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| Name | Symbol | Market | Type |
|---|---|---|---|
| Madinet Masr For Housing and Development | LSE:MNHD | London | Depository Receipt |
| Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0 | - |
From May 2019 to May 2024
TIDMMNHD
RNS Number : 0945U
Madinet Nasr for Housing & Develop.
20 November 2019
Nasr City 9-2019E2
Madinet Nasr for Housing and Development S.A.E.
SUMMARIZED SEPARATE
Interim FINANCIAL STATEMENTS
and limited review report thereon
AT 30 September 2019
Translation of financial statements
originally issued in Arabic
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 September 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 5 November 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 September 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, 19 November 2019
Madinet Nasr for Housing and Development S.A.E.
SEPARATE STATEMENT OF FINANCIAL POSITION
At 30 September 2019
Hot Features
Premium
30/9/2019 31/12/2018
Note L.E. L.E.
Non-current Assets
Fixed assets (Net) 4/1 39,907,245 42,801,213
Fixed assets under construction 4/2 17,186,934 17,482,227
Investment in subsidiaries 5/1 64,900,606 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 4,237,931 4,282,547
Long term notes receivables (Net) 7 6,117,396,047 6,149,282,308
Deferred tax assets 19 2,564,674 1,878,565
Total non-current assets 6,250,829,509 6,295,791,445
--------------- ---------------
Current Assets
Lands and unfinished properties - WIP 6 2,265,049,882 1,455,180,109
Finished properties 6 78,545,714 78,545,714
Inventory - materials 1,627,856 657,387
Short term notes receivable 7 2,420,155,124 2,239,238,936
Trade receivables (Net) 7 443,745,361 401,120,522
Trade payables - debit balances 402,485,702 98,674,042
Amount due from related parties 29 57,104,484 39,540,611
Debtors and other debit balances 8 335,537,217 264,803,270
Investments at fair value through profit or loss 5/5 12,611,730 12,169,504
Held to maturity investments - Treasury bills 5/6 103,653,634 115,893,797
Bank deposits of compounds facility management 18 394,067,214 338,488,109
Cash and bank balances 9 770,874,516 394,278,740
Total current assets 7,285,458,434 5,438,590,741
--------------- ---------------
Total assets 13,536,287,943 11,734,382,186
=============== ===============
Equity
Issued and paid up capital 15 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 613,288,228 1,069,653,619
Total shareholders' equity 3,843,336,180 3,334,777,952
--------------- ---------------
Non-current Liabilities
Unearned revenue 10 7,386,939,387 6,694,922,866
Term loans 16 503,608,238 238,780,101
Long term notes payable 14 9,813,981 39,255,924
Total non-current liabilities 7,900,361,606 6,972,958,891
--------------- ---------------
Current Liabilities
Provisions 11 78,954,518 79,954,518
Project infrastructure completion liabilities 12 96,150,449 116,553,019
Creditors and other credit balances 14 385,779,001 201,521,850
Current portion of long term loans 16 62,816,379 137,768,093
Short term loans 17 233,332,984 111,666,664
Bank's overdraft (credit facilities) 156,184,295 12,231,854
Liabilities of compounds facility management 18 390,182,790 340,312,213
Trade payables 8/2 170,826,350 84,064,430
Amounts due to related parties 29 6,764,014 19,554,706
Tax Authority 185,313,483 311,058,047
Dividends payable 26,285,894 11,959,949
Total current liabilities 1,792,590,157 1,426,645,343
--------------- ---------------
Total liabilities 9,692,951,763 8,399,604,234
--------------- ---------------
Total Equity and Liabilities 13,536,287,943 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 September 2019
From 1/1/2019 to From 1/1/2018 to From 1/7/2019 to From 1/7/2018 to
30/9/2019 30/9/2018 30/9/2019 30/9/2018
Note L.E. L.E. L.E. L.E.
Net revenue 21-a 1,184,170,537 1,725,348,975 246,782,618 702,806,821
Less:
Cost of revenue 21-b (216,935,576) (438,624,182) (52,310,979) (335,500,393)
-------------------- -------------------- --------------------- ---------------------
Gross Profit 967,234,961 1,286,724,793 194,471,639 367,306,428
Less:
Selling & marketing
expenses 22 (150,474,099) (145,494,638) (47,545,062) (25,128,477)
General &
administrative
expenses 23 (85,375,198) (57,880,936) (27,518,101) (22,539,047)
Impairment of
amounts due from
related parties 29 (2,545,554) - (2,545,554) -
Provisions - (8,195,530) - (4,741,586)
Finance cost (61,000,312) (85,647,427) (26,482,030) (28,678,603)
Add:
Financing income 24 61,266,487 23,051,434 23,147,140 11,463,949
Relevant to activity
income 25 72,161,967 39,041,915 20,783,633 15,047,469
-------------------- -------------------- --------------------- ---------------------
Profits from
operation 801,268,252 1,051,599,611 134,311,665 312,730,133
Return on 1,920,006 - - -
investments in
subsidiaries
Return on
investments held to
maturity and
available for sale 623,663 45,985 - 4,270
Impairment in
investments in
subsidiaries 5/1 (10,527,907) (24,375,000) (4,527,907) (8,125,000)
Reverse of
impairment in
investments in
subsidiaries 5/1 - 19,518,646 - -
Other expenses 26 (3,798,312) (683,250) (859,309) (19,151)
-------------------- -------------------- --------------------- ---------------------
Net profit for the
period before tax 789,485,702 1,046,105,992 128,924,449 304,590,252
Income tax 20 (176,883,583) (229,304,361) (27,027,667) (62,043,571)
Deferred tax 19 686,109 (55,349) 123,209 (189,241)
Net profit for the
period 613,288,228 816,746,282 102,019,991 242,357,440
==================== ==================== ===================== =====================
Earnings per share
for the period 27 0.37 0.51 0.06 0.14
==================== ==================== ===================== =====================
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 September 2019
From 1/1/2019 to From 1/1/2018 to From 1/7/2019 to From 1/7/2018 to
30/9/2019 30/9/2018 30/9/2019 30/9/2018
L.E. L.E. L.E. L.E.
