, in the same year or other year, outside profit or loss either in other comprehensive income or directly in equity, or
-- Business combinations. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities according to the accounting basis used in the separate financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, based on tax rates that have been enacted or substantively enacted at the separate financial statements date.
Deferred tax liabilities are generally recognized (generated from taxable temporary differences in the future) while deferred tax assets recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reduced to the extent that it is no longer probable that sufficient taxable profits will be available in future years to allow all or part of the asset to be recovered. The balance sheet method is used in accounting for deferred assets and liabilities and they are recognized as non-current assets and liabilities.
v) Earnings per share
Earnings per share are calculated by dividing the net profit for the period, after deducting employees share and Board of Directors remuneration, by the weighted average number of outstanding shares during the period.
w) Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of a qualified asset for capitalization of cost of borrowing; are capitalized as part of the cost of the asset. Other borrowing costs are charged as an expense in the separate statement of income on a time-apportioned basis using the effective interest rate.
An asset eligible to bear the cost of borrowing necessarily requires a long period of time to process it for use for its intended purposes or to sell it. This applies to land and building facilities items as fixed assets under construction (under construction projects) and incomplete inventory of reconstruction and housing projects.
Capitalization of borrowing costs begins as part of the cost of the qualifying asset to bear the cost of borrowing when:
- Expenditure on the qualified asset. - The Company incurs a borrowing cost.
- The activities required for the preparation of the asset for use for purposes specified for it or for its sale to others are currently under implementation.
Capitalization of borrowing costs is suspended during periods in which the effective construction of the asset is impaired. Capitalization is contingent upon the completion of all material activities necessary to prepare the qualifying asset to bear the borrowing cost for its intended use or to sell it to third parties.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued x) Legal reserve
As required by the Companies Law No. 159 of 1981 and the company's Articles of Association, 5% of the profit for the year is transferred to the legal reserve. The company may resolve to discontinue such annual transfers when the reserve totals 50% of the issued share capital. The legal reserve cannot be distributed except in cases stated in the Law.
y) Foreign currency transactions
The company's functional currency is the Egyptian pound. Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the separate financial position date are translated at the rate of exchange ruling at that date. Retranslation exchange profit and loss is taken to the separate statement of income.
z) Related parties' transactions
Related parties transactions carried out by the company within its normal course of business, are recognized pursuant to the conditions set out by the Board of Directors on an arm's length- basis.
4/1 FIXED ASSETS Land Buildings and Machinery Motor Tools Furniture Computers Total (*) constructions and vehicles and office and (*) equipment equipment software L.E. L.E. L.E. L.E. L.E. L.E. L.E. L.E. Cost: At 1 January 2019 1,351,229 21,962,081 5,859,120 3,209,603 517,824 11,966,863 27,041,081 71,907,801 Additions during the period - 520,101 - 31,600 - 698,686 1,967,136 3,217,523 Transferred from Projects under construction (Note 4/2) - 576,804 435,259 - - - - 1,012,063 At 30 June 2019 1,351,229 23,058,986 6,294,379 3,241,203 517,824 12,665,549 29,008,217 76,137,387
---------- -------------- ----------- ----------- -------- ----------- ----------- ----------- Accumulated depreciation: At 1 January 2019 - 5,012,895 2,812,936 3,145,805 513,849 6,675,637 10,945,466 29,106,588 Provided during the period - 1,033,043 507,797 10,357 1,384 930,825 3,632,198 6,115,604 At 30 June 2019 - 6,045,938 3,320,733 3,156,162 515,233 7,606,462 14,577,664 35,222,192 ---------- -------------- ----------- ----------- -------- ----------- ----------- ----------- Net book value: At 30 June 2019 1,351,229 17,013,048 2,973,646 85,041 2,591 5,059,087 14,430,553 40,915,195 ========== ============== =========== =========== ======== =========== =========== =========== At 31 December 2018 1,351,229 16,949,186 3,046,184 63,798 3,975 5,291,226 16,095,615 42,801,213 ========== ============== =========== =========== ======== =========== =========== ===========
(*) Land and buildings includes land and building of the social club and the playground for Madinet Nasr for Housing and Development Employees' club, and the book value is approximately L.E. 1.3 million for land and L.E. 4.5 million for buildings. There are no guarantees or pledging on fixed assets at the date of the separate financial statements.
