Cleopatra Hospital Company S.A.E

ELECTRONIC TRANSMISSION DISCLAIMER STRICTLY NOT TO BE FORWARDED TO ANY OTHER PERSONS IMPORTANT: You must read the following disclaimer before continuing. This electronic transmission applies to the attached document and you are therefore advised to read this disclaimer carefully before reading, accessing or making any other use of the attached international offering memorandum (the ‘‘Offering Memorandum’’) relating to Cleopatra Hospital Company S.A.E. (the ‘‘Company’’) dated 18 May 2016 accessed from this page or otherwise received as a result of such access and you are therefore advised to read this disclaimer carefully before reading, accessing or making any other use of the attached document. In accessing the attached document, you agree to be bound by the following terms and conditions, including any modifications to them from time to time, each time you receive any information from us as a result of such access. You acknowledge that this electronic transmission and the delivery of the attached document is confidential and intended for you only and you agree you will not forward, reproduce or publish this electronic transmission or the attached document to any other person. The Offering Memorandum has been prepared solely in connection with the proposed offering of ordinary shares (the ‘‘Shares’’) of the Company to certain institutional investors in a number of countries, including Egypt but excluding the United States (the ‘‘International Offer’’). The Offering Memorandum relates to the International Offer only. A simultaneous offer of Shares will take place in Egypt to Egyptian retail investors. Prospective Egyptian retail investors should refer to the document to be issued in connection with the domestic offering in Egypt and may not rely on the Offering Memorandum. The Offering Memorandum has been published and is available from the Company’s registered office and on the Company’s website at http://investors.cleopatrahospitals.com. Pricing information and other related disclosures have also been or will be, as applicable, published on this website. Prospective investors are advised to access such information prior to making an investment decision. THIS ELECTRONIC TRANSMISSION AND THE ATTACHED DOCUMENT MAY ONLY BE DISTRIBUTED OUTSIDE THE UNITED STATES IN ‘‘OFFSHORE TRANSACTIONS’’ AS DEFINED IN, AND IN RELIANCE ON, REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘U.S. SECURITIES ACT’’). ANY FORWARDING, DISTRIBUTION OR REPRODUCTION OF THE ATTACHED DOCUMENT IN WHOLE OR IN PART IS UNAUTHORISED. FAILURE TO COMPLY WITH THIS NOTICE MAY RESULT IN A VIOLATION OF THE U.S. SECURITIES ACT OR THE APPLICABLE LAWS OF OTHER JURISDICTIONS. NOTHING IN THIS ELECTRONIC TRANSMISSION AND THE ATTACHED DOCUMENT CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY JURISDICTION WHERE IT IS UNLAWFUL TO DO SO. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OF THE UNITED STATES OR OTHER JURISDICTION AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES. This electronic transmission and the attached document and the International Offer when made are only addressed to and directed at persons in member states of the European Economic Area who are ‘‘qualified investors’’ within the meaning of Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (‘‘Qualified Investors’’). In addition, in the United Kingdom, this electronic transmission and the attached document is being distributed only to, and is directed only at, Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the ‘‘Order’’) and Qualified Investors falling within Article 49(2)(a) to (d) of the Order, and (ii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as ‘‘relevant persons’’). This electronic transmission and the attached document must not be acted on or relied on (i) in the United Kingdom, by persons who are not relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, by persons who are not Qualified Investors. Any investment or investment activity to which this document relates is available only to (i) in the United Kingdom, relevant persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified Investors, and will be engaged in only with such persons. Confirmation of Your Representation: This electronic transmission and the attached document is delivered to you on the basis that you are deemed to have represented to the Company and EFG Hermes Promoting and Underwriting (EFG Hermes) that (i) you are acquiring such securities in ‘‘offshore transactions’’, as defined in, and in reliance on, Regulation S under the U.S. Securities Act; (ii) if you are in the U.K., you are a relevant person, and/or a relevant person who is acting on behalf of, relevant persons in the United Kingdom and/or Qualified Investors to the extent you are acting on behalf of persons or entities in the U.K. or the EEA; (iii) if you are in any member state of the European Economic Area other than the U.K., you are a Qualified Investor and/or a Qualified Investor acting on behalf of, Qualified Investors or relevant persons, to the extent you are acting on behalf of persons or entities in the EEA or the U.K.; and (iv) you are an institutional investor that is eligible to receive this document and you consent to delivery by electronic transmission. You are reminded that you have received this electronic transmission and the attached document on the basis that you are a person into whose possession this document may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not nor are you authorised to deliver this document, electronically or otherwise, to any other person. This document has been made available to you in an electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither the Company, EFG Hermes nor any of their respective affiliates accepts any liability or responsibility whatsoever in respect of any difference between the document distributed to you in electronic format and the hard copy version. By accessing the attached document, you consent to receiving it in electronic form. None of EFG Hermes or any of its affiliates accepts any responsibility whatsoever for the contents of the attached document or for any statement made or purported to be made by it, or on its behalf, in connection with the Company or the Shares. EFG Hermes and each of its affiliates, each accordingly disclaims all and any liability whether arising in tort, contract or otherwise which they might otherwise have in respect of such document or any such statement. No representation or warranty express or implied, is made by EFG Hermes or any of its affiliates as to the accuracy, completeness or sufficiency of the information set out in the attached document. Price Range Prospectus 18 May 2016 Cleopatra Hospital Company S.A.E. (a joint stock company incorporated under the laws of the Arab Republic of Egypt) Offer of up to 40,000,000 Shares at an Offer Price expected to be between EGP 8.75 and EGP 11.88 per Share Care Healthcare Limited (Care Healthcare or the Selling Shareholder) is offering up to 40,000,000 ordinary shares (Shares) of Cleopatra Hospital Company S.A.E. (Cleopatra Hospital Company or the Company) through (i) an institutional offering of up to 34,000,000 Shares (the International Offer Shares) to certain institutional investors in a number of countries, including Egypt but excluding the United States, (the International Offer) and (ii) an offering of up to 6,000,000 Shares (the Egyptian Retail Offer Shares and, together with the International Offer Shares, the Offer Shares) in a domestic retail offering in Egypt (the Egyptian Retail Offer and, together with the International Offer, the Combined Offer). The International Offer Shares and the Egyptian Retail Offer Shares will be offered and sold by the Selling Shareholder at the same price (the Offer Price), which is expected to be between EGP 8.75 and EGP 11.88 per Share (the Offer Price Range). Following completion of the Combined Offer, the Company will offer to the Selling Shareholder by way of a closed subscription (the Closed Subscription) the right to subscribe for up to 40,000,000 new Shares (the Closed Subscription Shares) at the Offer Price. The number of Closed Subscription Shares will equal the number of Offer Shares less any Shares repurchased by the Selling Shareholder pursuant to Stabilisation (defined herein). Pursuant to the Closed Subscription, the Company will issue and allot the Closed Subscription Shares to the Selling Shareholder and the Selling Shareholder will pay to the Company the Offer Price multiplied by the number of Closed Subscription Shares. The Closed Subscription will be available only to the Selling Shareholder and the Selling Shareholder has undertaken to exercise the Closed Subscription. The purpose and effect of the Combined Offer and the Closed Subscription is to raise capital for the Company through an increase of its share capital. Although it is expected that 34,000,000 Shares will be sold pursuant to the International Offer and 6,000,000 Shares will be sold pursuant to the Egyptian Retail Offer, Offer Shares may be reallocated from the International Offer to the Egyptian Retail Offer depending on the level and nature of demand for the Offer Shares (Right of Reallocation). The Right of Reallocation will be at the discretion of the Company and the Sole Global Coordinator. The Shares were listed on the Egyptian Exchange (EGX) on 13 April 2016 (Listing), but trading of the Shares is conditional on the satisfaction of certain conditions set out in the EGX Listing Rules including, without limitation, completion of the Combined Offer. Trading of the Shares is expected to commence on the EGX on 2 June 2016 (Commencement of Trading). This international offering memorandum (this Offering Memorandum) relates to the International Offer only. Prospective Egyptian retail investors should refer to, and will be purchasing Egyptian Retail Offer Shares solely in reliance on, the document to be issued in connection with the Egyptian Retail Offer (the Public Offering Notice) and may not rely on this Offering Memorandum. All information included in this Offering Memorandum relating to the Egyptian Retail Offer has been included for information purposes only. Investors purchasing International Offer Shares may not purchase Egyptian Retail Offer Shares. Investing in the International Offer Shares involves a high degree of risk. Please read the Risk Factors beginning on page 17 for a discussion of certain matters that prospective investors should consider prior to making an investment in the International Offer Shares. The International Offer Shares are offered by EFG Hermes Promoting and Underwriting (EFG Hermes or the Sole Global Coordinator) as sole global coordinator and bookrunner, subject to receipt and acceptance by it of, and subject to its right to reject, in whole or in part, any order.

Sole Global Coordinator and Bookrunner EFG Hermes Promoting and Underwriting Manager Pharos Holding ORDINARY SHARE CAPITAL OF THE COMPANY Issued and fully paid Number Nominal Value 160,000,000 EGP 0.5

This Offering Memorandum is dated 18 May 2016. The Selling Shareholder is offering up to 34,000,000 International Offer Shares and up to 6,000,000 Egyptian Retail Offer Shares to raise gross proceeds of EGP 412.6 million (assuming the Offer Price is set at the mid-point of the Offer Price Range, all of the Offer Shares are sold in the Combined Offer and no Stabilisation). Following completion of the Combined Offer, the Company will offer to the Selling Shareholder by way of the Closed Subscription the right to subscribe for up to 40,000,000 Closed Subscription Shares at the Offer Price. The number of Closed Subscription Shares will equal the number of Offer Shares less any Shares repurchased by the Selling Shareholder pursuant to Stabilisation (defined herein). Pursuant to the Closed Subscription, the Company will issue and allot the Closed Subscription Shares to the Selling Shareholder and the Selling Shareholder will pay to the Company the Offer Price multiplied by the number of Closed Subscription Shares. The Closed Subscription will be available only to the Selling Shareholder and the Selling Shareholder has undertaken to exercise the Closed Subscription. The purpose and effect of the Combined Offer and the Closed Subscription is to raise capital for the Company through an increase of its share capital. The Offer Price Range has been set by the Selling Shareholder and the Company (in consultation with the Sole Global Coordinator), and it is currently expected that the Offer Price will be set within the Offer Price Range. The Offer Price Range is indicative only and the Offer Price may be set within or below, but not above, the Offer Price Range. All Offer Shares will be sold at the Offer Price, which will be determined by the Selling Shareholder and the Company following a bookbuilding process and consultation with the Sole Global Coordinator. A number of factors will be considered in determining the Offer Price and the basis of allocation, including the level and nature of demand for the Offer Shares during the bookbuilding process, prevailing market conditions and the objective of establishing an orderly after market in the Shares, as well as the Company’s historical performance, estimates of its business potential and earnings prospects and consideration of these factors in relation to the market valuation of companies in related businesses. A pricing statement (the Pricing Statement) containing the Offer Price and related disclosures will be published on or about 26 May 2016 and will be available on the Company’s website at http:// investors.cleopatrahospitals.com. The Sole Global Coordinator is acting exclusively for the Company and the Selling Shareholder and no one else in connection with the International Offer. The Sole Global Coordinator will not regard any other person (whether or not a recipient of this Offering Memorandum) as a client in relation to the International Offer and will not be responsible to anyone other than the Company and the Selling Shareholder for providing the protections afforded to its clients or for the giving of advice in relation to the International Offer or any transaction, matter, or arrangement referred to in this Offering Memorandum. Apart from the responsibilities and liabilities, if any, which may be imposed on the Sole Global Coordinator by the regulatory regime established thereunder or under the regulatory regime of any jurisdiction where exclusion of liability under the relevant regulatory regime would be illegal, void or unenforceable, neither the Sole Global Coordinator nor any of its affiliates accepts any responsibility whatsoever for the contents of this Offering Memorandum including its accuracy, completeness and verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the Company, the Shares or the International Offer. The Sole Global Coordinator and each of its affiliates accordingly disclaim, to the fullest extent permitted by applicable law, all and any liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise be found to have in respect of this Offering Memorandum or any such statement. No representation or warranty express or implied, is made by the Sole Global Coordinator or any of its affiliates as to the accuracy, completeness, verification or sufficiency of the information set out in this Offering Memorandum, and nothing in this Offering Memorandum will be relied upon as a promise or representation in this respect, whether or not to the past or future. This Offering Memorandum does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities other than the securities to which it relates or any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, such securities by any person in any circumstances in which such offer or solicitation is unlawful. No action has been or will be taken in any jurisdiction that would permit a public offering of the International Offer Shares or the possession, circulation or distribution of this Offering Memorandum or any other material or information relating to the Company or the International Offer Shares in any jurisdiction where action for that purpose is required. Accordingly, the International Offer Shares may not be offered or sold, directly or indirectly, and neither this Offering Memorandum nor any other offering

2 material or advertisement in connection with the International Offer Shares may be distributed or published, in or from any country or jurisdiction except in full compliance with any applicable rules and regulations of that country or jurisdiction. The International Offer Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the U.S. Securities Act), or any state securities laws in the United States or under the applicable securities laws of Australia, Canada or Japan. Further, the International Offer Shares may not be offered or sold directly or indirectly in or into the United States. There will be no offer, public or otherwise, of the International Offer Shares in the United States. Neither the U.S. Securities and Exchange Commission (the SEC) nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Offering Memorandum. Any representation to the contrary is a criminal offence in the United States. The International Offer Shares are being offered and sold exclusively outside the United States in reliance on Regulation S under the U.S. Securities Act. The distribution of this Offering Memorandum and the offer and sale of the International Offer Shares in certain jurisdictions may be restricted by law. No action has been or will be taken by the Company, the Selling Shareholder or the Sole Global Coordinator to permit a public offering of the International Offer Shares under the applicable securities laws of any jurisdiction. No action has been taken or will be taken to permit the possession or distribution of this Offering Memorandum (or any other offering or publicity materials relating to the International Offer Shares) in any jurisdiction where action for that purpose may be required or where doing so is restricted by law. Accordingly, neither this Offering Memorandum, nor any advertisement, nor any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Offering Memorandum comes should inform themselves about and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction. In connection with the International Offer, the Sole Global Coordinator and any of its affiliates, acting as investors for their own accounts, may acquire International Offer Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such International Offer Shares and other securities of the Company or related investments in connection with the Combined Offer or otherwise. Accordingly, references in this Offering Memorandum to the Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue, offer, subscription, acquisition, dealing or placing by, the Sole Global Coordinator and any of its affiliates acting as investors for their own accounts. The Sole Global Coordinator does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so. In connection with the Egyptian Retail Offer, EFG Hermes, or any of its agents, may effect transactions in the Shares with a view to supporting or maintaining the market price of the Shares at a level higher than that which might have otherwise prevailed in the open market (Stabilisation). EFG Hermes will withhold from the payment of the proceeds of the Combined Offer an amount equal to 15 per cent. of the gross proceeds of the sale of all Offer Shares at the Offer Price, which shall be deposited in a stabilisation account (the Stabilisation Fund). If the trading price per Share falls below the Offer Price on or after the date of Commencement of Trading, and ending 30 days after that date (such period being the Stabilisation Period), purchasers of Egyptian Retail Offer Shares in the Egyptian Retail Offer may submit sell orders and EFG Hermes will submit purchase orders for Shares at the Offer Price, which will remain open until the end of the Stabilisation Period. At the end of the Stabilisation Period, open purchase orders submitted by EFG Hermes will be matched with open sale orders and executed on the EGX. All Shares purchased in this manner will be placed in the Stabilisation Fund. EFG Hermes will remit to the Selling Shareholder, at the end of the Stabilisation Period, any funds then remaining in the Stabilisation Fund and any remaining Shares purchased during the Stabilisation Period using the Stabilisation Fund. Purchasers of International Offer Shares in the International Offer may not participate in the Stabilisation. EFG Hermes will disclose any Stabilisation transactions to the EGX at the end of the Stabilisation Period.

3 CONTENTS

PART PAGE Summary ...... 5 PART 1 Risk Factors ...... 17 PART 2 Presentation of Financial and Other Information ...... 37 PART 3 Directors, Secretary, Registered and Head Office and Advisers ...... 49 PART 4 Expected Timetable of Principal Events and Offer Statistics ...... 50 PART 5 Industry Overview ...... 51 PART 6 Business Description ...... 62 PART 7 Directors, Senior Management and Corporate Governance ...... 87 PART 8 Selected Financial Information ...... 92 PART 9 Operating and Financial Review ...... 99 PART 10 Capitalisation and Indebtedness ...... 134 PART 11 Unaudited Pro Forma Consolidated Financial Information ...... 136 PART 12 Details of the Combined Offer ...... 145 PART 13 Additional Information ...... 155 PART 14 Historical Financial Information ...... 165 PART 15 Definitions ...... 307

4 SUMMARY The summary should be read as an introduction to this Offering Memorandum. Any decision to invest in the securities should be based on consideration of this Offering Memorandum as a whole by the investor. No consent has been given by the Company or any person responsible for drawing up this Offering Memorandum to the use of this Offering Memorandum for subsequent resale or final placement of securities by financial intermediaries.

ISSUER AND SELLING SHAREHOLDER

Legal name of issuer Cleopatra Hospital Company S.A.E. Domicile and legal form of issuer .... The Company was incorporated as an Egyptian limited partnership company on 6 November 1979 under the Investment Guarantees and Incentives Law No. 8 of 1997, as amended (the Investment Law). On 28 July 2005 the Company became a joint stock company. The Company’s registration number is 199393. Legal name of selling shareholder ..... Care Healthcare Limited Domicile and legal form of selling shareholder ..... The Selling Shareholder is a company organised and existing under the laws of the Republic of Malta under registration number C64614. Current operations and principal activities ...... The Group is the largest private hospital group in Egypt, measured by number of hospital beds and number of hospitals, and currently operates four hospitals in Greater Cairo, each of which was acquired within the past two years. The Group’s hospitals, on an aggregated basis, had 624 hospital beds as at 31 December 2015, and in 2015 serviced 47,256 inpatients, 606,206 outpatient clinic visits and 278,404 emergency room patients and performed 34,900 surgeries. The Group’s vision is to become the leading integrated healthcare provider in Egypt through a platform of world class quality medical facilities and services to enhance patients’ quality of life. The Group’s mission is to deliver the finest quality of healthcare in a safe, reliable and caring environment, through highly trained healthcare providers, state of the art facilities and the latest medical technology, putting patients and their families first. The Group’s four hospitals—Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk—are multi-speciality hospitals that offer a full array of general and emergency healthcare services. Some of their service offerings include general surgery, emergency and ambulance services, cardiology, gynaecology and obstetrics, oncology, orthopaedics and a number of outpatient clinics, including dental, physiotherapy and primary care. The Group plans to develop, in addition to the general services that the Group’s hospitals currently offer, centres of excellence in each of the hospitals in separate specialised medical fields, such as renal transplantation and oncological radiotherapy. The centres of excellence will have state-of-the-art equipment for the relevant speciality practice and will staff the most renowned doctors in the respective field. This business model allows patients to attend the Group’s facilities at locations convenient to them for routine examinations, simple procedures and operations and general services such as pharmacy, blood bank and diagnostic services while also being able to offer highly specialised services at other hospitals in the Group’s platform.

5 Over the past decade, the private healthcare sector in Egypt has grown significantly, as the population is seeking higher quality and safer healthcare options than those offered by the government. Traditionally, patients tended to choose their healthcare providers based on the personal reputations of the physicians. As the private medical insurance industry grows in size and influence, patients have begun choosing their healthcare providers based on the reputation and brand of the hospitals. This is due to private insurance providers and companies offering their employees private medical coverage through direct contractual agreements generally with hospitals rather than individual physicians. The Group is at the forefront of this market evolution in which hospitals are growing larger, consolidating and developing their own reputations and brand identities. The Group aims to lead this trend by implementing a uniform standard of high-quality patient care across its platform, expanding its existing one-stop shop model to contract patients so that patients can receive all required healthcare services within the Group’s platform, upgrading its facilities with state-of-the-art equipment and attracting the best doctors and healthcare providers in Egypt. Significant recent trends affecting the Group ...... The Group’s overall operational performance remained positive during the first quarter in 2016. Sales volume and operating revenue both increased compared with the same period in 2015 and gross profit remained strong and in line with management’s projections. Management is therefore confident in the operational and financial ability of the Group to execute its strategy as set forth in this Offering Memorandum and is confident in the Group’s long-term outlook. Group structure .... The Company owns and controls the majority of the share capital of each of Cairo Specialized Hospital Company S.A.E. (Cairo Specialized Hospital Company), Nile Badrawi Hospital Company S.A.E. (Nile Badrawi Hospital Company) and Al Shorouk Hospital Company S.A.E. (Al Shorouk Hospital Company). The term ‘‘Group’’ refers to the Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company. Major shareholders . As at the date of this Offering Memorandum, 99.99 per cent. of the share capital of the Company is owned and controlled by Care Healthcare. Care Healthcare is beneficially owned, through intermediate wholly-owned subsidiaries, by Abraaj NAH Limited (Abraaj NAH), European Bank for Reconstruction and Development (EBRD), DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG) and Societ´ e´ de Promotion et de Participation pour la Cooperation´ Economique S.A. (Proparco). Abraaj NAH is owned by funds managed and controlled by The Abraaj Group, a Dubai-based private equity firm. Immediately following completion of the Closed Subscription, it is expected that Care Healthcare will hold at least 80 per cent. of the issued ordinary share capital of the Company.

6 Selected key financial information ...... The tables below set out summary financial information for the Company and each of its three subsidiaries for the periods indicated and certain unaudited pro forma consolidated financial information. The summary financial information below has been extracted from the audited unconsolidated financial statements of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as at and for the three years ended 31 December 2015, 2014 and 2013 and the unaudited pro forma consolidated financial information set out in Part 11 (Unaudited Pro Forma Consolidated Financial Information). Consolidated results for 2015 include the full-year results of Cleopatra Hospital Company, as well as three months of results for Cairo Specialized Hospital Company (acquired by an affiliate of Care Healthcare in 2014, but structured under the Company in late September 2015) and Nile Badrawi Hospital Company (acquired by the Company in September 2015). Consolidated results for 2015 do not include the results of Al Shorouk Hospital Company, which was acquired by the Company in January 2016.

Summary statement of income data of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company

Year ended 31 December 2015 Cairo Cleopatra Specialized Nile Badrawi Al Shorouk Hospital Hospital Hospital Hospital Company Company Company Company (audited) (EGP) Operating revenue ...... 332,002,699 149,377,454 121,307,079 138,642,178 Operating costs ...... (214,407,386) (111,849,380) (81,601,341) (99,913,207) Gross profit ...... 117,595,313 37,528,074 39,705,738 38,728,917 General and administrative expenses ...... (27,859,422) (14,207,273) (28,072,750) (25,581,868) Provisions ...... (2,973,505) (6,945,188) (4,218,259) (5,070,124) Other income ...... 1,028,699 3,808,193 1,856,750 1,231,343 Profit for the year before finance income and income tax ...... 87,791,085 20,183,806 9,271,479 9,308,322 Finance cost ...... (8,487,998) — — (1,333,834) Profit for the year before income tax ...... 84,407,319 24,204,940 9,265,392 8,102,830 Profit for the year ...... 64,690,205 17,248,355 3,612,489 4,193,032

Non-GAAP measures: Adjusted profit for the year(1) ...... 64,690,205 24,154,267 15,454,757 12,006,467 EBITDA(1) ...... 99,445,630 33,487,278 27,104,161 22,550,534 Adjusted EBITDA(1) ...... 99,445,630 33,487,278 27,104,161 22,550,534

(1) Unaudited.

7 Summary pro forma statement of income data

Note: The pro forma statement of income shows the effect of the Company’s ownership of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as if the acquisition of each of those companies had occurred on 1 January 2015. For more information, see Part 11 (Unaudited Pro Forma Consolidated Financial Information).

8 Summary statement of income data

Year ended 31 December 2015 2014 2013 (audited) (EGP) Cleopatra Hospital Company Operating revenue ...... 332,002,699 290,294,814 243,293,152 Gross profit ...... 117,595,313 85,686,660 71,687,122 Profit for the year ...... 64,690,205 43,802,125 38,688,155 Non-GAAP measures: Adjusted profit for the year(1) ...... 64,690,205 64,102,125 41,785,123 EBITDA(1) ...... 99,445,630 72,842,960 59,211,607 Adjusted EBITDA(1) ...... 99,445,630 93,142,960 62,308,575 Cairo Specialized Hospital Company Operating revenue ...... 149,377,454 123,280,745 114,040,779 Gross profit ...... 37,528,074 32,875,581 31,920,783 Profit for the year ...... 17,248,355 18,525,072 22,141,427 Non-GAAP measures: Adjusted profit for the year(1) ...... 24,154,267 18,525,072 22,141,427 EBITDA(1) ...... 33,487,278 30,287,270 30,218,695 Adjusted EBITDA(1) ...... 33,487,278 30,287,270 30,218,695 Nile Badrawi Hospital Company Operating revenue ...... 121,307,079 107,482,434 86,802,150 Gross profit ...... 39,705,738 31,362,364 17,756,944 Profit for the year ...... 3,612,489 18,157,285 6,727,793 Non-GAAP measures: Adjusted profit for the year(1) ...... 15,454,757 18,157,285 6,727,793 EBITDA(1) ...... 27,104,161 28,935,704 13,423,336 Adjusted EBITDA(1) ...... 27,104,161 28,935,704 13,423,336 Al Shorouk Hospital Company Operating revenue ...... 138,642,178 117,592,072 98,542,206 Gross profit ...... 38,728,917 31,741,518 22,488,817 Profit for the year ...... 4,193,032 11,448,396 (70,196) Non-GAAP measures: Adjusted profit for the year(1) ...... 12,006,467 11,448,396 6,752,875 EBITDA(1) ...... 22,550,534 20,741,353 14,097,618 Adjusted EBITDA(1) ...... 22,550,534 20,741,353 14,097,618

(1) Unaudited.

9 Key operational performance indicators

Year ended 31 December 2015 2014 2013 Inpatient revenue per inpatient (EGP)(1) Cleopatra ...... 4,171 3,639 3,186 Cairo Specialized Hospital ...... 2,986 2,639 2,504 Nile Badrawi ...... 5,565 5,661 3,980 Al Shorouk ...... 4,546 4,105 3,798 Outpatient revenue per outpatient clinic visit (EGP)(2) Cleopatra ...... 204 180 168 Cairo Specialized Hospital ...... 84 106 146 Nile Badrawi ...... 272 308 145 Al Shorouk ...... 378 271 263 Operating revenue per bed (EGP thousands)(3) Cleopatra ...... 2,012 1,759 1,475 Cairo Specialized Hospital ...... 747 616 570 Nile Badrawi ...... 873 773 624 Al Shorouk ...... 1,155 980 821

Note: Figures include data for periods during which the Company did not own the respective hospitals. (1) Defined as the operating revenue generated by inpatients (defined as patients admitted to an accommodation room) divided by the number of inpatients. (2) Defined as the operating revenue generated by outpatient clinic visits (defined as the total number of visits to the outpatient clinics made by patients during the period) divided by the number of outpatient clinic visits. (3) Defined as operating revenue divided by total number of beds.

Summary balance sheet data of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company

As at 31 December 2015 Cairo Nile Cleopatra Specialized Badrawi Al Shorouk Hospital Hospital Hospital Hospital Company Company Company Company (audited) (EGP) Total non-current assets ...... 427,851,466 25,678,386 18,884,960 52,946,283 Total current assets ...... 99,658,411 82,793,359 51,291,592 35,439,387 Total assets ...... 527,509,877 108,471,745 70,176,552 88,385,770 Total non-current liabilities ..... 217,906,819 1,727,506 — 891,782 Total current liabilities ...... 109,580,657 40,341,609 35,267,169 44,949,796 Total liability ...... 327,487,476 42,069,115 35,267,169 45,841,578 Total shareholders’ equity ..... 200,022,401 66,402,630 34,909,383 42,544,092 Total funding of working capital and non-current liabilities(1) .. 417,929,220 68,130,136 34,909,383 43,435,874 Non-GAAP measures: Net debt(2) ...... 260,736,241 (28,379,862) 7,394,084 25,573,457

(1) Total funding of working capital and non-current liabilities is a measurement required by EAS. (2) Unaudited.

10 Summary pro forma balance sheet data

Pro Forma As at 31 December 2015 (unaudited) (EGP) Total non-current assets ...... 657,475,446 Total current assets ...... 198,171,019 Total current liabilities ...... 230,127,498 Total Shareholder’s equity ...... 125,966,544 Non-Controlling interest ...... 36,078,338 Total Equity ...... 162,044,882 Total non-current liabilities ...... 463,474,085 Total equity and non-current liabilities ...... 625,518,967 Non-GAAP measures: Pro forma net debt ...... 538,596,607

Note: The pro forma balance sheet shows the effect of the Company’s ownership of Al Shorouk Hospital Company as if the acquisition of that company had occurred on 31 December 2015. The Company already owned Cairo Specialized Hospital Company and Nile Badrawi Hospital Company as at 31 December 2015. For more information, see Part 11 (Unaudited Pro Forma Consolidated Financial Information).

11 Summary balance sheet data

As at 31 December 2015 2014 2013 (audited) (EGP) Cleopatra Hospital Company Total assets ...... 527,509,877 192,221,873 169,253,303 Total liability ...... 327,487,476 56,889,677 38,907,471 Total shareholders’ equity ...... 200,022,401 135,332,196 130,345,832 Non-GAAP measures: Net debt(1) ...... 260,736,241 (23,779,663) 4,026,626

Cairo Specialized Hospital Company Total assets ...... 108,471,745 87,735,328 80,571,883 Total liability ...... 42,069,115 36,884,298 29,345,816 Total shareholders’ equity ...... 66,402,630 50,851,030 51,226,067 Non-GAAP measures: Net debt(1) ...... (28,379,862) (26,860,379) (22,465,844)

Nile Badrawi Hospital Company Total assets ...... 70,176,552 61,029,923 45,192,087 Total liability ...... 35,267,169 29,733,029 29,728,325 Total shareholders’ equity ...... 34,909,383 31,296,894 15,463,762 Non-GAAP measures: Net debt(1) ...... 7,394,084 16,751,013 24,686,565

Al Shorouk Hospital Company Total assets ...... 88,385,770 85,993,190 78,427,213 Total liability ...... 45,841,578 38,777,022 37,342,954 Total shareholders’ equity ...... 42,544,092 47,216,168 41,084,259 Non-GAAP measures: Net debt(1) ...... 25,573,457 21,776,790 22,748,754

(1) Unaudited.

Qualifications in the auditor’s report on the historical financial information ...... There are no qualifications to the auditor’s reports on the historical financial information included in this Offering Memorandum. Working capital .... In the opinion of the Company, the Group has sufficient working capital for its present requirements, that is for at least the next 12 months following the date of this Offering Memorandum.

12 THE SECURITIES

Type and class of securities ...... Pursuant to the Combined Offer, the Selling Shareholder is offering up to 34,000,000 International Offer Shares and up to 6,000,000 Egyptian Retail Offer Shares of EGP 0.5 each. All Shares in issue are fully paid. The Shares are registered with ISIN number EGS729J1C018 and under the symbol ‘‘CLHO.CA’’. Currency ...... Egyptian pounds Issued share capital . As at the date of this Offering Memorandum and immediately following Commencement of Trading, the issued share capital of the Company is EGP 80,000,000, comprising 160,000,000 Shares of EGP 0.5 each (all of which are fully paid or credited as fully paid). Rights attaching to the Shares ...... The rights attaching to the Shares are uniform in all respects and they will form a single class for all purposes, including with respect to voting and for all dividends and other distributions thereafter declared, made or paid on the ordinary share capital of the Company. Each shareholder of the Company (Shareholder) shall have one vote per Share. Restrictions on transfer ...... There are no restrictions on the free transferability of the Offer Shares. Listing and Commencement of Trading ...... The Shares were listed on the EGX on 13 April 2016, but trading of the Shares is conditional on the satisfaction of certain conditions set out in the EGX Listing Rules including, without limitation, completion of the Combined Offer. Trading of the Shares is expected to commence on the EGX on 2 June 2016. Dividend policy .... The Company may pay dividends only as permitted by law and the Statutes of the Company and subject to consideration of its investment requirements, financial condition (including its level of indebtedness and liquidity requirements) and its results of operations. The Directors expect to maintain a flexible dividend policy with a view to balance between growth opportunities and availability of funds for dividend distribution. The Directors currently expect that in accordance with the Group’s well-defined integration plan, no dividends will be paid in 2016 and 2017 as the reinvestment of cash surpluses into the business will have a better impact on long-term shareholder value than the distribution as dividends. There can be no assurance that any dividends will be paid in the future or as to the level of any such dividends. The declaration, amount and payment of dividends is determined, subject to the limitations set forth above, by an absolute majority vote of the shareholders represented at an ordinary general assembly meeting on the recommendation of the Directors. Future dividends will depend on the Group’s results of operations, financial position, dividends received from its subsidiaries and affiliates, cash requirements, legal reserve and minimum capital requirements, availability of opportunities that fit the Group’s scope and investment criteria, restrictive covenants in the Group’s finance agreements and other factors deemed relevant by the Directors and the Shareholders. If the Company defaults on its debt obligation, it will be limited in its ability to pay dividends. The Group intends to maintain, starting in 2018, a policy of distributing, subject to the liquidity and capital expenditure requirements of the business in each year, all excess cash. In the absence of viable expansion or investment opportunities that fit the Company’s scope and investment criteria, the expected payout ratio is 50 per cent. or higher of profits available for distribution. For more detail on the distribution of dividends, see ‘‘Dividends’’ in paragraph 2 of Part 13 (Additional Information) of this Offering Memorandum.