Net profit for the
period 613,288,228 816,746,282 102,019,991 242,357,440
Other comprehensive
income - - - -
Total comprehensive
income
for the period 613,288,228 816,746,282 102,019,991 242,357,440
====================== ====================== ====================== ======================
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 September 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) - -
Capital increase in
accordance with the
Extraordinary
General Assembly
Resolution of
1/4/2018
(Note 15) 202,899,611 - (202,899,611) - -
Comprehensive income
for the period - - - 816,746,282 816,746,282
Balance at 30
September 2018 1,200,000,000 170,478,648 894,645,685 816,746,282 3,081,870,615
===================== ============ ================== ===================== ==============
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) - -
Capital increase in
accordance with the
Ordinary General
Assembly Resolution
of 25/3/2019
(Note 15) 240,000,000 - (240,000,000) - -
Comprehensive income
for the period - - - 613,288,228 613,288,228
Balance at 30
September 2019 1,440,000,000 223,961,329 1,566,086,623 613,288,228 3,843,336,180
===================== ============ ================== ===================== ==============
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 September 2019
30/9/2019 30/9/2018
Note L.E. L.E.
OPERATING ACTIVITIES
Net profit for the period before tax 789,485,702 1,046,105,992
Adjustments for:
Depreciation of fixed assets and investment properties 4/1, 5/4 9,275,028 4,484,609
Capital loss 26 - 13,260
Impairment of amounts due from related parties 29 2,545,554 -
Provisions 11 - 8,195,530
Impairment of trade payables - debit balances 5/1 10,527,907 24,375,000
Reverse of impairment of investments in subsidiaries 5/1 - (19,518,646)
Return on investments held to maturity (623,663) (45,985)
Deferred profits and accrued interests on installments during the
period (Net) 13 (28,915,125) (41,410,524)
Bad debts 26 227,916 3,016
Return on Treasury Bills 24 (13,616,039) -
Loss /(Gain) on foreign currencies exchange 25/26 224,528 (20,712)
-------------- ----------------
Operating profit before working capital changes: 769,131,808 1,022,181,540
Housing and development projects (810,840,242) (9,497,036)
Trade receivables, customers, trade payables and notes receivables (563,331,119) (1,430,066,400)
Trade payables - unearned revenue, creditors, and projects'
infrastructure completion liabilities 900,400,387 1,058,172,857
Provisions used 11 (1,000,000) (588,984)
Dividends paid to Board of Directors and employees (90,404,055) (82,581,702)
investments held to maturity- Treasury bills 114,909,836 -
Income tax paid (302,628,147) (270,900,234)
Net cash from operating activities 16,238,468 286,720,041
-------------- ----------------
INVESTING ACTIVITIES:
Payments for purchase of fixed assets & Fixed assets under construction (6,044,430) (12,121,108)
Proceeds from gain on sale of fixed assets 3,279 -
Proceeds from investments held to maturity 623,663 45,985
Proceeds from amounts due from related parties 29 - 5,862,492
Net cash (used in) investing activities (5,417,488) (6,212,631)
-------------- ----------------
Madinet Nasr for Housing and Development S.A.E.
SEPARATE STATEMENT OF CASH FLOWS - Continued
For the period from 1 January to 30 September 2019
30/9/2019 30/9/2018
Note L.E. L.E.
FINANCING ACTIVITIES:
Payments for long term loans 16 (103,448,935) (120,693,933)
Proceeds from long term loans 16 293,325,358 -
Payments for short term loans 17 (278,333,680) (196,469,455)
Proceeds from short term loans 17 400,000,000 335,010,374
Net cash from financing activities 311,542,743 17,846,986
-------------- --------------
Change in cash and cash equivalents 322,363,723 298,354,396
Cash and cash equivalents at the beginning of the period 408,816,390 123,514,275
(Loss)/gain on foreign exchange 25/26 (224,528) 20,712
-------------- --------------
Total cash and cash equivalents at the end of the period 730,955,585 421,889,383
Less: Restricted time deposits against letters of guarantee (4,592,268) (4,592,268)
Restricted investment certificates against letters of guarantee (10,164,807) (8,888,556)
Cash and cash equivalents at the end of the period 17 716,198,510 408,408,559
============== ==============
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 amount transferred from fixed assets under construction to fixed assets during the period.