4/1 FIXED ASSETS - Continued a) The fully depreciated assets and still working are as follows: 30/6/2019 31/12/2018 L.E. L.E. Buildings and constructions 114,889 114,889 Motor vehicles 3,105,900 3,105,900 Furniture and office equipment 2,500,815 1,235,017 Computers and software 2,428,138 228,491 Machinery and equipment 1,385,657 862,022 Tools 512,241 512,241 10,047,640 6,058,560 =========== =========== b) Depreciation for the period is allocated as follows: 30/6/2019 30/6/2018 L.E. L.E. Cost of sales - 524,885 Selling and marketing expenses (Note 23) 1,432,616 611,291 General and administrative expenses (Note 24) 4,682,988 1,721,123 6,115,604 2,857,299 ========== ========== 4/2 PROJECTS UNDER CONSTRUCTION 30/6/2019 31/12/2018 L.E. L.E. Balance at the beginning of the period/year 17,482,227 10,106,923 Additions during the period/year 593,042 9,203,809 Transferred to fixed assets (Note 4/1) (1,012,063) (1,828,505) Balance at the end of the period/year 17,063,206 17,482,227 ============ ============ 5. INVESTMENTS 5/1 Investments in subsidiaries Contribution 30/6/2019 31/12/2018 % L.E. L.E. Al Nasr Co. for Utilities and Erections -S.A.E. (*) 98.37 155,815,000 155,815,000 Less :Impairment of investment (151,287,093) (145,287,093) -------------- -------------- 4,527,907 10,527,907 Al Nasr Co. for Civil Works - S.A.E. 52.46 64,900,606 64,900,606 69,428,513 75,428,513 ============== ============== 5. INVESTMENTS - Continued
(**) The movements in impairment of investments are as follows:
30/6/2019 31/12/2018 L.E. L.E. Impairment balance at the beginning period /year 145,287,093 90,333,646 Transferred from impairment of amounts due from related parties. (Notes 8/1) - 74,472,093 Provided during the period (Al Nasr 6,000,000 - For Civil Works) Reserve of impairment in subsidiaries (Al Nasr For Civil Works) - (19,518,646) Impairment balance at the end of period /year 151,287,093 145,287,093 ============ ============= 5/2 Held to maturities investments 30/6/2019 31/12/2018 L.E. L.E. Investments in Governmental treasury bonds (non-active market) 121,962 121,962 ========== =========== 5/3 Available for sale investments Contribution 30/6/2019 31/12/2018 % L.E. L.E. Egyptian Kuwaiti Real Estate Development 7.503 4,314,110 4,314,110 High Education House ( S.A.E) 1.200 200,000 200,000 4,514,110 4,514,110 ========== ===========
Available for sale investments are not listed in active market (stock exchange), the company's management considers that there is no significant difference between the cost of investments and its fair value as the date of separate financial statements.
5/4 Investment properties 30/6/2019 31/12/2018 L.E. L.E. Allocated land for Developing and Housing Projects (**) 176,318 176,318 Title held land on sold properties 3,427,692 3,427,692 Rental buildings (Net) (*) 648,956 678,537 4,252,966 4,282,547 ========== =========== 5. INVESTMENTS - Continued
The fair values of investment properties are not less than its book value.
(*) Rental buildings (Net) Residential units None residential units Total L.E. L.E. L.E. Cost: At 1 January 2019 and 30 June 2019 545,997 2,645,758 3,191,755 ------------------ ----------------------- ---------- Accumulated depreciation: At 1 January 2019 457,863 2,055,355 2,513,218 Provided during the period (Note 22-b) 4,631 24,950 29,581 At 30 June 2019 462,494 2,080,305 2,542,799 ------------------ ----------------------- ---------- Net book value: At 30 June 2019 83,503 565,453 648,956 ================== ======================= ========== At 31 December 2018 88,134 590,403 678,537 ================== ======================= ==========
Cost of investment properties which are fully depreciated and still in use are as follows:
30/6/2019 31/12/2018 L.E. L.E. Residential units 109,417 109,417 Non residential units 300,737 300,737 410,154 410,154 ========== =========== 5/5 Investments at fair value through profit and loss 30/6/2019 31/12/2018 L.E. L.E. Investment certificates in: Bank Misr Investment Fund (Day-By-Day) 294,576 275,845 QNB Investment Fund 1,217,950 1,098,848 Banque Du Caire Investment Fund (Day-By-Day) 507,840 776,798 United Bank Investment Fund (Rakhaa) (*) 10,677,387 9,996,054 Arab Investment Bank Investment Fund - 21,959 12,697,753 12,169,504 =========== ===========
(*) United Bank Investment Fund (Rakhaa) includes pledged investment certificates by L.E. 9,837,327 against letters of guarantee as of separate financial statements date. (Note 18)
5. INVESTMENTS - Continued 5/6 Held to maturities investments - Treasury Bills 30/6/2019 31/12/2018 L.E. L.E. Treasury Bills - 63 days - 14,600,000 Treasury Bills - 124 days - 106,500,000 Less: Not accrued interest - (5,206,203) - 115,893,797 ======================================= ============
Treasury bills are classified as follows:
30/6/2019 31/12/2018 L.E. L.E. Treasury bills matures within 3 months (Note 18 ) - 14,600,000 Treasury bills matures more than 3 months - 101,293,797 - 115,893,797 =============================================================== ============ 6. HOUSING AND DEVELOPMENT PROJECTS 30/6/2019 31/12/2018 L.E. L.E. Unfinished properties and lands: El Waha Project 19,543,039 46,841,246 6(th) October Project (Nasr Gardens) 206,981,732 203,688,886 Tag City Project (*) 1,155,386,528 793,409,875 Nasr City (Main City) Project 1,046,791 1,046,791 Sarai City 446,288,442 410,193,311 1,829,246,532 1,455,180,109 -------------- -------------- Finished properties: El Waha Project 6,680,048 6,680,048 Nasr City (Main City) Project 11,587,224 11,587,224 6(th) October Project (Nasr Gardens) 60,278,442 60,278,442 78,545,714 78,545,714 -------------- -------------- Total unfinished properties and lands and finished properties 1,907,792,246 1,533,725,823 ============== ==============
(*)The main project "Taj City" includes the stages that have been launched for sale: "Taj Sultan", "Zone T", "Zone B", "Zone A - CBD". In addition to the stages not yet put up for sale, the balance on June 30, 2019 represents the cost of the work of external and internal facilities and construction
Housing and development projects has been recorded at cost which is not less than net realizable value as of the separate financial statements date.