13 THE COMBINED OFFER

Net proceeds and costs of the Combined Offer . . The Selling Shareholder is offering up to 40,000,000 Offer Shares to raise gross proceeds of EGP 412.6 million (assuming the Offer Price is set at the mid-point of the Offer Price Range, all of the Offer Shares are sold in the Combined Offer and no Stabilisation). Following completion of the Combined Offer, the Company will offer to the Selling Shareholder by way of the Closed Subscription the right to subscribe for up to 40,000,000 Closed Subscription Shares at the Offer Price. The number of Closed Subscription Shares will equal the number of Offer Shares less any Shares repurchased by the Selling Shareholder pursuant to Stabilisation. Pursuant to the Closed Subscription, the Company will issue and allot the Closed Subscription Shares to the Selling Shareholder and the Selling Shareholder will pay to the Company the Offer Price multiplied by the number of Closed Subscription Shares. The Closed Subscription will be available only to the Selling Shareholder and the Selling Shareholder has undertaken to exercise the Closed Subscription. The purpose and effect of the Combined Offer and the Closed Subscription is to raise capital for the Company through an increase of its share capital. The aggregate expenses of, or incidental to, the Combined Offer and the Closed Subscription to be borne by the Company, including the Sole Global Coordinator’s commission, professional fees and expenses and the costs of printing and distribution of documents, are estimated to be approximately EGP 35 million (including all applicable taxes and assuming the Offer Price is at the mid-point of the Offer Price Range, all of the Offer Shares are sold in the Combined Offer and no Stabilisation), which the Company intends to pay out of the proceeds of the Closed Subscription. Reasons for the Combined Offer and use of proceeds ...... All of the proceeds from the Combined Offer will be received by the Selling Shareholder. The Selling Shareholder has undertaken to use the gross proceeds of the Combined Offer (less any amount reclaimed by purchasers of Egyptian Retail Offer Shares pursuant to Stabilisation) to subscribe for the Closed Subscription Shares at the Offer Price pursuant to the Closed Subscription. The Company intends to use the net proceeds from the Closed Subscription, in addition to a portion of cash available for capital expenditure and operational activities, to fund its capital expenditure plans, including development of extensions of Al Shorouk and Cleopatra. The Group is also considering the acquisition of a facility in New Cairo that it would develop into a new hospital facility. The Directors believe that the Combined Offer and the Closed Subscription will further increase the Group’s profile, brand recognition and credibility with its customers, suppliers and employees, as well as assist in recruiting, retaining and incentivising key management, doctors and employees. Terms and conditions of the Combined Offer ...... The Selling Shareholder is offering up to 40,000,000 Offer Shares through (i) an institutional offering of up to 34,000,000 International Offer Shares to certain institutional investors in a number of countries, including Egypt but excluding the United States, and (ii) an offering of up to 6,000,000 Egyptian Retail Offer Shares in a domestic retail offering in Egypt.

14 This Offering Memorandum relates to the International Offer only. Prospective Egyptian retail investors should refer to, and will be purchasing Egyptian Retail Offer Shares solely in reliance on, the Public Offering Notice and may not rely on this Offering Memorandum. All information included in this Offering Memorandum relating to the Egyptian Retail Offer has been included for information purposes only. Investors purchasing International Offer Shares may not purchase Egyptian Retail Offer Shares. The Offer Price is expected to be between EGP 8.75 and EGP 11.88 per Share. In addition, Shares (representing up to 15 per cent. of the total number of Offer Shares) are being made available pursuant to Stabilisation. Following completion of the Combined Offer, the Company will offer to the Selling Shareholder by way of the Closed Subscription the right to subscribe for up to 40,000,000 Closed Subscription Shares at the Offer Price. The number of Closed Subscription Shares will equal the number of Offer Shares less any Shares repurchased by the Selling Shareholder pursuant to Stabilisation. Pursuant to the Closed Subscription, the Company will issue and allot the Closed Subscription Shares to the Selling Shareholder and the Selling Shareholder will pay to the Company the Offer Price multiplied by the number of Closed Subscription Shares. The Closed Subscription will be available only to the Selling Shareholder and the Selling Shareholder has undertaken to exercise the Closed Subscription. The purpose and effect of the Combined Offer and the Closed Subscription is to raise capital for the Company through an increase of its share capital. The Offer Price Range has been set by the Selling Shareholder and the Company (in consultation with the Sole Global Coordinator), and it is currently expected that the Offer Price will be set within the Offer Price Range. The Offer Price Range is indicative only and the Offer Price may be set within or below, but not above, the Offer Price Range. All Offer Shares will be sold at the Offer Price, which will be determined by the Selling Shareholder and the Company following a bookbuilding process and consultation with the Sole Global Coordinator. A number of factors will be considered in determining the Offer Price and the basis of allocation, including the level and nature of demand for the Offer Shares during the bookbuilding process, prevailing market conditions and the objective of establishing an orderly after market in the Shares, as well as the Company’s historical performance, estimates of its business potential and earnings prospects and consideration of these factors in relation to the market valuation of companies in related businesses. The Pricing Statement containing the Offer Price and related disclosures will be published on or about 26 May 2016 and will be available on the Company’s website at http://investors.cleopatrahospitals.com. Although it is expected that 34,000,000 Shares will be sold pursuant to the International Offer and 6,000,000 Shares will be sold pursuant to the Egyptian Retail Offer, Offer Shares may be reallocated from the International Offer to the Egyptian Retail Offer depending on the level and nature of demand for the Offer Shares. The Right of Reallocation will be at the discretion of the Company and the Sole Global Coordinator. The Shares were listed on the EGX on 13 April 2016, but trading of the Shares is conditional on the satisfaction of certain conditions set out in the EGX Listing Rules including, without limitation, completion of the Combined Offer. Trading of the Shares is expected to commence on the EGX on 2 June 2016. The Combined Offer is subject to the satisfaction of certain conditions contained in the Underwriting Agreement, which are typical for an agreement of this nature, including Commencing of Trading occurring no later than 10:00 a.m. Cairo time on 2 June 2016 and on the Underwriting Agreement not having been terminated prior to Commencement of Trading.

15 Selling Shareholder and Lock-up ..... As at the date of this Offering Memorandum, Care Healthcare owns and controls 99.99 per cent. of the ordinary share capital of the Company. Abraaj NAH, EBRD, DEG and Proparco beneficially own, through intermediate wholly-owned subsidiaries, 72.5 per cent., 12.5 per cent., 7.5 per cent. and 7.5 per cent. of Care Healthcare, respectively. Abraaj NAH is owned by funds managed and controlled by The Abraaj Group, a Dubai-based private equity firm. Immediately following completion of the Closed Subscription, it is expected that Care Healthcare will hold at least 80 per cent. of the issued ordinary share capital of the Company. Pursuant to the EGX Listing Rules, the Company is required to lock-up 51 per cent. of the Shares held by the Selling Shareholder until the later of (i) the publication of the second annual financial statements following Commencement of Trading or (ii) 24 months following Commencement of Trading (the Mandatory Lock-up), subject to certain exceptions. During the Mandatory Lock-up period, the Company can increase its share capital, but the Selling Shareholder must maintain the percentage of locked-up Shares, except for any bonus shares. Pursuant to the Underwriting Agreement, the Company will agree that, subject to certain exceptions including the Closed Subscription, during the period of 180 days from Commencement of Trading, it will not, without the prior written consent of the Sole Global Coordinator, issue, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce an offer of any Shares (or any interest therein or in respect thereof) or enter into any transaction with the same economic effect as any of the foregoing. Pursuant to the Underwriting Agreement, the Selling Shareholder will agree that, subject to certain exceptions, during the period of 180 days from Commencement of Trading, it will not, without the prior written consent of the Sole Global Coordinator, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce an offer of any Shares (or any interest therein in respect thereof) or enter into any transaction with the same economic effect as any of the foregoing. Expenses charged to the investor ...... No expenses will be charged by the Company or Selling Shareholder to any investor who purchases Offer Shares pursuant to the International Offer.

16 PART 1 Risk Factors Any investment in the Shares is subject to a number of risks. Prior to investing in the Shares, prospective investors should carefully consider the risk factors associated with any investment in the Shares, the Group’s business and the industry in which it operates, together with all other information contained in this Offering Memorandum including, in particular, the risk factors described below. Prospective investors should note that the risks relating to the Group, its industry and the Shares summarised in the section of this Offering Memorandum headed ‘‘Summary’’ are the risks that the Directors and the Company believe to be the most essential to an assessment by a prospective investor of whether to consider an investment in the Shares. However, as the risks which the Group faces relate to events and depend on circumstances that may or may not occur in the future, prospective investors should consider not only the information on the key risks summarised in the section of this Offering Memorandum headed ‘‘Summary’’ but also, among other things, the risks and uncertainties described below. The risk factors described below are not an exhaustive list or explanation of all risks which investors may face when making an investment in the Shares and should be used as guidance only. Additional risks and uncertainties relating to the Group that are not currently known to the Group, or that the Group currently deems immaterial, may individually or cumulatively also have a material adverse effect on the Group’s business, results of operations and/or financial condition and, if any such risk should occur, the price of the Shares may decline and investors could lose all or part of their investment. An investment in the Shares involves complex financial risks and is suitable only for investors who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. Investors should consider carefully whether an investment in the Shares is suitable for them in the light of the information in this Offering Memorandum and their personal circumstances.

RISKS RELATED TO EGYPT 1. Continued political instability in Egypt may materially and adversely affect the Group’s business. Egypt has been subject to political instability and multiple changes of government in the last five years. Popular unrest led to the 25 January revolution in 2011 (the Revolution) and resulted in the stepping down of long-standing President Hosni Mubarak, the suspension of the Egyptian constitution and the handover of power to the Supreme Council of the Armed Forces in February 2011. Demonstrations and protests continued throughout 2011 in response to the perceived slow pace of political change, and Egypt experienced continued political uncertainty and instability over the course of 2012 and 2013. Following a popular uprising, which led to the downfall of the previous government, presidential elections were held in May 2014 and Abdel Fattah Al Sisi was sworn in as President of Egypt on 8 June 2014. The political and economic disturbances that occurred in Egypt following popular uprisings in 2011 and 2013 resulted in worker strikes, security concerns in the countryside, international delivery delays, replacement of governmental officials, fluctuations in currency prices and reduced foreign currency reserves. More recently, as part of a general Egyptian government policy for economic reform, the public has experienced increased fuel costs as government subsidies have decreased. The sustained political uncertainty and instability, including the adoption of two constitutions in short succession, have had and may continue to have a material adverse effect on Egyptian businesses. The policies of the government are subject to uncertainties following parliamentary elections concluded in December 2015, as is the reaction of the various political parties to the policies of the government. The government is likely to continue to face socio-economic challenges and risks of instability that often accompany political transition. These challenges, together with other incidents of social and political unrest and violence, have had an adverse effect on the Egyptian economy. Further incidents of political or social instability, protests or violence may directly or indirectly affect Egypt and its economy, which, in turn, could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

2. Egypt has experienced, and continues to experience, terrorist incidents and occasional civil disorder. Egypt has experienced, and continues to experience, terrorist attacks and occasional civil disorder. Terrorist attacks have largely targeted security and military personnel, religious minorities and political figures, and have also targeted natural gas pipelines. In July 2015, militants launched a number of

17 simultaneous attacks, including suicide car bombings, on Egyptian military checkpoints in the Sinai Peninsula, killing 21 soldiers. In October 2015, a bomb was planted by a terrorist organisation on a Russian commercial airliner departing from Sharm el-Sheikh. The bomb exploded while the plane was flying over the Sinai Peninsula, killing all of the 224 passengers and crew. Given these, and other, security concerns in North Africa and the Middle East, there can be no assurance that extremists or terrorist groups will not escalate or continue violent activities in Egypt or expand their operations to include more targets. Egypt has also experienced incidents of civil disorder, including demonstrations by banned political groups, football-related violence and sit-ins by opposition parties. Many of these events have resulted in violence and, in many cases, loss of life and has discouraged tourists from visiting, and deterred investments in, Egypt. Such events could lead to a deterioration of the macroeconomic climate, creating further strain on net international reserves and, in turn, a worsening of the political and social environment. The effects of any such terrorist activities or civil disorder could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations, as well as on investor confidence in investing in Egypt.

3. The Group’s results are subject to the political, social and economic conditions of Egypt. The Group’s revenue has benefited in part from the increasing expenditure in Egypt on lifestyle diseases requiring routine treatment and a higher frequency of hospital visits. In 2013, according to the LOGIC Report, Egypt had the 3rd highest prevalence of diabetes globally in the 20–79 age group, 62.0 per cent. of the Egyptian population was overweight and 28.9 per cent. of the population was considered obese. Egypt also had one of the highest number of cases of hepatitis C globally in 2012, according to the LOGIC Report. The Group believes that the increased expenditure on these lifestyle diseases has not been a result of increased prevalence of such diseases, but a result of Egyptians’ increased ability to afford the necessary treatments and an increasing awareness of health-related issues in the general population. Where patients, directly or indirectly (such as through private health insurance premiums), are responsible for all or part of the cost of their healthcare, individual decisions to reduce healthcare expenditures may result in a reduction in demand for the Group’s services. A decrease in household disposable income, or the perception thereof, in times of economic downturn can lead to a reduction in individuals’ healthcare expenditures. This may result in patients postponing certain types of medical treatment and could result in a significant decrease in the volume of business the Group is able to conduct. Further, during economic downturns, employers generally seek to cut costs. If companies in Egypt cut employee benefit schemes, including healthcare plans, the Group’s revenue derived from its contract customers could be materially adversely affected. The Group is therefore subject to political, social and economic conditions in Egypt, which have varied in recent years. The Egyptian Ministry of Finance estimates that the budget deficit grew to 12.2 per cent. of GDP in the government’s 2013/14 fiscal year and then decreased to 11.5 per cent. of GDP in 2014/15. At the Egypt Economic Development Conference in March 2015, certain Gulf Cooperation Council (GCC) member states pledged substantial grants, private investment and other budgetary support to Egypt to help tackle the budget deficit and stabilise the economy. However, with the onset of the decline in world oil prices, this needed aid has largely failed to materialise. In the first half of the government’s 2015/16 fiscal year, net foreign direct investment in Egypt rose to US$3.1 billion from US$2.6 billion in the same period the previous year. This is below the average of US$4.1 billion since the Revolution, and far below the peak of US$13.2 billion in 2007/08. Revenue from tourism has been steadily decreasing—down 15 per cent. in 2015 compared to 2014, according to the Ministry of Tourism—and was hit hard after the attack on the Russian commercial airliner in October 2015 by a terrorist organisation. The Egyptian Prime Minister Sherif Ismail estimated that as of 29 February 2016, the attack had led to a loss of roughly US$1.3 billion in tourism revenue. In the absence of robust tourism revenue, Egypt’s net international reserves have been heavily supported by supplies of energy on concessionary terms and new deposits with the Central Bank of Egypt by GCC member states. There can be no assurance that these concessionary terms will continue, in particular in light of recent low oil prices. As of 30 April 2016, net international reserves at the Central Bank of Egypt had fallen to just US$17.01 billion, which is equivalent to approximately three months’ worth of imports. Net foreign assets turned negative in September 2015 and stood at negative EGP 13.6 billion as at 31 December 2015.

18 Egypt may continue to experience further political, social and economic difficulties and there can be no assurance that Egypt will be able to adequately address these and other difficulties and stabilise or improve the political and macroeconomic environment. In particular, significant failures to address Egypt’s fiscal and current account deficits may lead to a challenging macroeconomic environment that could lead to some fiscal or balance of payments difficulties. The inability to obtain adequate amounts of foreign currency has put a strain on the economy, and low oil prices have reduced remittances sent home by Egyptian workers abroad and have affected revenue from the Suez Canal. Unemployment in Egypt remains high, at a rate of 12.8 per cent. in the fourth quarter of 2015, according to the state statistics agency CAPMAS, and is expected to remain high for the next several years. Further, Egypt may not continue to benefit from fiscal or foreign exchange support that it has received in the past from member states of the GCC. Any reduction or cessation of this support may lead to deterioration in the macroeconomic environment in Egypt, which may have a material adverse effect on the Group’s business, prospects, financial condition or results of operations. Prolonged economic downturns like the recent global economic crisis are characterised by high unemployment, lower household income, lower corporate earnings, lower business investment and lower consumer spending, any of which could negatively affect demand for the Group’s services, and thus have a material adverse effect on the Group’s business, prospects, financial condition or results of operations. Additionally, changes in investment policies or shifts in the prevailing political climate in Egypt could result in the introduction of increased government regulations, or the enforcement of government regulations in a different manner, with respect to, among other things: • price controls; • export and import controls; • income and other taxes; • ownership restrictions; • access to capital; • foreign exchange and currency controls; and • labour and welfare benefit policies. Any unexpected changes in the political, social, economic or other conditions in Egypt, or in neighbouring countries, could have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.

4. The Group is exposed to the risk of inflation. The Egyptian economy has been characterised by substantial inflation. Central Bank of Egypt core inflation has averaged approximately 7.9 per cent. since January 2011, standing at 8.4 per cent. in March 2016. Central Bank of Egypt headline inflation averaged 9.4 per cent. in that period and frequently rose substantially above 10 per cent. The inflation has largely reflected the Egyptian pound’s significant devaluation over the last five years. Between January 2011 and January 2015 the Egyptian pound fell 23 per cent. against the US dollar, between January 2015 and December 2015 it fell 8 per cent. and in the first four months of 2016 it fell 14 per cent., according to the Central Bank of Egypt. This inflation has negatively affected the Group’s revenue and margins. The Group endeavours to preserve its margins by enhancing operational efficiencies and increasing its bargaining power with suppliers and contract customers in order to reduce costs. When possible, the Group passes inflation related cost increases on to its customers. An inability to pass these costs onto customers could result in reduced margins that could materially and adversely affect the Group’s financial condition and results of operations, while increasing prices to cover inflationary cost increases may cause some of the Group’s customers to stop using the Group’s services, which would have a material adverse effect on the Group’s business, results of operations, financial condition and prospects.

19 5. Egyptian law does not permit the transfer of Egyptian pounds outside of Egypt, and the supply of foreign currency in Egypt is limited, which may materially and adversely affect the ability of the investors outside of Egypt to repatriate proceeds and dividends from their Egyptian investments. The Group intends to pay any dividends or make other distributions in Egyptian pounds. Egyptian law prohibits the transfer of Egyptian pounds out of Egypt, and foreign currency is transferable out of Egypt only through registered banks. The Central Bank of Egypt currently allows foreign investors who access the Egyptian market through the Central Bank of Egypt to convert, without delay, the proceeds and dividends from their Egyptian investments to foreign currency for repatriation through registered banks (the Repatriation Fund). The Repatriation Fund was re-instituted in 2013 and its policies have been modified from time to time since then. Outside of the Repatriation Fund, the availability of foreign currency in Egypt is limited, unpredictable and sometimes only available at unfavourable exchange rates. Without access to the Repatriation Fund, the ability of investors outside of Egypt to transfer dividend payments or proceeds of the sale of investments out of Egypt may be materially and adversely affected by the unavailability, and/or fluctuating exchange rates for or high cost, of foreign currency in Egypt and the possible imposition of additional remittance restrictions. There can be no assurance that the Repatriation Fund will continue to allow such repatriation of dividend payments or proceeds of the sale of investments.

6. The Egyptian legal system and new legislation can create an uncertain environment for investment and business activity. The Egyptian legal system is still developing the framework to support a market economy. As a result, there are uncertainties that may not exist in countries with more developed market economies with respect to legal, business and tax decisions. The evolution of Egypt’s legal system may adversely affect relevant market developments resulting in certain cases of ambiguities, inconsistencies or anomalies in the law, its implementation and judicial practice. Further, as relevant legislation evolves, the rules and regulations governing the Group may change, which could result in non-compliance by the Group or increased compliance costs. Enforcement of contractual rights through the courts may also face difficulties and delays. The foregoing factors may have an adverse effect on the Group’s ability to protect certain contractual rights or to defend against certain claims by others, including challenges by regulatory and governmental authorities in relation to the Group’s compliance with applicable laws and regulations and could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations.

7. The Egyptian income tax regime has recently changed. The Egyptian tax regime is subject to regular changes, and recent amendments to Income Tax Law No. 91 of 2005 as amended by Law no. 53 of 2014 and Law no. 96 of 2015 and Executive Regulations (Ministerial Decree No. 172 of 2015 amended Ministerial Decree 991 of 2005) (together, the Egyptian Income Tax Law) are ambiguous and untested. Differing opinions regarding the interpretation of the Egyptian Income Tax Law exist, creating uncertainty and potential areas of conflict for the Group and foreign investors. Egypt is expected to transition from the current sales tax system to a value added tax system in 2016. The envisaged value added tax system will apply to a broader range of goods and services, although the healthcare sector is expected to be exempt under the Egyptian value added tax legislation that is currently under review by the Egyptian parliament. For more detail, see Paragraph 8 ‘‘Egyptian Taxation’’ in Part 13 (Additional Information) of this Offering Memorandum. There can be no assurance that such legislation will be enacted. The Egyptian Ministry of Finance introduced in August 2015 a reduced maximum rate of income tax applicable to both corporate and personal income of 22.5 per cent. Additionally, the previously applied five per cent. surtax was abolished. The new tax regimes are ambiguous and untested, and there can be no assurance that the tax laws will remain the same or that the Group will correctly predict how they are enforced.

8. Official statistics and data published in Egypt may not be complete or reliable. Although a number of ministries, agencies and entities within the Egyptian government produce national statistics and data, such statistics and data may not be as accurate or reliable as those compiled in more developed countries.

20 Neither the Directors nor the Company has independently verified such official statistics or other data, and any discussion of this data in this Offering Memorandum is accordingly subject to uncertainty regarding the completeness or reliability of such information.

RISKS RELATED TO THE GROUP’S BUSINESS AND INDUSTRY 9. Failure to comply with Egyptian healthcare laws and regulations, and changes in such laws and regulations, may materially adversely affect the Group’s business. The Group’s business is subject to, and affected by, extensive, stringent and frequently changing laws and regulations, as well as frequently changing enforcement regimes. The Group’s hospitals are regulated by various bodies and legislation, including, but not limited to, the Egyptian Ministry of Health and Population (MoHP) and the Egyptian Law No. 51 for the year 1981 and its Executive Regulations, as amended from time to time (Medical Establishments Law). The extensive regulatory regimes include, but are not limited to, laws and regulations requiring: • licensing of healthcare facilities and healthcare professionals; • compliance with operational, personnel and quality requirements, including annual inspections by the MOHP; • compliance with requirements relating to the social insurance of employees and contributions to employee training and service funds; • establishment of safety and health standards for employees; • proper handling, transportation and disposal of biological and hazardous waste; and • maintaining the privacy of patient data. For more on the regulations to which the Group is subject, see ‘‘Regulatory Overview’’ in Part 6 (Business Description) of this Offering Memorandum. The Group must meet extensive requirements relating to workplace safety for employees in hospitals who could be exposed to various biological risks, such as blood-borne pathogens (including HIV and the hepatitis B virus). These requirements include work practice controls, protective clothing and equipment, training and medical follow-up and may also include vaccinations and other measures designed to minimise exposure to, and transmission of, blood-borne pathogens. A regulatory agency or tribunal may conclude that the Group is not in compliance in all material respects with applicable laws and regulations, or may choose to investigate potential non-compliance, and has the power to permanently or temporarily close all or part of the Group’s facilities. For instance, the MoHP temporarily closed Nile Badrawi’s radiology department following the death of a patient being treated by that department approximately a year and a half prior to the Company’s acquisition of Nile Badrawi. The doctor and two nurses treating the patient were found guilty of malpractice in an Egyptian court and the MoHP closed the department for approximately six months at the end of 2014 while it investigated compliance with applicable regulations. For more detail on this incident, see ‘‘Legal and Administrative Proceedings’’ in Part 6 (Business Description) of this Offering Memorandum. If the Group fails to comply with applicable laws and regulations, if such laws or regulations change in a matter adverse to the Group or if the Group cannot maintain, renew or secure required permits, licenses or other necessary regulatory approvals, such as licenses from the MoHP, the Group may be unable to operate its business or commercialise its services, suffer civil and criminal penalties or fines, or incur additional liabilities from third-party claims. For instance, the building permit for the top two floors of Nile Badrawi requires those floors to be used for residential purposes, rather than the commercial purposes for which they’re currently being used. There is a risk that the Cairo Governorate could choose to enforce that building permit and either require Nile Badrawi to cease commercial operations on those floors or pay fines. If any of the foregoing were to occur, the Group’s reputation could be damaged, important relationships with insurance providers or other contract customers could be adversely affected and these developments could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations. Regulation in the healthcare industry is constantly changing, and the Group may be unable to accurately predict the future course of such regulation. In addition, safety, health and environmental laws and regulations in Egypt have been increasing in stringency in recent years, and it is possible that they will

21 become significantly more stringent in the future. To comply with these requirements, the Group may have to incur substantial operating costs and/or capital expenditure in the future, which could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

10. The Group’s business is dependent on obtaining and maintaining governmental licenses necessary to operate its private healthcare facilities. The Group’s business is subject to extensive licensing requirements. In particular, the Group is required to obtain licenses for, among others, the following activities: operation of a private hospital, provision of ionised radiation services, provision of heart catheterisation services, operation of a blood bank, provision of pharmaceutical services, operation of a medical laboratory, provision of physiotherapy services, operation of kidney dialysis units and provision of organ transplantation operations. In addition to licenses for certain medical services, the Group’s business requires licenses to operate its power generators, boilers and elevators, which are essential to its operations. The Group’s business activities and operations are subject to regular reviews by licensing authorities. If any licensing requirements are not met by the Group, the authorities may suspend or revoke the Group’s licenses or impose other restrictions on its operations. In addition, the licensing requirements in Egypt can be complex and are often not transparent or consistently enforced, which gives rise to compliance risks. The Group cannot predict what new licensing requirements, if any, will be implemented or the effect such licensing requirements may have on the Group. Further, the Group cannot predict whether the government will begin enforcing requirements that are currently unenforced. Punitive restrictions on the Group’s operations or suspension or revocation of any of the Group’s licenses could result in costly remedial actions or disruptions in the Group’s operations, which could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations. The Group’s hospitals are in the process of renewing or obtaining certain licenses from governmental authorities with respect to their current operations (see ‘‘Regulatory Overview’’ in Part 6 (Business Description) of this Offering Memorandum). The Group is currently operating without these licenses and failure to renew or obtain them could have a material adverse effect on the Group’s business, prospects, financial conditions or results of operations. The Group’s relationship with local licensing authorities is important to the continued operation of its business and to its future growth, including the Group’s ability to maintain its existing licenses and obtain additional licenses for any new healthcare facilities. Deterioration of the Group’s relationship with any key government agencies could have a material adverse effect on its business, prospects, financial condition or results of operations.

11. The Group’s performance depends on its ability to recruit and retain high quality doctors and other healthcare professionals. The Group’s operations depend on the number, efforts, ability and experience of the doctors and other healthcare professionals at its hospitals. The Group competes with other healthcare providers to recruit and retain qualified doctors and other healthcare professionals. As is common in the Egyptian private healthcare market, the Group does not employ the majority of the doctors who work at its hospitals. Rather, the Group enters into non-exclusive arrangements with doctors whereby a doctor will utilise a hospital’s facilities and the hospital will share in the doctor’s fees generated from the patient. The Group refers to these doctors as consultant doctors (see ‘‘Consultant Doctors’’ in Part 6 (Business Description) of this Offering Memorandum). The reputation, expertise and demeanour of the doctors and other medical professionals who provide medical services at the Group’s hospitals are instrumental to its ability to maintain high safety and quality standards and attract patients and are a key part of the Group’s strategy. The success of the Group’s hospitals depends, therefore, in part on the number and quality of the doctors working at the hospitals, the admitting practices of those doctors and maintaining good relations with those doctors. The Group is currently aiming to add an additional 50 to 60 new physicians to its roster of consultant doctors across its platform by the end of 2016. Because the arrangements with consultant doctors are non-exclusive, there is significant competition between the Group and its competitors to ensure that the highest qualified and most renowned doctors are practising at its hospitals. The factors that doctors consider important in deciding where they will work include their compensation package, the reputation of the hospital, the quality of equipment and facilities,

22 the quality and number of supporting staff and market leadership of the hospital. The Group may not be able to compete with other healthcare providers on all of these factors. In addition, the Group has experienced and expects to continue to experience significant wage and benefit pressures created by a current shortage of healthcare professionals. The recent growth of the Egyptian private healthcare market has created a shortage of highly qualified healthcare professionals. The Group expects this shortage to continue, and it may be required to enhance wages and benefits to recruit and retain highly qualified healthcare professionals in the face of increasing opportunities for its healthcare professionals. The loss of a significant number of the Group’s doctors or other healthcare professionals, or the inability to attract or retain sufficient numbers of qualified doctors and other healthcare professionals, could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

12. The failure to maintain the quality of services provided at the Group’s facilities may negatively impact the Group’s brand or reputation and could lead to a decrease in the number of patients. Some of the Group’s patients are referred to its hospitals by medical professionals while others select their healthcare providers themselves based upon brand recognition and reputation. The Group’s business is dependent upon providing high quality healthcare (e.g., medical care, facilities and related services), measured by reference to factors such as quality of medical care, doctor expertise, friendliness of staff, waiting times and ease of access to doctors. If the Group is unable to provide high quality services to its patients, fails to maintain a high level of patient satisfaction, is unable to execute its on-going medical capital expenditure plan or experiences a high rate of mortality or medical malpractice suits, its brand or reputation could be damaged. This damage could cause patients to select alternative healthcare providers or could cause medical professionals to refer patients to the Group’s competitors, either of which could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations. Quality of healthcare is also a key criteria that is evaluated in connection with accreditations and certifications from industry standards bodies such as the International Organization for Standardization (ISO) and Joint Commission International (JCI). Cleopatra hospital and Al Shorouk hospital have both obtained accreditations by the ISO, and the Group is working towards JCI accreditation for all of its hospitals. Although the Company believes its hospitals are not at risk of losing their existing accreditations, if this were to occur, or if the Group’s hospitals fail to obtain JCI accreditations, the Group’s brand and reputation could be adversely affected and could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

13. The Company may not be able to successfully integrate the businesses that it recently acquired or may acquire in the future, and the Group may not be able to realise the anticipated cost savings, revenue enhancements or other synergies from such acquisitions. The Company has acquired all of its subsidiaries and the majority of its business operations within the past two years. The integration of the Group’s operations is still on-going and it has a limited track record of operating more than one hospital. In addition, part of the Group’s growth strategy involves potential further acquisitions. The process of integrating acquired businesses involves risks. These risks include, but are not limited to: • recruiting qualified management personnel to lead integration processes and diversion of existing management’s attention from the management of daily operations to the integration of newly acquired operations; • difficulties in the assimilation of different corporate cultures, practices and sales and distribution methodologies; • difficulties in conforming the acquired company’s accounting, book and records, internal accounting controls, procedures and policies; • retaining the loyalty and business of the customers of acquired businesses; • retaining employees who may be vital to the integration of the acquired business or to the future prospects of the combined businesses;

23 • difficulties and unanticipated expenses integrating technologies and maintaining uniform standards, such as internal accounting controls, procedures and policies; and • unanticipated costs and expenses associated with any undisclosed or potential liabilities. Failure to transfer business operations successfully and to otherwise integrate the former operations of any acquired businesses may result in lower margins or fewer operating efficiencies than those the Group has achieved or might have achieved if it had not acquired such businesses, as well as the loss of customers of the acquired businesses. Furthermore, even if the Group is able to integrate the operations of acquired businesses successfully, it may not be able to realise the potential cost savings, synergies and revenue enhancements that were anticipated from the integration, either in the amount or within the timeframe the Group expects, and the costs of achieving these benefits may be higher than expected. The Group’s ability to realise anticipated cost savings, synergies and revenue enhancements may be affected by a number of factors, including, but not limited to, the following: • the Group’s ability to realise economies of scale with suppliers and insurance providers and other contract customers; • the use of more cash or other financial resources on integration and implementation activities than the Group expects; • increases in other expenses unrelated to the acquisitions, which may offset the cost savings and other synergies from the acquisitions; • the Group’s ability to eliminate duplicative back-office overhead and overlapping and redundant functions; and • the Group’s ability to avoid labour disruptions in connection with any integration, particularly in connection with any headcount reduction. If the Group fails to realise anticipated cost savings, synergies or revenue enhancements either at all or in the expected timeframe, its business, prospects, financial condition or results of operations could be materially adversely affected.

14. If the Group does not continually enhance its facilities with the most recent technological advances in diagnostic and surgical equipment, the Group’s prospects for growth, its reputation and its ability to recruit and retain medical staff could be materially adversely affected. Technological advances in the medical field continue to evolve rapidly. In order to compete with other healthcare providers for patients, as well as attract consultant doctors and recruit and retain medical staff, the Group must continually assess its equipment needs at its facilities and upgrade equipment as a result of technological improvements. Operating room equipment, as well as radiology, intensive care unit and laboratory equipment, tends to have a relatively short lifespan and must be replaced often with more advanced equipment. Such equipment costs represent significant capital expenditure. If the Group is unable to purchase new technology, medical practitioners would be unable to provide required services. This could lead to a decline of revenue, as patients would seek out other healthcare providers that offer such services, or a loss of medical staff, as the Group considers its facilities and equipment to be a key recruitment tool. Rapid technological advances could also, at times, lead to earlier-than-planned redundancy of equipment and result in asset impairment charges. Any of these outcomes could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

15. Hospital groups are often the subject of litigation by patients, and it is possible that some of these cases will be determined adversely against the Group. In recent years, plaintiffs have brought actions against hospitals and other healthcare providers in Egypt, including against the Group’s hospitals, alleging malpractice, product liability or other legal claims. Most claims are for relatively small amounts, but in July 2015 the heirs of a deceased patient filed a lawsuit against Nile Badrawi Hospital Company claiming civil damages of EGP 95 million. The claim is based on criminal judgments rendered against a doctor and two nurses in 2014 for wrongful death due to medical malpractice. The case is currently pending. For more detail on this incident, which occurred nearly a year and a half prior to the Company’s acquisition of Nile Badrawi, see ‘‘Legal and Administrative Proceedings’’ in Part 6 (Business Description) of this Offering Memorandum.