- An amount of L.E. 394,067,214 represents bank accounts and deposits against liabilities of compounds facility management.
- An amount of L.E. 240,000,000 represents amounts of capital increase by stock dividends 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 September 2019 on 3 November 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) Fixed assets under construction
Fixed assets 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. Fixed assets 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) Lands, unfinished and finished properties
All cost incurred on lands, unfinished and finished properties are included in this account. At point of sale, this account is adjusted based on actual per meter cost of land or units sold. Lands, unfinished and finished properties 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 consolidated 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 lands, unfinished and finished properties inventory account. Cost of the completed units 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 - 922,400 3,853,559 5,327,660
Transferred
from fixed
assets under
construction
(Note 4/2) - 576,804 435,259 - - - - 1,012,063
Disposals
during the
period - - - - - (10,499) - (10,499)
At 30
September
2019 1,351,229 23,058,986 6,294,379 3,241,203 517,824 12,878,764 30,894,640 78,237,025
---------- -------------- ----------- ----------- -------- ----------- ----------- -----------
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 1,572,634 755,205 17,178 2,087 1,397,992 5,485,316 9,230,412
Disposals
during the
period - - - - - (7,220) - (7,220)
At 30
September
2019 - 6,585,529 3,568,141 3,162,983 515,936 8,066,409 16,430,782 38,329,780
---------- -------------- ----------- ----------- -------- ----------- ----------- -----------
Net book
value:
At 30
September
2019 1,351,229 16,473,457 2,726,238 78,220 1,888 4,812,355 14,463,858 39,907,245
========== ============== =========== =========== ======== =========== =========== ===========
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:
30/9/2019 31/12/2018
L.E. L.E.
Buildings and constructions 114,889 114,889
Machinery and equipment 1,392,608 862,022
Motor vehicles 3,105,900 3,105,900
Furniture and office equipment 2,800,266 1,235,017
Computers and software 3,072,377 228,491
Tools 512,241 512,241
10,998,281 6,058,560
=========== ===========
b) Depreciation for the period is allocated as follows:
30/9/2019 30/9/2018
L.E. L.E.
Cost of sales - 524,885
Selling and marketing expenses (Note 22) 2,138,019 1,140,363
General and administrative expenses (Note 23) 7,092,393 2,773,569
9,230,412 4,438,817
========== ==========
4/2 FIXED ASSETS UNDER CONSTRUCTION
30/9/2019 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 716,770 9,203,809
Transferred to fixed assets (Note 4/1) (1,012,063) (1,828,505)
Balance at the end of the period/year 17,186,934 17,482,227
============ ============
5. INVESTMENTS
5/1 Investments in subsidiaries
Contribution 30/9/2019 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 (155,815,000) (145,287,093)
-------------- --------------
- 10,527,907
Al Nasr Co. for Civil Works - S.A.E. 52.46 64,900,606 64,900,606
64,900,606 75,428,513
============== ==============
5. INVESTMENTS - Continued
(**) The movements in impairment of investments are as follows:
30/9/2019 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 29) - 74,472,093
Provided during the period (Al Nasr 10,527,907 -
For Civil Works)
Reserve of impairment in subsidiaries
(Al Nasr For Civil Works) - (19,518,646)
Impairment balance at the end of period
/year 155,815,000 145,287,093
------------ =============
5/2 Held to maturities investments
30/9/2019 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 30/9/2019 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
30/9/2019 31/12/2018
L.E. L.E.
Land held for investment purpose (**) 176,318 176,318
Title held land on sold properties 3,427,692 3,427,692
Rental buildings (Net) (*) 633,921 678,537
4,237,931 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 September 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 21-b) 6,985 37,631 44,616
At 30 September 2019 464,848 2,092,986 2,557,834
------------------ ----------------------- ----------
Net book value:
At 30 September 2019 81,149 552,772 633,921
================== ======================= ==========
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:
30/9/2019 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
30/9/2019 31/12/2018
L.E. L.E.
Investment certificates in:
Bank Misr Investment Fund (Day-By-Day) 304,554 275,845
QNB Investment Fund 1,202,079 1,098,848
Banque Du Caire Investment Fund (Day-By-Day) 64,500 776,798
United Bank Investment Fund (Rakhaa) (*) 11,040,597 9,996,054
Arab Investment Bank Investment Fund - 21,959
12,611,730 12,169,504
=========== ===========
(*) United Bank Investment Fund (Rakhaa) includes pledged investment certificates by L.E. 10,164,807 against letters of guarantee as of separate financial statements date. (Note 17)
5. INVESTMENTS - Continued
5/6 Held to maturities investments - Treasury Bills
30/9/2019 31/12/2018
L.E. L.E.
Treasury Bills - 63 days - 14,600,000
Treasury Bills - 90 days 104,325,000 -
Treasury Bills - 124 days - 106,500,000
Less:
Not accrued interest (671,366) (5,206,203)
103,653,634 115,893,797
============ ============
Treasury bills are classified as follows:
30/9/2019 31/12/2018
L.E. L.E.