7. TRADE AND NOTES RECEIVABLES 30/6/2019 31/12/2018 L.E. L.E. Long term notes receivable Tag Sultan customers 289,980,639 339,937,210 Tag City customers (Zone T) 1,930,550,300 2,040,268,312 Tag City customers (Zone B) 1,458,656,327 1,470,693,448 Tag City customers (Zone A) 262,681,733 - Premira customers 51,434,884 63,480,106 Capital Gardens customers (*) 340,951,782 376,806,276 Sarai City(1) customers 792,600,641 917,561,199 Sarai City(2) customers 2,082,287,029 1,978,825,254 Sarai City(3) customers 352,751,576 317,033,107 El Waha and Nasr city 79,802,240 - Lands customers 27,557,142 - Total long term notes receivables 7,669,254,293 7,504,604,912 ---------------- ---------------- Less: Present value discount Tag Sultan Project (47,972,666) (56,209,331) Tag City Project (Zone T) (312,007,541) (331,669,477) Tag City Project (Zone B) (220,615,125) (238,347,477) Tag City Project (Zone A) (51,041,894) - Premira Project (17,157,603) (20,754,041) Capital Gardens Project (*) (133,636,596) (153,670,025) Sarai City (1) Project (115,295,730) (138,844,423) Sarai City (2) Project (347,787,242) (367,285,477) Sarai City (3) Project (54,954,283) (48,542,353) ---------------- Total present value discount (1,300,468,680) (1,355,322,604) ---------------- Net long term notes receivables 6,368,785,613 6,149,282,308 ================ ================ Short term notes receivable Tag Sultan customers 191,382,870 229,264,003 Tag City customers (Zone T) 606,293,300 573,873,051 Tag City customers (Zone B) 403,925,021 380,222,994 Tag City customers (Zone A) 62,485,306 - Premira customers 26,774,079 34,611,060 Capital Gardens customers (*) 90,250,749 90,767,155 Sarai City(1) customers 280,989,268 281,999,760 Sarai City(2) customers 628,857,808 576,448,134 Sarai City(3) customers 88,265,197 72,052,779 El Waha and Nasr city 25,833,631 - Lands customers 50,530,579 - 2,455,587,808 2,239,238,936 ================ ================ Trade debtors Tag Sultan 12,462,493 9,133,903 Tag City (Zone T( 142,396,236 124,501,331 Tag City (Zone B( 68,980,365 32,555,901 Tag City (Zone A( 2,000,000 - Premira 1,328,731 741,706 Sarai City 1 47,516,039 32,253,825 Sarai City 2 141,847,312 108,857,586 Sarai City 3 25,312,536 7,384,828 El Waha and Nasr City 68,358,367 192,539,232 Lands 34,376,619 90,408,858 Leaseholders 1,770,870 1,361,496 ---------------- ---------------- 546,349,568 599,738,666 Less: Deferred profits and interests on outstanding installments (Note 14) (169,547,373) (183,956,762) Impairment of customers balances (14,661,382) (14,661,382) 362,140,813 401,120,522 ================ ================ 7. TRADE AND NOTES RECEIVABLES -Continued
(*) Capital Gardens project is a joint operation between the company and Palm Hills For Development Company in accordance with joint operations Contract dated on 5 July 2015. The company's share is 36% of total project's revenues (Note 30)
8. TRADE PAYABLES 8/1 Trade payables - debit balances 30/6/2019 31/12/2018 L.E. L.E. Suppliers and contractors 255,493,067 98,674,042 Amount due from related parties (Note 30) 54,475,207 39,540,611 309,968,274 138,214,653 ============ ============ (*) The movements in impairment of amounts due from related parties are as follows: 30/6/2019 31/12/2018 L.E. L.E. Impairment balance at the beginning period/year - 50,097,093 Provided during the period /year - 24,375,000 Transfer during the period /year (Note 5/1) (**) - (74,472,093) Impairment balance at the end of - - period/year =========== ============= 8/2 Trade payable - credit balances 30/6/2019 31/12/2018 L.E. L.E. Trade payables 103,513,444 84,064,430 Amount due to related parties (Note 30) 6,274,742 19,554,706 109,788,186 103,619,136 ============ ============ 9. DEBTORS AND OTHER DEBIT BALANCES 30/6/2019 31/12/2018 L.E. L.E. Cheques under collection 312,966 202,968 Refundable deposits 24,776,117 19,194,708 Prepaid expenses 281,423,179 237,507,110 Cash margin on letters of guarantee (Note 29) 6,892,374 6,892,374 Accrued revenue (Note 30) 1,920,006 - Other debit balances 2,229,602 1,006,110 317,554,244 264,803,270 ============ ============ 10. CASH AND BANK BALANCES 30/6/2019 31/12/2018 L.E. L.E. Cash on hand 1,130,932 649,568 Bank current accounts with return 689,123,704 388,029,172 Time deposits (3 months) (*) 5,600,000 5,600,000 695,854,636 394,278,740 ============ ============