24 Although the Group maintains professional liability and general liability insurance coverage to cover claims arising out of the operations of its hospitals, the Group’s insurance coverage may not be sufficient to cover all future claims. For example, Nile Badrawi did not have malpractice insurance at the time of the aforementioned malpractice incident at that hospital, and the Group may therefore be liable for any damages awarded by the court. While the Group will continue to defend itself vigorously against claims and lawsuits, these matters could: • require the Group to pay substantial damages or amounts in judgments or settlements which, individually or in the aggregate, could exceed amounts, if any, that may be recovered under the Group’s insurance policies where coverage applies and is available; • cause the Group to incur substantial expenses and/or substantial increases in its insurance premiums; • require significant time and attention from the Group’s management; and • require the Group to incur debt to finance any judgment or settlement. In addition to financial risks, legal claims or judgments against the Group’s hospitals can result in harm to the Group’s reputation and the goodwill associated with its brand. For instance, the claim against Nile Badrawi discussed above was widely publicised in the Egyptian media and led to the closure of the hospital’s radiology department for approximately six months by the MoHP while it investigated compliance with applicable regulations. Any of the aforementioned outcomes could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

16. Because of the risks typically associated with the operation of medical care facilities, patients may contract serious communicable infections or diseases at hospitals. The operation of a hospital involves the treatment of patients with a variety of infectious diseases. Previously healthy or uninfected people may contract serious communicable diseases in connection with their stay or visit at hospitals. This could result in significant claims for damages and, as a result of reports and press coverage, to loss of reputation. For example, although not currently prevalent in Egypt, diseases or infections such as Methicillin-resistant Staphylococcus Aureus, or MRSA, and legionella bacteria may pose risks in the future. Furthermore, these germs or infections could also infect employees and thus significantly reduce the treatment and care capacity at the medical facilities involved in the short-, medium- and long-term as well as lead to legal claims for damages. In addition to claims for damages, any of these events may lead directly to limitations on the activities of the hospital involved as a result of quarantines, closing of parts of the hospitals at times for sterilisation, regulatory restrictions on, or the withdrawal of, permits and authorisations, and it may indirectly result, through a loss of reputation, in reduced utilisation of the affected hospitals. Although the Group knows of no confirmed cases of patients being infected with a disease or communicable illness as a result of a stay or visit at one of its hospitals, if this were to occur at any of the Group’s hospitals, its business, prospects, financial condition or results of operations could be materially affected.

17. The Group may be unable to identify expansion opportunities or may experience delays or other problems in pursuing those opportunities. The Group’s strategy involves expansion through opportunistic acquisition of existing hospital facilities in Greater Cairo. Although the Group continuously evaluates acquisition opportunities, it may not be able to identify suitable targets or negotiate attractive terms for such acquisitions. The number of attractive expansion opportunities may be limited and may command high valuations, in particular if the Group’s competitors vie for the same opportunities. In addition, the Group’s ability to make future acquisitions depends, in part, on its available financial resources and could be limited by restrictions imposed by competition or other authorities or by availability of funding, in particular under the Group’s credit arrangements. Future acquisitions may require the Group to borrow additional debt, issue additional equity or assume significant liabilities, resulting in either increased financial leverage or significant dilution of existing shareholders. The Group may not be able to source adequate financing or may only be able to find such financing on unfavourable pricing terms or terms that restrict its business. Further, the expansion of the Group, whether by acquisition or organic investment, may require the Group to commit significant capital expenditure to the expansion projects.

25 If such acquisitions are commenced, their implementation may be delayed or fail if adequate management and capital resources are not available or if the Group faces increased competition. If the Group cannot identify suitable expansion opportunities, secure financing for its expansion plans or implement such plans effectively, its business, prospects, financial condition or results of operations could be materially adversely affected.

18. The Group faces competition from other hospitals and healthcare providers, which may result in a decline in revenues, profitability and market share. The healthcare business in Egypt is competitive, and competition among hospitals and other healthcare providers for patients and customers has intensified in recent years. Hospitals compete on factors such as reputation, clinical excellence and patient satisfaction. Recently, as the number of patients in Egypt covered by private insurance plans or employer-sponsored healthcare plans has increased, the Group has faced steep competition in contract customer pricing, especially from new market entrants. The Group also faces competition from other providers such as state-owned hospitals, standalone clinics, outpatient centres and diagnostic centres and may face further competition from international healthcare companies with substantially greater resources than the Group, which may begin providing services in Egypt in the future. Consolidation in the medical industry is on the rise and there has been an increase in foreign investment in the private healthcare sector in Egypt. The Group’s competitors may merge, develop alliances or receive foreign investment and may acquire significant market share and improve their competitive position. In addition, hospitals and day patient medical centres that focus on one or only a few medical specialities continue to operate and are currently being developed. If the number of such hospitals and day patient medical centres increases over time, they may attract patients for their respective specialities who might otherwise go to the Group’s hospitals for the same specialities, causing increased competition for the Group’s business, which could, in turn, negatively affect its patient volumes and overall market share. Should the Group fail to compete effectively with other healthcare providers and other firms generally, prospective patients could elect to seek treatment at other healthcare service providers, which would adversely affect the Group’s business, prospects, financial condition or results of operations.

19. The Group’s success depends on the skills, experience and efforts of the senior management team. Individuals with industry-specific experience are scarce, and the market for such individuals is highly competitive. As a result, the Group may not be able to attract and retain qualified personnel to replace or succeed members of its senior management or other key employees, should the need arise. None of the Group’s directors (the Directors) or members of senior management are covered by key man life insurance policies. The loss of services of one or more members of the Group’s senior management could significantly weaken the Group’s ability to deliver healthcare services efficiently. This could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

20. The Group is subject to environmental, health and safety laws and regulations and may be exposed to significant liabilities if it fails to comply with such laws and regulations. The Group is subject to various national and local environmental, health and safety laws and regulations, and may incur substantial costs as a result of compliance with these laws and regulations. The principal environmental, health and safety laws and regulations applicable to the Group’s operations relate to proper management of regulated materials; medical, low-level radioactive and hazardous waste; safety measures relating to the hospitals’ personnel; hazardous or flammable equipment and management of building conditions. As the Group’s assets were only recently acquired by the Group, there can be no assurance that the previous management teams adhered to necessary regulations. Despite seeking strict adherence to safety standards, the Group’s employees may be harmed, environmental damage may occur or the Group’s strategy of increasing safety and quality and obtaining key quality accreditations may be delayed as a result of the Group’s activities. Waste in some healthcare facilities may not be properly disposed of because of misconduct or mistakes by employees or contracted individuals or businesses, and damages may be incurred as a result. The Group may be subject to requirements related to the remediation of hazardous substances and other regulated materials that have been released into the environment at properties now or formerly owned or operated by the Group, or at properties where such substances and materials were sent for off-site treatment or disposal. Liability for costs of investigation and remediation may be imposed without regard to fault, and under certain circumstances on a joint and several basis. These costs could be substantial. Any of these factors could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

26 21. The Group is subject to stringent privacy laws and information security policies, which if breached could lead to lawsuits, liability, reputational damage and loss of customers. The Group receives, generates and stores significant volumes of personal and sensitive information, such as patient medical information, and is therefore subject to privacy and security regulations with respect to the uses and disclosures of protected health information, which are intended to protect the confidentiality, integrity and availability of such information. Egyptian privacy regulations and the Egyptian criminal code establish a regulatory framework on a variety of subjects, including: • the prohibition of disclosing certain health information learned during the course of diagnosis and treatment; • the circumstances under which use or disclosure of protected health information is permitted or required without a specific authorisation by the patient; • the requirements to notify patients of privacy practices for protected health information; and • safeguards required of entities that use or receive protected health information. If the Group does not adequately safeguard confidential patient data or other protected health information, or if such information or data are wrongfully used by the Group or disclosed to an unauthorised person or entity, the Group’s reputation could suffer, resulting in a loss of customers, and it could be subject to fines, penalties and litigation, any of which could have a material adverse effect on the Group’s business, prospects, financial conditions or results of operations.

22. The Group’s operations could be impaired by a failure of its information systems or any failure to update or upgrade these systems in a timely manner. The Group’s information systems are essential to a number of critical areas of the Group’s business operations, including patient and insurance billing, electronic document management systems, medical and non-medical materials management and patient information management. Further, the Group is investing heavily to integrate and centralise its information technology functions across its hospitals, which are currently using the legacy systems that existed prior to the Group’s acquisitions of the hospitals. The Group expects that, as the systems are integrated and centralised across its platform, the systems will have an increasingly large role in its business. Any system failure that causes an interruption in service or availability of the Group’s systems could materially adversely affect the Group’s business and/or delay the collection of revenue. Further, because the Group’s patient management systems track medical history, medication requirements and dietary requirements, a failure of these systems could lead to patient illnesses or, in the most extreme cases, death. In addition, although the Group has implemented network security measures, its servers are potentially vulnerable to computer viruses, break-ins and similar disruptions from unauthorised tampering. The occurrence of any of these events could result in interruptions, delays, the loss or corruption of data or the unavailability of systems, and these outcomes may subject the Group to liability as a result of any theft or misuse of personal information stored in its systems. Any of these events could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations. Furthermore, the back-up policies and procedures the Group has in place to support its disaster recovery processes are currently limited manual processes such as server replacement or hard disk replacement, which could result in a delay in the Group’s ability to access and process information. In addition, the Group is currently in the process of implementing a new enterprise resource planning (ERP) system to be provided by SAP. The implementation of this system requires migration of extensive data from existing systems. There can be no assurance that the Group will not encounter data migration or other errors, which could result in the loss of important data, interruptions, delays or cessations in the availability of the Group’s systems, any of which could have a material adverse effect on the Group’s business, financial condition or results of operations.

23. The Group’s internal controls over financial reporting are exposed to risk. As a result of the Group having acquired all of its business operations within the past two years, the Group has not yet fully integrated its IT and internal financial control systems. The Group therefore currently uses different IT systems that are not interconnected or sufficiently secured, and the Group has identified and is addressing the resulting weaknesses in its internal financial control systems relating to having an adequate fixed assets register and coding system to facilitate controls over fixed assets including physical

27 existence and accounting; having adequate ageing analysis to assist in more effective follow-up and calculation of probability of customer default; having a uniform general ledger coding system and uniform mapping to allow efficient preparation of separate and consolidated financial information; having an automated liquidity analysis to assist management in cash management decisions; and having an automated segmental revenue and cost analysis for better segmental reporting. The Group’s management is in the process of upgrading its IT systems into a unified platform. As part of this upgrade, the Group has selected and acquired an SAP ERP system for the back-office functions, implementation of which is intended to be complete by the end of 2016. The Group has also implemented standard accounting policies and treatments across its hospitals, implemented a centralised authority matrix, applied a dual-signatory requirement for banking transactions and is unifying its financial reporting systems, amongst other initiatives. If the Group is unable to effectively implement the new ERP system or any of its other remedial measures, or if the Group is otherwise unable to remedy the lack of a unified system with respect to its internal financial controls, the Group may be unable to strengthen control over financial reporting, generate accurate data required for calculation of depreciation of fixed assets and impairment of receivables, facilitate the consolidation process including segmental reporting or generate more accurate risk management data. Any of these outcomes could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

24. Litigation, enforcement and/or administrative proceedings could materially and adversely affect the Group’s business, financial condition, results of operations, client base and reputation. The Group is involved, and in the future may become involved, in various legal proceedings, including disputes, proceedings, investigations or enforcement actions concerning professional liability and malpractice, employee-related matters, regulatory matters, administrative, civil or other proceedings, as well as inquiries from, or investigations or enforcement actions commenced by, regulators, other governmental agencies and/or health insurance carriers. For more detail, see ‘‘Legal and Administrative Proceedings’’ in Part 6 (Business Description) of this Offering Memorandum. Some of the proceedings may concern claims for substantial amounts of money and could divert management’s attention from day-to-day business operations to address such issues, as well as result in substantial monetary damages and legal expenses, damage to the Group’s reputation and/or decreased demand for its services. The outcome of any proceedings, investigations, enforcement actions or claims referred to above, if adverse to the Group could have a material adverse effect on the Group’s business, results of operations, financial condition, reputation and prospects. As at 31 December 2015, the Group (excluding Al Shorouk) and Al Shorouk Hospital Company had an EGP 17.9 million and EGP 11.9 million, respectively, provision for potential liabilities relating to claims and litigation, which the Directors believe, if determined adversely to the Group, would not have a material adverse effect on its results of operations. The quantum of this provision has been determined by management with regard to the likelihood of success of various legal and administrative claims against the Group and may not be sufficient to cover all potential liabilities related to litigation or administrative proceedings.

25. The Group is involved in disputes over its real estate and property. It was discovered in the 1980s that a part of the Nile Badrawi facility was erected on state-owned property. The owners of Nile Badrawi at that time approached the Cairo Governorate to rectify the error through a purchase of the relevant land, and in 1988 the Cairo Governorate issued a decree approving the sale. In 1995 it was discovered that the land in question had not been owned by the Cairo Governorate, but had been allocated to the River Transport Authority and could therefore not be disposed of by the Cairo Governorate. In 2002, the matter was submitted to the Ministerial Committee for Settlement of Investment Disputes, which issued a decision approving the Cairo Governorate’s decision to sell the land and confirming the River Transport Authority’s non-objection to the transfer subject to receiving appropriate compensation. The Ministerial Committee for Settlement of Investment Disputes suggested that such compensation be guided by the amount paid to the Cairo Governorate in 1988. The terms of the transfer have not yet been agreed with the River Transport Authority. The Company has recently submitted an application to the Ministerial Committee for Settlement of Investment Disputes to expedite resolution of the matter. In order to acquire proper title to the land, the Group could have to pay compensation and could be impacted by loss or disruption of operations. On 13 May 2015, the Head of the Dar Al Salam District rendered a demolition order for the 12th and 13th floors of Nile Badrawi, alleging those floors were built without a permit. Nile Badrawi Hospital Company filed a lawsuit before the Cairo Administrative Court requesting: a summary court judgment

28 ordering the suspension of execution of the demolition order until a judgment on the substance is rendered by the court; the cancellation of the demolition order and appointment by the court of an expert to conduct a site visit of Nile Badrawi to review the building permit and the technical drawings and plans of the building. The hospital is comprised of a basement, a ground floor and 11 floors, and management is of the opinion that the building complies with its permit. The court is scheduled to render its judgment in relation to the summary court order request on 26 May 2016, which, in the worst case scenario, could result in the demolition of part of the Nile Badrawi building. Management does not believe this to be a likely outcome. The Group is involved in an administrative lawsuit in connection with its plot of land adjacent to Cleopatra, which the Group intends to develop into an extension of the hospital. The plot contains a building that is listed by the Heritage Buildings Committee, and the Company is attempting to overturn the listing in order to demolish the building and develop the hospital extension. The court rendered a preliminary judgment ordering a committee of engineering professors from Ain Shams University to advise on the matter. If the listing is not overturned, the Group may not be able to proceed with its plans to build an extension of Cleopatra. The Group is also party to two administrative lawsuits against the Cairo Governorate regarding a residential apartment purchased by the Group and used for administrative purposes. The Cairo Governorate alleges that the apartment is being used for administrative purposes without a proper license and issued an order to stop such usage of the apartment. The Group obtained a judgment from the summary court suspending execution of the order until a judgment on the substance is issued by the administrative court where the Group has challenged the Cairo Governorate’s order. The Cairo Governorate has challenged the summary court judgment before the high administrative court. The administrative court ruling on the substance of the order rejected the Group’s challenge on 28 April 2016, and the Group is in the process of filing an appeal before the high administrative court. If the Group is unsuccessful in the lawsuits, it may not be able to use the apartment for administrative purposes and could have to pay fines. Land and property legislation in Egypt is complicated and often ambiguous. Due to the complexity of recording historical changes to the legal status of real estate in the relevant Egyptian registries, data in these registries is commonly not updated upon the purchase or sale of real estate. Although registration of title in Egypt is not presently required to confer ownership, personal rights or possession rights, it is essential to confer title to real estate. As a result of inconsistencies and inaccuracies in the registration systems, transferring title to the Group may be delayed or suspended or the Group may have to undertake costly measures to establish its title to land. For instance, Al Shorouk has not yet perfected its title to a plot of land upon which an extension of the hospital was built and has filed a claim to perfect such title. If the Group fails to establish title to its real estate, or is required to devote significant time or capital to establish title, the Group’s business, prospects, financial condition or results of operations could be materially adversely affected.

26. If the Group’s relationships with insurance providers and other contract customers deteriorate, if the Group is unable to negotiate and retain similar fee arrangements, or if these third parties are unable to make payments to the Group, the Group’s business may be materially adversely affected. Over the last few years, an increasing proportion of the Group’s revenues has been received from health insurance companies and other contract customers that typically contract on discounted fee structures. In 2015, revenue from these third parties represented 61.1 per cent., 65.6 per cent., 67.4 per cent. and 39.1 per cent. of Cleopatra’s, Cairo Specialized Hospital’s, Nile Badrawi’s and Al Shorouk’s total revenues, respectively. If the Group is not able to negotiate extensions of the contracts on favourable terms, the Group’s revenue or margins could be materially adversely affected. The Group generally negotiates on an annual basis with insurance companies and other contract customers regarding the fees or pricing arrangements to be paid for services provided at the Group’s facilities. Recently, there has been consolidation in the Egyptian insurance market, including some small providers joining third-party administration organisations, which insurers use to control costs by centralising back office functions, processing claims and negotiating fees and pricing arrangements with hospitals. The Group may face downward pressure on some of the payment rates from these insurers, particularly if there is further consolidation of insurance companies, which may strengthen their bargaining position and result in less favourable pricing and other terms for the Group. The Group may also be unable to effectively pass on any increases in its cost base to the tariffs paid by insurers. Further, international insurance providers

29 are entering the Egyptian market, and these providers generally have more complex and regulated payment models, which may require further IT and other investment by the Group in order to comply with their policies. The Group’s future success will depend, in part, on is ability to maintain good relationships with insurance providers and other contract customers. Referrals to the Group’s hospitals by insurance providers and other contract customers have been an increasingly large driver of revenue in recent years, and the Group expects that trend to continue. Competition from other hospital groups and healthcare providers may impact the Group’s relationships with, or ability to negotiate fee increases or other favourable terms from, insurance providers and other contract customers. If these relationships deteriorate, the Group may be unable to negotiate favourable fee arrangements and/or its business may otherwise be adversely affected. The Group’s strategy of becoming a one-stop shop through its ancillary services (including pharmacy, radiology and laboratory diagnostics) is particularly susceptible to this risk, as the profitability of these ancillary services are dependent on the Group’s ability to reach attractive fee arrangements and discount models with third-party payers. The Group is also exposed to the risk that insurance companies and other contract customers reject, delay or fail to make payment for claims the Group submits for medical services rendered to patients claiming coverage under such schemes. This risk may arise from disputes with insurers over the medical necessity of services the Group provides, clerical errors that occur when the Group provides information to insurance companies during the claims process, gaps in system and process compatibility between the Group and the insurance companies, or financial difficulties such as liquidity constraints and insolvency experienced by the insurance companies. An increase in claims rejections or significant failures by insurance companies to make payments could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

27. The Group is dependent on third-party suppliers and sub-contractors. The Group sources the majority of its medical supplies, pharmaceuticals and equipment from Egypt-based agents acting as the distributors for third-party suppliers in Egypt. The Group also outsources various activities, such as renovation services, to sub-contractors. The use of third-party suppliers and sub-contractors exposes the Group to potential supplier bottlenecks, quality problems and other potential liabilities that may arise in cases where such third-party suppliers and sub-contractors fail to meet their commitments. If the Group is not able to access high-quality products on a cost-effective basis or if suppliers are not able to fulfil the Group’s requirements for such products, the Group could face a decline in patient volumes or disruption in its relationships with doctors. In addition, the Group may face increases in the cost of supplies that it is unable to pass through fully to increases in its tariffs. To the extent that the Group is unable to rely on these third-party suppliers and sub-contractors, either due to an adverse change in relationships with them, increases in the cost of their goods and services that the Group is unable to pass through to its patients or their insurers, or a supplier’s or sub-contractor’s inability to provide the Group with the requisite quantity and quality of supplies or services in a timely manner, the Group’s business, prospects, financial condition and results of operations could be materially adversely affected.

28. The Group is subject to antitrust regulations, the violation of which would materially and adversely affect the Group’s business. The Group is the largest private hospital group in Egypt, measured by number of hospital beds and number of hospitals, and currently operates four of the ten largest hospitals in Cairo. The Egyptian hospital market is large and fragmented, and the private sector is only a small part of that market, which consists of small and large private hospitals and large governmental and quasi-governmental institutions. As a company operating in Egypt, the Group is subject to antitrust and competition-related restrictions, as well as the possibility of investigation by the Egyptian Competition Authority. The Group could face penalties if it is found to be in a dominant position in the Egyptian or Greater Cairo market and/or engaging in prohibited practices (for example, preventing competitors from penetrating the market or restricting suppliers from dealing with other competitors). The Directors believe that the Group does not engage in prohibited practices and does not hold a dominant position in the Egyptian or Greater Cairo hospital market, as described above. These determinations are subject to the assessment of the Egyptian Competition Authority. While no such determinations have been made with regard to the Group, if the Egyptian Competition Authority were to investigate the Group and determine that it does hold a dominant market position in Egypt or Greater Cairo and/or engages in prohibited practices, it could impose fines

30 and other penalties, which could have a material adverse effect on the Group’s business, prospects, financial condition and results of operations.

29. Ageing electromechanical infrastructure and power outages in Egypt could have a negative adverse effect on the Group’s operations. Electromechanical infrastructure—such as cooling systems, air intake and filtration systems, ventilation systems and backup power generators—in the Group’s facilities is ageing, requiring frequent maintenance. Such maintenance is part of the Group’s capital expenditure plans, but if the systems nevertheless fail, the Group’s operations could be negatively adversely affected. In 2014, due to a shortage of Egypt’s natural gas supplies, the country experienced rolling blackouts in February and then again, more acutely, in the summer months of July–September. Most outages in Greater Cairo lasted one to one and a half hours, but a system failure in the electricity grid led to the longest outage in the capital area of more than four hours. The Group’s hospitals each have two redundant power supplies to protect against an outage in either one, as well as backup generators. Further, when controlled power outages have occurred, the government has prioritised maintaining electric power to hospitals. However, there can be no assurance that these failsafes will work as designed, and there are unique risks for healthcare providers during power outages and failures of electromechanical systems. If the Group’s generators were to fail during a power outage, life support equipment, cooling systems, air intake and filtration systems and other electromechanical systems would cease to function and could cause death, injury, dehydration or heatstroke. Moreover, if the Group’s facilities were affected uniquely by a power failure, this could have a detrimental impact on the Group’s reputation. Any such failures of electromechanical systems or backup generators could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

30. The Group’s insurance coverage may be insufficient to cover its losses. The Group carries insurance of various types, including civil liability, malpractice (only at Cleopatra, Cairo Specialized Hospital and, since February 2015, Nile Badrawi), property, theft, fire and default. While the Group seeks to maintain appropriate levels of insurance, not all claims are insurable and there can be no assurances that the Group will not experience major incidents of a nature not covered by its insurance policies. For example, Nile Badrawi did not have malpractice insurance at the time of the 2015 malpractice incident at that hospital described further in ‘‘Legal and Administrative Proceedings’’ in Part 6 (Business Description) of this Offering Memorandum, and the Group may therefore be liable for any damages awarded by the court. The Group maintains an amount of insurance protection that it believes is adequate, but there can be no assurances that its insurance coverage will be sufficient or effective under all circumstances and against all liabilities to which it may subject. The Group could, for example, be subject to substantial claims for damages upon the occurrence of several events within one calendar year. In addition, the Group’s insurance costs may increase over time in response to any negative developments in its claims history or due to material price increases in the insurance market in general. The Group may not be able to maintain its current insurance coverage or do so at a reasonable cost. Liabilities that are not covered by insurance or that exceed the insurance coverage, or the Group’s inability to maintain its current insurance coverage, could have a material adverse effect on its business, prospects, financial condition or results of operations.

31. Business interruption at one of the Group’s hospitals could result in significant losses to the Group’s business. All of the Group’s operations are located on four sites in Greater Cairo, Egypt. The functionality of each of these sites is therefore critical to the Group’s business. External factors such as natural disasters, fire, riots, terrorism, acts of war, vandalism, extended power failures or other unforeseen events may cause business interruption to any of these four sites. For example, in 2013 the Cairo-wide curfew resulted in a decrease in the number of outpatients for a period of about one week. Business interruption could also be the result of internal factors such as failure to comply with regulatory requirements and the resulting loss of authorisation to operate the facility. For instance, the MoHP temporarily closed Nile Badrawi’s radiology department for approximately six months at the end of 2014 following the death of a patient being treated by that department while it investigated compliance with applicable regulations. For more detail on this incident, which occurred nearly a year and a half prior to the Company’s acquisition of Nile

31 Badrawi, see ‘‘Legal and Administrative Proceedings’’ in Part 6 (Business Description) of this Offering Memorandum. A business interruption of any kind at one of the Group’s facilities could have a severe negative impact on its overall business, both by direct loss of revenue and profits related to the site, but also through the long-term damage that such a business interruption could inflict on patient relationships and the Group’s reputation. Either of these outcomes could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

32. Labour disputes could disrupt the Group’s operations or lead to higher labour costs. The Group is subject to the risk of labour disputes, which may disrupt its operations. Labour laws and consultative procedures could limit the Group’s flexibility with respect to employment policy or economic reorganisation and could limit its ability to respond to market changes efficiently. Even where consultative procedures are not mandatory, important strategic business decisions could be negatively received by some employees, which could lead to labour actions that could disrupt the Group’s business. Although the Group believes its relations with its employees are good, its operations may nevertheless be materially affected by strikes, work stoppages, work slowdowns or other labour-related developments in the future. Further, labour-related disruptions, including the settlement of actual or threatened labour disputes, may materially and adversely affect the Group’s labour costs, productivity and flexibility, which in turn may materially and adversely affect the Group’s business, prospects, financial condition or results of operations.

33. The Group may not be able to protect its name and trademarks. The Group’s name and trademarks support its business. The Group believes that its reputation is associated with the Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk names, and that this association has contributed towards the success of its business. The Group has registered the trademark for ‘‘Cleopatra Hospital’’, and is in the process of initiating the registration of the trademark ‘‘Cleopatra Hospital Group’’, in Egypt. Marketing activities that are carried out to promote the Group’s products and services and to strengthen its position within the industry depend on the association of the Group’s brand names with the Group’s reputation, and the Group’s brand names may be damaged if they are used by third parties whose reputation or brand is not associated with quality. The Group currently knows of other medical facilities in Cairo not associated with the Group using the Cleopatra brand name. Failure by the Group to control the unauthorised use of its brand names could have a material adverse effect on the Group’s business, prospects, financial condition or results of operations.

34. The Company’s credit facilities may restrict its ability to pay dividends or obtain financing. Certain of the Company’s credit facilities restrict its ability to pay dividends. The Company is subject to covenants that prohibit the payment of dividends during any period in which the Company is in default of its payment obligations under the credit and financing arrangements or during any given financial year in which due payment (including principal, interest, commissions and expenses) under the credit and financing arrangements is in arrears. A breach of any covenant may restrict the Company’s ability to pay dividends to Shareholders. Certain of the Company’s credit facilities also include financial covenants and restrictions, including, but not limited to, requirements to maintain debt to equity ratios and debt service levels, restrictions on disposing of or mortgaging assets and the incurrence of additional indebtedness. Such covenants and restrictions may limit the Company’s ability to obtain additional financing or to finance future expansion plans, which could limit the growth of the Group. Although the Company has not experienced any material problems with its current credit facilities, or with securing financing in general, there can be no assurance that the lenders will continue to show such flexibility. If a lender, in the future, decided not to grant an increase of a borrowing limit or relax a covenant or restriction, the Company could breach provisions of its credit facilities. This could have a material adverse effect on the Company’s business, prospects, financial condition or results of operations.

35. The Group may be required to make payments to statutory employees’ funds. Egyptian employment law requires every employer in Egypt employing more than ten employees to pay one per cent. of its annual net profits to the Professional Training Fund established by the Ministry of Manpower. The Group does not pay such contributions and believes it is a common practice in Egypt for

32 companies not to make such contributions, as the constitutionality of the requirement is currently disputed. However, the government occasionally seeks payment of due amounts retroactively. In the event such requirement is enforced, the Group’s results of operations could be materially adversely affected.

RISKS RELATED TO THE INTERNATIONAL OFFER AND THE SHARES 36. The Company’s ability to pay dividends in the future depends, among other things, on the Group’s financial performance and capital requirements and is therefore not guaranteed. If the Group’s cash flow underperforms market expectations, then the Company’s capacity to pay a dividend may be affected. The Directors intend to adopt a dividend policy that reflects the long-term earnings and cash flow potential of the Group, but there can be no assurance that the Company will pay dividends in the future. The Group intends to pay any dividends or make other distributions in Egyptian pounds. Egyptian law prohibits the transfer of Egyptian pounds out of Egypt, and foreign currency is transferable out of Egypt only through registered banks. The Egyptian government currently allows foreign investors who access the Egyptian market through the Central Bank of Egypt to convert, without delay, the proceeds and dividends from their Egyptian investments to foreign currency for repatriation through registered banks. The Repatriation Fund was instituted in 2013 and its policies have been modified from time to time since then. There can be no assurance that the Repatriation Fund will continue to allow such repatriation of dividend payments or proceeds of the sale of investments. (see Risk Factors—Risks Related to Egypt and the MENA Region—Egyptian Law does not permit the transfer of Egyptian pounds outside of Egypt, and the supply of foreign currency in Egypt is limited, which may materially and adversely affect the ability of the investors outside of Egypt to repatriate proceeds and dividends from their Egyptian investments). Any proposal to the shareholders’ general meeting to declare and pay dividends will be made at the discretion of the Directors and will depend on, among other things, applicable law, regulation, restrictions, the Group’s financial position, regulatory capital requirements, working capital requirements, finance costs, general economic conditions and other factors the Directors deem significant from time to time.

37. Fluctuations in the value of the Egyptian pound could significantly affect the value of an investment in the Shares and any dividends paid to Shareholders that are subsequently converted to other currencies. The quoted price of the Shares will be in, and any dividends that the Company pays will be paid in, Egyptian pounds. The Egyptian pound has been significantly devalued over the last five years. Between January 2011 and January 2015 the Egyptian pound fell 23 per cent. against the US dollar, between January 2015 and December 2015 it fell 8 per cent. and in the first four months of 2016 it fell 14 per cent., according to the Central Bank of Egypt. Fluctuations in, or significant devaluation of, the Egyptian pound in relation to other currencies may affect the value of the Shares and dividends upon conversion to other currencies.

38. The EGX is less liquid than major world equity securities markets. The EGX is less liquid than major world equity securities markets and, therefore, prices of Egyptian securities have tended to be more volatile than in such other securities markets. In addition, a small number of stocks represent a disproportionately large percentage of the aggregate market capitalisation and trading volume of the EGX. The limited market capitalisation and liquidity of the EGX may impair the ability of holders of Shares to sell the Shares or impair the price realised from such a sale. Although the EGX has a book-entry system for trading dematerialised shares, settlement procedures in Egypt remain less developed than those in more established securities markets. Accordingly, while the official settlement period for trades effected on the EGX is up to two business days, settlement delays and administrative problems may occur.

39. Egyptian disclosure standards, corporate governance requirements and protections for Shareholders may differ in certain significant respects from those in more developed markets leading to a relatively limited amount of information being available. The corporate affairs of the Company are governed by laws governing companies incorporated in Egypt and listed on the EGX. The rights of the Shareholders and the responsibilities of the Directors under Egyptian law are different in certain respects from those applicable to companies organised in the United Kingdom and other jurisdictions. In particular, Egyptian law significantly limits the circumstances under

33 which shareholders of an Egyptian company may bring shareholder derivative actions. Regulations governing the Egyptian securities market are not as extensive as those in the United Kingdom and certain other markets. In addition, although Egyptian law imposes restrictions and penalties on insider trading and price manipulation, the Egyptian securities market is not highly regulated or supervised and regulations are less rigorously enforced than in more established securities markets such as those in the United Kingdom and certain other Western European countries. Moreover, many provisions of Egypt’s securities laws have not yet received judicial or regulatory interpretation or review and are therefore less developed than comparable provisions in certain other countries. There is generally less information available about Egyptian companies than is regularly available for listed companies in the United Kingdom and other jurisdictions with more established securities markets. Regulations concerning reporting requirements and auditing standards for Egyptian companies may not afford the same degree of investor protection that is available in the United Kingdom or other European markets, for instance. The Group is subject to Egyptian disclosure requirements, including the requirement to submit annual and interim financial statements prepared in accordance with Egyptian Accounting Standards (EAS), to provide notices of any material developments to the Egyptian Financial Supervisory Authority (EFSA) and to the EGX, to provide EFSA with minutes of ordinary and extraordinary general meetings and to publish annual and semi-annual financial statements in local newspapers. In recent years, the corporate governance and disclosure standards applicable to Egyptian publicly listed companies have been subject to significant amendments including, most recently, the amendment and restatement of the EGX Listing Rules as of 1 February 2014. The interpretation and application of these recently introduced rules are still evolving. Many aspects of laws and regulations in Egypt relating to public companies and the capital markets have not yet been subject to judicial or regulatory interpretation or review and are, therefore, still subject to certain uncertainties relating to their application.

40. The Abraaj Group will have a significant interest in and exert substantial influence over the Group following the Combined Offer and Closed Subscription and its interests may differ from or conflict with those of other Shareholders. Immediately following completion of the Closed Subscription, Care Healthcare will own at least 80 per cent. of the issued ordinary share capital of the Company. Abraaj NAH beneficially owns, through intermediate wholly-owned subsidiaries, 72.5 per cent. of Care Healthcare. Abraaj NAH is owned by funds managed and controlled by The Abraaj Group, a Dubai-based private equity firm. As a result of its ultimate control over Care Healthcare, The Abraaj Group will possess sufficient voting power to have a significant influence over Company matters requiring shareholder approval, including the election of directors and approval of significant corporate transactions. While the EGX Listing Rules provide for shareholder approval of related party transactions (discussed in detail in ‘‘Related Party Transactions’’ in Part 7 (Directors, Senior Management and Corporate Governance) of this Offering Memorandum), nonetheless there is no relationship agreement governing how The Abraaj Group may exert its influence over the Group. The interests of The Abraaj Group may not always be aligned with those of other holders of Shares. In particular, The Abraaj Group may hold interests in, or may make acquisitions of or investments in, other businesses that may be, or may become, competitors of the Group.

41. The market price of the Shares could be negatively affected by sales of substantial amounts of such shares in the public markets following the expiry of the lock-up periods, or the perception that these sales could occur. Following completion of the Closed Subscription, the Selling Shareholder will own beneficially, in aggregate, at least 80 per cent. of the Company’s issued ordinary share capital. The Selling Shareholder and the Company are subject to restrictions on the issue, sale and/or transfer of Shares as described in ‘‘Lock-up arrangements’’ in Part 12 (Details of the Combined Offer) of this Offering Memorandum. The issue or sale of a substantial number of Shares by the Company, the Selling Shareholder, the Directors or senior management after any applicable lock-up restrictions expire may depress the market price of the Shares and could impair the Group’s ability to raise capital through the sale of additional equity securities.