Treasury bills matures within 3 months (Note 17) 103,653,634 14,600,000
Treasury bills matures more than 3 months - 101,293,797
103,653,634 115,893,797
============ ============
6. LANDS, UNFINISHED AND FINISHED PROPERTIES
30/9/2019 31/12/2018
L.E. L.E.
Lands and unfinished properties:
El Waha 17,341,943 46,841,246
6(th) October (Nasr Gardens) 211,920,429 203,688,886
Tag City (*) 1,529,917,908 793,409,875
Nasr City (Main City) 1,046,792 1,046,791
Sarai City 504,822,810 410,193,311
2,265,049,882 1,455,180,109
-------------- --------------
Finished properties:
El Waha 6,680,048 6,680,048
Nasr City (Main City) 11,587,224 11,587,224
6(th) October (Nasr Gardens) 60,278,442 60,278,442
78,545,714 78,545,714
-------------- --------------
Total lands, unfinished and finished properties 2,343,595,596 1,533,725,823
============== ==============
(*) The main development "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 September 30, 2019 represents the cost of the work of external and internal facilities and construction
Lands, unfinished and finished properties 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
30/9/2019 31/12/2018
L.E. L.E.
Long term notes receivable
Tag Sultan customers 324,266,901 339,937,210
Tag City customers (Zone T) 1,788,492,654 2,040,268,312
Tag City customers (Zone B) 1,383,775,603 1,470,693,448
Tag City customers (Zone A) 265,681,381 -
Premira customers 46,701,696 63,480,106
Capital Gardens customers (*) 314,559,081 376,806,276
Sarai City(1) customers 731,529,408 917,561,199
Sarai City(2) customers 2,006,410,838 1,978,825,254
Sarai City(3) customers 352,457,764 317,033,107
El Waha and Nasr city 73,155,569 -
Lands customers 20,747,344 -
Total long term notes receivables 7,307,778,239 7,504,604,912
---------------- ----------------
Less: Present value discount
Tag Sultan (52,601,673) (56,209,331)
Tag City (Zone T) (277,577,579) (331,669,477)
Tag City (Zone B) (198,017,722) (238,347,477)
Tag City (Zone A) (51,162,327) -
Premira (15,441,267) (20,754,041)
Capital Gardens (*) (120,806,805) (153,670,025)
Sarai City (1) (101,927,387) (138,844,423)
Sarai City (2) (320,748,174) (367,285,477)
Sarai City (3) (52,099,258) (48,542,353)
----------------
Total present value discount (1,190,382,192) (1,355,322,604)
----------------
Net long term notes receivables 6,117,396,047 6,149,282,308
================ ================
Short term notes receivable
Tag Sultan customers 194,412,290 229,264,003
Tag City customers (Zone T) 600,125,399 573,873,051
Tag City customers (Zone B) 397,983,692 380,222,994
Tag City customers (Zone A) 52,065,693 -
Premira customers 24,606,002 34,611,060
Capital Gardens customers (*) 88,698,537 90,767,155
Sarai City(1) customers 280,465,830 281,999,760
Sarai City(2) customers 625,781,723 576,448,134
Sarai City(3) customers 93,751,279 72,052,779
El Waha and Nasr city 23,921,930 -
Lands customers 38,342,749 -
2,420,155,124 2,239,238,936
================ ================
Trade debtors
Tag Sultan 17,878,178 9,133,903
Tag City (Zone T( 139,814,017 124,501,331
Tag City (Zone B( 84,537,781 32,555,901
Tag City (Zone A( 19,817,216 -
Premira 1,146,032 741,706
Sarai City 1 57,595,550 32,253,825
Sarai City 2 156,903,909 108,857,586
Sarai City 3 38,512,090 7,384,828
El Waha and Nasr City 64,329,328 192,539,232
Lands 36,372,685 90,408,858
Leaseholders 1,393,395 1,361,496
Other Customers 358,231 -
---------------- ----------------
618,658,412 599,738,666
Less:
Deferred profits and interests on outstanding installments (Note 13) (160,251,669) (183,956,762)
Impairment of customers balances (14,661,382) (14,661,382)
443,745,361 401,120,522
================ ================
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 29)
8. DEBTORS AND OTHER DEBIT BALANCES
30/9/2019 31/12/2018
L.E. L.E.
Cheques under collection 312,966 202,968
Refundable deposits 24,776,117 19,194,708
Prepaid expenses 300,265,751 237,507,110
Cash margin on letters of guarantee (Note 28) 6,892,374 6,892,374
Other debit balances 3,290,009 1,006,110
335,537,217 264,803,270
============ ============
9. CASH AND BANK BALANCES
30/9/2019 31/12/2018
L.E. L.E.
Cash on hand 706,531 649,568
Bank current accounts with return 764,567,985 388,029,172
Time deposits (3 months) (*) 5,600,000 5,600,000
770,874,516 394,278,740
============ ============
(*) Time deposits includes L.E. 4,592,268 (2018: L.E. 4,592,268) pledged time deposits against letters of guarantee. (Notes 17, 29)
10. UNEARNED REVENUE
30/9/2019 31/12/2018
L.E. L.E.