(*) Time deposits includes L.E. 4,592,268 (2018: L.E. 4,592,268) pledged time deposits against letters of guarantee. (Notes 18, 29)
11. UNEARNED REVENUE 30/6/2019 31/12/2018 L.E. L.E. Tag Sultan project 176,250,621 203,252,825 Premira project 10,530,716 31,162,943 Tag City (Zone T) project 2,234,616,387 2,131,674,074 Tag City (Zone B) project 1,463,225,505 1,316,699,988 Tag City (Zone A) project 147,384,647 - Capital Gardens project 135,520,158 134,825,919 Sarai City(1) project 879,923,324 864,952,324 Sarai City(2) project 2,010,876,172 1,829,635,619 Sarai City(3) project 226,977,259 182,719,174 7,285,304,789 6,694,922,866 ============== ============== 12. PROVISIONS Balance at 1/1/2019 Provided during the Used during the period Balance at 30/6/2019 period L.E. L.E. L.E. L.E. Disputed taxes provision 11,978,471 - - 11,978,471 Claims provision 45,270,822 - (1,000,000) 44,270,822 Legal provision 20,767,529 - - 20,767,529 Other provisions 1,937,696 - - 1,937,696 79,954,518 - (1,000,000) 78,954,518 ==================== ====================== ======================= ===================== 13. PROJECT INFRASTRUCTURE COMPLETION LIABILITIES Balance Provided Balance at at 1/1/2019 / (returns) Work executed 30/6/2019 L.E. L.E. L.E. L.E. Tag City project 48,802,876 33,507,854 (60,777,344) 21,533,386 Sarai City project 58,596,511 35,103,916 (7,891,321) 85,809,106 Capital Gardens project 4,311,598 1,513 - 4,313,111 El Waha Project 4,842,034 1,317,100 (5,624,833) 534,301 116,553,019 69,930,383 (74,293,498) 112,189,904 ============= ============= ============== ============
This balance represents estimated amounts to complete utilities for projects that have not been completely delivered.
14. DEFERRED PROFITS AND INTERESTS ON OUTSTANDING INSTALLMENTS Land Properties Total L.E. L.E. L.E. 30/6/2019 Balance at beginning of the period 40,386,717 143,570,045 183,956,762 Additions during the period 6,217,710 - 6,217,710 Due during the period (Note 22/A) (5,678,560) (14,643,218) (20,321,778) Disposals during the period - (305,321) (305,321) Balance at the end of the period (Note 7) 40,925,867 128,621,506 169,547,373 ------------- ------------- ------------- 31/12/2018 Balance at beginning of the year 48,852,758 177,958,402 226,811,160 Additions during the year 14,685,971 - 14,685,971 Due during the year (19,025,841) (32,872,543) (51,898,384) Disposals during the year (4,126,171) (1,515,814) (5,641,985) Balance at the end of the year (Note 7) 40,386,717 143,570,045 183,956,762 ============= ============= ============= 15. CREDITORS AND OTHER CREDIT BALANCES 30/6/2019 31/12/2018 L.E. L.E. Notes payable- Purchase of lands (*) 39,255,924 39,255,924 Notes payable 40,899,325 31,416,958 Support to National Housing Project 880,000 880,000 Down payment for reservation of land and property sales 11,639,597 16,207,949 Accrued sales and marketing commission 8,494,122 12,281,600 Premira collections 788,677 1,791,217 Employees bonus 8,154,789 8,154,789 Customers' balances for canceled reservations 13,115,179 13,144,322 Proceeds for maintenance expenses and counters 9,048,930 9,359,760 Accrued interest on long term loans 19,633,449 16,679,297 Governmental authorities 43,519,459 41,145,033 Accrued advertising expense 10,500,761 5,363,225 Early retirement benefits and others 6,041 44,853 Proceeds from customers under reconciliation 11,912,127 1,517,936 Takaful contribution 2,573,573 3,574,807 Other 739,860 704,180 221,161,813 201,521,850 ============ ============
(*) The Company has purchased pieces of lands in Tag City project from its own Customers during 2018 by L.E. 100,009,500 and it has paid 20% as an advance payment of total lands price, the rest amount against notes payable over (8) quarterly advances ended in year 2020.
30/6/2019 31/12/2018 L.E. L.E. Purchase price 100,009,500 100,009,500 Less: Advance payment (20,001,900) (20,001,900) ------------- ------------- 80,007,600 80,007,600 Less: Settlement (**) (1,495,752) (1,495,752) Paid during the period (19,627,962) - 58,883,886 78,511,848 ============= =============
(**) The rest of amounts due from the company's customers regarding previously sold lands to its customers were settled against purchase of lands.