34 42. Foreign judgments may not be enforceable against the Company or the Directors. The ability of a Shareholder to bring an action against the Company may be limited under law. The Company is a joint stock company incorporated under Egyptian law. The rights of Shareholders are governed by Egyptian law and by the Statutes of the Company (the Statutes). These rights may differ from the rights of shareholders in other jurisdictions. A Shareholder may not be able to enforce a judgment against the Directors and executive officers. All of the executive officers and a majority of the Directors are residents of Egypt, and all of the Company’s assets are located in Egypt. Consequently, it may not be possible for a Shareholder to effect service of process upon the Directors and executive officers within the Shareholder’s country of residence or to enforce against the Directors and executive officers judgments of courts of the Shareholder’s country of residence based on civil liabilities under that country’s securities laws. Further, Shareholders may not be able to enforce any judgments in civil and commercial matters or any judgments under the securities laws of countries other than Egypt against the Directors or executive officers who are residents of a country other than those in which judgment is made. In addition, the courts in Egypt, or elsewhere, may not impose civil liability on the Directors or executive officers in any original action based solely on foreign securities laws brought against the Company or the Directors in a court of competent jurisdiction in Egypt or another country. Enforcement of foreign judgments in Egypt is subject to the following conditions: • the foreign courts rendering the relevant judgment offer reciprocal treatment to judgments obtained in the courts of Egypt. If reciprocal treatment is not offered by the court where judgment is obtained, then the Egyptian courts will re-examine the merits of the case in the same manner as that adopted by those courts; • the courts of Egypt are not exclusively competent to hear the dispute which constituted the object of the foreign judgment while the foreign courts are shown to have been competent to hear the dispute in accordance with their own respective laws; • the parties to the dispute were duly notified and properly represented in the proceedings; the foreign judgment is final and conclusive in accordance with the relevant law; and • the foreign judgment does not conflict with a prior Egyptian judgment in the same case and is not contrary to public order or morality in Egypt. Judgments of the courts of foreign jurisdictions may not be enforceable in Egypt because there may be no bilateral treaties between Egypt and the relevant jurisdiction on the enforcement of judgments and the foreign courts may be deemed not to offer reciprocal treatment to judgments obtained in the courts of Egypt.

43. There is only a limited free float of the Shares and this may have a negative impact on the liquidity of and market price for the Shares. After completion of the Closed Subscription, the percentage of the Company’s outstanding share capital held by persons other than the Selling Shareholder is expected to be 20 per cent. The limited free float may have a negative impact on the liquidity of the Shares and result in a low trading volume of the Shares, which could adversely affect the then prevailing market price for the Shares.

44. There is no existing market for the Shares and an active trading market for the Shares may not develop or be sustained. Prior to Commencement of Trading there has been no public trading market for the Shares. Although the Group has applied for admission to trading on the EGX, the Group can give no assurance that an active trading market for the Shares will develop or, if developed, could be sustained following the closing of the International Offer. If an active trading market is not developed or maintained, the liquidity and trading price of the Shares could be adversely affected.

45. Shares in the Company may be subject to market price volatility and the market price of the Shares in the Company may decline in response to developments that are unrelated to the Company’s operating performance. The Offer Price is not indicative of the market price of the Shares following Commencement of Trading. The market price of the Shares may be volatile and subject to wide fluctuations. The market price of the

35 Shares may fluctuate as a result of a variety of factors, including, but not limited to, those referred to in these Risk Factors, as well as period-to-period variations in operating results or changes in revenue or profit estimates by the Group, industry participants or financial analysts. The market price could also be adversely affected by developments unrelated to the Group’s operating performance, such as the operating and share price performance of other companies that investors may consider comparable to the Company, speculation about the Group in the press or the investment community, unfavourable press or research analyst ratings, strategic actions by competitors (including acquisitions and restructurings), changes in market conditions and regulatory changes. Any or all of these factors could result in material fluctuations in the price of Shares, which could lead to investors getting back less than they invested or a total loss of their investment.

46. The issuance of additional Shares in the Company in connection with future acquisitions, any share incentive or share option plan or otherwise may dilute all other shareholdings. The Group may seek to raise financing to fund future acquisitions and other growth opportunities. The Group may, for these and other purposes, such as in connection with share incentive and share option plans, issue additional equity or convertible equity securities. As a result, the Company’s existing Shareholders may suffer dilution in their percentage ownership or the market price of the Shares may be adversely affected.

36 PART 2 Presentation of Financial and Other Information General Investors should only rely on the information in this Offering Memorandum. No person has been authorised to give any information or to make any representations in connection with the International Offer, other than those contained in this Offering Memorandum and, if given or made, such information or representations must not be relied upon as having been authorised by or on behalf of the Company, the Selling Shareholder, the Directors or the Sole Global Coordinator. No representation or warranty, express or implied, is made by the Sole Global Coordinator, any of its respective affiliates or any selling agent as to the accuracy or completeness of such information, and nothing contained in this Offering Memorandum is, or shall be relied upon as, a promise or representation by the Sole Global Coordinator, any of its affiliates or any selling agent as to the past, present or future. Neither the delivery of this Offering Memorandum nor any purchase of International Offer Shares pursuant to the International Offer shall, under any circumstances, create any implication that there has been no change in the business or affairs of the Group since the date of this Offering Memorandum or that the information contained herein is correct as of any time subsequent to its date. The Company will update the information provided in this Offering Memorandum prior to Commencement of Trading by means of a supplement hereto if a significant new factor that may affect the evaluation by prospective investors of the International Offer occurs after the publication of this Offering Memorandum or if this Offering Memorandum contains any mistake or substantial inaccuracy. The contents of this Offering Memorandum are not to be construed as legal, business or tax advice. Each prospective investor should consult his or her own lawyer, financial adviser or tax adviser for legal, financial or tax advice. In making an investment decision, each investor must rely on their own examination, analysis and enquiry of the Company and the terms of the International Offer, including the merits and risks involved. This Offering Memorandum is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by any of the Company, the Selling Shareholder, the Directors or the Sole Global Coordinator or any of their affiliates or representatives that any recipient of this Offering Memorandum should purchase the International Offer Shares. Prior to making any decision as to whether to purchase the International Offer Shares, prospective investors should read this Offering Memorandum. Investors should ensure that they read the whole of this Offering Memorandum carefully and not just rely on key information or information summarised within it. In making an investment decision, prospective investors must rely upon their own examination of the Company and the terms of this Offering Memorandum, including the risks involved. Investors who purchase International Offer Shares in the International Offer will be deemed to have acknowledged that: (i) they have not relied on the Sole Global Coordinator, its affiliates, officers, directors or any person affiliated with it in connection with any investigation of the accuracy of any information contained in this Offering Memorandum or their investment decision; and (ii) they have relied on the information contained in this Offering Memorandum, and no person has been authorised to give any information or to make any representation concerning the Group or the Shares (other than as contained in this Offering Memorandum) and, if given or made, any such other information or representation should not be relied upon as having been authorised by the Company, the Selling Shareholder, the Directors or the Sole Global Coordinator. None of the Company, the Selling Shareholder, the Directors or the Sole Global Coordinator or any of their affiliates or representatives is making any representation to any offeree or purchaser of the International Offer Shares regarding the legality of an investment by such offeree or purchaser. In connection with the International Offer, the Sole Global Coordinator and any of its affiliates, acting as investors for their own accounts, may acquire International Offer Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such International Offer Shares and other securities of the Company or related investments in connection with the Combined Offer or otherwise. Accordingly, references in this Offering Memorandum to the Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any or issue, offer, subscription, acquisition, dealing or placing by, the Sole Global Coordinator and any of its affiliates acting as investors for their own accounts. The Sole Global Coordinator does not intend to disclose the extent of

37 any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Stabilisation In connection with the Egyptian Retail Offer, EFG Hermes, or any of its agents, may effect transactions in the Shares with a view to supporting or maintaining the market price of the Shares at a level higher than that which might have otherwise prevailed in the open market. EFG Hermes will withhold from the payment of the proceeds of the Combined Offer an amount equal to 15 per cent. of the gross proceeds of the sale of all Offer Shares at the Offer Price, which shall be deposited in the Stabilisation Fund. If the trading price per Share falls below the Offer Price during the Stabilisation Period, purchasers of Egyptian Retail Offer Shares in the Egyptian Retail Offer may submit sell orders and EFG Hermes will submit purchase orders for Shares at the Offer Price, which will remain open until the end of the Stabilisation Period. At the end of the Stabilisation Period, open purchase orders submitted by EFG Hermes will be matched with open sale orders and executed on the EGX. All Shares purchased in this manner will be placed in the Stabilisation Fund. EFG Hermes will remit to the Selling Shareholder, at the end of the Stabilisation Period, any funds then remaining in the Stabilisation Fund and any remaining Shares purchased during the Stabilisation Period using the Stabilisation Fund. Purchasers of International Offer Shares in the International Offer may not participate in the Stabilisation. EFG Hermes will disclose any Stabilisation transactions to the EGX at the end of the Stabilisation Period.

Presentation of financial information The Company directly operates the Cleopatra hospital in Egypt and also has three main operating subsidiaries—Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company—each of which operates a hospital in Egypt. The Company was beneficially acquired by Abraaj NAH in July 2014. Also in July 2014, Abraaj NAH acquired a majority beneficial stake in Cairo Specialized Hospital Company, which it subsequently made a subsidiary of the Company in September 2015 as part of a corporate restructuring. Nile Badrawi Hospital Company and Al Shorouk Hospital Company were acquired by the Company in September 2015 and January 2016, respectively. Together, the Group’s four hospitals constitute all of the business undertakings of the Company as at the date of this Offering Memorandum. For more detail on the formation of the Group, see ‘‘History’’ and ‘‘Group Structure’’ in Part 6 (Business Description) of this Offering Memorandum. Because the hospitals were acquired at various times during 2014, 2015 and 2016, the Company believes that its current business undertakings are not accurately represented by the audited consolidated financial statements of the Company and its subsidiaries as at and for the year ended 31 December 2015 or the audited financial statements of the Company as at and for the three years ended 31 December 2015, 2014 and 2013. Accordingly, the Company has included in this Offering Memorandum the following financial information: • audited financial statements for each of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as at and for the three years ended 31 December 2015, 2014 and 2013; and • audited consolidated financial statements for Cleopatra Hospital Company and its subsidiaries as at and for the year ended 31 December 2015 (note that consolidated results for 2015 include the full-year results of Cleopatra Hospital Company, as well as three months of results for Cairo Specialized Hospital Company (acquired by an affiliate of Care Healthcare in 2014, but structured under the Company in late September 2015) and Nile Badrawi Hospital Company (acquired by the Company in September 2015). Consolidated results for 2015 do not include the results of Al Shorouk Hospital Company, which was acquired by the Company in January 2016). The historical financial information included in this Offering Memorandum has been prepared in accordance with EAS and has been extracted from the audited consolidated financial statements of the Company and its subsidiaries as at and for the year ended 31 December 2015 and the audited financial statements of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as at and for the three years ended 31 December 2015, 2014 and 2013 (the Historical Financial Information). This Offering Memorandum also includes the unaudited pro forma consolidated financial information prepared for illustrative purposes only to show the effect of the Company’s ownership of Al Shorouk

38 Hospital Company as if the acquisition of that company had occurred on 31 December 2015 from a balance sheet perspective and to show the effect of the Company’s ownership of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as if the acquisition of each of those companies had occurred on 1 January 2015 from a statement of income perspective (the Unaudited Pro Forma Consolidated Financial Information). Because of its nature, the Unaudited Pro Forma Consolidated Financial Information addresses a hypothetical situation and does not, therefore, represent the Group’s actual financial position or trading results. The Company’s financial year runs from 1 January to 31 December. The financial information included in Part 14 (Historical Financial Information) is covered by the respective auditor’s reports therein. The significant EAS accounting policies applied in the financial information of the Group are applied consistently in the financial information in this Offering Memorandum.

Restatements The audited financial statements as at and for the three years ended 31 December 2015 for Cairo Specialized Hospital Company included elsewhere in this Offering Memorandum have been restated to reflect an increase in the tax provision not accounted for in the existing 2014 financial information previously issued. The audited financial statements as at and for the three years ended 31 December 2015 for Nile Badrawi Hospital Company included elsewhere in this Offering Memorandum have been restated to correct certain accounting errors in the 2013 and 2014 financial information previously issued. The audited financial statements as at and for the three years ended 31 December 2015 for Al Shorouk Hospital Company included elsewhere in this Offering Memorandum have been restated to correct certain accounting errors in the 2013 and 2014 financial information previously issued. The financial information included in this Offering Memorandum that corresponds to 2014 financial information of Cairo Specialized Hospital Company, 2013 and 2014 financial information of Nile Badrawi Hospital Company and 2013 and 2014 financial information of Al Shorouk Hospital Company is therefore labelled ‘‘restated’’ to state that fact.

Certain differences between EAS and IFRS Certain differences exist between EAS and International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS) that may be material to the financial information included in this Offering Memorandum. A description of significant differences between EAS and IFRS is included in ‘‘Summary of Significant Differences Between IFRS and EAS’’ in Part 9 (Operating and Financial Review) of this Offering Memorandum. The Company is responsible for preparing the description therein. The Company has not prepared a complete reconciliation of its Historical Financial Information between EAS and IFRS and has not quantified such differences. In making an investment decision, investors must rely upon their own examination of the Company, the terms of the International Offer and the Historical Financial Information. Each potential investor is advised to consult its own accounting advisers for an understanding of the differences between EAS and IFRS and how those differences might affect the Historical Financial Information and other financial information included in this Offering Memorandum.

Non-GAAP financial measures This Offering Memorandum includes certain references to non-GAAP measures such as the Group’s net debt, total capital, capital expenditure, gearing ratio, working capital, adjusted operating costs, adjusted gross profit, adjusted general and administrative expenses, EBITDA margin, adjusted EBITDA margin, EBITDA, pro forma EBITDA, pro forma net debt, adjusted EBITDA and adjusted profit for the year (the Non-GAAP Financial Measures). The Non-GAAP Financial Measures are supplemental measures of the Group’s ability to service debt that are not required by, or presented in accordance with EAS. The Non-GAAP Financial Measures are not measurements of the Group’s financial performance under EAS and should not be considered as an alternative to operating revenue, gross profit, profit for the year or any other performance measures derived in accordance with EAS or as an alternative to cash flows from operating activities as a measure of the Group’s liquidity. Potential investors are cautioned not to place undue reliance on the Non-GAAP Financial Measures and should note that the Non-GAAP Financial

39 Measures as calculated by the Group, may differ materially from similarly titled measures reported by other companies, including the Group’s peers.

Net debt Net debt is the sum of current portion of borrowings (which includes overdrafts), non-current portion of borrowings and creditors and other credit balances less cash on hand and at banks.

Total capital Total capital is net debt plus total equity.

Capital expenditure Capital expenditure is payments made to purchase fixed assets recorded on the statement of cash flows.

Gearing ratio Gearing ratio is net debt divided by total capital.

Working capital Working capital is inventories and trade receivables less creditors and other credit balances.

Adjusted operating costs Adjusted operating costs are operating costs excluding fixed assets depreciation and write-offs.

Adjusted gross profit Adjusted gross profit is gross profit excluding fixed assets depreciation and write-offs.

Adjusted general and administrative expenses Adjusted general and administrative expenses are general and administrative expenses excluding impairment of trade receivables and fixed assets depreciation.

Adjusted profit for the year Adjusted profit for the year is profit for the year excluding certain non-recurring items, including a donation, liquidation of an employee fund, certain portions of impairment of trade receivables and provisions for claims. The reconciliation of Cleopatra Hospital Company’s profit for the year to adjusted profit for the year is as follows:

For the year ended 31 December 2015 2014 2013 (unaudited) (EGP thousands) Profit for the year ...... 64,690 43,802 38,688 Add back: Donations ...... — — 3,097(1) Employees fund ...... — 20,300(2) — Adjusted profit for the year ...... 64,690 64,102 41,785

(1) Non-recurring donation to a university in Cairo. The hospital made donations in 2015 and 2014, the average of which was EGP 641,060. This amount is considered to be recurring and has been deducted from the total donation amount incurred in 2013 that is being excluded from adjusted profit for the year. (2) Non-recurring liquidation of the hospital’s employee fund that the Group no longer operates.

40 The reconciliation of Cairo Specialized Hospital Company’s profit for the year to adjusted profit for the year is as follows:

For the year ended 31 December 2015 2014 2013 (unaudited) (EGP thousands) Profit for the year ...... 17,248 18,525 22,141 Add back: Provisions for claims ...... 6,000(1) —— Impairment of trade receivables ...... 906(2) —— Adjusted profit for the year ...... 24,154 18,525 22,141

(1) Provisions for claims incurred in 2015 but that are relevant to a prior period and are not expected to be incurred in the future because, going forward, appropriate provisions will be made for each period separately. (2) The portion of impairment of trade receivables that does not pertain to 2015 one per cent. of revenue is considered to be the recurring portion. The reconciliation of Nile Badrawi Hospital Company’s profit for the year to adjusted profit for the year is as follows:

For the year ended 31 December 2015 2014 2013 (unaudited) (EGP thousands) Profit for the year ...... 3,612 18,157 6,728 Add back: Provisions for claims ...... 1,925(1) —— Impairment of trade receivables ...... 9,917(2) —— Adjusted profit for the year ...... 15,455 18,157 6,728

(1) Provisions for claims incurred in 2015 but that are partially relevant to a prior period and such part not expected to be incurred in the future because, going forward, appropriate provisions will be made for each period separately. (2) Provisions taken in 2015 that are related to receivables’ balances not pertaining to 2015.

The reconciliation of Al Shorouk Hospital Company’s profit for the year to adjusted profit for the year is as follows:

For the year ended 31 December 2015 2014 2013 (unaudited) (EGP thousands) Profit for the year ...... 4,193 11,448 (70) Add back: Provisions for claims(1) ...... 4,870 — 6,823 Impairment of trade receivables ...... 2,943(2) —— Adjusted profit for the year ...... 12,006 11,448 6,753

(1) Required provisions covering claims for the periods prior to 2013 and 2015, as applicable, and are not expected to be incurred in the future because, going forward, appropriate provisions will be made for each period separately. (2) The portion of impairment of trade receivables that does not pertain to 2015 one per cent. of revenue is considered to be the recurring portion.

EBITDA and adjusted EBITDA EBITDA is calculated from profit for the year adjusted for finance income, finance costs, current tax, deferred tax, fixed asset depreciation and write-offs, provisions, (loss)/gain on currency translation

41 differences and impairment of trade receivables. Adjusted EBITDA is EBITDA excluding a non-recurring donation to a university in Cairo and a non-recurring liquidation of Cleopatra’s employee fund. The liquidation occurred because the Group no longer plans to operate the fund. EBITDA and adjusted EBITDA are not a measurements of the Group’s financial performance under EAS. Information regarding EBITDA and adjusted EBITDA or similar measures is sometimes used by investors to evaluate the efficiency of a company’s operations and its ability to employ its earnings toward repayment of debt, capital expenditures and working capital requirements. There are no generally accepted principles governing the calculation of EBITDA and adjusted EBITDA or similar measures and the criteria upon which EBITDA and adjusted EBITDA or similar measures are based can vary from company to company. EBITDA and adjusted EBITDA, by themselves, do not provide a sufficient basis to compare the Company’s performance with that of other companies and should not be considered in isolation or as a substitute for operating profit or any other measure as an indicator of operating performance, or as an alternative to cash generated from operating activities as a measure of liquidity. The Company uses EBITDA and adjusted EBITDA in the management reporting of its segments and in assessing the Group’s growth and operational efficiencies. The reconciliation of Cleopatra Hospital Company’s profit for the year to EBITDA and adjusted EBITDA is as follows:

For the year ended 31 December 2015 2014 2013 (audited) (EGP thousands) Profit for the year ...... 64,690 43,802 38,688 Add back: Finance income ...... (5,104) (2,087) (1,573) Finance costs ...... 8,488 3 — Current tax ...... 20,603 21,372 13,997 Deferred tax ...... (886) (283) (11) Provisions ...... 2,974 2,887 761 Fixed asset depreciation and write-offs ...... 6,551 7,153 7,278 Impairment of trade receivables ...... 2,130 (4) 71 EBITDA ...... 99,446 72,843 59,212 Add back: Donations ...... — — 3,097(1) Employees fund ...... — 20,300(2) — Adjusted EBITDA ...... 99,446 93,143 62,309

(1) Non-recurring donation to a university in Cairo. The hospital made donations in 2015 and 2014, the average of which was EGP 641,060. This amount is considered to be recurring and has been deducted from the total donation amount incurred in 2013 that is being excluded from adjusted EBITDA. (2) Non-recurring liquidation of the hospital’s employee fund that the Group no longer operates.

42 The reconciliation of Cairo Specialized Hospital Company’s profit for the year to EBITDA and adjusted EBITDA is as follows:

For the year ended 31 December 2015 2014 2013 (audited) (EGP thousands) Profit for the year ...... 17,248 18,525 22,141 Add back: Finance income ...... (4,021) (2,705) (2,260) Current tax ...... 7,387 8,689 7,006 Deferred tax ...... (431) 694 265 Provisions ...... 6,945 710 — Fixed asset depreciation and write-offs ...... 3,676 3,636 3,065 Impairment of trade receivables ...... 2,682 737 — EBITDA ...... 33,487 30,287 30,219 Add back: Donations ...... ——— Employees fund ...... ——— Adjusted EBITDA ...... 33,487 30,287 30,219

The reconciliation of Nile Badrawi Hospital Company’s profit for the year to EBITDA and adjusted EBITDA is as follows:

For the year ended 31 December 2015 2014 2013 (audited) (EGP thousands) Profit for the year ...... 3,612 18,157 6,728 Add back: Finance income ...... — — (11) (Loss)/gain on currency translation differences ...... 6 (38) (18) Current tax ...... 4,991 7,018 2,061 Deferred tax ...... 662 (282) (417) Provisions ...... 4,218 723 — Fixed asset depreciation and write-offs ...... 1,197 3,462 3,851 Impairment of trade receivables ...... 12,417 (104) 1,230 EBITDA ...... 27,104 28,936 13,423 Add back: Donations ...... ——— Employees fund ...... ——— Adjusted EBITDA ...... 27,104 28,936 13,423

43 The reconciliation of Al Shorouk Hospital Company’s profit for the year to EBITDA and adjusted EBITDA is as follows:

For the year ended 31 December 2015 2014 2013 (audited) (EGP thousands) Profit for the year ...... 4,193 11,448 (70) Add back: Finance income ...... (128) (113) (73) Finance costs ...... 1,334 55 21 Current tax ...... 4,108 4,492 2,638 Deferred tax ...... (198) (30) (172) Provisions ...... 5,070 — 6,677 Fixed asset depreciation and write-offs ...... 3,842 4,889 5,042 Impairment of trade receivables ...... 4,330 — 35 EBITDA ...... 22,551 20,741 14,098 Add back: Donations ...... ——— Employees fund ...... ——— Adjusted EBITDA ...... 22,551 20,741 14,098

Pro forma EBITDA Pro forma EBITDA is pro forma profit for the year adjusted for pro forma finance income, pro forma finance costs, pro forma (loss)/gain on currency translation differences, pro forma current tax, pro forma deferred tax, pro forma provisions, pro forma fixed asset depreciation and write-offs and pro forma impairment of trade receivables. The reconciliation of the Company’s pro forma profit for the year to pro forma EBITDA is as follows:

Pro forma for the year ended 31 December 2015 (unaudited) (EGP thousands) Pro forma profit for the year ...... 51,722 Add back: Pro forma finance income ...... (9,254) Pro forma finance costs ...... 59,417 Pro forma (loss) / gain on currency translation differences ...... 6 Pro forma current tax ...... 25,931 Pro forma deferred tax ...... (854) Pro forma provisions ...... 19,207 Pro forma fixed asset depreciation and write-offs ...... 14,852 Pro forma impairment of trade receivables ...... 21,560 Pro forma EBITDA ...... 182,588

Note: Pro forma results show the effect of the Company’s ownership of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as if the acquisitions of those companies had occurred on 1 January 2015.

Pro forma net debt Pro forma net debt is the sum of pro forma current portion of borrowings (which includes overdrafts), pro forma non-current portion of borrowings, pro forma creditors and other credit balances less cash on hand and at banks.

EBITDA margin EBITDA margin is EBITDA divided by operating revenue.

44 Adjusted EBITDA margin Adjusted EBITDA margin is adjusted EBITDA divided by operating revenue.

Currency presentation Unless otherwise indicated, all references in this Offering Memorandum to ‘‘EGP’’ or ‘‘Egyptian pounds’’ are to the lawful currency of Egypt. The Company prepares its financial statements in EGP. All references to ‘‘pounds sterling’’, ‘‘British pounds’’, ‘‘GBP’’, ‘‘£’’ or ‘‘pence’’ are to the lawful currency of the United Kingdom. All references to the ‘‘euro’’ or ‘‘A’’ are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community, as amended. All references to ‘‘US dollars’’ or ‘‘US$’’ are to the lawful currency of the United States. The average exchange rates of the Egyptian pound, the Group’s functional currency, are shown relative to pounds sterling, the euro and the US dollar below. The rates below may differ from the actual rates used in the preparation of the financial statements and other financial information that appears elsewhere in this Offering Memorandum. The inclusion of these exchange rates is for illustrative purposes only and does not mean that the EGP amounts actually represent such pounds sterling, euro or US dollar amounts or that such EGP amounts could have been converted into pounds sterling, euro or US dollars at any particular rate, if at all.

Average Egyptian pound rate against the British pound

British pound Year Period End Average High Low 2013 ...... 11.5062 10.7545 11.5062 10.0747 2014 ...... 11.1403 11.6722 12.2727 11.0952 2015 ...... 11.5277 11.7777 12.4175 10.7876 January 2016 ...... 11.1527 11.2808 11.5697 11.1022 February 2016 ...... 10.8909 11.2016 11.4183 10.8626 March 2016 ...... 12.7896 12.0389 12.8648 10.9231 April 2016 ...... 12.9586 12.7031 12.9885 12.4911 May 2016 (through 11 May) ...... 12.8433 11.9473 13.0398 10.8626

Average Egyptian pound rate against the euro

Euro Year Period End Average High Low 2013 ...... 9.5753 9.1309 9.5783 8.3749 2014 ...... 8.6526 9.4115 9.7900 8.6526 2015 ...... 8.5018 8.5543 9.1146 7.9763 January 2016 ...... 8.4811 8.5042 8.5762 8.4111 February 2016 ...... 8.5127 8.6938 8.8710 8.5127 March 2016 ...... 10.1121 9.4061 10.1121 8.4923 April 2016 ...... 10.1685 10.0720 10.1685 9.9636 May 2016 (through 11 May) ...... 10.1492 8.8503 10.2324 8.2633

45 Average Egyptian pound rate against the US dollar

US dollar Year Period End Average High Low 2013 ...... 6.9456 6.8746 7.0325 6.3592 2014 ...... 7.1506 7.0851 7.1600 6.9534 2015 ...... 7.8229 7.7047 8.0392 7.1390 January 2016 ...... 7.8300 7.8288 7.8354 7.8146 February 2016 ...... 7.8281 7.8286 7.8346 7.8183 March 2016 ...... 8.8800 8.4400 8.9518 7.8250 April 2016 ...... 8.8819 8.8792 8.8864 8.8696 May 2016 (through 11 May) ...... 8.8755 7.9653 8.9518 7.5301

Source: Bloomberg Composite Rate

Roundings Certain data in this Offering Memorandum, including financial, statistical, and operating information has been rounded. As a result of the rounding, the totals of data presented in this Offering Memorandum may vary slightly from the actual arithmetic totals of such data. Percentages in tables have been rounded and accordingly may not add up to 100 per cent.

Market, economic and industry data Unless the source is otherwise stated, the market, economic and industry data in this Offering Memorandum constitute the Directors’ estimates, using underlying data from independent third parties. The Company obtained market data and certain industry forecasts used in this Offering Memorandum from internal surveys, reports and studies, where appropriate, as well as market research, publicly available information and industry publications, including publications and data compiled by the Central Agency for Public Mobilization and Statistics of Egypt (CAPMAS), World Health Organization (WHO), Business Monitor International (BMI), the International Monetary Fund (IMF) and the World Bank. Certain statements in this Offering Memorandum relating to the Group’s business have been extracted without material adjustment from a report purchased by the Group prepared by LOGIC Market Research, a market research company (the LOGIC Report). Where information has been extracted from the LOGIC Report, it is so noted. Whilst the Directors believe the third-party information included herein to be reliable, the Company has not independently verified such third-party information, and neither the Company nor the Sole Global Coordinator make any representation or warranty as to the accuracy or completeness of such information as set forth in this Offering Memorandum. The Company confirms that all third-party data contained in this Offering Memorandum has been accurately reproduced and, so far as the Company is aware and able to ascertain from information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading. Where third-party information has been used in this Offering Memorandum, the source of such information has been identified.

Enforcement of arbitral decisions and civil liabilities in Egypt Egypt is a party to the New York Convention. Consequently, Egyptian courts should recognise and enforce in Egypt a valid arbitral award made in the United Kingdom and other signatories of the New York Convention, on the basis of the rules of the New York Convention, subject to qualifications provided for in the New York Convention and compliance with Egyptian procedural regulations and arbitration law. However, in practice, it may be difficult to enforce arbitral awards in Egypt due to: a) the relatively limited experience of Egyptian courts in enforcing international commercial arbitral awards; b) the Egyptian courts’ inability or unwillingness to enforce those awards; and/or c) legal grounds (e.g., the concept of ‘‘public order’’) and/or technical grounds (e.g., the lack of capacity of the parties or the invalidity of an arbitration clause).

46 In addition, the Company is an Egyptian joint stock company and the liability of its shareholders is limited to their respective capital contributions. All of the executive officers and a majority of the Directors are residents of Egypt, and all of the assets of the Company are located in Egypt. It may not be possible for investors to effect service of process within the United Kingdom or elsewhere on the Company or any of those persons or to enforce against any of them judgments obtained in courts outside of Egypt predicated on the civil liability provisions of the securities laws of those other jurisdictions. Enforcement of foreign judgments in Egypt is subject to the following conditions: a) the foreign courts rendering the relevant judgment offer reciprocal treatment to judgments obtained in the courts of Egypt. If reciprocal treatment is not offered by the court where judgment is obtained, then the Egyptian courts will re-examine the merits of the case in the same manner as that adopted by those courts; b) the courts of Egypt are not exclusively competent to hear the dispute which constituted the object of the foreign judgment while the foreign courts are shown to have been competent to hear the dispute in accordance with their own respective laws; c) the parties to the dispute were duly notified and properly represented in the proceedings; d) the foreign judgment is final and conclusive in accordance with the relevant law; and e) the foreign judgment does not conflict with a prior Egyptian judgment in the same case and is not contrary to public order or morality in Egypt. Judgments of the courts of foreign jurisdictions may not be enforceable in Egypt because there may be no bilateral treaties between Egypt and the relevant jurisdiction on the enforcement of judgments and the foreign courts may be deemed not to offer reciprocal treatment to judgments obtained in the courts of Egypt.

No incorporation of website information The contents of the Group’s websites do not form part of this Offering Memorandum.

Information not contained in this Offering Memorandum No person has been authorised to give any information or make any representation other than those contained in this Offering Memorandum and, if given or made, such information or representation must not be relied upon as having been so authorised. Neither the delivery of this Offering Memorandum nor any purchase made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since the date of this Offering Memorandum or that the information in this Offering Memorandum is correct as of any time subsequent to the date hereof.

Definitions Certain terms used in this Offering Memorandum, including all capitalised terms and certain technical and other items, are defined and explained in Part 15 (Definitions) of this Offering Memorandum.

Information regarding forward-looking statements This Offering Memorandum includes forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the Group’s control and all of which are based on the Directors’ current beliefs and expectations about future events. Forward-looking statements are sometimes identified by the use of forward-looking terminology such as ‘‘believe’’, ‘‘expects’’, ‘‘may’’, ‘‘will’’, ‘‘could’’, ‘‘should’’, ‘‘shall’’, ‘‘risk’’, ‘‘intends’’, ‘‘estimates’’, ‘‘aims’’, ‘‘plans’’, ‘‘predicts’’, ‘‘continues’’, ‘‘assumes’’, ‘‘positioned’’ or ‘‘anticipates’’ or the negative thereof, other variations thereon or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this Offering Memorandum and include statements regarding the intentions, beliefs or current expectations of the Directors or the Group concerning, among other things, the results of operations, financial condition, prospects, growth, strategies, and dividend policy of the Group and the industry in which it operates. In particular, the statements under the headings ‘‘Summary’’, ‘‘Risk Factors’’, ‘‘Business Description’’ and ‘‘Operating and Financial Review’’ regarding the Company’s strategy and other future events or prospects are forward-looking statements.

47 These forward-looking statements and other statements contained in this Offering Memorandum regarding matters that are not historical facts involve predictions. No assurance can be given that such future results will be achieved; actual events or results may differ materially as a result of risks and uncertainties facing the Group. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed, or implied in such forward-looking statements. These include, among others, statements relating to: • the economic and political instability in Egypt, including terrorist incidents and occasional civil disorder; • the general political, social and economic conditions of Egypt; • the devaluation of the Egyptian pound and access to foreign currency; • restrictions on the transfer of Egyptian pounds out of Egypt; • uncertainty regarding the Egyptian legal system, laws and new income tax regime; • the Group’s compliance with applicable laws, regulations and licensing requirements and which may change from time to time, including environmental, health, safety and privacy laws and regulations; • the Group’s ability to recruit and retain personnel; • the Group’s ability to maintain its quality standards; • the Group’s integration of its recently acquired businesses; • the Group’s ability to enhance its facilities with technological advances; • litigation brought by patients, enforcement proceedings by regulators or other third parties against the Group; • failure to identify expansion opportunities or to pursue those opportunities in a timely manner; • failure to detect or correct in a timely manner deficiencies and weaknesses in the Group’s internal controls over financial reporting; • the incidence of serious communicable infections or diseases in the Group’s hospitals • failure of the Group’s information systems and failure to update these systems in a timely manner; • the Group’s ability to counter competition in the healthcare industry in Egypt; • the Group’s ability to retain contract customers; • risks associated with the Combined Offer; and • other factors discussed in this Offering Memorandum, including the detailed discussions of certain risks in Part 1 (Risk Factors). Such forward-looking statements contained in this Offering Memorandum speak only as of the date of this Offering Memorandum. The Company, the Selling Shareholder, the Directors and the Sole Global Coordinator expressly disclaim any obligation or undertaking to update these forward-looking statements contained in this Offering Memorandum to reflect any change in their expectations or any change in events, conditions, or circumstances on which such statements are based unless required to do so by applicable law.