Tag Sultan 222,410,786 203,252,825
Premira 5,427,122 31,162,943
Tag City (Zone T) 2,219,260,568 2,131,674,074
Tag City (Zone B) 1,481,294,247 1,316,699,988
Tag City (Zone A) 158,130,856 -
Capital Gardens 133,538,955 134,825,919
Sarai City(1) 881,745,572 864,952,324
Sarai City(2) 2,036,992,443 1,829,635,619
Sarai City(3) 248,138,838 182,719,174
7,386,939,387 6,694,922,866
============== ==============
11. PROVISIONS
Balance at 1/1/2019 Provided during the Used during the period Balance at 30/9/2019
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
==================== ====================== ======================= =====================
12. PROJECT INFRASTRUCTURE COMPLETION LIABILITIES
Balance Provided Balance at
at 1/1/2019 / (returns) Work executed 30/9/2019
L.E. L.E. L.E. L.E.
Tag City 48,802,876 42,920,727 (83,252,594) 8,471,009
Sarai City 58,596,511 43,937,540 (19,542,837) 82,991,214
Capital Gardens 4,311,598 (64,550) - 4,247,048
El Waha 4,842,034 3,879,702 (8,280,558) 441,178
116,553,019 90,673,419 (111,075,989) 96,150,449
============= ============= ============== ===========
This balance represents estimated amounts to complete utilities for projects that have not been completely delivered.
13. DEFERRED PROFITS AND INTERESTS ON OUTSTANDING INSTALLMENTS
Land Properties Total
L.E. L.E. L.E.
30/9/2019
Balance at beginning of the period 40,386,717 143,570,045 183,956,762
Additions during the period 6,217,708 - 6,217,708
Due during the period (Note 21/A) (7,144,116) (21,771,009) (28,915,125)
Disposals during the period - (1,007,676) (1,007,676)
Balance at the end of the period (Note 7) 39,460,309 120,791,360 160,251,669
============= ============= =============
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
============= ============= =============
14. CREDITORS AND OTHER CREDIT BALANCES
30/9/2019 31/12/2018
L.E. L.E.
Notes payable- Purchase of lands (*) 39,255,924 39,255,924
Notes payable 165,245,371 31,416,958
Support to National Housing Project 880,000 880,000
Down payment for reservation of land and
property sales 33,881,317 16,207,949
Accrued sales and marketing commission 11,229,991 12,281,600
Premira collections 854,655 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 11,738,093 9,359,760
Accrued interest on long term loans 23,461,673 16,679,297
Governmental authorities 46,806,477 41,145,033
Accrued advertising expense 14,947,025 5,363,225
Early retirement benefits and others 40,333 44,853
Proceeds from customers under reconciliation 12,219,252 1,517,936
Takaful contribution 3,300,356 3,574,807
Other 648,566 704,180
385,779,001 201,521,850
============ ============
(*) 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.
30/9/2019 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 (29,441,943) -
49,069,905 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.
The balance in the separate financial statements is classified as follows:
30/9/2019 31/12/2018
L.E. L.E.
Long term liabilities
Long term notes payable 9,813,981 39,255,924
----------- -----------
Current liabilities
Creditors and other credit balances 39,255,924 39,255,924
49,069,905 78,511,848
=========== ===========
15. SHARE CAPITAL
Authorized capital:
The authorized capital is five billion Egyptian Pounds.
30/9/2019 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 September 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. 50,963,824 50,963,824 3.54%
Banque Misr 45,627,636 45,627,636 3.17%
Other shareholders 677,932,638 677,932,638 47.08%
1,440,000,000 1,440,000,000 100%
============== ============== =============
List of percentage of shares of issued and paid up capital for shareholders as of 31 December 2018 is as follows:
Name No. of shares Nominal value Contribution
%
L.E. L.E.
BIG Investment Group Ltd. 238,590,867 238,590,867 19.88%
Holding Co. for Construction and Development 182,285,249 182,285,249 15.19%
BPI Holding for Financial Investments S.A.E. 89,462,770 89,462,770 7.45%
National Investment Bank 44,224,368 44,224,368 3.69%
Al Olayan Saudi Investment Co. Ltd. 42,303,187 42,303,187 3.53%
Misr Banque 38,023,030 38,023,030 3.17%
Other shareholders 565,110,529 565,110,529 47.09%
1,200,000,000 1,200,000,000 100.00%
============== ============== =============
16. TERM LOANS
National Arab Investment Commercial Total
Investment Bank International
Bank Bank
L.E. L.E. L.E. L.E.
30/9/2019
Balance at the beginning
of the period 1,237,813 - 375,310,381 376,548,194
Proceeds during the period - - 293,325,358 293,325,358
Installments paid during
the period (491,458) - (102,957,477) (103,448,935)
Balance at the end of
the period 746,355 - 565,678,262 566,424,617
============ ================ =============== ==============
Classified in financial
position as follows:
Current liabilities:
Current portion of term
loans 430,219 - 62,386,160 62,816,379
============ ================ =============== ==============
Non-current liabilities:
Term loans 316,136 - 503,292,102 503,608,238
============ ================ =============== ==============
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
============ ================ =============== ==============
17. CASH AND CASH EQUIVALENTS
Cash and cash equivalents included in the separate statement of cash flows comprise the following separate financial position amounts:
30/9/2019 31/12/2018
L.E. L.E.