15. CREDITORS AND OTHER CREDIT BALANCES
The balance in the separate financial statements is classified as follows:
30/6/2019 31/12/2018 L.E. L.E. Long term liabilities Long term notes payable 19,627,962 39,255,924 ----------- ----------- Current liabilities Creditors and other credit balances 39,255,924 39,255,924 58,883,886 78,511,848 =========== =========== 16. SHARE CAPITAL
Authorized capital:
The authorized capital is five billion Egyptian Pounds.
30/6/2019 31/12/2018 L.E. L.E. Issued and paid up capital 1.44 billion shares (2018:1.2 Billion shares) -The value of each share is one Egyptian Pound 1,440,000,000 1,200,000,000 ============== ==============
List of percentage of shares of issued and paid up capital for shareholders as of 30 June 2019 is as follows:
Name No. of shares Nominal value Contribution L.E L.E % BIG Investment Group Ltd. 286,309,039 286,309,039 19.88% Holding Co. for Construction and Development 218,742,298 218,742,298 15.19% B Investments Holding S.A.E. 107,355,324 107,355,324 7.46% National Investment Bank 53,069,241 53,069,241 3.68% Al Olayan Saudi Investment Co. Ltd. 50,763,824 50,763,824 3.53% Banque Misr 45,627,636 45,627,636 3.17% Other shareholders 678,132,638 678,132,638 47.09% 1,440,000,000 1,440,000,000 100% ============== ============== ============= 17. TERM LOANS National Arab Investment Commercial Total Investment Bank International Bank Bank L.E. L.E. L.E. L.E. 30/6/2019 Balance at the beginning of the period 1,237,813 - 375,310,381 376,548,194 Proceeds during the period - - 16,870,342 16,870,342 Installments paid during the period (491,458) - (68,638,319) (69,129,777) Balance at the end of the period 746,355 - 323,542,404 324,288,759 ============ ================ =============== ============== Classified in financial position as follows: Current liabilities: Current portion of term loans 491,458 - 96,705,318 97,196,776 ============ ================ =============== ============== Non-current liabilities: Term loans 254,897 - 226,837,086 227,091,983 ============ ================ =============== ============== 31/12/2018 Balance at the beginning of the year 1,694,337 2,026,971 381,323,986 385,045,294 Proceeds during the year - - 209,966,744 209,966,744 Installments paid during the year (456,524) (2,026,971) (215,980,349) (218,463,844) Balance at the end of the year 1,237,813 - 375,310,381 376,548,194 ============ ================ =============== ============== Classified in financial position as follows: Current liabilities: Current portion of term loans 491,458 - 137,276,635 137,768,093 ============ ================ =============== ============== Non-current liabilities: Term loans 746,355 - 238,033,746 238,780,101 ============ ================ =============== ============== 18. CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the separate statement of cash flows comprise the following separate financial position amounts:
30/6/2019 31/12/2018 L.E. L.E. Cash and bank balances (Note 10) 695,854,636 394,278,740 Investment at fair value through profit and loss (Note 5/5) 12,697,753 12,169,504 Investment held to maturity - Treasury bills (Note 5/6) - 14,600,000 Less: Bank's overdraft - Credit facilities (119,509,890) (12,231,854) -------------- ------------- 589,042,499 408,816,390 Less: Restricted time deposits against letters of guarantee (Note 10) (4,592,268) (4,592,268) Restricted investment certificates against letters of guarantee (Note 5/5) (9,837,327) (9,203,122) Cash and cash equivalents at the end of the period /year 574,612,904 395,021,000 ============== =============
Short term loan
30/6/2019 31/12/2018 L.E. L.E. Balance at the beginning of the period /year 111,666,664 56,875,747 Proceeds during the period /year 400,000,000 335,010,373 Installments and interests paid during the period /year (145,000,545) (280,219,456) Balance at the end of the period /year 366,666,119 111,666,664 ============== ============== 19. CREDITORS OF PROJECT DEPOSITS FOR MAINTENANCE 30/6/2019 31/12/2018 L.E. L.E. Bank current accounts 19,894,832 11,082,624 Time deposits 307,647,803 286,322,778 Cheques under collection 41,338,763 35,585,953 Accrued revenue 3,483,099 5,496,754 ------------ ------------ Project maintenance deposit liabilities 372,364,497 338,488,109 Amounts under settlement 928,930 1,824,104 Project maintenance creditors 373,293,427 340,312,213 ============ ============
The checks received from the customers for the project management, operation and maintenance account amounted to L.E. 1,217,451,405 (2018: L.E. 1,101,300,866).The sum of L.E. 372,364,497 (2018: L.E. 338,488,109) included this collection and invested in deposits and interest-bearing bank accounts. The remaining balance amounting to L.E. 845,086,908 at 30 June 2019 (2018: L.E. 762,812,758) will be collected on maturity dates during the subsequent periods, the deposit's ranges from 1 to 6 months.