48 PART 3 Directors, Secretary, Registered and Head Office and Advisers

Directors Dr. Ahmed Ezzeldin Mahmoud Abdelaal Ahmed Adel Badreldin Walid Fayez Said Bakr Dr. Mohamed Awad Tag El Din Nabil Walid Kamhawi Omar Atef Kinawy Sameh Mahmoud Mohsen Registered and head office of the 39–41 Cleopatra Street Company Heliopolis Cairo Egypt Sole Global Coordinator and EFG Hermes Promoting and Underwriting Bookrunner B129, Phase 3 Smart Village, Km 28 Cairo Alexandria Desert Road Egypt English and US legal advisers to the Freshfields Bruckhaus Deringer LLP Company 65 Fleet Street London EC4Y 1HS United Kingdom Egyptian legal advisers to the Zulficar & Partners Company Nile City Building, South Tower Eighth Floor, 2005 A Cornich El Nil Ramlet Beaulac, Cairo, Egypt 11221 English and US legal advisers to the Shearman & Sterling (London) LLP Sole Global Coordinator and 9 Appold Street Bookrunner London EC2A 2AP United Kingdom Egyptian legal advisers to the Sole Matouk Bassiouny Global Coordinator and 12 Mohamed Ali Genah Bookrunner Garden City Cairo, Egypt Manager Pharos Holding 7 Abu El Feda Street Zamalek 11211 Cairo, Egypt Auditors Mansour & Co. PricewaterhouseCoopers (PricewaterhouseCoopers) Plot No 211, Second Sector, City Center New Cairo 11835 PO Box 170 New Cairo, Egypt

49 PART 4 Expected Timetable of Principal Events and Offer Statistics Expected timetable of principal events

Event Time and Date(1)(2) Publication of this Offering Memorandum ...... 18 May 2016 Announcement of Offer Price and allocation(3) ...... 26 May 2016 Publication of the Pricing Statement(3) ...... 26 May 2016 Commencement of Trading ...... 10:00 a.m. Cairo time on 2 June 2016

(1) Times and dates set out in the timetable above and mentioned throughout this Offering Memorandum that fall after the date of publication of this Offering Memorandum are indicative only and may be subject to change without further notice. (2) All references to time in this timetable are to Cairo time. (3) The Offer Price will be set out in the Pricing Statement. The Pricing Statement will not necessarily be sent to persons who receive this Offering Memorandum but it will be available free of charge on the Company’s website (subject to certain exceptions) at http://investors.cleopatrahospitals.com.

Offer statistics

Offer Price Range (per Share)(1) ...... EGP 8.75 to EGP 11.88 Number of International Offer Shares ...... up to 34,000,000 Number of Egyptian Retail Offer Shares ...... up to 6,000,000 Number of Shares subject to Stabilisation(2) ...... up to 6,000,000 Number of Shares currently in issue ...... 160,000,000 Number of Shares following the Closed Subscription(3) ...... 200,000,000 Market capitalisation of the Company at the Offer Price following the Closed Subscription(3)(4)(5) ...... EGP 2,063.0 million Estimated gross proceeds of the Combined Offer receivable by the Selling Shareholder(3)(4)(6) ...... EGP 412.6 million

Notes: (1) It is currently expected that the Offer Price will be within the Offer Price Range. It is expected that the Pricing Statement containing the Offer Price will be published on or about 26 May 2016 and will be available (subject to certain restrictions) on the Company’s website at http://investors.cleopatrahospitals.com. (2) The maximum number of Shares subject to Stabilisation is, in aggregate, equal to 15 per cent. of the number of Offer Shares. Only purchasers of Egyptian Retail Offer Shares in the Egyptian Retail Offer will be eligible to participate in the Stabilisation. (3) Assuming all of the Offer Shares are sold in the Combined Offer and no Stabilisation. (4) Assuming the Offer Price is set at the mid-point of the Offer Price Range. (5) The market capitalisation of the Company at any given time will depend on the market price of the Shares at that time. There can be no assurance that the market price of a Share will be equal to or exceed the Offer Price. (6) The Selling Shareholder has undertaken to use the proceeds of the Combined Offer to subscribe for the Closed Subscription Shares at the Offer Price pursuant to the Closed Subscription.

50 PART 5 Industry Overview Unless indicated otherwise, market data, statistics and information in this section of this Offering Memorandum in respect of the Egyptian hospital markets, including statements of expectation, projections and forecasts, have been extracted from the LOGIC Report and information derived from the Central Agency for Public Mobilization and Statistics of Egypt, WHO, IMF, World Bank, Business Monitor International, as well as other publicly available information sources. Such reports were neither prepared nor independently verified by the Company. In considering industry wide trends and opportunities discussed below, investors should be aware that, given the Group’s particular strengths and strategies, on the one hand, and its risks, on the other, the impact on the Group of such trends and opportunities may be more or less than their impact on the industry as a whole. Additional factors which should be considered in assessing the usefulness of the market and competitive data described elsewhere in this Offering Memorandum, including those set out in the section of this Offering Memorandum headed ‘‘Risk Factors’’.

Overview of the Healthcare System Structure The diverse and stratified healthcare system in Egypt comprises numerous stakeholders with respective roles and functions on different levels. In the public sector, the MoHP operates a network of public healthcare facilities and supervises those run by the semi-government sector. In the private sector, private hospitals and non-governmental organizations, funded by out-of-pocket payments by individuals and insurance companies, provide relatively more developed and alternative healthcare services.

Healthcare System Structure in Egypt

Public Healthcare Private Healthcare

Other Ministry of ministries, Higher including Private Private MoHP Education Ministry of Hospitals/ Voluntary NGOs (University Defense and Clinics/Doctors Organisations(2) Hospitals) Ministry of Interior

Health THIO and Insurance CCO(1) Organization

941 659 Public Private

Hospitals in Egypt 12MAY201607370034

As of 31 December 2014 Source: Healthcare System Egypt USAID-2020, NHA Egypt—2008/2009, CAPMAS, LOGIC Report (1) Teaching Hospitals and Institutes Organization (THIO) and Curative Care Organization (CCO) (2) Religiously affiliated clinics and privately owned charitable organisations.

Public Healthcare The MoHP is the primary healthcare services provider in Egypt, providing healthcare services on all levels including primary, secondary and tertiary levels to offer comprehensive, preventative and curative care services in among others, general hospitals, specialized medical centres and hospitals and basic care centres. Services provided by MoHP facilities are accessible by all Egyptian citizens with substantial subsidies by the government, funding from donors through grants and loans. In general, approximately

51 20 per cent. of MoHP services require direct out-of-pocket payments from patients. The MoHP is also the policy-setting body and regulator of the healthcare system in Egypt. Under the authority of MoHP, the Health Insurance Organization provides insurance to all Egyptians and operates hospitals, outpatient clinics and school clinics. THIO and CCO, which act autonomously under the umbrella of MoHP, operate general teaching hospitals and research institutes. The Ministry of Higher Education, through university hospitals, also runs a network of hospitals as teaching and research institutes. In addition, other ministries such as the Ministry of Interiors, the Ministry of Transport, and the Ministry of Defence operate their own facilities. As of 31 December 2014, the public healthcare sector consisted of 659 public hospitals (approximately 41 per cent. of the 1,600 hospitals in Egypt) with an aggregate of 98,000 beds (approximately 75 per cent. of the 130,600 beds in Egypt).

Private Healthcare The private sector is fragmented and comprises a wide range of for-profit and non-profit service providers, including private hospitals, clinics, pharmacies, NGOs, mosques and church clinics. The private sector has been well-established in Egypt and offers comprehensive healthcare services. Private healthcare services tend to offer more advanced and a wider range of alternative services than public facilities and are more concentrated in Cairo and the urban districts. All private healthcare service providers are required to register with the MoHP and the national-level Medical Syndicate. Funded directly through out-of-pocket payments by individuals and households, private healthcare service providers usually charge a higher fee than those in the public sector. As of 31 December 2014, the private healthcare sector consisted of 941 private hospitals (approximately 59 per cent. of the total number of hospitals) with an aggregate of 32,600 beds (approximately 25 per cent. of the total number of beds in Egypt).

Split of hospital beds in Egypt (2014) Split of hospital in Egypt (2014)

25%

41% 75% 59%

% of Private Hospital Beds % of Private Hospitals % of Public9MAY201622171223 Hospital Beds % of Public9MAY201622171363 Hospitals

As of 31 December 2014 Source: LOGIC Report

52 Historical Growth in Number of Beds in Egypt (‘000s)

Private Public Total

CAGR 5.1%

CAGR -1.2%

131 129 128 128 128

98 103 99 99 97

33 27 29 29 32

2009 2010 2011 20129MAY201622171081 2013

Source: CAPMAS, LOGIC Report

Growth Drivers for the Private Hospital Market Underserved Egyptian Hospitals Market with Low Public Sector Contribution Egyptian national healthcare expenditure (defined as the final consumption or spending on healthcare goods and services) has historically constituted a relatively low percentage of the GDP. During the period from 2011 to 2014, national healthcare expenditure amounted to an average of 5.0 per cent. of the GDP, of which public and private healthcare expenditures represented 42 per cent. and 58 per cent., respectively, in 2014. In January 2014, a new constitution was passed in Egypt which requires a minimum of three per cent. of GDP spending on healthcare. As such, healthcare spending is expected to grow to approximately 6 per cent. in 2019. The following shows the total healthcare spending in Egypt, including private and public healthcare services:

Egyptian Healthcare Market

Healthcare Spending as a % of GDP Healthcare Spending (USD mn)

4.9% 5.0% 5.1% 5.2% 5.3% 5.5% 5.7% 5.9% 6.0%

CAGR 17.6%

31.8 CAGR 9.2% 27.2 23 16.6 16.6 11.3 12.7 12.9 14.7

2011 2012 2013 2014 2015 2016 2017 2018 20199MAY201622170418

Source: LOGIC Report

53 The demand for healthcare services in Egypt exceeds the supply of public healthcare services. Egypt spends less on healthcare than its regional and developed peers, resulting in high out-of-pockets payments expenditure. It is estimated that 42 per cent. of the Egyptian population is not covered under the public health insurance under the administration of the Health Insurance Organization. Disadvantaged patients in the low-income group in particular receive limited coverage in healthcare services, despite the presence of multiple public and semi-public healthcare providers.

Healthcare Expenditure per Capita (USD)(2013)

9MAY201622511965

As of 31 December 2013 Source: World Bank In comparison with its regional peers, the Egypt hospitals market is relatively underpenetrated, with a very low number of hospital beds per 1,000 people (0.5 hospital beds/1,000 people) as compared to advanced countries such as Germany (8.2 hospital beds/1,000 people).

Hospital Beds / (1,000 people) (2013)

9MAY201622512302

As of 31 December 2013 Source: World Bank, LOGIC Report

Low Quality Public Healthcare Services As a result of the low government spending on public healthcare services, public hospitals receive limited funding and therefore have weak infrastructure and facilities. Further, public hospitals have a high average number of beds (149 per public hospital in 2014), thereby contributing to lower healthcare quality. Due to the imbalance in supply and demand, public hospitals are believed to be unable to devote much attention to each patient. In comparison, private hospitals serve an average 35 beds per hospital.

54 Beds per hospital in Egypt (2014)

149

Private9MAY201622165876 Public

As of 31 December 2014 Source: LOGIC Report Further, physicians and health staff receive low wages and therefore have little incentive to provide a high quality of service. In addition, almost 80 per cent. of the doctors work in both the public and private sectors, contributing to the problem of doctors being overworked and unable to tend to each patient with the level of care they deserve. In turn, this translates into a strong demand for private healthcare services. According to World Bank, a survey conducted in 2011 showed that 66 per cent of patients were satisfied with service at public MoHP hospitals while 76 per cent. of patients were satisfied with service at private hospitals.

Growth Potential in Private Sector Benefitting from the low government spending on public healthcare and the low quality of public healthcare services, the Egypt private healthcare services market has seen an increase in demand for good quality healthcare services. From 2009 to 2013, the number of private hospital beds increased from 26,814 to 31,653, representing a CAGR of 5.1 per cent. In contrast, the number of public hospital beds decreased from 136,882 to 128,473, representing a CAGR of 3.4 per cent. Similarly, the number of private hospitals increased from 686 in 2008 to 941 in 2014, representing a CAGR of 5.4 per cent., whereas the number of public hospitals decreased from 1,146 to 659, representing a CAGR of 8.8 per cent. Private healthcare spending in the form of out-of-pockets payments has increased from US$5.5 billion in 2009 to US$7.7 billion in 2013, representing a CAGR of 8.7 per cent. (as compared to public healthcare spending of US$3.9 billion in 2009 and US$5.3 billion in 2013, representing a CAGR of 8.0 per cent.). This includes inpatient, outpatient, long-term medical care services, and medical goods including pharmaceuticals and supplies, and collective services and capital formation such as administration requirements and development costs. It is estimated that 9.6 per cent. of household income is spent on healthcare in 2015. In 2014, the outpatient care segment was the largest segment in private healthcare spending, with total expenditure of US$5.4 billion, representing 37.0 per cent. of the sector’s overall value, followed by medical goods (26.7 per cent.), inpatient care (21.2 per cent.), collective services and capital formation (9.6 per cent.) and long-term care (5.5 per cent.).

5% 10%

Outpatient care 37% 21% Medical goods

Inpatient care

Collective services and Capital 27% formation Long-term care9MAY201622170814

As of 31 December 2014 Source: LOGIC Report

55 Favourable Demographic and Socio-Economic Indicators Egypt population is growing and ageing The population of Egypt, estimated to be 93.4 million in 2016 (a 2.2 per cent. CAGR increase from 2012), is further expected to increase to 100.5 million by the end of 2020. This represents one of the highest annual growth rates in population among both developed and developing countries. The country’s population aged over 65 who generally have a higher incidence of chronic illnesses comprises 5 per cent. of the Egypt population in 2013. As life expectancy is expected to increase from 69.8 years in 2007 to 71.7 years in 2013, the population is also facing an ageing problem with a greater population of elderly people.

Population (in million) and Growth Rate

100.5

CAGR 2.2% 93.4 91.5 89.6 87.6 85.7

2012 2013 2014 2015e 2016F9MAY2016221700262020

Source: Business Monitor International

Life Expectancy at Birth (years) Demographic Profile (per cent.)

71.7 62%

70.9 Ages 65+ 70.7 70.5 Ages 0-14 70.2 Ages 15-64 70 5% 69.8

33% 9MAY201622170287

2007 2008 2009 2010 20119MAY201622171510 2012 2013

As of 31 December 2013 Source: LOGIC Report

Higher spending per capita As Egypt’s GDP rises in recent years, the nominal GDP per capita increases and therefore the spending power of the country has strengthened. Nominal GDP per capita increased from EGP 19,120 in 2012 to EGP 26,126 in 2015, representing a CAGR of 11.0 per cent. and is further expected to reach EGP 44,889

56 in 2020 with a CAGR of 11.4 per cent.. Egypt’s richest 10 per cent. command 30 per cent. of Egypt’s GDP, while the poorest 20 per cent. only contributes to 9 per cent. of Egypt’s GDP.

Growing GDP per capita (EGP)(1)

44,889 40,748 36,825 32,892 29,097 26,126 23,040 20,700 19,120

2012 2013 2014 2015 2016 2017 2018 20199MAY201622170680 2020

(1) Nominal GDP per capita Source: IMF

Population Pyramid by Socio-Economic Class

Class A Richest 10 per cent. 10%

Class B 14 per cent. of GDP 10%

Class C 20 per cent. of GDP 20%

Class D 15 per cent. of GDP 20%

Class E 12 per cent. of GDP 20%

Class F Poorest 20 per cent. 20% 9MAY201622171650

As of 31 December 2014 Source: LOGIC Report

Prevalence of Certain Diseases In recent years Egypt has experienced an increasing incidence of lifestyle and chronic non-communicable diseases such as Hepatitis C, diabetes, obesity and cancer. These diseases contribute to a host of other health conditions that require long-term and constant monitoring and treatment. In particular, Egypt has the highest Hepatitis C prevalence in the world, with more than 6.0 million cases in 2012 (as compared to 3.4 million in the United States).

57 Hepatitis C Prevalence (‘000 cases)

9MAY201622512136

As of 31 December 2012 Source: LOGIC Report Egypt also ranks high in the world in terms of diabetes prevalence (third highest in the 20–79 years age group in 2013) and in cancer prevalence (third highest in total cases of cancer prevalence in 2012). According to the LOGIC Report, 62 per cent. of the Egypt population was overweight and 29 per cent. was obese in 2013. Non-communicable diseases caused 72 per cent. of all mortality and morbidity in 2010 (in terms of disability-adjusted life-years). Further, as health awareness improves through education and policy initiatives, the general expectations of healthcare services provided also increase and thereby drive more demand for private healthcare services.

Competitive Landscape for Private Hospitals Geography Private hospitals in Egypt are generally centred in Greater Cairo and other more urbanised city centres. Competition in such metropolitan areas is more intense than the outlying areas. The following table shows the distribution of private healthcare services in Greater Cairo versus other regions in Egypt:

Private Hospitals and Beds

574 17604

367 14996

Private Hospitals Private Beds

Greater Cairo Others9MAY201622171782

As of 31 December 2014 Source: LOGIC, CAPMAS

Market Players The competitive landscape for hospital healthcare services in Egypt is divided between public hospitals and clinics managed either by the MoHP or other government entities and privately owned and managed hospitals. Competition is based on factors such as reputation, quality of practicing doctors and health staff, range of medical services offered, technology, quality and efficiency of care, pricing and geographical convenience. The private healthcare sector is highly fragmented, with the top 10 hospitals of more than 100 beds capturing almost 10 per cent. of the private beds in Greater Cairo. According to the LOGIC Report, the Company is the market leader with four hospitals under the group and 624 beds (indicated in red in the following chart), followed by Dar Al Fouad and As Salam International, which operate as a group and have a combined 345 beds, and Saudi German Hospital with one hospital and 300 beds.

58 The following table shows the top large private hospitals in Cairo by number of beds:

Total Number of Beds in Cairo

300 200 200 177 165 152 145 139 120 120 110 100

Saudi Cairo As Salam Dar El Shefaa CleopatraEl Do'aat Dar Al Fouad Nile Badrawi Al Shorouk Dar El Hekma Nozha Ganzouri German (1) Specialized International International Hospital Hospital

16MAY201602262661

As of 31 December 2015 Source: LOGIC Report (1) Saudi German Hospital started operations in Q1 2016

Insurance Market Overview of health insurance activity in Egypt

1964 ...... Health Insurance Organization established to provide health insurance coverage for all Egyptians 1975 ...... People’s Assembly passed Public Law 32 providing coverage to certain governmental employees Public Law 79 was also passed to provide coverage to other governmental employees, employees, retirees, and widows of publicly owned institutions and some private sector employees 1992 ...... Public Law 99 was passed to roll out the Student Health Insurance Program that covers schoolchildren Newborns receive coverage by a ministerial decree 2001 ...... Egypt took part in the Abuja Declaration, which set a target for member countries to allocate at least 15 per cent. of their annual budget to improve the health sector. 2014 ...... New constitution passed in January 2014 to increase public healthcare spending, which led to health target spending for 2016 through 2017 to be set at 3 per cent. of GDP. By November 2014, subsidies provided by the government for medical care for ‘‘incapable citizens’’ had risen by 28.2 per cent., from EGP 255.6 million in October to EGP 327.8 million in November. This constituted a 22.4 per cent. year-on-year rise over the EGP 267.8 million recorded in November 2013. 2015 ...... Subsidy increases of 208% for the health insurance system were approved at the start of 2015, from EGP 811 million to EGP 2.5 billion. The Minister of Health announced that the new law requires a mandatory contribution of 4 per cent., with employers contributing 3 per cent. The MoHP will start implementing the new scheme in a limited number of cities as a pilot before it is rolled out across the country.

Source: Oxford Business Group

59 Insurance Schemes The Health Insurance Organization is the primary provider of insurance to Egypt citizens. However due to the lack of funds, the population under coverage represents only 58 per cent. of the total population. Further, the social insurance system does not cover the majority of clinical services but only 6 per cent. of health expenditures.

HIO Coverage (millions of people)

50.2 48.7 46.8 46.9 45.0

2010 2011 2012 20139MAY201622395007 2014

Source: CAPMAS

Public Health Insurance Coverage Sources of Healthcare Financing in Egypt

1% Out-of-pockets 1% payments 5% 5% 1% MoHP

THIO, CCO and others 42% 15% Health Insurance 58% Organization

Ministry of Higher 72% Education and other public agencies Private/Syndicate Insurance

Population under coverage Firms/NGOs Population out of coverage 16MAY201619375336

As of 31 December 2014 As of 31 December 2010 Source: LOGIC Report Source: World Bank In addition to the public health insurance provided by the Health Insurance Organization, private health insurance coverage is also provided by mainly inter-state companies such as Misr Life Insurance. On a smaller scale, many companies, both private and semi-governmental, provide medical care to employees of corporate employers through commercial arrangements. Further, groups of professionals and workers (such as the medical, commercial, agricultural sectors) are organized into occupational associations, or syndicates, that give members and families coverage for outpatient and inpatient care, as well as pharmaceuticals, at providers contracted by the syndicate. Generally, the following are the different sources of health financing: • Social Health Insurance—primary insurance provider covering formal public sector workers, schoolchildren, widows, pensioners and children under five years old • MoHP / other agencies—free / heavily subsidised services to citizens not covered under HIO • Program for Treatment at the Expense of the State—extends financial assistance to cover the uninsured and currently covers 1.7 million people • Family health funds—provides basic benefit package to the poor and those in the informal sector

60 • Private firms and organisations (including private insurance companies, professional syndicates and non-profit organisations)—two per cent. of private healthcare spending is funded by private insurance (as shown in the following table) Private healthcare spending remains largely funded by individual out-of-pocket payments rather than through insurance schemes. The following shows the proportions of private healthcare spending in 2013:

Private Health Expenditure

Insurance Private spend 2% 98% by type (2013) Out Of Pocket (OOP) 9MAY201622171914

As of 31 December 2013 Source: LOGIC Report

61 PART 6 Business Description Investors should read this Part 6 (Business Description) in conjunction with the more detailed information contained in this Offering Memorandum including the financial and other information appearing in Part 9 (Operating and Financial Review). Where stated, financial information in this section has been extracted from Part 11 (Unaudited Pro Forma Consolidated Financial Information) Part 14 (Historical Financial Information).

Introduction The Group is the largest private hospital group in Egypt, measured by number of hospital beds and number of hospitals, and currently operates four hospitals in Greater Cairo, each of which was acquired within the past two years. The Group’s hospitals, on an aggregated basis, had 624 hospital beds as at 31 December 2015, and in 2015 serviced 47,256 inpatients, 606,206 outpatient clinic visits and 278,404 emergency room patients and performed 34,900 surgeries. The Group’s vision is to become the leading integrated healthcare provider in Egypt through a platform of world class quality medical facilities and services to enhance patients’ quality of life. The Group’s mission is to deliver the finest quality of healthcare in a safe, reliable and caring environment, through highly trained healthcare providers, state of the art facilities and the latest medical technology, putting patients and their families first. The Group’s four hospitals—Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk—are multi-speciality hospitals that offer a full array of general and emergency healthcare services. Some of their service offerings include general surgery, emergency and ambulance services, cardiology, gynaecology and obstetrics, oncology, orthopaedics and a number of outpatient clinics, including dental, physiotherapy and primary care. The Group plans to develop, in addition to the general services that the Group’s hospitals currently offer, centres of excellence in each of the hospitals in separate specialised medical fields, such as renal transplantation and oncological radiotherapy. The centres of excellence will have state-of-the-art equipment for the relevant speciality practice and will staff the most renowned doctors in the respective field. This business model allows patients to attend the Group’s facilities at locations convenient to them for routine examinations, simple procedures and operations and general services such as pharmacy, blood bank and diagnostic services while also being able to offer highly specialised services at other hospitals in the Group’s platform. Over the past decade, the private healthcare sector in Egypt has grown significantly, as the population is seeking higher quality and safer healthcare options than those offered by the government. Traditionally, patients tended to choose their healthcare providers based on the personal reputations of the physicians. As the private medical insurance industry grows in size and influence, patients have begun choosing their healthcare providers based on the reputation and brand of the hospitals. This is due to private insurance providers and companies offering their employees private medical coverage through direct contractual agreements generally with hospitals rather than individual physicians. The Group is at the forefront of this market evolution in which hospitals are growing larger, consolidating and developing their own reputations and brand identities. The Group aims to lead this trend by implementing a uniform standard of high-quality patient care across its platform, expanding its existing one-stop shop model to contract patients so that patients can receive all required healthcare services within the Group’s platform, upgrading its facilities with state-of-the-art equipment and attracting the best doctors and healthcare providers in Egypt. The Group’s hospitals date back as far as 1976 when Dr. Hassan Zahed, a prominent Egyptian physician, opened Cairo Specialized Hospital, one of Egypt’s first private sector hospital. Cleopatra, Al Shorouk and Nile Badrawi were established in 1979, 1981 and 1982, respectively. In 2014, Abraaj NAH acquired a majority beneficial stake in Cairo Specialized Hospital Company and, in the same month, acquired a majority beneficial stake in Cleopatra Hospital Company. In 2015, the Company acquired a majority stake in Nile Badrawi Hospital Company and, in 2016, a majority stake in Al Shorouk Hospital Company.

62 The following table sets forth certain key financial information of the Group:

Year ended 31 December Key Financial Information(1) 2015 2014 2013 Operating revenue (EGP millions) Cleopatra ...... 332.0 290.3 243.3 Cairo Specialized Hospital ...... 149.4 123.3 114.0 Nile Badrawi ...... 121.3 107.5 86.8 Al Shorouk ...... 138.6 117.6 98.5 Adjusted profit for the year(2) (EGP millions) Cleopatra ...... 64.7 64.1 41.8 Cairo Specialized Hospital ...... 24.2 18.5 22.1 Nile Badrawi ...... 15.5 18.2 6.7 Al Shorouk ...... 12.0 11.4 6.8 EBITDA(3) (EGP millions) Cleopatra ...... 99.4 72.8 59.2 Cairo Specialized Hospital ...... 33.5 30.3 30.2 Nile Badrawi ...... 27.1 28.9 13.4 Al Shorouk ...... 22.6 20.7 14.1 Adjusted EBITDA(4) (EGP millions) Cleopatra ...... 99.4 93.1 62.3 Cairo Specialized Hospital ...... 33.5 30.3 30.2 Nile Badrawi ...... 27.1 28.9 13.4 Al Shorouk ...... 22.6 20.7 14.1 EBITDA margin(5) (%) Cleopatra ...... 30.0 25.1 24.3 Cairo Specialized Hospital ...... 22.4 24.6 26.5 Nile Badrawi ...... 22.3 26.9 15.5 Al Shorouk ...... 16.3 17.6 14.3 Adjusted EBITDA margin(6) (%) Cleopatra ...... 30.0 32.1 25.6 Cairo Specialized Hospital ...... 22.4 24.6 26.5 Nile Badrawi ...... 22.3 26.9 15.5 Al Shorouk ...... 16.3 17.6 14.3

Key Pro Forma Financial Information(7) Pro forma operating revenue (EGP millions) ...... 741.3 Pro forma EBITDA(8) (EGP millions) ...... 182.6 Pro forma EBITDA margin(9) (%)...... 24.6

(1) Figures include data for periods during which the Company did not own the respective hospitals. (2) See ‘‘Non-GAAP financial measures’’ in Part 2 (Presentation of Financial and Other Information) for a reconciliation of profit for the year to adjusted profit for the year. (3) Defined as profit for the year adjusted for finance income, finance costs, current tax, deferred tax, fixed asset depreciation and write-offs, provisions, (loss)/gain on currency translation differences and impairment of trade receivables. (4) Defined as EBITDA excluding a non-recurring donation to a university in Cairo and a non-recurring liquidation of Cleopatra’s employee fund. The liquidation occurred because the Group no longer plans to operate the fund. (5) Defined as EBITDA divided by operating revenue. (6) Defined as adjusted EBITDA divided by operating revenue. (7) Pro forma to show the effect of the Company’s ownership of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as if the acquisitions of those companies had occurred on 1 January 2015. (8) Defined as pro forma profit for the year adjusted for pro forma finance income, pro forma finance costs, pro forma (loss)/gain on currency translation differences, pro forma current tax, pro forma deferred tax, pro forma provisions, pro forma fixed asset depreciation and write-offs and pro forma impairment of trade receivables. (9) Defined as pro forma EBITDA divided by pro forma operating revenue.

63 Group Key Performance Indicators (KPIs) The following table sets forth certain key performance indicators that the Group uses to manage its business.

Year ended 31 December Key Performance Indicator(1) 2015 2014 2013 Inpatient occupancy rate(3) Cleopatra ...... 64.1% 67.4% —(2) Cairo Specialized Hospital ...... 71.2% 72.5% —(2) Nile Badrawi ...... 46.0% 53.3% —(2) Al Shorouk ...... 98.9% 95.8% —(2) Number of inpatients(4) ...... 47,256 46,886 46,613 Cleopatra ...... 14,211 14,555 14,204 Cairo Specialized Hospital ...... 13,869 13,771 13,151 Nile Badrawi ...... 8,528 8,089 9,116 Al Shorouk ...... 10,648 10,471 10,142 Number of outpatient clinic visits(5) ...... 606,206 472,319 419,222 Cleopatra ...... 310,627 276,713 249,170 Cairo Specialized Hospital ...... 191,745 95,987 73,173 Nile Badrawi ...... 40,710 43,801 45,806 Al Shorouk ...... 63,124 55,818 51,073 Number of emergency room patients(6) ...... 278,404 253,523 230,283 Cleopatra ...... 176,503 171,185 159,218 Cairo Specialized Hospital ...... 67,979 50,615 43,008 Nile Badrawi ...... 11,248 11,049 10,277 Al Shorouk ...... 22,674 20,674 17,780 Number of surgeries(7) ...... 34,900 33,925 32,535 Cleopatra ...... 13,995 13,832 13,719 Cairo Specialized Hospital ...... 9,938 9,037 8,040 Nile Badrawi ...... 4,389 4,493 4,705 Al Shorouk ...... 6,578 6,563 6,071 Number of lab tests(8) ...... 1,022,543 1,025,632 872,000 Cleopatra ...... 470,386 491,946 361,393 Cairo Specialized Hospital ...... 217,929 196,198 203,828 Nile Badrawi ...... 158,965 159,253 147,753 Al Shorouk ...... 175,263 178,235 159,026 Number of catheterisation patients(9) ...... 2,644 2,354 2,287 Cleopatra ...... 992 913 894 Cairo Specialized Hospital ...... 1,203 1,027 1,040 Nile Badrawi ...... 449 414 353 Al Shorouk ...... — — — Average length of stay (days)(10) Cleopatra ...... 2.07 2.13 —(2) Cairo Specialized Hospital ...... 3.36 3.44 —(2) Nile Badrawi ...... 2.52 3.08 —(2) Al Shorouk ...... 3.53 3.47 —(2)

(1) Figures include data for periods during which the Company did not own the respective hospitals. Totals represent aggregated sums of the Group’s four hospitals, including for periods during which the Company did not own the respective hospitals. (2) Data not available. (3) Defined as the number of nights occupied divided by the total number of nights available in the accommodation rooms and ICU. Inpatient occupancy rate does not include emergency room, operating room, incubator and dialysis or outpatient clinics and therefore does not reflect the hospitals’ overall utilisation rate. (4) Defined as patients admitted to an accommodation room. (5) Defined as the total number of visits to the outpatient clinics made by patients during the period. (6) Defined as the total number of visits to the emergency room during the period. (7) Defined as the number of surgeries performed during the period.

64 (8) Defined as the number of tests performed at the relevant laboratory in the period. (9) Defined as the total number of visits to the catheterisation lab during the period. (10) Defined as the average number of days an inpatient stays at the hospital. The following table sets forth the number and type of hospital beds at each of the Group’s four hospitals.

Hospital beds(1) 2015 and 2014 Room/ward beds ...... 400 Cleopatra ...... 89 Cairo Specialized Hospital ...... 138 Nile Badrawi ...... 88 Al Shorouk ...... 85 Emergency room beds ...... 45 Cleopatra ...... 29 Cairo Specialized Hospital ...... 8 Nile Badrawi ...... 5 Al Shorouk ...... 3 Operating room beds ...... 26 Cleopatra ...... 6 Cairo Specialized Hospital ...... 9 Nile Badrawi ...... 5 Al Shorouk ...... 6 Catheterisation room beds ...... 9 Cleopatra ...... 4 Cairo Specialized Hospital ...... 4 Nile Badrawi ...... 1 Al Shorouk ...... — Intensive care unit beds(2) ...... 112 Cleopatra ...... 28 Cairo Specialized Hospital ...... 37 Nile Badrawi ...... 34 Al Shorouk ...... 13 Incubators and dialysis beds ...... 32 Cleopatra ...... 9 Cairo Specialized Hospital ...... 4 Nile Badrawi ...... 6 Al Shorouk ...... 13 Total beds ...... 624 Cleopatra ...... 165 Cairo Specialized Hospital ...... 200 Nile Badrawi ...... 139 Al Shorouk ...... 120

65 History

Year Event 1976 ...... Establishment of Cairo Specialized Hospital • Cairo Specialized Hospital is established by Dr. Hassan Zahed as Egypt’s first private sector hospital 1979 ...... Establishment of Cleopatra • Cleopatra hospital is established in Heliopolis, Cairo 1981 ...... Establishment of Al Shorouk • Al Shorouk hospital is established in Mohandesin, Giza 1982 ...... Establishment of Nile Badrawi • Nile Badrawi hospital is established in Maadi, Cairo 1998 ...... Radiotherapy introduced to Nile Badrawi • Nile Badrawi acquires a radiotherapy linear accelerator, positioning the hospital as an oncology centre 1999 ...... Expansion of Cleopatra • Cleopatra adds a new building adjacent to its existing facility 1999–2000 ...... Expansion of Al Shorouk • Al Shorouk acquires an adjacent building, allowing the hospital to reach 120 beds 2014 ...... Formation of the Group • Abraaj NAH acquires majority beneficial stake in Cleopatra Hospital Company and Cairo Specialized Hospital Company 2015 ...... Expansion of the Group • The Company acquires control of Nile Badrawi Hospital Company 2016 ...... Further expansion and IPO • The Company acquires control of Al Shorouk Hospital Company and plans an initial public offering on the EGX

Group Structure The Company owns and controls the majority of the share capital of each of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company. As at the date of this Offering Memorandum, 99.99 per cent. of the share capital of the Company is owned and controlled by

66 Care Healthcare. Care Healthcare is beneficially owned, through intermediate wholly-owned subsidiaries, by Abraaj NAH, EBRD, DEG and Proparco. Abraaj DEG Proparco EBRD NAH* 72.5% 7.5% 7.5% 12.5%

Creed Healthcare Holdco Ltd.