Cash and bank balances (Note 9) 770,874,516 394,278,740
Investment at fair value through profit and loss (Note 5/5) 12,611,730 12,169,504
Investment held to maturity - Treasury bills (Note 5/6) 103,653,634 14,600,000
Less:
Bank's overdraft - Credit facilities (156,184,295) (12,231,854)
-------------- -------------
730,955,585 408,816,390
Less:
Restricted time deposits against letters of guarantee (Note 9) (4,592,268) (4,592,268)
Restricted investment certificates against letters of guarantee (Note 5/5) (10,164,807) (9,203,122)
Cash and cash equivalents at the end of the period /year 716,198,510 395,021,000
============== =============
Short term loan
30/9/2019 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 (278,333,680) (280,219,456)
Balance at the end of the period /year 233,332,984 111,666,664
============== ==============
18. BANK DEPOSITS OF COMPOUNDS FACILITY MANAGEMENT
30/9/2019 31/12/2018
L.E. L.E.
Bank current accounts 20,737,864 11,082,624
Time deposits 332,958,929 286,322,778
Cheques under collection 37,387,242 35,585,953
Accrued revenue 2,983,179 5,496,754
------------ ------------
Bank deposits of compounds facility management 394,067,214 338,488,109
Amounts under settlement (3,884,424) 1,824,104
Liabilities of compounds facility management 390,182,790 340,312,213
============ ============
The checks received from the customers for the compounds facility management amounted to L.E. 1,253,955,258 (2018: L.E. 1,101,300,866), including collections of L.E. 394,067,214 (2018: L.E. 338,488,109) invested in deposits and interest-bearing bank accounts. The remaining balance amounting to L.E. 859,888,044 is notes receivable at 30 September 2019 (2018: L.E. 762,812,758) and will be collected on maturity dates during the subsequent periods. The deposit's term ranges from 1 to 6 months.
19. DEFERRED TAX
30/9/2019 31/12/2018
-------------------------- --------------------------
Assets (Liabilities) Assets (Liabilities)
L.E. L.E. L.E. L.E.
Fixed assets - (2,147,730) - (2,833,839)
Provisions 4,712,404 - 4,712,404 -
---------- -------------- ---------- --------------
Total deferred tax assets/(liability) 4,712,404 (2,147,730) 4,712,404 (2,833,839)
---------- --------------
Net deferred tax Asset/(liability) 2,564,674 - 1,878,565 -
========== ============== ========== ==============
Deferred tax charged to the separate statement of income 686,109 - 212,968 -
========== ============== ========== ==============
Unrecorded deferred tax assets
30/9/2019 31/12/2018
L.E. L.E.
Unrecorded deferred tax assets (provisions and impairment) 38,929,935 35,988,407
=========== ===========
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.
20. RECONCILIATIONS TO CALCULATE THE EFFECTIVE INCOME TAX RATE
30/9/2019 30/9/2018
L.E. L.E.
Net accounting profit before tax 789,485,702 1,046,105,992
Calculated income tax according to income tax law:
Takaful contribution 3,300,356 -
Net movement in provisions and impairment 13,073,461 6,710,298
Depreciation differences 3,049,374 (384,076)
Provided /(used) from project infrastructure completion liabilities (20,402,570) (32,333,862)
Exempted revenue (3,819,537) (1,221,858)
Not deducted expenses 1,400,250 254,000
Taxable profit (Tax pole) 786,087,036 1,019,130,494
------------- --------------
Taxable rate 22.5% 22.5%
Income tax 176,869,583 229,304,361
------------- --------------
Tax on dividends 14,000 -
Income tax charged in income statement 176,883,583 229,304,361
Effective income tax rate 22.40% 21,92%
============= ==============
21. REVENUES AND COST OF REVENUES
21-a Net revenues
30/9/2019 30/9/2018
L.E. L.E.
Property sales revenue
Tag Sultan 146,073,006 235,644,325
Premira 26,740,217 102,780,982
Tag City (Zone T) 133,213,286 96,133,265
Tag City (Zone B) 136,219,552 350,857,148
Tag City (Zone A) 50,348,546 -
Capital Garden 6,385,725 88,488,384
Sarai City 1 22,680,086 212,989,414
Sarai City 2 348,270,194 115,952,788
Sarai City 3 78,398,902 108,152,024
El Waha - 120,000
-------------- --------------
Total property sales revenue 948,329,514 1,311,118,330
Land sales revenue - El Waha and Original City 49,592,360 214,280,140
Land sales revenue - Tag city (Zone A) 115,205,441 -
-------------- --------------
Total property and land sales revenues 1,113,127,315 1,525,398,470
Less:
Tag Sultan sales returns (9,493,273) (1,366,350)
Premira sales returns - (244,400)
Tag City Zone T sales returns (68,320,496) (32,744,585)
Tag City Zone B sales returns (51,881,073) (7,817,419)
Tag City Zone A sales returns (1,443,903) -
Capital Garden sales returns (8,302,519) (4,611,318)
Sarai City 1 sales returns (23,373,712) (6,569,421)
Sarai City 2 sales returns (123,862,597) (68,476,774)
Sarai City 3 sales returns (12,979,344) -
El Waha sales returns - (1,653,494)
-------------- --------------
Total finished properties sales returns (299,656,917) (123,483,761)
Net sales 813,470,398 1,401,914,709
-------------- --------------
Amortization of notes receivable of present value discount 340,868,875 281,114,154
Profit, interest and installments due during the period 28,915,125 41,410,524
Income from investment properties 916,139 909,588
Net sales revenue 1,184,170,537 1,725,348,975
============== ==============
21-b Cost of revenues
30/9/2019 30/9/2018
L.E. L.E.