20. DEFERRED TAX 30/6/2019 31/12/2018 -------------------------- -------------------------- Assets (Liabilities) Assets (Liabilities) L.E. L.E. L.E. L.E. Fixed assets - (2,270,939) - (2,833,839) Provisions 4,712,404 - 4,712,404 - ---------- -------------- ---------- -------------- Total deferred tax assets/(liability) 4,712,404 (2,270,939) 4,712,404 (2,833,839) ---------- -------------- Net deferred tax Asset/(liability) 2,441,465 - 1,878,565 - ========== ============== ========== ============== Deferred tax charged to the separate statement of income 562,900 - 212,968 - ========== ============== ========== ==============
Unrecorded deferred tax assets
30/6/2019 31/12/2018 L.E. L.E. Unrecorded deferred tax assets (provisions and impairment) 12,543,595 11,193,595 =========== ===========
Deferred tax assets did not include the balances of litigation provision, as there is no high probability to use the deferred tax in the future.
21. RECONCILIATIONS TO CALCULATE THE EFFECTIVE INCOME TAX RATE 30/6/2019 30/6/2018 L.E. L.E. Net accounting profit before tax 660,561,253 741,515,740 Calculated income tax according to income tax law: Takaful contribution 2,573,573 - Net movement in provisions and impairment 6,000,000 18,103,943 Depreciation differences 2,501,780 (144,470) Exempted revenue (2,543,669) (819,695) Provided /(used) from project infrastructure completion liabilities (4,363,116) (15,385,232) Not deducted expenses 1,234,250 111,000 Taxable profit (Tax pole) 665,964,071 743,381,286 ------------ ------------- Taxable rate 22.5% 22.5% ------------ ------------- Income tax 149,841,916 167,260,790 Tax on dividends 14,000 - Income tax charged in statement of income 149,855,916 167,260,790 ============ ============= Effective income tax rate 22.69% 22.56% ============ ============= 22. REVENUES AND COST OF REVENUES 22-a Net revenues 30/6/2019 30/6/2018 L.E. L.E. Property sales revenue Tag Sultan Project 88,303,503 51,928,492 Premira Project 20,631,623 7,050,800 Tag City (Zone T) Project 101,770,253 80,166,544 Tag City (Zone B) Project 115,258,062 255,289,842 Tag City (Zone A) Project 45,836,756 Capital Garden project 6,385,725 80,135,970 Sarai City 1 project 16,444,582 119,479,592 Sarai City 2 project 279,552,255 83,873,119 Sarai City 3 project 53,985,395 - El Waha Project - 120,000 -------------- -------------- Total property sales revenue 728,168,154 678,044,359 Land sales revenue - El Waha and Madinet Nasr project 49,592,360 176,336,140 Land sales revenue - Tag City (Zone A) project 115,205,441 - -------------- -------------- Total property and land sales revenues 892,965,955 854,380,499 -------------- -------------- Less: Tag Sultan Project sales returns (7,897,322) (216,410) Premira sales returns - (244,400) Tag City Zone T sales returns (34,215,129) (12,335,774) Tag City Zone B sales returns (37,801,480) (3,260,387) Tag City Zone A sales returns (1,443,903) - Capital Garden sales returns (4,580,704) (3,356,477) Sarai City 1 project sales returns (15,442,236) (613,578) Sarai City 2 project sales returns (91,175,354) (38,270,485) Sarai City 3 project sales returns (9,727,406) - El Waha Project sales returns - (1,653,493) Total finished properties sales returns (202,283,534) (59,951,004) -------------- -------------- Net sales 690,682,421 794,429,495 -------------- -------------- Amortization of notes receivable of present value discount 225,774,132 196,927,866 Profit, interest and installments due during the period 20,321,778 30,578,830 Income from investment properties 609,588 605,963 Net sales revenue 937,387,919 1,022,542,154 ============== ============== 22. REVENUES AND COST OF REVENUES - Continued 22-b Cost of revenues 30/6/2019 30/6/2018 L.E. L.E. Cost of sold property Cost of Tag Sultan Project 62,674,687 39,467,628 Cost of Premira Project 26,928,738 1,634,555 Cost of Tag City Zone T Project 13,658,395 6,491,209 Cost of Tag City Zone B Project 22,155,609 28,236,615 Cost of Tag City Zone A Project 5,166,731 - Cost of Capital Garden project 165,986 2,400,191 Cost of Sarai City 1 project 4,488,328 17,398,556 Cost of Sarai City 2 project 37,949,123 15,118,702 Cost of Sarai City 3 project 3,553,958 - Total cost of properties sales 176,741,555 110,747,456 ------------- ------------- Cost of land sold - El Waha project 3,046,928 2,644,646 ------------- ------------- Cost of Land sold - Tag City (Zone A) project 17,690,400 - ------------- ------------- Total