100% Offshore Entities Creed Healthcare Limited

99.99% Care Healthcare Limited

The Group 99.99% Cleopatra Hospital Company Acquired in July 2014

99.9% 52.7% 99.9% Nile Badrawi Cairo Specialized Al Shorouk Hospital Company Hospital Company Hospital Company Acquired in September 2015 Acquired in July 2014** Acquired in January 2016 12MAY201614011884

* Abraaj NAH is owned by funds managed and controlled by The Abraaj Group, a Dubai-based private equity firm ** Creed Healthcare Holdco Ltd. acquired beneficial ownership of Cairo Specialized Hospital Company in July 2014. Cleopatra Hospital Company acquired beneficial ownership in September 2015 as part of a corporate restructuring.

Competitive Strengths Exposure to a resilient market with structural demand in an underpenetrated private hospital market Egypt has largely demonstrated stable growth based on strong market fundamentals since 2010, despite recent political and economic turmoil in the region. GDP growth in Egypt is expected to stabilise and improve over the long-term, according to the International Monetary Fund and is expected to be higher than in many other regional and more developed markets. According to the IMF’s World Economic Outlook Database, the CAGR of nominal GDP per capita between 2015 and 2020 is expected to be 11.4 per cent., compared to an expected average rate of 2.7 per cent. for the G7 countries. The Group anticipates that Egypt’s relatively high GDP per capita growth rate will be reflected in greater healthcare spending. Relative to other developed markets both globally and regionally, Egypt is an underpenetrated market with US$159 of healthcare expenditure per capita in 2013, compared to US$1,551 and US$1,052 in the United Arab Emirates and Saudi Arabia, respectively, according to the World Bank. Further, there was only one hospital bed per every 2,000 people in Egypt, compared to 16.4 in Germany, 5.8 in the United States and 4.2 in Saudi Arabia. The Egyptian healthcare market grew by a CAGR of 9.0 per cent. between 2011 and 2014, and the number of private hospital beds in Egypt has grown over the past several years while the number of public hospital beds has remained relatively flat. LOGIC Market

67 Research forecasts that the Egyptian healthcare market will grow by a CAGR of 17.6 per cent. between 2015 and 2019. Driven by the confluence of the following trends, the Group expects Egyptians to spend an increasing amount on healthcare: • A population that is growing and rapidly ageing: according to the IMF’s World Economic Outlook Database and Business Monitor International, the population of Egypt is projected to increase by a CAGR of 1.9 per cent. from 2015 to 2020, while the percentage of the population aged 65 or over is projected to grow from 5.2 per cent. to 5.5 per cent. in the same period. • Increased spending on lifestyle-related medical conditions: As Egyptian GDP per capita grows, the Group expects the expenditure on lifestyle diseases to increase. In particular, Egypt ranks 3rd in the world for prevalence of diabetes in the 20–79 age group, amounting to 16.6 per cent. of that age group in Egypt in 2013. Further, 62.0 per cent. of the population was overweight in 2013 and 28.9 per cent. were considered obese, according to the LOGIC Report. Diabetes and obesity are drivers of numerous medical conditions, including those that are the most expensive to treat and which require the greatest degree of medical specialisation and sophistication, such as diseases of the cardiovascular system, the kidneys and the eyes. Egypt also had one of the highest number of cases of hepatitis C globally in 2012, according to the LOGIC Report. • Increased government spending on healthcare: The new Egyptian constitution passed in January 2014 stipulates that the government must spend a minimum of three per cent. of GDP on healthcare. The Group believes this will further boost its revenue as patients under the public health plans are expected to be able to attend private hospitals so long as the hospitals charge those patients in line with government prices.

Reputable brands, a strong track record and a leading market position with high barriers to entry The Group’s hospitals date back as far as 1976 when Dr. Hassan Zahed, a prominent Egyptian physician, opened Cairo Specialized Hospital, Egypt’s first private sector hospital. Since then, Cairo Specialized Hospital, and subsequently the Group’s three other hospitals, have enjoyed strong track records of profitable growth, even through adverse economic conditions during the sub-prime crisis and the Revolution. The Group’s hospitals, on an aggregated basis, performed 34,900 surgeries and serviced 47,256 inpatients, 606,206 outpatient clinic visits and 278,404 emergency room patients in 2015. The consultant doctors practising at the Group’s hospitals are highly qualified, with a majority of them also holding positions as university professors, and Cleopatra boasts one of the best staffed emergency rooms in Egypt. The Group is now the largest institutional hospital group in Egypt measured by the number of hospitals and the number of beds, with 624 beds and four hospitals in Greater Cairo on an aggregated basis as at 31 December 2015, compared to an aggregate of 345 beds at the As Salam International / Dar Al Fouad Hospital group, which is the Group’s next largest competitor. The Group benefits from high barriers to entry in the Egyptian private healthcare market. Large investments on medical infrastructure, equipment and real estate are required, and wide geographic coverage is needed to penetrate a highly fragmented market. The Group’s size make it well-positioned to take advantage of these high barriers to entry. Further, each of the Group’s hospitals has operated in Cairo for decades and has established strong relationships and brand equity in the private healthcare market, including an ability to attract the most renowned consultant doctors.

Seasoned and experienced management team with robust track record in the healthcare industry The Group has a seasoned and experienced management team. The CEO has worked at Johnson & Johnson as a director overseeing government affairs and policy for MENA and Pakistan and has also worked at GlaxoSmithKline, where he led the Middle East region integration plan as part of the merger of SmithKline & Beecham and Glaxo Wellcome. The managing directors of each of the Group’s four hospitals have an average of over 33 years of experience in the healthcare sector. They each hold PhDs or MDs and have served in prestigious positions at universities and hospitals in Cairo. The Group is led by a seasoned board of directors which includes medical and financial experts including a former Minister of Health of Egypt, the founder of Cleopatra and the former head of Ernst & Young in Egypt.

68 Significant scale and integrated platform The Group has grown into a major player in the Egyptian private medical hospital market and is now the largest institutional hospital group in Egypt measured by the number of hospitals and the number of beds, with 624 beds and four hospitals in Greater Cairo on an aggregated basis as at 31 December 2015, compared to an aggregate of 345 beds at the As Salam International / Dar Al Fouad Hospital group, which is the Group’s next largest competitor. The Group has started and will continue to enhance operational efficiencies. These initiatives include centralising the quality, IT, human resources, finance and supply chain functions, standardising operating procedures across the Group’s hospitals and implementing new ERP and hospital information systems. Centralising the supply chain function will ensure standardised procurement processes and enable savings across the Group from increased bargaining power with suppliers. The Group also expects to have increased bargaining power with private insurance providers and other contract customers to negotiate better pricing. The Group’s hospital brands have a strong reputation for quality and patient care, with two of its hospitals having achieved ISO accreditations and each of its four hospitals working toward JCI accreditation . The Group intends to further enhance its reputation and the quality of its services as it integrates its hospitals. The Group’s size and brand reputation have positioned it to capitalise on the increased demand and expenditure on healthcare services in Egypt and have placed it at a competitive advantage to its competitors, allowing it to forge mutually beneficial relationships with strategic partners such as Philips and GE Healthcare to enhance the Group’s technical capabilities.

Solid financial performance and potential for enhanced profitability Revenue of each of the Group’s four hospitals has grown steadily over the past three years, with CAGRs of 16.8 per cent., 14.4 per cent., 18.2 per cent. and 18.6 per cent. between 2013 and 2015. Gross profit at Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk grew at a CAGR of 28.1 per cent., 8.4 per cent., 49.5 per cent. and 31.2 per cent., respectively, between 2013 and 2015. Adjusted EBITDA has also grown steadily, with CAGRs of 26.3 per cent., 5.3 per cent., 42.1 per cent. and 26.5 per cent. between 2013 and 2015 at the Group’s four hospitals. In 2015, Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk had adjusted EBITDA margins of 30.0 per cent., 22.4 per cent., 22.3 per cent. and 16.3 per cent., respectively. The Group aims to enhance profitability by improving efficiencies of underperforming recently-acquired assets. For instance, Cairo Specialized Hospital was acquired by an Abraaj entity in July 2014. Between 2014 and 2015, the number of outpatient clinic visits at Cairo Specialized Hospital increased by 99.8 per cent., the number of emergency room procedures increased by 34.3 per cent., the number of inpatients increased by 0.8 per cent. and revenue increased by 21.2 per cent. The Group believes there is scope to continue significantly enhancing profitability at each of its four hospitals.

The Group’s Strategy Improve quality of care The Group’s mission is to deliver the finest quality of healthcare in a safe, reliable and caring environment, through highly trained healthcare providers, state of the art facilities and the latest medical technology, putting patients and their families first. In order to achieve this, the Group consistently invests in its infrastructure and the most advanced technology through its short-term capital expenditure plan. Of its cash available for capital expenditure and operational activities, the Group is targeting to spend EGP 124 million in 2016 on short-term capital expenditure. The Group expects that of this EGP 124 million, EGP 64 million will be spent on medical capital expenditure such as new electric beds, ventilators, ambulances, interventional x-ray and other medical equipment; EGP 33 million will be spent on civil capital expenditure such as building infrastructure, electromechanical infrastructure and vehicles; and EGP 20 million will be spent on information technology systems, including the implementation of a new hospital information system and ERP system. The remaining EGP 7 million is expected to be spent at Al Shorouk but has not been allocated to specific projects. Of the cash intended to be spent on medical capital expenditure, about half is expected to be spent at Cairo Specialized Hospital; of the cash intended to be spent on civil capital expenditure, the majority is expected to be spent at Cairo Specialized Hospital and Nile Badrawi; and of the cash intended to be spent on IT capital expenditure, the majority is expected to be spent at Cleopatra and Cairo Specialized Hospital. Not only will these initiatives improve the quality of care, the Group believes they will help attract the most renown consultant doctors to practise at the

69 Group’s hospitals. The Group believes that continued investment into the quality of care provided at its hospitals is key to achieving its aim of becoming the leading integrated healthcare provider in Egypt.

Enhance utilisation of and optimise existing capacity The Group aims to grow its number of patients by enhancing the utilisation of and optimising its existing facilities. The Group believes that with better management, its recently acquired hospitals have the potential to be as operationally efficient as Cleopatra. Cairo Specialized Hospital is already benefiting from this: from 2014 to 2015 its number of outpatient clinic visits grew 99.8 per cent., its number of emergency room patients grew 34.3 per cent. and its revenue grew 21.2 per cent. The Group is implementing a plan to reallocate space in its hospitals to increase space for services in higher demand, such as the intensive care units (ICUs). There is currently a shortage of ICU beds in Egypt, and such beds tend to be priced between 50 per cent. and 100 per cent. higher than other hospital beds. The Group intends to add new ICU beds in Cleopatra Hospital and Nile Badrawi Hospital. The Group’s outpatient clinics will also benefit from optimised facilities. For instance, the Group is aiming to implement strategies to enhance the utilisation of space in the outpatient clinics to accommodate more revenue- generating space, as well as create more appointment times for the consultant doctors in highest demand. The Group is also targeting strategies to decrease waiting times for patients, including systems to enhance communication with patients ahead of their appointments and developing better waiting rooms. The Group also plans to increase the operating hours of its outpatient clinics at Nile Badrawi and Al Shorouk from six hours per day to 12 hours per day, six days per week, to accommodate more patients. At its inpatient departments, the Group is aiming to shorten average length of stay through enhanced clinical and operational procedures. The Group also plans to undertake various civil works and refurbishments, which it expects to enhance the quality of services and attract better consultant doctors, thereby enabling it to increase prices. The Group plans to expand and enhance its ancillary service offerings, including radiology, laboratory testing and pharmacy services. The Group’s hospitals each offer these services, but prior to the Company acquiring them the hospitals did not effectively leverage these offerings. For instance, patients were being referred by doctors in the hospitals to pharmacies outside of the hospitals. On average in 2015, pharmacy services accounted for around 30—35 per cent. of a patient’s bill. By increasing the number of patients who use the in-house ancillary services, the Group’s hospitals will be able to increase revenue per patient. The Group, with its expanded scale and service offerings, recently renegotiated more favourable arrangements with major private insurance companies operating in Egypt to enable patients being treated at the Group’s hospitals to use the pharmacies located in those hospitals. Cairo Specialized Hospital is in the process of upgrading and renovating its radiology department, in partnership with Philips, so that the Group’s other hospitals will be able to leverage their relationship with Cairo Specialized Hospital by referring to it patients needing advanced radiology services. Increased usage of the Group’s ancillary services is expected to boost revenue margins, as laboratory and radiology services tend to have strong margins.

Build additional capacity The Group plans to increase capacity by expanding its existing facilities. The Group has acquired two facilities, one adjacent to Al Shorouk and one adjacent to Cleopatra. It plans to develop those facilities into expansions of the existing hospitals. The Al Shorouk expansion will increase capacity by approximately 40 beds, including beds dedicated to ICU, which tend to achieve higher revenue than other hospital beds. The Cleopatra expansion will alleviate the current high occupancy rate at that hospital’s outpatient clinics and ICU department, among others. The expansion is expected to increase capacity by approximately 100 beds. The Al Shorouk expansion and Cleopatra expansion are expected to cost approximately EGP 150 million and EGP 250 million, respectively, and the Group intends to finance these projects with the net proceeds of the Closed Subscription.

Develop centres of excellence in separate specialised medical fields at each of the Group’s hospitals to drive higher margins In order to leverage the expertise of certain of the Group’s physician consultants, each of the hospitals will become a centre of excellence in separate specialised medical fields while each also maintaining their general, multi-speciality business model. The Group intends the centres of excellence to have state-of-the-art equipment for the relevant specialty practice (for example, oncology and renal transplantation at Nile Badrawi) and will seek to staff the most renowned doctors in the respective field.

70 For more detail see ‘‘Centres of Excellence’’ in this Part 6 (Business Description) of this Offering Memorandum. This is designed to allow patients to attend the Group’s facilities at locations convenient to them for routine examinations, simple procedures and operations and general services while also being able to offer highly specialised services at other hospitals in the Group’s platform. The Group intends to seek affiliations with international institutions in order to attract globally recognised experts in the respective fields. This business model will result in a mix of offered services geared toward more specialised services, which command premium pricing and higher margins. Establishing centres of excellence will also decrease required capital expenditure because the Group will not need to invest in the same specialty equipment in each of its hospitals.

Expand customer reach through a feeder network of polyclinics Proximity to healthcare facilities is a main concern for Egyptian patients. The Group is aiming to implement a hub-and-spoke polyclinic business model in order to penetrate smaller neighbourhoods. Under this plan, the Group would open Cleopatra-branded polyclinics, which would act as extensions of the Group’s hospital platform, in key secondary urban developments where population density doesn’t economically justify opening a full hospital. The polyclinics, which would require relatively low capital expenditure to setup and operate, would have the capabilities to perform minor procedures, routine examinations and diagnostic testing. The polyclinics could leverage the Group’s size when referrals to a larger hospital are required for more complex procedures. Each polyclinic is expected to cost approximately EGP 3.5 million to open, which would be funded out of cash generated from operating activities. The Group expects to begin implementation of this strategy by the end of 2016, but does not expect any capital expenditure outlays to occur until 2017. The Group is targeting to open a total of 10 polyclinics over the next five years. After successful implementation of this plan in the Greater Cairo area, the Group will look to establish polyclinics or smaller hospitals in other governorates in Egypt. Because Cairo is the only major medical centre in Egypt, patients in other governorates commonly travel to Cairo for medical care. By expanding into these other governorates, the Group would seek to capture these patients’ business when they travel to Cairo for highly specialised procedures. The feeder network would operate under the Cleopatra brand in order to leverage the Group’s brand identity.

Broaden Group reach and expand scale through opportunistic acquisitions The Group is also targeting expansion through opportunistic acquisition of existing hospital facilities in Greater Cairo. The Group has a track record of growth through acquisition and has been able to reduce costs through economies of scale and operational synergies. The Group intends to leverage its scalable business model, strong brand reputation and reputation for quality medical services to continue this expansion where suitable opportunities arise. Proximity to healthcare facilities is a main concern for Egyptian patients and the Group will seek to expand into areas of Greater Cairo in which it does not yet have a presence. In the longer term, the Group will also explore expansion into governorates other than Cairo.

Business Operations Service Offerings Medical services The medical services offered by the Group at its four hospitals include, but are not limited to: • Emergency room and ambulance services. Each of the Group’s four hospitals provides emergency rooms staffed round-the-clock for prompt treatment of acute illnesses, traumas and other medical emergencies, as well as private ambulance services. Some of the Group’s ambulances are equipped to operate as mobile ICUs. • General surgery. The Group offers a range of private general surgery, both open and laparoscopic, aimed at the diagnosis and treatment of injury, deformity and disease by the use of instruments. The MoHP has licensed Nile Badrawi and Al Shorouk to perform renal, or kidney, transplantation, a highly complicated procedure. The Group plans to make Nile Badrawi a centre of excellence for this sought-after procedure and already has amassed a substantial waiting list. The percentage of surgical inpatients from total inpatients in 2015 was 68.5 per cent., 46.2 per cent., 48.9 per cent. and 58.1 per cent. at Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk, respectively.

71 • Cardiology and cardiovascular surgery. Cardiology deals with disorders of the heart, including congenital heart defects, coronary artery disease, heart failure and valvular heart disease. Cardiovascular surgery is surgery on the heart or large blood vessels to the heart performed by cardiac surgeons to treat heart disease, correct congenital heart defects or treat valvular heart disease. The Group offers a catheterisation lab, as well as a range of tests and scans, procedures and heart operations performed by its consultant cardiologists and cardiac surgeons including electrocardiograms, cardiac MRI scans, coronary angiography, pacemaker implementation, valve replacement and coronary artery bypass graft. • Gynaecology and obstetrics. Gynaecology is the medical specialty dealing with the care of the female reproductive system. The Group offers a comprehensive, specialist service, including normal and surgical procedures, for all gynaecological conditions, pelvic pain, period problems, prolapse, incontinence, fertility and polycystic ovarian syndrome, gynaecological malignancy and endometriosis. The gynaecology and obstetrics department is complemented by its paediatric and intensive care units to provide neonatal ICU services. The Group’s obstetric and gynaecological treatments include: colposcopy, endometrial ablation, female sterilisation, hysterectomy, nuchal scanning, ovarian cyst removal, stress urinary incontinence, ultrasound scan, uterine fibroid embolization and vaginal repair operation. The Group’s hospitals also offer other women’s health procedures, such as breast lump investigation and removal. • Oncology. Oncology is the branch of medicine that deals with cancer. The Group has dedicated teams with specially trained physicians, clinical pharmacists, chemotherapy technicians and nurses to support the oncologists and haematologists who practise at its hospitals. The Group’s oncology offering includes the diagnosis as well as treatment of cancer patients. Diagnostic services include physical examinations, blood tests, scans and biopsies. As part of treatment, patients may undergo surgery and/or receive chemotherapy prepared by professional, clinical pharmacists, and at Nile Badrawi, patients may receive radiotherapy. • Orthopaedics and arthroplasty. Orthopaedics and arthroplasty are branches of surgery concerned with the musculoskeletal system. Orthopaedic surgeons use both nonsurgical and surgical means, including laparoscopic procedures, to treat musculoskeletal trauma, sports injuries, degenerative diseases, infections, tumours and congenital disorders. The Group’s orthopaedic procedures include: back pain investigations, hip replacement surgery, back surgery, joint pain treatment, carpel tunnel syndrome, knee arthroscopy, epidural injections, knee ligament surgery, facet joint injections, knee replacement surgery, foot bunion removal, shoulder arthroscopy, ganglion removal, shoulder replacement surgery and extracorporeal shock wave therapy. • Outpatient clinics. The Group’s hospitals offer a number of services that do not require patients to be admitted to its facilities overnight. • Dental. The Group offers dental services aimed at preventing, diagnosing and treating diseases, disorders and conditions of the mouth and teeth. • Physiotherapy. Physiotherapy is the branch of medicine that deals with the rehabilitation of movement and function after an injury. Cleopatra’s physiotherapy capabilities include electrotherapy, electrodiagnosis, hydrotherapy and access to gymnasiums. • Primary care. Primary care is a general term for the diagnosis and treatment of acute and chronic illnesses. Providing primary care services at the Group’s hospitals enables the Group to capture new patients and increase referrals to other services, doctors or hospitals in the Group’s platforms.

Ancillary services The Group offers the following ancillary services at its four hospitals. • Blood bank services. There are two distinct types of blood banks that can be operated by private hospitals in Egypt—storage and collection. Storage blood banks can operate with fewer licenses and are limited to storage, analysis of samples and preparation of samples for transfusions. Collection blood banks are licensed for storage services and to collect, distribute and sell blood samples. Cleopatra, Cairo Specialized Hospital and Al Shorouk each operate a collection blood bank, with Cairo Specialized Hospital’s being one of the largest in the country, and Nile Badrawi operates a storage blood bank.

72 • Laboratory services. The Group offers laboratory testing of blood and other biological samples in order to obtain information about the health of the patient. • Pharmacy. The Group’s hospitals each have inpatient pharmacy services for patients admitted to the hospitals, outpatient pharmacy services that act as retail pharmacies for outpatients and chemotherapy services that complement the hospitals’ oncology departments. • Radiology. Radiology is a medical specialty that uses imaging to diagnose and treat diseases seen within the body. Development of the Group’s ancillary services is a key part of the Group’s strategy to enhance revenue and margins. Pharmacy services, for example, on average, accounted for around 30–35 per cent. of a patient’s bill in 2015. By developing and marketing the ancillary services to patients who are already using the Group’s hospitals, the Group will be able to increase its revenue per patient. For instance, the Group recently negotiated favourable arrangements with certain insurance companies to enable patients being treated at the Group’s hospitals to use the pharmacies located in those hospitals. Further, Cairo Specialized Hospital is in the process of upgrading and renovating its radiology department so that the Group’s other hospitals will be able to leverage their relationship with Cairo Specialized Hospital by referring to it patients needing advanced radiology services. The following chart sets forth the wide range of specialties and services offered at the Group’s hospitals.

Cairo Cleopatra Medical Center Nile Badrawi Al Shorouk Inpatients ...... Surgeries ...... Catheters ...... Outpatient clinics ...... Laboratory ...... Radiology ...... Heart tests ...... Oncology ...... Emergency room ...... Endoscopy ...... Dental ...... Physiotherapy ...... (1) Pharmacy ...... Dialysis ...... (3) (3) (1) (1) Renal transplantation ...... (2)

(1) The Group is in the process of obtaining the necessary license. (2) The Group is in the process of renewing the necessary license. (3) Cleopatra and Cairo Specialized Hospital do not have a kidney dialysis unit and are providing dialysis services on an emergency need basis for inpatients.

Centres of Excellence Each of the Group’s hospitals provides a full array of general healthcare services as discussed above in ‘‘Service Offerings’’. In order to leverage the expertise of certain of the Group’s physician consultants, each of the hospitals will become a centre of excellence in separate specialised medical fields, such as renal transplantation and oncological radiotherapy. The Group intends the centres of excellence to have state-of-the-art equipment for the relevant specialty practice and will seek to staff the most renowned doctors in the respective field. This is designed to allow patients to attend the Group’s facilities at locations convenient to them for routine examinations, simple procedures and operations and general services while also being able to offer highly specialised services at other hospitals in the Group’s platform. The Group intends to seek affiliations with international institutions in order to attract globally recognised experts in the respective fields. The Group is aiming to establish the following centres of excellence: • Neuroscience and urology at Al Shorouk • Cardiology and radiology at Cairo Specialized Hospital • Orthopaedic and micro-invasive surgeries at Cleopatra • Oncology and renal transplantation at Nile Badrawi

73 Consultant Doctors In the Egyptian private healthcare market, it is uncommon for senior specialised medical doctors and surgeons (referred to herein as consultant doctors) to be employed directly by hospitals. Rather, hospitals enter into non-exclusive arrangements with consultant doctors, often on an unwritten basis, whereby a consultant doctor will utilise a hospital’s facilities and the hospital will share in the consultant doctor’s fees generated from the patient. Consultant doctors are approved to work in each of the Group’s hospitals by medical committees within each hospital, generally comprising the hospital’s medical director and key consultants within the relevant speciality. The arrangements are individually agreed with each consultant doctor. A patient’s bill is divided into hospital fees, of which the hospital keeps 100 per cent, and consultant fees, which are generally shared between the consultant doctor and the hospital. The fee split varies based on the type of service provided by the doctor and the doctor’s seniority and reputation. On average, the hospital will receive approximately 30-40 per cent. and the consultant doctor will receive approximately 60-70 per cent. of the consultant fees generated from contract patients. If a consultant doctor specifically refers one of his or her patients to the hospital to receive treatment by himself or herself, and that patient pays out-of-pocket, the consultant will generally keep 100 per cent. of the consultant fees. The Group’s hospital platform is able to attract well-reputed consultant doctors because of the Group’s hospitals’ track record, brand reputation and patient base. The hospitals employ certain doctors directly, including senior management, general managers and certain heads of departments, as well as junior doctors (referred to as resident doctors) who provide medical support to the consultant doctors and staff the hospitals 24 hours a day.

Revenue generation The Group derives its operating revenue from two principal types of patients: contract and out-of-pocket. Contract patients are those patients whose services are partially or fully paid for by private medical insurance providers or through direct corporate agreements with the patients’ employers. Out-of-pocket patients are those patients who pay for their own services entirely. The following charts set forth the breakdown of the Group’s revenue by patient type in 2015. Cleopatra revenue Cairo Specialized Hospital by patient type revenue by patient type (2015) (2015) Out-of- Out-of- pocket pocket 34% 39% Contract 61% Contract 66%

Nile Badrawi revenue Al Shorouk revenue by patient type by patient type (2015) (2015)(1) Out-of- pocket Contract 33% 39% Out-of- Contract pocket 67% 6MAY20160356155261%

(1) The percentage of Al Shorouk’s operating revenue derived from out-of-pocket patients has historically been higher because its business model was largely built on patients referred to specific consultant doctors, which patients tend to pay out-of-pocket. Also, Al Shorouk is certified to provide check-ups of travellers to Gulf countries as part of the Gulf Approved Medical Centres Association programme, and these patients are classified as out-of-pocket.

74 Contract patients Contract patients, which in 2015 represented 61.1 per cent., 65.6 per cent., 67.4 per cent. and 39.1 per cent. of Cleopatra’s, Cairo Specialized Hospital’s, Nile Badrawi’s and Al Shorouk’s revenue, respectively, include patients whose services are paid for by private medical insurance providers or through arrangements with patients’ employers. Insurance providers and companies contract directly with the Group for set services at set prices. Contracts generally have a duration of one year and are non-exclusive. Each hospital maintains a price list that forms the basis of negotiations for its contracts with insurance providers and certain other contract customers. Syndicates generally have their own price lists. The Group’s contract customers will receive discounts, which range from five per cent. to 20 per cent., based on factors such as the volume of services expected under the contract, the complexity of the services covered by the contract, the expected turnover and the quality classification of the relevant hospital. The percentage of the Group’s revenue derived from contract customers has grown steadily over the past three years at 54.5 per cent., 37.2 per cent., 41.9 per cent. and 70.0 per cent. between 2013 and 2015 at Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk, respectively. As at 31 December 2015, the Group had 499 contracts with insurance providers and other companies. This number does not adjust for insurance providers or other companies that have contracts with multiple Group hospitals, which the Group is in the process of consolidating at a Group-wide level. Insurance companies in Egypt classify healthcare providers into several categories based on pricing and quality of service. As an example, MetLife uses the following classifications: • Gold card. This category includes the premium quality hospitals that are relatively more expensive. Services at these hospitals are available only to the highest insurance package holders. Gold card holders are welcome to use any hospitals in the system. Gold card hospitals generally achieve between a 15 and 20 per cent. pricing premium over silver card hospitals. • Silver card. This category includes 2nd tier hospitals for midsized insurance package holders. Silver card holders can use any hospitals in the system except for the gold card tier. • Green card. This category includes 3rd tier hospitals for patients with a lower profile grade. Green card holders can use green or orange card hospitals. • Orange card. This category includes the cheapest insurance packages and lowest quality of healthcare services. These hospitals are available to all patients, regardless of their profile grades. Orange card holders may only use hospitals in this tier. Cleopatra is a gold card hospital and Cairo Specialized Hospital, Nile Badrawi and Al Shorouk are silver card hospitals.

75 The Group’s top contract customers in 2015 are listed below, by hospital, along with the corresponding percentage of contract revenue from each contract customer.

% of contract revenue Cleopatra MetLife ...... 23% Glob Med ...... 7% Prime Health ...... 7% Med Right ...... 6% Next Care ...... 5% Cairo Specialized Hospital MetLife ...... 8% D.M.S...... 6% Presidential Office ...... 6% MedCare ...... 6% Life for Health Services ...... 6% Nile Badrawi(1) MedCare ...... 7% Ahram Institution ...... 6% Radio and Television Union ...... 6% Eastern Company ...... 6% Telecom Egypt ...... 3% Al Shorouk(1) Embassy of Libya ...... 36% Egyptian Ministry of Justice ...... 8% MetLife ...... 8% Bupa ...... 5% Ahly Projects and Services ...... 4%

(1) Figures include data for periods during which the Company did not own the respective hospitals. The Group has established a business development function to strengthen relationships with contract customers and help ensure that the Group is maximising potential profit from contract patients by improving the billing and collection processes. For more detail on these processes, see ‘‘Billing and Payment’’ in this Part 6 (Business Description).

Out-of-pocket patients Out-of-pocket patients, which in 2015 represented 38.9 per cent., 34.4 per cent., 32.6 per cent. and 60.9 per cent. of Cleopatra’s, Cairo Specialized Hospital’s, Nile Badrawi’s and Al Shorouk’s revenue, respectively, include patients who pay for their services entirely out-of-pocket. These patients typically attend one of the Group’s hospitals because of that hospital’s reputable brand, because of the quality of the consultant doctors practising in it or after being referred to it by a physician. Historically, patients would be referred to the consultant doctors practising at the Group’s hospitals through word of mouth in the medical community. The Group plans to implement a business development strategy to increase awareness of its hospitals with referring physicians, as well as directly with patients. Out-of-pocket patients are charged according to the price lists maintained by each of the Group’s hospitals. Those price lists are generally reviewed annually by a Group-wide pricing committee. Al Shorouk has a higher percentage of out-of-pocket patients as compared to the rest of the hospitals in the Group because some of its largest clients, including GAMCA, are considered cash accounts.

Ambulances Each of the Group’s hospitals owns and operates a number of ambulances. The Group’s ambulance service is private and is used for emergency pickups, for transfers of patients between facilities or to specialist

76 centres or to drive certain patients home following discharge from the hospital. The following table sets forth the number of ambulances each of the Group’s hospitals owns and operates.

Number of ambulances Cleopatra ...... 2 Cairo Specialized Hospital ...... 2 Nile Badrawi ...... 2 Al Shorouk ...... 3

The Group’s Hospital Facilities Cleopatra Cleopatra Hospital Company operates the Cleopatra hospital in Heliopolis, Cairo. The hospital was brought under common control with Cairo Specialized Hospital in July 2014. As at 31 December 2015, Cleopatra had 7,380 square metres of gross internal area, 165 beds, six operating rooms, 14 outpatient clinics and one catheterisation lab with four beds. The hospital, which has developed over 40 specialisations since it was established in 1979, is one of Egypt’s leading private general hospitals. As at 31 December 2015, it employed 335 nurses and 260 resident doctors. Many of the consultant doctors practising at Cleopatra are university professors and renowned in their field of expertise. Cleopatra also has one of Egypt’s best staffed emergency rooms, with specialised medical doctors in addition to general practitioners. In 2006, the Company acquired a facility adjacent to Cleopatra that the Group intends to develop into an extension of the hospital. Since Cleopatra currently has a high occupancy rate at its outpatient clinics and ICU department, among others, the new facility is intended to serve as overflow for those services, as well as expanded radiology services. The extension is intended to house approximately 100 beds and is expected to be operational within 12–18 months after obtaining the necessary licenses and permits. Since management began the integration of the Group, the following key integration milestones have been accomplished: • Introduction of a business development department • Replacement of equipment in the endoscopy department • Quality team tasked with monitoring KPIs • Inclusion of Cleopatra’s pharmacy prescriptions in eight of the top ten insurance agreements • Clinical pharmacists hired to oversee medicine administration for inpatients • Utilisation of outpatient clinics’ schedules improved • Procurement department tasked with overseeing all purchasing activities • Salary review undertaken and adjustment to employee packages • Development of a business and capital expenditure plan • Conversion of unutilised beds into ICU beds, which tend to command higher fees • Introduction of disposable gowns and linens, which has improved cost savings and hygiene

Cairo Specialized Hospital Cairo Specialized Hospital Company operates the Cairo Specialized Hospital, located in Heliopolis, Cairo. The hospital was brought under common control with Cleopatra in July 2014 and became a subsidiary of Cleopatra Hospital Company in September 2015. As at 31 December 2015, Cairo Specialized Hospital had 14,600 square metres of gross internal area, 200 beds, nine operating rooms, 17 outpatient clinics and one catheterisation lab with four beds. It employed 212 nurses and 183 resident doctors as at 31 December 2015. The hospital also has around 206 consultant doctors who practise at its facilities, the majority of whom are university professors. Cairo Specialized Hospital was one of the first private sector hospital built in Egypt.