Cost of sold property
Cost of Tag Sultan 98,589,190 222,314,275
Cost of Premira 35,875,001 121,199,445
Cost of Tag City Zone T 17,041,352 8,534,604
Cost of Tag City Zone B 26,555,784 39,090,999
Cost of Tag City Zone A 5,650,843 -
Cost of Capital Garden 165,986 2,629,994
Cost of Sarai 1 City 5,991,700 32,505,517
Cost of Sarai 2 City 46,909,916 21,486,253
Cost of Sarai 3 City 5,198,952 6,960,009
Total cost of properties sales 241,978,724 454,721,096
Cost of land sold - El Waha and Original City 3,046,929 3,331,709
Cost of land - Tag city (Zone A) 17,690,400 -
Total cost of land and finished properties sales 262,716,053 458,052,805
============ ============
21. REVENUES AND COST OF REVENUES - Continued
30/9/2019 30/9/2018
L.E. L.E.
Less:
Cost of Tag Sultan sales returns (3,038,721) (750,470)
Cost of Premira sales returns (61,107)
Cost of Tag City Zone T sales returns (6,268,875) (2,950,870)
Cost of Tag City Zone B sales returns (5,479,031) (882,894)
Cost of Tag City Zone A sales returns (170,652)
Cost of Capital Garden sales returns (298,058) (157,264)
Cost of Sarai 1 sales returns (4,030,474) (1,226,607)
Cost of Sarai 2 sales returns (25,732,743) (13,161,796)
Cost of Sarai 3 sales returns (820,402)
Cost of El Waha sales returns - (283,407)
-------------
Total cost of sales returns (45,838,956) (19,474,415)
------------- -------------
Net cost of sales 216,877,097 438,578,390
------------- -------------
Depreciation of investment properties (Note 5/4) 44,616 45,792
Investment properties maintenance 13,863 -
Cost of revenue 216,935,576 438,624,182
============= =============
22. SELLING AND MARKETING EXPENSES
30/9/2019 30/9/2018
L.E. L.E.
Salaries and wages 7,930,510 1,297,187
Sales and marketing concession 40,945,720 46,357,248
Advertisement expenses (including stamp tax) 85,356,241 82,887,305
Rent 9,022,157 6,959,848
Professional fees 197,034 2,120,350
Depreciation (Note 4/1) 2,138,019 1,140,363
Transportation and sundry expenses 4,884,418 4,732,337
150,474,099 145,494,638
============ ============
23. GENERAL AND ADMINISTRATIVE EXPENSES
30/9/2019 30/9/2018
L.E. L.E.
Salaries, wages and equivalent 27,154,699 18,290,430
Board of Directors remuneration 5,217,459 4,236,209
Advertisement expenses 1,081,118 1,383,164
Transportation and communications expenses 2,525,596 5,553,251
Consulting fees, training and conferences 10,702,589 6,716,236
Depreciation (Note 4/1) 7,092,393 2,773,569
Maintenance expenses, and software licenses 11,877,702 4,798,582
Rent of electronic data storage sites 2,843,404 2,778,692
Raw materials, fuel and spare parts 7,123,627 2,499,841
Property tax and stamp tax 978,916 1,361,360
International deposit certificates at London Stock Exchange expenses 1,323,978 2,280,589
Security, cleaning and training expenses 3,445,398 2,403,556
Bank charges 2,341,482 1,779,738
Other service expenses 1,666,837 1,025,719
85,375,198 57,880,936
=========== ===========
24. FINANCE INCOME
30/9/2019 30/9/2018
L.E. L.E.
Return on investment at fair value through
profit and loss 1,275,868 1,221,856
Credit interest 46,374,580 21,829,578
Return on Treasury Bills 13,616,039 -
61,266,487 23,051,434
=========== ===========
25. RELEVANT TO ACTIVITY INCOME
30/9/2019 30/9/2018
L.E. L.E.
Administrative fees from customers (for
redemption assignment etc.) 51,824,299 28,970,140
Delay fines on customers 16,271,684 6,448,745
Delay penalty on contractors 222,539 -
Sundry revenue 3,843,445 3,598,670
Gain on foreign exchange - 20,712
Capital gains - 3,648
72,161,967 39,041,915
=========== ===========
26. OTHER EXPENSES
30/9/2019 30/9/2018
L.E. L.E.