cost of land and finished properties sales 197,478,883 113,392,102 ------------- ------------- Less: Cost of Tag Sultan sales returns (2,836,943) (45,006) Cost of Premira sales returns - (61,107) Cost of Tag City Zone T Project sales returns (3,105,431) (1,159,952) Cost of Tag City Zone B project sales returns (3,811,472) (375,258) Cost of Tag City Zone A project sales returns (170,652) - Cost of Capital Garden project sales returns (168,241) (119,658) Cost of Sarai 1 project sales returns (2,570,903) (395,504) Cost of Sarai 2 project sales returns (19,638,689) (7,857,674) Cost of Sarai 3 project sales returns (595,399) - Cost of El Waha sales returns - (283,407) Total cost of sales returns (32,897,730) (10,297,566) Net cost of sales 164,581,153 103,094,536 ------------- ------------- Depreciation of investment properties (Note 5/4) 29,581 29,253 Cost of investment properties 13,863 - Cost of revenue 164,624,597 103,123,789 ============= ============= 23. SELLING AND MARKETING EXPENSES 30/6/2019 30/6/2018 L.E. L.E. Salaries and wages 5,275,124 807,574 Sales and marketing concession 33,739,057 21,048,445 Advertisement expenses (including stamp tax) 52,665,587 88,903,588 Rent 5,980,079 5,046,785 Professional fees 197,034 727,251 Depreciation (Note 4/1) 1,432,616 611,291 Transportation and sundry expenses 3,639,540 3,221,227 102,929,037 120,366,161 ============ ============ 24. GENERAL AND ADMINISTRATIVE EXPENSES
30/6/2019 30/6/2018 L.E. L.E. Salaries, wages and equivalent 19,441,534 12,033,977 Board of Directors remuneration 3,779,056 3,119,806 Advertisement expenses 965,475 769,971 Transportation and communications expenses 1,798,647 1,204,332 Consulting fees, training and conferences 6,924,773 3,795,539 Depreciation (Note 4/1) 4,682,988 1,721,123 Maintenance expenses, and software licenses 8,414,132 4,040,811 Rent of electronic data storage sites 1,721,034 1,825,786 Raw materials, fuel and spare parts 3,696,680 642,443 Property tax and stamp tax 654,928 813,933 International deposit certificates at London Stock Exchange expenses 1,199,352 1,877,473 Security, cleaning and training expenses 2,268,376 1,525,465 Bank charges 1,162,351 1,281,784 Other service expenses 1,147,771 689,446 57,857,097 35,341,889 =========== =========== 25. FINANCE INCOME 30/6/2019 30/6/2018 L.E. L.E. Return on investment at fair value through profit and loss 870,649 819,695 Credit interest 29,533,405 10,767,790 Return on treasury bills 7,715,293 - 38,119,347 11,587,485 =========== =========== 26. RELEVANT TO ACTIVITY INCOME 30/6/2019 30/6/2018 L.E. L.E. Administrative fees from customers (for redemption assignment etc.) 32,561,171 17,630,234 Delay fines on customers 14,946,990 4,272,625 Delay penalty on contractors 209,539 - Sundry revenue 3,660,634 2,075,292 Gain on foreign exchange - 16,295 51,378,334 23,994,446 =========== =========== 27. OTHER EXPENSES 30/6/2019 30/6/2018 L.E. L.E. Compensations and fines 81,525 25,839 Donations for others 24,565 625,000 Loss on foreign exchange 259,340 - Capital losses - 13,260 Takaful contribution 2,573,573 - 2,939,003 664,099 ========== ========== 28. EARNINGS PER SHARE 30/6/2019 30/6/2018 L.E. L.E. Net profit for the period after tax 511,268,237 574,388,842 Less: Estimated employees and Board of Directors share in profit (54,760,000) (47,415,000) Shareholders share in net profit 456,508,237 526,973,842 -------------- -------------- Weighted average numbers of shares outstanding during the period 1,440,000,000 1,440,000,000 ============== ============== Earnings per share 0.32 0.37 ============== ============== 29. CONTINGENT LIABILITIES
Letters of guarantee
The letters of guarantees issued amounted to L.E. 22,490,720 by National Bank of Egypt, and United Bank as of 30 June 2019 as a guarantee of Al Nasr Company for Utilities and Erections - subsidiary in favor of third parties (2018: L.E. 23,204,040), the letters are secured by the company's time deposits amounted to L.E. 4,592,268 (2018: L.E. 4,592,268) - (Note 10), and margin of letters of guarantee by L.E. 6,892,374 (2018: L.E. 6,892,374) - (Note 9) and investment certificates (Rakhaa) in united bank by L.E 9,837,327 (2018 : L.E 9,203,122).
30. TRANSACTIONS WITH RELATED PARTIES
Related parties are represented in the shareholding by the company and companies in which the shareholders have directly or indirectly shares that entitles them to exercise control or significant influence.