77 Since management began the integration of the Group, the following key integration milestones have been accomplished: • New managing director, operations director, sales and marketing manager, emergency room manager, head nurse and head of quality hired • Renovation of the emergency room, endoscopy, ICU and dental departments • Dental and outpatient clinics brought under direct management of the hospital • Chief pharmacist and team hired to manage inpatient medication and the outpatient pharmacy • Blood bank’s monthly rental fee doubled • Kitchen renovated and Compass Group hired to provide catering services • Introduction of disposable gowns and linens, which has improved cost savings and hygiene

Nile Badrawi Nile Badrawi Hospital Company operates the Nile Badrawi hospital, located in Maadi, Cairo. The hospital was acquired by the Company in September 2015. As at 31 December 2015, Nile Badrawi had 10,980 square metres of gross internal area, 139 beds, five operating rooms, 17 outpatient clinic and one catheterisation lab with one bed. It employed 138 nurses and 94 resident doctors as at 31 December 2015. The hospital also has around 270 consultant doctors who practise at its facilities. The hospital specialises in complex treatments such as in vitro fertilisation, neonatal care, organ transplant and open heart surgery, and it was one of the first hospitals in Egypt to offer radiotherapy. Nile Badrawi’s oncology department also features a state-of-the-art linear accelerator. Since the Company’s acquisition of Nile Badrawi, the following key integration milestones have been accomplished: • Appointment of a new managing director, medical director and head of radiology • Blood bank license obtained • Development of a strategic plan for hospital renovation, including electromechanical and civil works, as well as upgrades to the outpatient clinics • Improvement of utilisation of catheterisation labs by hiring new consultant doctors and international experts • Number of renal transplantation patients increased • Introduction of disposable gowns and linens, which has improved cost savings and hygiene

Al Shorouk Al Shorouk Hospital Company operates the Al Shorouk hospital, located in Mohandesin, Giza near Cairo. The hospital was acquired by the Company in January 2016 for EGP 280 million, subject to closing account adjustments. As at 31 December 2015, Al Shorouk had 5,270 square metres of gross internal area, 120 beds, six operating rooms and 17 outpatient clinics. It employed 304 nurses and 96 resident doctors as at 31 December 2015. The hospital also has around 221 consultant doctors who practise at its facilities, the majority of whom are university professors. The hospital was established with the purpose of constructing a therapeutic hospital that is fully equipped for patient care. In 2010, Al Shorouk Hospital Company acquired a facility adjacent to its existing hospital that the Group intends to develop into an extension of the hospital. The extension is intended to, in addition to general services, focus on ICU services, of which there is a current shortage in Cairo and which tend to achieve higher revenue than other hospital beds. The extension is intended to house approximately 40 beds and is expected to be operational in 2017, subject to obtaining all necessary licenses and approvals. Since the Company’s acquisition of Al Shorouk, the following key integration milestones have been accomplished: • New management hired for the laboratory and radiology departments • Appointment of a financial controller, a human resources business partner and a head of business development • Alignment of the 2016 pharmacy purchases with the Group’s pharmaceutical tender • Application of a standard organisational chart and introduced a business model to align with the rest of the Group

78 Marketing The Group does not currently engage in traditional advertising such as billboards, TV or radio, though it will seek to do so in the future with special campaigns for each new service. To market its hospital brands, the Group plans to sponsor healthcare awareness campaigns, which it will do through its planned call centre and other traditional advertising such as radio, provided it obtains the necessary approvals for medical advertising. Also, some of the Group’s resident doctors have participated, and will continue to participate, in medical convoys with the MoHP. These medical convoys travel to areas of Egypt that lack adequate healthcare services and provide low-cost or free healthcare services to the local population. The costs of these convoys are generally covered by the MoHP and/or private hospitals as part of corporate social responsibility programmes. The Group intends to, in the short term, keep the existing branding of each hospital as it is, rather than merge them under a single brand. Once all of the Group’s hospitals have been operationally integrated and demonstrate a Group-wide standard of care, the Group plans to develop a single umbrella brand. In the meantime, the Group plans to begin operating its ambulances under a single brand. This strategy is meant to ensure that, no matter where a patient is in Cairo, they can call a standard Group ambulance phone number and know that an ambulance is nearby. The ambulances will take the patient to the nearest Group hospital for treatment.

Procurement and Warehousing Since 2015, the Group has been working to integrate and centralise its procurement and warehousing functions. The Group has established specific guidelines for purchasing, tendering and evaluation that it has applied across Cleopatra, Cairo Specialized Hospital and Nile Badrawi. It aims to apply these guidelines to Al Shorouk, which was only recently acquired. Since the beginning of 2016, the Group is making purchases of both medical and non-medical supplies on a Group-wide basis and thereby taking advantage of economies of scale and increased bargaining power with suppliers. The Group is also in the advanced stages of centralising its warehousing. Currently, instead of a centralised warehouse, each of the Group’s hospitals has its own storage rooms within its facilities. The Group plans to outsource its warehousing to a third-party in order to free up space in the hospitals that can be used for revenue generating services.

Intellectual Property The Group operates its hospitals and medical centres under the trade names Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk, along with logos incorporating those names. The Company registered the trademark for ‘‘Cleopatra Hospital’’ in Egypt on 29 July 2010, and the trademark registration will expire on 20 June 2017. The Group is in the process of initiating the registration of the trademark ‘‘Cleopatra Hospital Group’’ in Egypt.

Information Technology The Group is reliant on IT systems for several key aspects of its administrative and patient management operations. The patient management system tracks information relating to patients throughout their journey within the Group’s facilities including registrations, patient records, admissions, surgeries, transfers and discharge, while administrative modules manage different aspects of HR, finance and procurement functions. The Group’s hospitals currently use different systems that are not interconnected. The Group is in the process of upgrading its IT systems into a unified platform comprising a new Hospital Information System (HIS) and an Enterprise Resource Planning System. The Group has selected and acquired an SAP system for the back-office functions (comprising procurement, supply chain, finance and reporting) and intends to complete implementation by the end of 2016. The Group has also implemented a new HR management information system that manages and controls the Group’s HR operations centrally. The Group is in the final phases of selection of an HIS which will manage the Group’s patient management operations, electronic medical records and clinical decision support systems. Implementation of the new HIS is expected to commence in the third quarter of 2016 and complete within 12 months thereafter. The new HIS system will ensure full electronic medical records and clinical integration of the Group.

79 17 IT professionals are currently employed by the Group, and the Group intends to implement a new departmental structure as it moves to full centralisation of the IT function.

Quality and Accreditation The Group has established a Group-wide quality department tasked with developing a unified standard of quality across the Group’s platform and obtaining key quality accreditations, including from JCI. The head of the quality department is Dr. Mohamed Khaled Hussein Elnoury, formerly the chief operating office of the 57357 children cancer hospital. The Group is planning to employ eight members of staff in each of its hospitals dedicated to implementing its quality strategy. These employees will be overseen by the Group-wide quality department, which in turn reports to the quality committee of the Board of Directors. Cleopatra has historically had a well-structured quality department that focuses on ISO standards and has obtained ISO 9001, ISO 22000 and ISO 10002 certifications for quality, food safety and customer satisfaction, respectively. Al Shorouk has also obtained the ISO 9001 quality certification. The Group’s target is to have all of its hospitals accredited by JCI by the end of 2017. The JCI team conducted a full accreditation readiness assessment for Cleopatra and Cairo Specialized Hospital during the first half of 2015. The assessment identified improvement areas, in response to which the Group has implemented a number of quality-related initiatives, primarily focused on patient safety; assessment of patients; anaesthesia and surgical care; medication management and use; and prevention and infection control. The average JCI accreditation process takes 18–24 months from the first readiness assessment. The Group is also targeting the Occupational Health and Safety Assessment Series 18001 certification for its health and safety management system, the Hazard Analysis and Critical Control Points food management system certification and the SGS food management system certification.

Competition Our main competition (targeting similar patient segments) are typically private hospitals that are greater than 100 beds in size (examples include Al Nozha Hospital, Ganzouri Hospital, Dar Al Fouad, and As Salam). To a lesser extent, the Group may also be competing with certain publicly owned hospitals (primarily those run by the Ministry of Defence) as these hospitals generally have good quality facilities and extend their service to the general public at market rates in certain specialties. The following table sets forth the number of beds in Egypt at each of these competitors as at 31 December 2015 as compared to the Group.

Number of beds in Egypt The Group(1) ...... 624 Dar Al Fouad Hospital and As Salam International Hospital(2)(3) ...... 345 Al Nozha Hospital(2) ...... 110 Ganzouri Hospital(2) ...... 100

(1) The figure is an aggregate of the Group’s four hospitals as at 31 December 2015, including Al Shorouk, which the Company did not own at that time. (2) Source: LOGIC Report. (3) Dar Al Fouad Hospital and As-Salam International Hospital operate as a group.

Billing and Payment Processing Out-of-pocket patients generally pay a portion of the expected cost of services prior to receiving such services. The amount of the prepayment is generally dependant on the type of services that will be rendered. Outpatients are expected to pay the difference immediately following receipt of the services. In the case of inpatients, the fees chargeable to the patient are reviewed at the end of each day that the patient remains admitted. If the expected cost of services rises, the advance payment will be adjusted accordingly by charging the patient an additional amount. The patient will be expected to pay the remaining balance upon discharge from the hospital. In the case of patients paying through insurance providers or other healthcare payment plans, the Group invoices the respective third-party payers at the beginning of the calendar month following treatment. The

80 invoices are payable within 15–60 days, depending on the arrangements established with each third-party payer. According to the Group’s accounting policies, a provision is made for amounts remaining unpaid for more than 150 days.

Employees The following table sets forth the numbers of the Company’s employees, all of whom are employed in Egypt, and consultant doctors as at 31 December 2015 and 2014:

Employees and Consultant Doctors(1)(2)

As at 31 December 2015 2014 Management and administration ...... 2,255 2,291 Cleopatra ...... 875 888 Cairo Specialized Hospital ...... 534 547 Nile Badrawi ...... 483 487 Al Shorouk ...... 363 369 Nursing staff ...... 989 925 Cleopatra ...... 335 331 Cairo Specialized Hospital ...... 212 177 Nile Badrawi ...... 138 133 Al Shorouk ...... 304 284 Doctors employed by the Group(3) ...... 633 584 Cleopatra ...... 260 245 Cairo Specialized Hospital ...... 183 145 Nile Badrawi ...... 94 97 Al Shorouk ...... 96 97 Total ...... 3,877 3,800 Consultant doctors(4) ...... 980 —(5) Cleopatra ...... 283 —(5) Cairo Specialized Hospital ...... 206 —(5) Nile Badrawi ...... 270 —(5) Al Shorouk ...... 221 —(5)

(1) The data represents the aggregate number of employees and consultant doctors on 31 December of each year. (2) Figures include data for periods during which the Company did not own the respective hospitals. Totals represent aggregated sums of the Group’s four hospitals, including for periods during which the Company did not own the respective hospitals. (3) Doctors employed by the Group comprise the heads of departments and resident doctors, and not consultant doctors. (4) Consultant doctors are not employed by the Group. The consultant doctors use the Group’s medical facilities and share with the hospital the doctors’ fees generated from their services. For more detail, see ‘‘Consultant Doctors’’ in this Part 6 (Business Description). The data represents the number of consultant doctors approved to work in the Group’s hospitals. The figures are estimates only. (5) Data not available. None of the Group’s employees is covered by a collective bargaining agreement or represented by a labour organisation. To date, the Group has not experienced any material labour-related work stoppages. The Company considers its relations with its employees to be good.

Legal and Administrative Proceedings The Group is a defendant in several litigation proceedings which predominantly include malpractice and employment lawsuits. The Group has also filed several lawsuits against patients refusing to pay medical fees and governmental regulatory authorities in an attempt to suspend and cancel certain administrative decisions.

81 Malpractice As at 11 May 2016, the Group was involved in ten malpractice lawsuits with claimed amounts of damages ranging between EGP 40,000 and EGP 300,000, save for one lawsuit in which the plaintiff’s civil damages claim is EGP 95 million. The details of this lawsuit are as follows: In 2014, nearly a year and a half prior to the Company acquiring Nile Badrawi, the heirs of a deceased patient filed a criminal lawsuit against a doctor and two nurses who were involved in the treatment of the decedent. The decedent died due to complications during a hysterography procedure on her uterus at Nile Badrawi when she was injected with formalin instead of the dye normally used for such a procedure. On 17 November 2014 a court rendered a judgment ordering five years imprisonment for the doctor and three years for the two nurses. The condemned parties appealed the judgment before the Court of Appeal, and on 25 May 2015 the Court of Appeal affirmed the judgment against the doctor and reduced the nurses’ prison terms to two years and one year, respectively. In 2015, based on the judgment rendered in the criminal lawsuit, the heirs of the decedent filed a civil damages claim against, amongst others, Nile Badrawi Hospital Company. The heirs of the decedent have made a joint claim against Nile Badrawi Hospital Company and the other defendants for EGP 95 million for material and moral damages. The case is currently being heard by the trial court. See ‘‘Hospital groups are often the subject of litigation by patients, and it is possible that some of these cases will be determined adversely against the Group’’ in Part 1 (Risk Factors) of this Offering Memorandum. In 2015, the parents of a patient filed a complaint against Nile Badrawi Hospital Company alleging that the patient was infected, as a result of medical negligence, with hepatitis during a surgery. The public prosecution has referred the matter to forensic medical examination for further investigation. If the investigation establishes that medical negligence occurred and a court renders such a judgment, the plaintiff will be entitled to file a civil damages claim against Nile Badrawi Hospital Company. In April 2013, following the death of a patient at Cairo Specialized Hospital due to complications that followed an operation to remove a tumour, the heirs of the deceased patient filed a lawsuit against the hospital requesting an expert’s opinion to establish whether the death resulted from medical negligence. The court referred the case to a forensic medical investigation, which concluded that the operation was necessary and that in similar cases the results of such operations are not guaranteed. Furthermore, the forensic medical investigation could not confirm, in view of the documentation presented, whether medical negligence occurred. Accordingly, the forensic medical investigation recommended referral of the matter to the General Directorate of Private Practice at the MoHP for further investigation. The court has discretion whether or not to follow such recommendation. If the court concludes that medical negligence occurred, the plaintiff will be entitled to claim civil damages, despite not having claimed any initially.

Employment As at 11 May 2016, there were six employment lawsuits pending against the Group in which the claimants are demanding the payment of profit-sharing bonuses and compensation for unfair dismissal. The claims range from EGP 15,000 to EGP 600,000.

Real Estate and Property It was discovered in the 1980s that a part of the Nile Badrawi facility was erected on state-owned property. The owners of Nile Badrawi at that time approached the Cairo Governorate to rectify the error through a purchase of the relevant land, and in 1988 the Cairo Governorate issued a decree approving the sale. In 1995 it was discovered that the land in question had not been owned by the Cairo Governorate, but had been allocated to the River Transport Authority and could therefore not be disposed of by the Cairo Governorate. In 2002, the matter was submitted to the Ministerial Committee for Settlement of Investment Disputes, which issued a decision approving the Cairo Governorate’s decision to sell the land and confirming the River Transport Authority’s non-objection to the transfer subject to receiving appropriate compensation. The Ministerial Committee for Settlement of Investment Disputes suggested that such compensation be guided by the amount paid to the Cairo Governorate in 1988. The terms of the transfer have not yet been agreed with the River Transport Authority. The Company has recently submitted an application to the Ministerial Committee for Settlement of Investment Disputes to expedite resolution of the matter. In order to acquire proper title to the land, the Group could have to pay compensation and could be impacted by loss or disruption of operations.

82 On 13 May 2015, the Head of the Dar Al Salam District rendered a demolition order for the 12th and 13th floors of Nile Badrawi, alleging those floors were built without a permit. Nile Badrawi Hospital Company filed a lawsuit before the Cairo Administrative Court requesting: a summary court judgment ordering the suspension of execution of the demolition order until a judgment on the substance is rendered by the court; the cancellation of the demolition order and appointment by the court of an expert to conduct a site visit of Nile Badrawi to review the building permit and the technical drawings and plans of the building. The hospital is comprised of a basement, a ground floor and 11 floors, and management is of the opinion that the building complies with its permit. The court is scheduled to render its judgment in relation to the summary court order request on 26 May 2016. The Group is involved in an administrative lawsuit in connection with its plot of land adjacent to Cleopatra, which the Group intends to develop into an extension of the hospital. The plot contains a building that is listed by the Heritage Buildings Committee, and the Company is attempting to overturn the listing in order to demolish the building and develop the hospital extension. The court rendered a preliminary judgment ordering a committee of engineering professors from Ain Shams University to advise on the matter. The Group is also party to two administrative lawsuits against the Cairo Governorate regarding a residential apartment purchased by the Group and used for administrative purposes. The Cairo Governorate alleges that the apartment is being used for administrative purposes without a proper license and issued an order to stop such usage of the apartment. The Group obtained a judgment from the summary court suspending execution of the order until a judgment on the substance is issued by the administrative court where the Group has challenged the Cairo Governorate’s order. The Cairo Governorate has challenged the summary court judgment before the high administrative court. The administrative court ruling on the substance of the order rejected the Group’s challenge on 28 April 2016, and the Group is in the process of filing an appeal before the high administrative court.

Insurance The Group carries insurance of various types, including civil liability, malpractice (only at Cleopatra, Cairo Specialized Hospital and, since February 2015, Nile Badrawi), property, theft, fire and default. The Group maintains an amount of insurance protection that it believes is adequate.

Internal Financial Controls As a result of the Group having acquired all of its business operations within the past two years, the Group has not yet fully integrated its IT and internal financial control systems. The Group therefore currently uses different IT systems that are not interconnected or sufficiently secured. The Group has identified and is addressing weaknesses in its internal financial control systems relating to having an adequate fixed assets register and coding system to facilitate controls over fixed assets including physical existence and accounting; having adequate ageing analysis to assist in more effective follow-up and calculation of probability of customer default; having a uniform general ledger coding system and uniform mapping to allow efficient preparation of separate and consolidated financial information; having an automated liquidity analysis to assist management in cash management decisions; and having an automated segmental revenue and cost analysis for better segmental reporting. In order to strengthen control over financial reporting, generate accurate data required for calculation of depreciation of fixed assets and impairment of receivables, facilitate the consolidation process including segmental reporting and generate more accurate risk management data, the Group’s management is in the process of upgrading its IT systems into a unified platform. As part of this upgrade, the Group has selected and acquired an SAP ERP system for the back-office functions, implementation of which is intended to be complete by the end of 2016. The Group has also implemented standard accounting policies and treatments across its hospitals, implemented a centralised authority matrix, applied a dual-signatory requirement for banking transactions and is unifying its financial reporting systems, amongst other initiatives.

Regulatory Overview Medical Establishments Law The Medical Establishments Law is the primary legislation governing the establishment, operation, and licensing of hospitals, clinics and certain other medical establishments in Egypt. The regulatory body that

83 grants licenses and monitors the hospitals’ compliance with the provisions of the Medical Establishments Law is the General Directorate of Private Practice at the MoHP.

Operational License The Medical Establishments Law requires that hospitals obtain a license from the MoHP. The Medical Permanent Committee of the MoHP is charged with reviewing licensing requests and issuing preliminary approvals for the establishment of private hospitals and monitoring the completion of equipment installation and adequate qualification of personnel. Once a hospital obtains approval from the Medical Permanent Committee, is registered with the Egyptian Medical Syndicate and has satisfied all conditions and requirements of the Medical Establishments Law, the relevant governor must issue an operational license (the Operational License) for the hospital. The Operational License must be issued in the name of a doctor who is licensed to practice medicine in Egypt, as further detailed under the heading ‘‘Management of Private Hospitals’’ below. If a hospital is found to be operating without the necessary license, the MoHP can shut down the hospital and request a court to impose a fine of EGP 1,000 to EGP 50,000. Operational Licenses do not have a prescribed duration and must be amended if the hospital undertakes certain changes, including, but not limited to, a change of the hospital’s medical manager or the addition of new units or departments. An Operational License can be revoked by the MoHP in certain circumstances, including, but not limited to: (i) the hospital being rebuilt or moving to a new location; (ii) the hospital being altered or modified in violation of applicable law; (iii) the hospital undertaking any activity outside of the license’s scope; (iv) a court rendering a judgment to shut down the hospital; (v) the hospital repeating a violation after previously being sanctioned for such a violation or (vi) unlicensed personnel undertaking healthcare services at the hospital. Hospitals in Egypt are subject to annual inspections by the MoHP. If a violation is found, the MoHP will notify the medical manager of the hospital to rectify the violation within 30 days. In the event of a serious violation, the relevant governor may, upon the request of the MoHP, order the administrative closure of the hospital for a period of time set by the governor. The hospital may not re-open until evidence is provided that the violation has been rectified. Any violation of the Medical Establishments Law can be penalised by a fine of EGP 2,000 to EGP 20,000. If a hospital does not remedy such a violation within the relevant notification period, a court may render a judgment to shut down the hospital temporarily or permanently. If it is possible to shut down only the unit or department of the hospital found to be in violation, the court may shut down only that unit or department. Nile Badrawi hospital is in the process of amending its Operational License, as legally required, to reflect its recent change of its medical manager. Al Shorouk has recently opened a new outpatient clinic located in a leased premise adjacent to its currently facility, and opening such a clinic requires a separate license. The license for this clinic reflects Dr. Khaled El Borolossy, Al Shorouk’s managing director, as the owner of the clinic, and the Group is in the process of rectifying this to designate Al Shorouk Hospital Company as the owner. Each of the Group’s hospitals has a valid Operational License.

Management of Private Hospitals The medical director of each hospital in Egypt must be a doctor licensed to practice medicine in Egypt and must be noted on the hospital’s Operational License. The MoHP and the relevant branch of the general Egyptian medical syndicate must be notified within two weeks if the medical director is replaced. If the medical director leaves the hospital and is not replaced within two weeks, the hospital is required to shut down until a new medical director is appointed. A hospital’s file with the competent medical syndicate needs to be updated upon any change to the hospital’s Operational License. This process can be lengthy and cause delays if certain required documentation is required. Nile Badrawi is currently facing such a delay after changing its medical director, but management does not believe there have been any negative consequences as a result of such delay.

84 Personnel All hospital personnel carrying out healthcare services, including doctors, nurses and technicians, must be licensed and registered with the MoHP. If any personnel are found to be practising without the proper license or registration, the relevant hospital’s Operational License may be revoked. All personnel working in a hospital must abide by their relevant professional code of conduct. A hospital must have one resident doctor for every 20 beds. Additionally, it must have one nurse for every five beds, covering 24 hours a day.

Fees Charged by Private Hospitals According to the Medical Establishments Law, the fees and prices a hospital can charge for patient stays and services should be determined by a committee of the MoHP and announced in a decree by the relevant governor. The MoHP committee has not been operative and has only convened once, in 2005. None of the Group’s hospitals has any governor decree determining its fees and prices.

Patients Data Privacy Under the Medical Establishments Law, private hospitals are bound by the Medical Code of Ethics, promulgated by the Ministerial Decree No. 238 for the year 2003. Pursuant to the code and the Medical Establishments Law, doctors and hospitals have a duty not to disclose any confidential information about their patients.

Other regulated medical activities In Egypt, a hospital may also engage in certain specialised medical services provided that it obtains the requisite licenses. Similar to the Operational License, the licenses for specialised medical services are issued in the name of the manager who must be (i) a specialised licensed doctor in the relevant area of practice and (ii) duly licensed and registered with the MoHP. Each unit providing specialised medical services is subject to inspection by the MoHP. Failure to comply with applicable requirements may lead to the closure of the breaching unit until such breach is rectified. In addition, the hospital may be fined and, in certain instances, the manager in charge of the breaching unit and/or the hospital may be imprisoned. In addition to the Medical Establishments Law, specialised medical services are governed by certain other laws. Specialised medical services subject to such additional laws include, but are not limited to, pharmacological activities, blood bank activities, diagnostic and laboratory services, physiotherapy, catheterisation, ionised radiation services, kidney dialysis and organ transplantation. Al Shorouk is in the process of obtaining a license to operate its physiotherapy unit and is renewing its license to provide organ and renal transplantation services. Nile Badrawi is in the process of updating its radiology license following a change of manager. The Group’s other hospitals have each obtained the requisite licenses to carry on the services provided therein. The MoHP has provided an annotation on Al Shorouk’s and Nile Badrawi’s Operational Licenses, pursuant to which the hospitals are providing kidney dialysis services. Al Shorouk and Nile Badrawi are each in the process of obtaining separate licenses to provide kidney dialysis services in compliance with Ministerial Decreee No. 518 for the year 2012.

Licensing of certain non-medical activities In addition to the laws related to provision of healthcare services, hospitals are bound by other laws governing the operation and licensing of certain equipment, including, but not limited to, boilers, generators and elevators. Nile Badrawi and Al Shorouk are each in the process of obtaining or renewing the required licenses to operate their elevators. Nile Badrawi is missing a license to operate its boiler, but the hospital is in the process of replacing the existing boiler with other machinery that will not require a license or permit. Each of the Group’s other hospitals has its required non-medical licenses. Failure to obtain the required licenses is penalised by a fine and the relevant administrative authority may order the equipment to be shut down until the license is obtained.

85 Environmental Requirements and Handling Hazardous Medical Wastes The Law No. 4 for the year 1994 and its executive regulations (the Environmental Law) is the primary law governing matters relating to the environment, including, but not limited to, treatment and handling of hazardous substances and waste and protection of the air and water from pollution. The regulatory authority that monitors compliance with the Environmental Law is the Egyptian Environmental Affairs Agency (EEAA). Under the Environmental Law, the Company’s hospitals must maintain environmental and hazardous waste registers; engage a licensed company to dispose of hazardous waste; and obtain a license to handle and dispose of hazardous substances and waste. The Environmental Law also mandates the locations that can be used for the disposal of waste. Cleopatra Hospital is in the process of renewing the required license to handle and dispose of hazardous substances and wastes. The EEAA conducts periodic inspections to ensure compliance with the Environmental Law. Violations are generally penalised by fines and/or imprisonment of the chairman of the company or the manager in charge of the hospital. In addition to these penalties, the hospital may be subject to administrative closure until the breach is remedied. Hospitals are required to operate a hazardous waste treatment unit, or, if such operation would be difficult, to collect and transport the hazardous waste to specified collection locations. A licensed entity must be used for the transportation of such waste. Hospitals are subject to additional laws regulating public cleanliness and the disposal of liquid waste.

Health and Safety Requirements The Law No. 12 for the Year 2003 (the Labour Law) is the main legislation regulating occupational health and safety. The Labour Law and certain other ministerial decrees mandate that companies provide all necessary health and safety precautions, equipment and machinery, as well as ensure the safety of the working environment from (i) physical dangers resulting from fluctuating temperature, noise and dangerous and harmful radiation, (ii) mechanical dangers resulting from equipment and machinery, (iii) biological dangers such as bacteria or viruses or (iv) dangers resulting from chemicals. The Labour Law allows the competent authority to shut down all or part of a company, or suspend the use of certain machinery or equipment, if it determines that there is an imminent safety hazard or health risk. The Group must also allow the General Authority for Medical Insurance to perform periodic medical tests for the Group’s employees. The Group’s management considers that the Group complies with the health and safety requirements of the Labour Law, except for certain fire-related requirements in Al Shorouk, Cairo Specialized Hospital and Nile Badrawi. The Group is in the process of rectifying these violations by obtaining the required equipment. Failure to comply with the health and safety requirements of the Labour Law could result in imprisonment of the Company’s legal representative for a period of not less than 3 months and/or a fine between EGP 1,000 and EGP 10,000. The penalty is doubled for recurring violations. The Group is subject to the additional health and safety requirements regulated under laws and decrees governing, inter alia, organ transplantation, certain medical tests and radiology. These additional requirements generally relate to infection control and protective equipment for hospital personnel.

86 PART 7 Directors, Senior Management and Corporate Governance Directors Pursuant to the Company’s Statutes, the Board must consist of a minimum of three and a maximum of nine Directors. Currently, the Board consists of seven Directors appointed by the Shareholders at the ordinary general meeting on 10 December 2015. The Board must meet at least once per year, Directors are generally elected for a term of three years. The committees of the Board are discussed in ‘‘Corporate Governance’’ below. The following table lists the names and positions of the Directors.

Name Position Dr. Ahmed Ezzeldin Mahmoud Abdelaal ...... Chairman and Group Chief Executive Officer Ahmed Adel Badreldin ...... Non-Executive Director Walid Fayez Said Bakr ...... Non-Executive Director Dr. Mohamed Awad Tag El Din ...... Independent Non-Executive Director Nabil Walid Kamhawi ...... Independent Non-Executive Director Omar Atef Kinawy ...... Independent Non-Executive Director Sameh Mahmoud Mohsen ...... Non-Executive Director

Dr. Ahmed Ezzeldin Mahmoud Abdelaal (Chairman and Group Chief Executive Officer) Dr. Ahmed Ezzeldin Mahmoud Abdelaal joined the Group in June 2015 after previously working at Johnson & Johnson as a director overseeing government affairs and policy for MENA and Pakistan. He had earlier served as managing director responsible for the medical sector at the same company, covering Egypt and Libya. There, he played a role in the development of healthcare systems in Egypt and the Middle East through the creation of four centres of excellence that together trained more than 1,500 healthcare professionals annually from 2006 through 2012. Prior to that, Dr. Ezzeldin worked at GlaxoSmithKline, where he led the Middle East region integration plan as part of the merger of SmithKline & Beecham and Glaxo Wellcome, as well as having roles in resource planning and segmentation projects. He had earlier spent 18 years with pharmaceutical company Merck Sharp & Dohme. Dr. Ezzeldin is past co-chairman of the Healthcare and Pharmaceutical Committee of the American Chamber of Commerce in Egypt and was a member of the Egyptian Ministry of Health’s Supreme Committee for Registration of Medical and Diagnostics Devices. He holds a Bachelor Degree in Pharmaceutical Science from Cairo University.

Ahmed Adel Badreldin (Non-Executive Director) Mr. Badreldin is a Partner and Head of MENA at The Abraaj Group and oversees its investments in the Middle East and North Africa. He currently serves as a director at Integrated Diagnostics Holdings, Oncology Diagnostics Morocco, and Clinique Taoufik Group. Prior to joining The Abraaj Group in 2008, he was a Director in Investment Banking at Barclays Capital in London in the Financial Sponsors and Leveraged Finance Team.

Walid Fayez Said Bakr (Non-Executive Director) Mr. Walid Fayez Said Bakr has 20 years of experience in finance, investment and operational roles across the Middle East, Europe and the U.S. He is also a Managing Director of the Abraaj Group and a member of its Middle East and North Africa investment team. He also serves on the Board of Trustees of Education for Employment Egypt, the American University in Cairo’s Entrepreneurship and Innovation Council and the Bidaya Fund advisory board. Prior to joining The Abraaj Group in 2010, Mr. Bakr was a director of Riyada Ventures and Director of the Technology Development Fund, Egypt’s leading venture capital fund. He also worked with AT&T in Kuwait and managed and established several IT companies in the United States and Europe. Mr. Bakr holds a Bachelor Degree of Science in Communications Engineering from Alexandria University and was selected as a Kauffman Fellow in 2013.

Dr. Mohamed Awad Tag El Din (Independent Non-Executive Director) Dr. Awad Tag El Din was the Egyptian Minister of Health from March 2002 to December 2005. Prior to that, he was the president and vice president of Ain Shams University for one and four years, respectively.

87 He holds a Bachelor Degree in medicine, two diplomas in internal medicine and pulmonology diseases and a PhD from Ain Shams University. He is also a professor and consultant of pulmonology.

Nabil Walid Kamhawi (Independent Non-Executive Director) Mr. Kamhawi has over 40 years of consulting, audit and advisory experience in Europe and the Middle East in a wide range of industries. He was the managing partner of Ernst & Young in Egypt following its integration with Arthur Andersen, of which he was the managing partner. Mr. Kamhawi holds a Bachelor Degree in commerce (accounting) from Ain Shams University and is a member of the Institute of Chartered Accountants in England and Wales.

Omar Atef Kinawy (Independent Non-Executive Director) Mr. Kinawy joined the Group in 2015. Prior to that, he was the former deputy head of the Egyptian General Intelligence and graduated from the Egyptian Military College in 1968.

Sameh Mahmoud Mohsen (Non-Executive Director) Mr. Mohsen is one of the founders and former CEO of Cleopatra and has worked in the industry for more than 29 years. He holds a Bachelor Degree in engineering from Cairo University.

Senior Management The Company’s senior management, in addition to the Group Chief Executive Officer listed above, are as follows:

Name Position Marwa Mohamed Hassan El Abassiry ...... Human Resources Director Amr Abdelghany Alashkar ...... Chief Information Officer Dr. Khaled Abdelwahab Elborolossy ...... Al Shorouk Chief Executive Officer Hassan Ahmed Hassan Fikry ...... Corporate Strategy and Development Manager Khaled Hassan Ahmed ...... Chief Financial Officer Dr. Mohamed Ibrahim Ahmed Yousef ...... Cleopatra General Manager Mona Makram Kamel ...... Supply Chain Director Dr. Mohamed Khaled Hussein Elnoury ...... Group Quality Director and Nile Badrawi Chief Executive Officer Professor Hassan Mohamed Zakaria Shaker ...... Cairo Specialized Hospital Managing Director

Marwa Mohamed Hassan El Abassiry (Human Resources Director) Ms. Marwa Al Abassiry joined the Group in February 2015. Previously, she was the Human Resources Business Partner at Electrolux Egypt. She also worked at Aga-Khan Cultural Services, Mobinil and P&G Egypt. Ms. Al Abassiry holds a Bachelor of Arts from the Faculty of Al-Alsun, Ain Shams University.

Amr Abdelghany Alashkar (Chief Information Officer) Mr. Amr Abdelghany Alashkar joined the Group in November 2015. Previously, he was the Chief Information Officer at Integrated Diagnostics Holdings and worked at OMS and the United Nations. He holds a Bachelor Degree in Computer Science from Ain Shams University, a Master of Computer Science from the University of Louisville and a Doctorate in Business Administration from Maastricht Business School, Holland.

Dr. Khaled Abdelwahab Elborolossy (Al Shorouk Chief Executive Officer) Dr. Khaled Abdelwahab Elborolossy is a co-founder, Chief Executive Officer and former Managing Director of Al Shorouk Hospital Company. He is also a Professor and Head of the Department of Anaesthesia at Cairo University. He holds a Bachelor Degree and two Masters Degrees, with a specialty in anaesthesia, from Cairo University.

88 Hassan Ahmed Hassan Fikry (Corporate Strategy and Development Manager) Prior to joining the Group in October 2015, Mr. Hassan Fikry was the Co-Founder Executive Director of El Seha Laboratories, the Executive Director of Dr. Ahmed Hassan Fikry Medical Centre and the Coordinator and Strategic Planner at Orascom Telecom Holding. He has a Bachelor of Commerce and Economics from the John Molson School of Business, Concordia University.