Compensations and fines 45,512 41,974
Donations for others - 625,000
Loss on foreign exchange 224,528 -
Capital losses - 13,260
Bad debt - customers 227,916 3,016
Takaful contribution 3,300,356 -
3,798,312 683,250
========== ==========
27. EARNINGS PER SHARE
30/9/2019 30/9/2018
L.E. L.E.
Net profit for the period after tax 613,288,228 816,746,282
Less:
Estimated employees and Board of Directors
share in profit (80,000,000) (76,000,000)
Shareholders share in net profit 533,288,228 740,746,282
============== ==============
Weighted average numbers of shares
outstanding
during the period 1,440,000,000 1,440,000,000
============== ==============
Earnings per share 0.37 0.51
============== ==============
28. CONTINGENT LIABILITIES
Letters of guarantee
The letters of guarantees issued amounted to L.E. 22,720,490 by National Bank of Egypt, and United Bank as of 30 September 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 9), and margin of letters of guarantee by L.E. 6,892,374 (2018: L.E. 6,892,374) - (Note 8) and investment certificates (Rakhaa) in united bank by L.E 10,164,807 (2018 : L.E 9,203,122).
29. 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 30/9/2019 30/9/2018
transactions
L.E. L.E.
Al Nasr Co. for Utilities & Utilities and installation
Erections - S.A.E. Subsidiary works 67,076,508 53,370,284
=========== ===========
Al Nasr Co. for Civil Works Subsidiary Dividends 1,920,006 -
S.A.E.
=========== ===========
Al Nasr Co. for Civil Works
S.A.E. Subsidiary Buildings and utilities works 37,847,462 21,841,816
=========== ===========
Balances of related parties are as follows:
Nature of 30/9/2019 31/12/2018
Nature
of relationship transactions L.E. L.E.
Amounts due from related
parties:
a) Al Nasr Co, for Utilities Long term
and Erections S.A.E. Subsidiary loan (*) 46,117,151 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) 537,340 504,535
Advance 11,032,780 9,034,300
Subsidiary Accrued Revenue 1,920,006 -
------------ -----------
Impairment of related
parties (*) (2,545,554) -
------------ -----------
57,104,484 39,540,611
============ ===========
(*) The movements in impairment of amounts due from related parties are as follows:
30/9/2019 31/12/2018
L.E. L.E.
Impairment balance at the beginning
period/year - 50,097,093
Provided during the period /year 2,545,554 24,375,000
Transfer during the period /year
(Note 5/1) (**) - (74,472,093)
Impairment balance at the end of 2,545,554 -
period/year
========== =============
29. TRANSACTIONS WITH RELATED PARTIES - Continued
Nature of 30/9/2019 31/12/2018
Nature
of relationship transactions L.E. L.E.
Amounts due to related
parties:
a) Al Nasr Co, for Utilities
and Erections S.A.E. Subsidiary Retention 614,942 7,844,902
Supplier (Credit) 669,460 3,424,460
b) Al Nasr Co, for Civil
Works S.A.E. Subsidiary Supplier (Credit) 1,346,621 6,042,757
Retention 4,132,991 2,242,587
6,764,014 19,554,706
============== ==============
Long term-
c) Capital Gardens Project Joint operations Notes Receivable 314,559,081 376,806,276
Present value
discount (120,806,805) (153,670,025)
-------------- --------------
193,752,276 223,136,251
Net - Short
term Notes
Receivables 88,698,537 90,767,155
-------------- --------------
282,450,813 313,903,406
============== ==============
30. TAX POSITION
The company submits tax returns to the Tax Authority on due dates and pays taxes on time.
31. 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.
31. FINANCIAL INSTRUMENTS AND RELATED RISKS - Continued
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.
30/9/2019
Long term loans 62,816,379 121,106,240 382,501,998 566,424,617
Creditors and other credit balances 385,779,001 - - 385,779,001
Short term loans 233,332,984 - - 233,332,984
Suppliers, taxes and related parties 362,903,847 - - 362,903,847
Long term notes payable - 9,813,981 - 9,813,981
1,044,832,211 130,920,221 382,501,998 1,558,254,430
============== ============ ============ ==============
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, taxes and related parties 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
============== ============ ============ ==============
-- 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:
30/9/2019 31/12/2018
L.E. L.E.
Financial assets instruments with fixed interest rate
Financial assets - trade and notes receivable 10,684,133,999 10,608,385,784
=============== ===============
Financial liabilities instruments with variable
interest rate
Financial liabilities- short term loans and credit banks 955,941,896 500,446,712
=============== ===============
-- 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 keeps currencies rather than Egyptian pound.
32. CONTRACTUAL COMMITMENTS
The value of contracts with contractors for the implementation of housing and development projects amounted to L.E. 4,708 million, the executed works till 30 September 2019 amounted to L.E. 1,449 million. Contractors' dues have been paid in accordance with the contracts.
33. FAIR VALUE
The fair values of financial assets and liabilities are not materially different from their carrying value as of 30 September 2019, except for investments available for sale.
34. 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.
END
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