The company has some transactions with the related parties that include subcontracting of the building, utilities and installation works according to the following:
Nature of relationship Nature of 30/6/2019 30/6/2018 transactions L.E. L.E. Al Nasr Co. for Utilities & Utilities and installation Erections - S.A.E. Subsidiary works 22,251,255 42,740,736 =========== =========== Al Nasr Co. for Civil Works Subsidiary Dividends S.A.E. 1,920,006 - =========== =========== Al Nasr Co. for Civil Works S.A.E. Subsidiary Buildings and utilities works 34,778,437 4,541,066 =========== ===========
Balances of related parties are as follows:
Nature of 30/6/2019 31/12/2018 Nature of relationship transactions L.E. L.E. Amounts due from related parties: a) Al Nasr Co, for Utilities and Erections S.A.E. Subsidiary Long term loan (*) 42,451,602 29,959,015 Supplier (Debit) 14,891 14,891 Advance 27,870 27,870 b) Al Nasr Co, for Civil Works S.A.E. Subsidiary Supplier (Debit) 334,259 504,535 Advance 11,646,585 9,034,300 -------------- -------------- 54,475,207 39,540,611 ============== ============== c) Al Nasr Co, for Civil Works S.A.E. (Note 9) Subsidiary Accrued Revenue 1,920,006 - ============== ============== d) Capital Gardens Project Joint operations Long term- Notes Receivable 340,951,782 376,806,276 Present value discount (133,636,596) (153,670,025) -------------- -------------- 207,315,186 223,136,251 Net - Short term Notes Receivables 90,250,749 90,767,155 -------------- -------------- 297,565,935 313,903,406 ============== ============== Amounts due to related parties: a) Al Nasr Co, for Utilities and Erections S.A.E. Subsidiary Retention 384,123 7,844,902 Supplier (Credit) 659,460 3,424,460 b) Al Nasr Co, for Civil Works S.A.E. Subsidiary Supplier (Credit) 1,251,620 6,042,757 Retention 3,979,539 2,242,587 6,274,742 19,554,706 ============== ============== - Amount due to/from related parties are disclosed in Notes 7, 8/1, 8/2 and 9. 31. TAX POSITION
The company submits tax returns to the Tax Authority on due dates and pays taxes on time.
32. FINANCIAL INSTRUMENTS AND RELATED RISKS
On-financial position financial instruments comprise cash and bank balances, financial investments, debtors, creditors, and amounts due from/to related parties, Notes to the separate financial statements include the accounting policies adopted in the recognition and measurement of financial instruments.
The significant risks associated with the financial instruments and the procedures followed by the company to mitigate these risks are as follows:
-- Credit risk
Credit risk is the risk that debtors fail to settle the amounts due from them, the company seeks to reduce this risk to the minimum by agreeing with the customers to transfer property after settling all of their debts, also the company takes delay penalties upon later installments which exceeded their due dates calculated on settlement.
-- Liquidity risk
Liquidity risk represents all factors which affect the company's ability to pay part or all of its obligations, According to the company's policy sufficient liquidity is maintained which reduce the risk to the minimum.
The following are due dates of the liabilities:
Less than 1 - 2 More than one year years 2 years Book value L.E. L.E. L.E. L.E. 30/6/2019 Long term loans 97,196,776 254,897 226,837,086 324,288,759 Creditors and other credit balances 221,161,813 - - 221,161,813 Short term loans 366,666,119 - - 366,666,119 Suppliers and taxes 269,791,732 - - 269,791,732 Long term notes payable - 19,627,962 - 19,627,962 954,816,440 19,882,859 226,837,086 1,201,536,385 ============ =========== ============ ============== 31/12/2018 Long term loans 137,768,093 28,813,357 209,966,744 376,548,194 Creditors and other credit balances 201,521,850 - - 201,521,850 Short term loans 111,666,664 - - 111,666,664 Suppliers and taxes 414,677,183 - - 414,677,183 Long term notes payable - 39,255,924 - 39,255,924 865,633,790 68,069,281 209,966,744 1,143,669,815 ============ =========== ============ ============== 32. FINANCIAL INSTRUMENTS AND RELATED RISKS - Continued -- Interest rate risk
Interest rate risk represents the risk of changes in the rate of interest, time deposits, loans and bank overdrafts are subject to this risk, the company uses most of its deposits in settling its loans and overdraft balances whenever a gab between debit and credit balances takes place in order to reduce this risk to the minimum as possible.
The following are the financial assets and liabilities according interest rate:
30/6/2019 31/12/2018 L.E. L.E. Financial assets instruments with fixed interest rate Financial assets - trade and notes receivable 10,988,745,913 10,608,385,784 =============== =============== Financial liabilities instruments with variable interest rate Financial liabilities- short term loans and credit banks 810,464,768 500,446,712 =============== =============== -- Foreign currency risk
Foreign currency risk represents the changes in the currency rates which affect the receipts and disbursements and the translation of assets and liabilities in foreign currencies, the company policy is neither takes a loan in foreign currencies nor keep currencies rather than Egyptian pound.
33. CONTRACTUAL COMMITMENTS
The value of contracts with contractors for the implementation of housing and development projects amounted to L.E. 3.45 billion, the executed works till 30 June 2019 amounted to L.E. 1.17 billion. Contractors' dues have been paid in accordance with the contracts.
34. FAIR VALUE
The fair values of financial assets and liabilities are not materially different from their carrying value as of 30 June 2019, except for investments available for sale.
35. COMPARATIVE FIGURES
Certain of prior period figures have been amended to be comparable to the separate financial statement presentation for the current period.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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