Khaled Hassan Ahmed (Chief Financial Officer) Mr. Khaled Hassan joined the Group in January 2015 and has 25 years of experience in financial management. Previously, he worked at Gozour Holding, ASEC Holding and FRANKE Egypt. Mr. Hassan holds a Bachelor Degree in Commerce from Cairo University, a Masters in Financial Control and is certified in Financial Modelling.

Dr. Mohamed Ibrahim Ahmed Yousef (Cleopatra General Manager) Prior to joining Cleopatra Hospital Company in 2001, Dr. Mohamed Ibrahim was a physician at Military Hospital and the Commander of Navy Hospital, UAE. He holds a Bachelor and Masters from Ain Shams University, faculty of Medicine, with a specialty in obstetrics and gynaecology, as well as a Masters in Hospital Management from the American University in Cairo.

Mona Makram Kamel (Supply Chain Director) Ms. Mona Makram joined the Group in November 2015. Prior to this, she served as the supply chain director at As-Salam International Hospital (part of the Alameda Group), as the regional supply chain manager of Telsol-El-Sewedy, as the procurement manager of CARE in Egypt and as the procurement manager of Al Futtaim in Egypt. She holds a Bachelor Degree in Agriculture and an international business administration diploma from the Institute of Agriculture Cooperation. She is also certified as an International Certified Supply Chain Manager by the International Purchasing and Supply Chain Management Institute in the United States as of 2013 and as a Certified Supply Chain Manager by APICS as of 2015.

Dr. Mohamed Khaled Hussein Elnoury (Group Quality Director and Nile Badrawi Chief Executive Officer) Dr. Mohamed Khaled Hussein Elnoury received his Doctorate of Business Administration, Hospital Management from the Arab Academy for Science, Technology & Maritime Support and his Master in Internal Medicine and Bachelor of Medicine and Surgery from Cairo University. He also has a Hospital Administration Diploma from Ain Sham University and a Healthcare TQM from the American University in Cairo. Before joining the Group in October 2015, Dr. El Noury was the Chief Operating Officer of the 57357 children cancer hospital. He also served as Medical Director and Director of Operations, Accident and Emergency at Arab Contractors Medical Center.

Professor Hassan Mohamed Zakaria Shaker (Cairo Specialized Hospital Managing Director) Professor Hassan Shaker received his MD in General Surgery, his Master of General Surgery and his Bachelor of Medicine from Ain Shams University. He is also a Professor of Surgery in the faculty of Medicine at Ain Shams University. Professor Shaker joined the Group in October 2015 after a previous managerial career including serving as the Managing Director of Ain Shams University Specialized Hospital and a Member of the Board at Railway Hospital and Arab Contractors Medical Center.

Corporate governance The corporate affairs of the Company are governed by Law No. 159 of 1981 and its Executive Regulations, as amended (the Companies Law), the Capital Market Law, the EGX Listing Rules, other laws governing companies incorporated in Egypt and its Statutes. The Company subject to Egyptian disclosure requirements and is required to publish annual and quarterly financial statements prepared in accordance with EAS, provide notices of any material developments to EFSA and the EGX and provide EGX with minutes of the Company’s ordinary and extraordinary general meetings.

89 Board Committees Audit committee Pursuant to the EGX Listing Rules, a listed company is required to have an audit committee comprising at least three non-executive directors with experience in the relevant sector. At least two members must be independent (defined as a non-executive director who, during the preceding three years was not an employee of, a party to an agreement with or a board member of the company, its holding company, its subsidiaries or its affiliates or any of their related parties). The audit committee must ensure that a listed company’s management abide with the auditor and EFSA’s recommendations, as well as meet and provide the Board with reports at least once every quarter. If the Board does not follow a material recommendation of the audit committee, the chairman of the audit committee must, within 60 days, notify both the EGX and EFSA. The Company’s audit committee complies with the requirements of the EGX Listing Rules. Nabil Walid Kamhawi is the chairman and Walid Fayez Said Bakr and Dr. Mohamed Awad Tag El Din are also members. Nabil Walid Kamhawi is considered a financial and accounting expert. Nabil Walid Kamhawi and Dr. Mohamed Awad Tag El Din are Independent Non-Executive Directors.

Quality control committee The quality control committee is in charge of the development and implementation of the Group’s quality control programmes. As part of this responsibility, it monitors the performance indicators and provides recommendations on strategic directions for the development of the Group’s services. The quality control committee is chaired by Dr. Mohamed Awad Tag El Din and Dr. Mohamed Khaled Hussein Elnoury is also a member.

Nominations and remuneration committee The nominations and remuneration committee is in charge of providing recommendations on the remuneration of the senior management, reviewing the Group’s bonus schemes and the development of the employment succession plan. The nominations and remuneration committee is chaired by Ahmed Adel Badreldin and also comprises Walid Fayez Said Bakr and Nabil Walid Kamhawi as members.

Related Party Transactions The following summarises the principles of the Companies Law with respect to related party transactions: • Any bilateral contract between a company and any of its founding shareholders during the first five years of the company’s existence, and any bilateral contract between a company and any of its board members at any time, must be authorised by the ordinary general meeting before each individual contract is entered into, failing which the contract will be deemed to be null and void. • No board member or manager may engage in the same business activities as those of the company or any branch thereof without the prior authorisation of the ordinary general meeting, failing which the company will be entitled to compensation or to treat such competitive transactions as having been carried out for the account of the company. • Where any matter to be considered by the board of a company involves or creates a conflict of interest between that company and any of its board members or managers, each such board member or manager must disclose such conflict to the board and refrain from voting on such matter. All such matters must be reported to the ordinary general meeting before any resolution relating to such matter is voted on by the ordinary general meeting. • No board member or manager may enter into any bilateral contract on behalf of a company with a second entity of which the board member or manager is also a director, or in which a shareholder or shareholders of the company own the majority of the shares, if the consideration for such contract is 20 per cent. or more below that which could be secured in an arm’s length agreement, failing which the transaction and/or contract shall be considered null and void. A related party transaction that is presented to a company’s ordinary general meeting must be approved by more than 50 per cent. of the shareholders attending the meeting.

90 Additionally, the EGX Listing Rules provide that insiders, founders and main shareholders (i.e. shareholders and their related parties owning, directly or indirectly, ten per cent. or more of the company’s shares) and their related parties may not be parties to any bilateral contracts with the company unless the contract is submitted for approval by the ordinary general meeting of the company with all its details and data including the quantity and price prior to undertaking the transaction or executing the contract. It should be noted that the concerned party from among the insiders, founders, main shareholders and/or their related parties cannot vote in such shareholders’ meeting. For a description of related party transactions entered into by the Company, see ‘‘Related Party Transactions’’ in Part 13 (Additional Information).

91 PART 8 Selected Financial Information The selected financial information and the related footnotes set out below has been extracted from the pro forma financial information included in Part 11 (Unaudited Pro Forma Consolidated Financial Information) and from the Historical Financial Information in Part 14 (Historical Financial Information) of this Offering Memorandum, where it is shown with important notes describing some of the line items and should be read in conjunction with Part 2 (Presentation of Financial and Other Information) and Part 9 (Operating and Financial Review).

Pro Forma Statement of Income

Pro Forma Year ended 31 December 2015 (unaudited) (EGP) Operating revenue ...... 741,329,410 Operating cost ...... (507,357,411) Gross profit ...... 233,971,999 General and administrative expenses ...... (95,721,313) Provisions ...... (19,207,076) Other income ...... 7,924,985 Profit before finance income & income tax ...... 126,968,595 Finance income ...... 9,253,708 Finance cost ...... (59,417,233) Foreign currency (Loss)/gain ...... (6,087) Profit before income tax ...... 76,798,983 Income tax ...... (25,931,261) Deferred tax ...... 853,826 Profit for the year ...... 51,721,548 Profit attributable to: Owners of the parent ...... 43,541,522 Non-controlling interests ...... 8,180,027 51,721,548 Non-GAAP measures: Pro forma EBITDA ...... 182,587,602

92 Cleopatra Hospital Company Statement of Income Data

Year ended 31 December 2015 2014 2013 (audited) (EGP) Operating revenue ...... 332,002,699 290,294,814 243,293,152 Operating costs ...... (214,407,386) (204,608,154) (171,606,030) Gross profit ...... 117,595,313 85,686,660 71,687,122 General and administrative expenses ...... (27,859,422) (20,670,525) (20,556,280) Provisions ...... (2,973,505) (2,886,902) (761,088) Other income ...... 1,028,699 678,591 731,740 Profit for the year before finance income and income tax . 87,791,085 62,807,824 51,101,494 Finance income ...... 5,104,232 2,086,651 1,572,705 Finance cost ...... (8,487,998) (3,235) — Profit for the year before income tax ...... 84,407,319 64,891,240 52,674,199 Current tax ...... (20,603,310) (21,372,222) (13,996,640) Deferred tax ...... 886,196 283,107 10,596 Profit for the year ...... 64,690,205 43,802,125 38,688,155 Non-GAAP measures: Adjusted profit for the year(1) ...... 64,690,205 64,102,125 41,785,123 EBITDA(1) ...... 99,445,630 72,842,960 59,211,607 Adjusted EBITDA(1) ...... 99,445,630 93,142,960 62,308,575

(1) Unaudited.

Cairo Specialized Hospital Company Statement of Income Data

Year ended 31 December 2015 2014 Restated 2013 (audited) (EGP) Operating revenue ...... 149,377,454 123,280,745 114,040,779 Operating costs ...... (111,849,380) (90,405,164) (82,119,996) Gross profit ...... 37,528,074 32,875,581 31,920,783 General and administrative expenses ...... (14,207,273) (10,058,402) (7,794,833) Provisions ...... (6,945,188) (710,000) — Other income ...... 3,808,193 3,096,473 3,027,518 Profit for the year before finance income and income tax .. 20,183,806 25,203,652 27,153,468 Finance income ...... 4,021,134 2,704,661 2,259,506 Profit for the year before income tax ...... 24,204,940 27,908,313 29,412,974 Current tax ...... (7,387,426) (8,688,849) (7,006,480) Deferred tax ...... 430,841 (694,392) (265,067) Profit for the year ...... 17,248,355 18,525,072 22,141,427 Non-GAAP measures: Adjusted profit for the year(1) ...... 24,154,267 18,525,072 22,141,427 EBITDA(1) ...... 33,487,278 30,287,270 30,218,695 Adjusted EBITDA(1) ...... 33,487,278 30,287,270 30,218,695

(1) Unaudited.

93 Nile Badrawi Hospital Company Statement of Income Data

Year ended 31 December 2015 2014 Restated 2013 Restated (audited) (EGP) Operating revenue ...... 121,307,079 107,482,434 86,802,150 Operating costs ...... (81,601,341) (76,120,070) (69,045,206) Gross profit ...... 39,705,738 31,362,364 17,756,944 General and administrative expenses ...... (28,072,750) (9,245,588) (10,286,049) Provisions ...... (4,218,259) (722,700) — Other income ...... 1,856,750 3,460,673 871,475 Profit for the year before finance income and income tax ... 9,271,479 24,854,749 8,342,370 Finance income ...... — — 11,312 (Loss)/gain on currency translation differences ...... (6,087) 38,313 17,577 Profit for the year before income tax ...... 9,265,392 24,893,062 8,371,259 Current tax ...... (4,991,312) (7,017,881) (2,060,578) Deferred tax ...... (661,591) 282,104 417,112 Profit for the year ...... 3,612,489 18,157,285 6,727,793 Non-GAAP measures: Adjusted profit for the year(1) ...... 15,454,757 18,157,285 6,727,793 EBITDA(1) ...... 27,104,161 28,935,704 13,423,336 Adjusted EBITDA(1) ...... 27,104,161 28,935,704 13,423,336

(1) Unaudited.

Al Shorouk Hospital Company Statement of Income Data

Year ended 31 December 2015 2014 Restated 2013 Restated (audited) (EGP) Operating revenue ...... 138,642,178 117,592,072 98,542 Operating costs ...... (99,913,207) (85,850,554) (76,035,389) Gross profit ...... 38,728,971 31,741,518 22,488,817 General and administrative expenses ...... (25,581,868) (17,078,570) (14,540,905) Provisions ...... (5,070,124) — (6,676,913) Other income ...... 1,231,343 1,189,322 1,072,690 Profit for the year before finance income and income tax ... 9,308,322 15,852,270 2,343,689 Finance income ...... 128,342 113,062 72,973 Finance cost ...... (1,333,834) (55,125) (20,861) Profit for the year before income tax ...... 8,102,830 15,910,207 2,395,801 Current tax ...... (4,108,178) (4,491,563) (2,638,327) Deferred tax ...... 198,380 29,752 172,330 Profit for the year ...... 4,193,032 11,448,396 (70,196) Non-GAAP measures: Adjusted profit for the year(1) ...... 12,006,467 11,448,396 6,752,875 EBITDA(1) ...... 22,550,534 20,741,353 14,097,618 Adjusted EBITDA(1) ...... 22,550,534 20,741,353 14,097,618

(1) Unaudited.

94 Pro Forma Balance Sheet

Pro Forma As at 31 December 2015 (unaudited) (EGP) Assets Non-current assets Property, plant and equipment ...... 377,459,385 Intangible assets ...... 277,852,615 Deferred tax ...... 2,163,446 Total non-current assets ...... 657,475,446 Current assets ...... Held to maturity investments ...... 38,080 Inventories ...... 24,230,153 Trade receivables ...... 110,273,624 Other debit balances ...... 20,632,474 Cash and cash equivalents ...... 42,996,688 Total current assets ...... 198,171,019 Current liabilities ...... Provisions ...... 31,960,921 Other credit balances ...... 111,844,319 Current Portion Of Long Term Loans ...... 50,077,471 Income tax liabilities ...... 36,244,787 Total current liabilities ...... 230,127,498 Working capital ...... (31,956,479) Total investment ...... 625,518,967 Financed as follows: ...... Equity ...... Paid up capital ...... 80,000,000 Legal reserve ...... (62,303,508) Retained earnings ...... 108,270,052 Total Shareholder’s equity ...... 125,966,544 Non-Controlling interest ...... 36,078,338 Total Equity ...... 162,044,882 Long Term Loans ...... 372,291,782 Trade and other payables—Due to related parties ...... 47,379,723 Deferred income tax liabilities ...... 43,802,580 Total non-current liabilities ...... 463,474,085 Total equity and non-current liabilities ...... 625,518,967 Non-GAAP measures: Pro forma net debt ...... 538,596,607

95 Cleopatra Hospital Company Balance Sheet Data

As at 31 December 2015 2014 2013 (audited) (EGP) Total non-current assets ...... 421,851,466 62,787,629 66,494,758 Total current assets ...... 99,658,411 129,434,244 102,758,545 Total assets ...... 521,509,877 192,221,873 169,253,303 Total non-current liabilities ...... 217,906,819 2,297,712 2,580,819 Total current liabilities ...... 109,580,657 54,591,965 36,326,652 Total liability ...... 327,487,476 56,889,677 38,907,471 Total shareholders’ equity ...... 200,022,401 135,332,196 130,345,832 Total funding of working capital and non-current liabilities(1) 417,929,220 137,629,908 132,926,651 Non-GAAP measures: Net debt(2) ...... 260,736,241 (23,779,663) 4,026,626

(1) Total funding of working capital and non-current liabilities is a measurement required by EAS. (2) Unaudited.

Cairo Specialized Hospital Company Balance Sheet Data

As at 31 December 2014 2015 Restated 2013 (audited) (EGP) Total non-current assets ...... 25,678,386 21,981,202 24,139,669 Total current assets ...... 82,793,359 65,754,126 56,432,214 Total assets ...... 108,471,745 87,735,328 80,571,883 Total non-current liabilities ...... 1,727,506 2,158,347 1,463,955 Total current liabilities ...... 40,341,609 34,725,951 27,881,861 Total liability ...... 42,069,115 36,884,298 29,345,816 Total shareholders’ equity ...... 66,402,630 50,851,030 51,226,067 Total funding of working capital and non-current liabilities(1) 68,130,136 53,009,377 52,690,022 Non-GAAP measures: Net debt(2) ...... (28,379,862) (26,860,379) (22,465,844)

(1) Total funding of working capital and non-current liabilities is a measurement required by EAS. (2) Unaudited.

96 Nile Badrawi Hospital Company Balance Sheet Data

As at 31 December 2014 2013 2015 Restated Restated (audited) (EGP) Total non-current assets ...... 18,884,960 12,971,036 12,155,920 Total current assets ...... 51,291,592 48,058,887 33,036,167 Total assets ...... 70,176,552 61,029,923 45,192,087 Total non-current liabilities ...... — — — Total current liabilities ...... 35,267,169 29,733,029 29,728,325 Total liability ...... 35,267,169 29,733,029 29,728,325 Total shareholders’ equity ...... 34,909,383 31,296,894 15,463,762 Total funding of working capital and non-current liabilities(1) .. 34,909,383 31,296,894 15,463,762 Non-GAAP measures: Net debt(2) ...... 7,394,084 16,751,013 24,686,565

(1) Total funding of working capital and non-current liabilities is a measurement required by EAS. (2) Unaudited.

Al Shorouk Hospital Company Balance Sheet Data

As at 31 December 2014 2013 2015 Restated Restated (audited) (EGP) Total non-current assets ...... 52,946,283 53,097,084 53,220,907 Total current assets ...... 35,439,387 32,896,106 25,206,306 Total assets ...... 88,385,670 85,993,190 78,427,213 Total non-current liabilities ...... 891,782 1,871,996 3,533,974 Total current liabilities ...... 44,949,796 36,905,026 33,808,980 Total liability ...... 45,841,578 38,777,022 37,342,954 Total shareholders’ equity ...... 42,544,092 47,216,168 41,084,259 Total funding of working capital and non-current liabilities(1) ... 43,435,874 49,088,164 44,618,233 Non-GAAP measures: Net debt(2) ...... 25,573,457 21,776,790 22,748,754

(1) Total funding of working capital and non-current liabilities is a measurement required by EAS. (2) Unaudited.

Cleopatra Hospital Company Cash Flow Statement Data

Year ended 31 December 2015 2014 2013 (audited) (EGP) Net cash flows generated from operating activities ...... 148,822,297 76,243,422 45,008,936 Net cash flows used in investing activities ...... (381,630,465) (1,337,905) (25,003) Net cash flows generated from / (used in) financing activities 202,733,506 (38,815,761) (44,189,019) Change in cash and cash equivalents during the year ...... (30,074,662) 36,089,756 794,914 Cash and cash equivalents at the end of the year ...... 23,557,392 53,632,054 17,542,289

97 Cairo Specialized Hospital Company Cash Flow Statement Data

Year ended 31 December 2014 2015 Restated 2013 (audited) (EGP) Net cash flows generated from operating activities ...... 17,174,218 29,238,155 22,842,235 Net cash flows used in investing activities ...... (55,262,110) (1,491,790) (2,442,473) Net cash flows used in financing activities ...... (1,696,755) (18,900,109) (17,331,847) Change in cash and cash equivalents during the year ...... (39,784,647) 8,846,256 3,067,915 Cash and cash equivalents at the end of the year ...... 4,674,101 44,458,748 35,612,492

Nile Badrawi Hospital Company Cash Flow Statement Data

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP) Net cash flows generated from operating activities ...... 13,663,167 14,604,868 10,453,828 Net cash flows used in investing activities ...... (1,233,595) (3,995,126) (2,802,430) Net cash flows used in financing activities ...... — (7,234,243) (7,110,812) Change in cash and cash equivalents during the year ...... 12,429,572 3,375,499 540,586 Cash and cash equivalents at the end of the year ...... 18,786,253 6,356,681 2,981,182

Al Shorouk Hospital Company Cash Flow Statement Data

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP) Net cash flows generated from operating activities ...... 10,519,029 12,264,230 14,587,418 Net cash flows used in investing activities ...... (3,940,191) (4,679,141) (2,126,337) Net cash flows used in financing activities ...... (7,247,688) (7,032,293) (10,382,797) Change in cash and cash equivalents during the year ...... (668,850) 552,796 2,078,284 Cash and cash equivalents at the end of the year ...... 4,089,819 4,758,669 4,205,873

98 PART 9 Operating and Financial Review This Part 9 (Operating and Financial Review) should be read in conjunction with the selected key Historical Financial Information table included within the ‘‘Summary’’, Part 2 (Presentation of Financial and Other Information), Part 5 (Industry Overview), Part 6 (Business Description), Part 8 (Selected Financial Information), Part 11 (Unaudited Pro Forma Consolidated Financial Information) and Part 14 (Historical Financial Information). Prospective investors should read the entire document and not just rely on the summary set out below. The financial information included in this Part 9 (Operating and Financial Review) is extracted from the financial information set out in Part 14 (Historical Financial Information) and has been prepared in accordance with EAS. The following discussion of the Company’s results of operations and financial condition contains forward- looking statements. The Company’s actual results could differ materially from those discussed in these forward- looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this Offering Memorandum, particularly under Part 1 (Risk Factors) and Part 2 (Presentation of Financial and Other Information). In addition, certain industry issues also affect the Company’s results of operations and are described in Part 5 (Industry Overview).

Overview The Group is the largest private hospital group in Egypt, measured by number of hospital beds and number of hospitals, and currently operates four hospitals in Greater Cairo, each of which was acquired within the past two years. The Group, on an aggregated basis, had 624 hospital beds as at 31 December 2015, and in 2015 serviced 47,256 inpatients, 606,206 outpatient clinic visits and 278,404 emergency room patients and performed 34,900 surgeries. The Group’s aim is to become the leading integrated healthcare provider in Egypt through a platform of world class quality medical facilities and services to enhance patients’ quality of life. The Group’s mission is to deliver the finest quality of healthcare in a safe, reliable and caring environment, through highly trained healthcare providers, state of the art facilities and the latest medical technology, putting patients and their families first. Over the past decade, the private healthcare sector in Egypt has grown significantly, as the population is seeking higher quality and safer healthcare options than those offered by the government. Traditionally, patients tended to choose their healthcare providers based on the personal reputations of the physicians. As the private medical insurance industry grows in size and influence, patients have begun choosing their healthcare providers based on the reputation and brand of the hospitals. This is due to private insurance providers and companies offering their employees private medical coverage through direct contractual agreements generally with hospitals rather than individual physicians. The Group is at the forefront of this market evolution in which hospitals are growing larger, consolidating and developing their own reputations and brand identities. The Group aims to lead this trend by implementing a uniform standard of high-quality patient care across its platform, expanding its existing one-stop shop model to contract patients so that patients can receive all required healthcare services within the Group’s platform, upgrading its facilities with state-of-the-art equipment and attracting the best doctors and healthcare providers in Egypt. The Group’s hospitals date back as far as 1976 when Dr. Hassan Zahed, a prominent Egyptian physician, opened Cairo Specialized Hospital, Egypt’s first private sector hospital. Cleopatra, Al Shorouk and Nile Badrawi were established in 1979, 1981 and 1982, respectively. In 2014, Abraaj NAH acquired a majority beneficial stake in Cairo Specialized Hospital Company and, in the same month, acquired a majority beneficial stake in Cleopatra Hospital Company. In 2015, the Company acquired a majority stake in Nile Badrawi Hospital Company and, in 2016, a majority stake in Al Shorouk Hospital Company. In 2015, the Group generated pro forma operating revenue of EGP 741.3 million and pro forma profit for the year of EGP 51.7 million, as if the acquisition of each of its hospitals had occurred on 1 January 2015.

Significant Factors Affecting the Group’s Results of Operations The Group’s results of operations are affected by a variety of factors. Set out below is a discussion of the most significant factors that have affected its results in the past and which the Group expects may affect its results in the future. Factors other than those set forth below could also have a significant impact on the Group’s results of operations and financial condition.

99 Increasing patient capacity and volumes and enhancing efficiency The Group’s revenue depends on the number of patients it treats at its hospitals. Since Abraaj NAH acquired a majority beneficial stake in the Company in July 2014, the Company has acquired Cairo Specialized Hospital from another Abraaj Group entity, as well as Al Shorouk and Nile Badrawi. These acquisitions have increased both patient capacity and volume, growing the Group through acquisition to a total of 624 hospital beds. Going forward, the Group intends to organically increase capacity by expanding its existing facilities, as well as inorganically through selective acquisition. The Group has acquired two facilities, one adjacent to Al Shorouk and one adjacent to Cleopatra. It plans to develop those facilities into expansions of the existing hospitals. The Al Shorouk expansion is intended to increase capacity by approximately 40 beds, including beds dedicated to ICU, which tend to achieve higher revenue than other hospital beds. The Cleopatra expansion is intended to alleviate the current high occupancy rate at that hospital, which would allow Cleopatra to accommodate an increased number of patients. The expansion is expected to increase capacity by approximately 100 beds. Proximity to healthcare facilities is a main concern for Egyptian patients, so the Group plans to increase the volume of patients by expanding its footprint in Greater Cairo by organically opening polyclinics that will act as a feeder network for the Group’s hospitals. The Group has increased, and expects to continue increasing, utilisation of its facilities through initiatives such as implementation of a system that allows consultant doctors with higher demand access to more time slots, increasing the opening hours of its outpatient clinics at Nile Badrawi and Al Shorouk from six hours per day to 12 hours per day (six days per week), splitting underutilised suites into multiple standard rooms and increasing revenue-generating space by removing underutilised storage areas.

Sales mix The Group also plans to increase the volume of sales at its pharmacies and laboratories by making them available to contract patients. Insurance providers and companies providing medical coverage to their employees require patients under their plans to use specific pharmacies and diagnostic laboratories and, until recently, the Group’s pharmacies and laboratories were not included on these lists due to high prices. Because of the Group’s leverage resulting from its increased size, many insurance providers and other companies are now allowing patients under their plans to be referred to the Group’s pharmacies and laboratories. The contract patients are utilising this option because of the convenience of having the facilities inside the referring hospital. The Group’s results for the first six months of 2016 will reflect this pharmacy and laboratory revenue growth. The Group has coupled the growth in outpatient clinic visits with an increased focus on complex surgeries commanding higher revenue per patient. In its inpatient departments, the Group has targeted increasing advanced medical procedures that tend to have minimal recovery times, thereby decreasing the average length of stay. The Group expects this initiative to increase available capacity, as well as increase margins due to the higher revenue generated on a patient’s first day compared to the remainder of his or her stay.

Capital expenditure The Group has spent an increasing amount on capital expenditure in the past several years. Cleopatra’s capital expenditure was EGP 1.9 million, EGP 3.5 million and EGP 5.6 million in 2013, 2014 and 2015, respectively. Cairo Specialized Hospital’s capital expenditure was EGP 2.4 million, EGP 1.5 million and EGP 7.4 million in 2013, 2014 and 2015, respectively. Nile Badrawi’s capital expenditure was EGP 2.9 million, EGP 4.0 million and EGP 1.2 million in 2013, 2014 and 2015, respectively. Al Shorouk’s capital expenditure was EGP 2.2 million, EGP 4.8 million and EGP 4.0 million in 2013, 2014 and 2015, respectively. This was largely due to upgrades of medical equipment, renovation of facilities and improvement of the quality of services offered. Going forward, the Group intends to continue its increased level of capital expenditure on these initiatives, as well as on integrating the Group’s hospitals and enhancing operational efficiency. The Group has acquired two facilities, one adjacent to Al Shorouk and one adjacent to Cleopatra, which the Group plans to develop into extensions of those hospitals. The Group is also considering the acquisition of a facility in New Cairo that it would develop into a new hospital facility. The Group intends to fund these projects with the net proceeds of the Closed Subscription in addition to a portion of cash

100 available for capital expenditures and operational activities. For more detail, see ‘‘Capital expenditure’’ in Part 9 (Operating and Financial Review) of this Offering Memorandum.

Key cost drivers The Group’s primary operating cost drivers are fees paid to consultant doctors, the purchase of medical supplies and the salaries of medical staff. Fees paid to consultant doctors accounted for 38.0 per cent., 23.3 per cent., 17.5 per cent. and 23.8 per cent. of operating costs in 2015 at each of Cleopatra, Cairo Specialized Hospital, Nile Badrawi and Al Shorouk, respectively. Fees paid to consultant doctors increased as a percentage of operating costs over the period under review, reflecting increased revenue from doctors’ fees as a result of an increased number of doctors practising at the Group’s hospitals. The Group is currently aiming to add an additional 50 to 60 new physicians to its current roster of approximately 979 consultant doctors across its platform by the end of 2016, which the Group expects will increase fees paid to consultant doctors by around 10 per cent. and result in a corresponding increase of revenue. Salaries paid to medical staff at some of the Group’s hospitals also increased as a percentage of operating costs. These increases were driven by competitive pressures, largely a result of the recent growth in Egypt’s private healthcare sector, which has increased the demand for highly qualified medical personnel. In order to remain competitive, the Group underwent a salary review that resulted in the raise of many medical staff salaries across the Group’s platform. Across the Group’s platform, costs related to medical staff salaries increased approximately 20 per cent. in 2015, and in 2016 these costs are expected to increase a further 10–15 per cent. Salary costs for non-medical staff are also expected to increase in 2016, by approximately 10 per cent.

Synergies and cost savings initiatives The acquisition of each of its four hospitals have positioned the Group to be able to take advantage of certain synergies. The Group is in the process of centralising and standardising functions across the Group’s platform with the aim of enhancing its margins. Since 2014 management has been working to integrate and centralise the procurement functions, whereas each of the hospitals had previously purchased supplies separately. The Group has established specific guidelines for purchasing, tendering and evaluation that it is applying across Cleopatra, Cairo Specialized Hospital and Nile Badrawi. It aims to apply these guidelines to Al Shorouk, which was only recently acquired, by the end of 2016. Once fully implemented, the Group expects to make purchases of both medical and non-medical supplies on a Group-wide basis and thereby take advantage of economies of scale and increased bargaining power with suppliers. The Group has already seen some positive effects of this at Cleopatra and Cairo Specialized Hospital, where it has begun rolling out this strategy on a preliminary basis and which contributed to a decrease in medical supply costs as a percentage of revenue at each of the hospitals—from 16.5 per cent. in 2014 to 15.1 per cent. in 2015 at Cleopatra and from 32.6 per cent. in 2014 to 31.8 per cent. in 2015 at Cairo Specialized Hospital. The Group is also in the advanced stages of centralising its warehousing. Currently, instead of a centralised warehouse, each of the Group’s hospitals has its own storage rooms within its facilities. The Group plans to outsource its warehousing to a third-party in order to free up space in the hospitals that can be used for revenue generating services. As the Group continues to standardise its service offerings across its platform, it plans to negotiate Group-wide terms with contractual and insurance clients that will be more favourable than the current terms negotiated by each individual hospital. The Group has begun this process at Cleopatra and Cairo Specialized Hospital, where it has renegotiated fees paid by some of its contract customers in 2015 and which contributed to a higher gross profit margin. Many of the Group’s patients are covered by third-party payers such as health insurance providers. As a result of the payment structure for third-party payers, the Group generally collects fees from these payers around two months after a claim is submitted. The Group has created a business development department tasked, in part, with shortening the average payment gap. The Group is targeting implementation of a 45-day payment policy for its receivables.

Contract patient base A key driver of the Group’s revenue growth is its ability to win new, and retain existing, contract customers such as private insurance companies and corporations. In 2015, revenue from these contract customers

101 represented 61.6 per cent., 65.6 per cent., 67.4 per cent. and 39.1 per cent. of Cleopatra’s, Cairo Specialized Hospital’s, Nile Badrawi’s and Al Shorouk’s total revenues, respectively. The Group believes it is well-placed to continue to win new, and retain existing, contracts given its relationships with many of these institutions, its focus on quality and its increased bargaining power resulting from the Group’s larger size. The Group, on an aggregated basis, had 499 contracts with insurance providers and other companies. This number does not adjust for insurance providers or other companies that have contracts with multiple Group hospitals, which the Group is in the process of consolidating at a Group-wide level. As the Egyptian private medical insurance industry continues to grow, the Group’s ability to win new, and retain existing, contract customers will give the Group access to a larger patient base that is spending an increasing amount on healthcare services. The Group plans to achieve this, in part, by hiring a business development team to focus on winning new, and retaining existing, contract customers.

Demographics and health habits of the population in Egypt The Group’s revenue has benefited in part from the high prevalence in Egypt of diseases requiring routine treatment and a higher frequency of hospital visits. In 2013, according to the LOGIC Report, Egypt had the 3rd highest prevalence of diabetes globally in the 20–79 age group, 62.0 per cent. of the Egyptian population was overweight and 28.9 per cent. of the population was considered obese. Egypt also had one of the highest number of cases of hepatitis C globally in 2012, according to the LOGIC Report. Diabetes and obesity are drivers of numerous medical conditions, including those that are the most expensive to treat and which require the greatest degree of medical specialisation and sophistication, such as diseases of the cardiovascular system, the kidneys and the eyes. Healthcare expenditure grew from 4.8 per cent. of GDP to 5.3 per cent. of GDP between 2010 and 2015, according to the LOGIC Report. In line with this trend, the Group has seen its revenues growing faster than Egypt’s GDP. Between 2013 and 2015, GDP per capita in Egypt grew by a CAGR of 12.3 per cent., according to the IMF. Revenue generated by Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company grew by a CAGR of 16.8 per cent., 14.4 per cent., 18.2 per cent. and 18.6 per cent., respectively, between 2013 and 2015. The Group believes that the increased expenditure on these lifestyle diseases has not been a result of increased prevalence of such diseases, but a result of Egyptians’ increased ability to afford the necessary treatments and an increasing awareness of health-related issues in the general population. The Group expects these general trends to continue and therefore expects its revenue to outpace the Egyptian economy as a whole. The Egyptian healthcare market is underpenetrated by global and regional standards. For example, total annual healthcare expenditure per capita in 2013 was approximately US$159 in Egypt, compared to US$1,551 and US$1,052 in the United Arab Emirates and Saudi Arabia, respectively, according to the World Health Organization. Further, there was only one hospital bed per every 2,000 people in Egypt, compared to 16.4 in Germany, 5.8 in the United States and 4.2 in Saudi Arabia. The LOGIC Report forecasts that the Egyptian healthcare market will grow by a CAGR of 17.6 per cent. between 2015 and 2019, in part fuelled by the expected population growth, and in particular the growth in the elderly segment of the population that is more vulnerable to acute diseases. The Group expects the demand for medical services, and consequently the Group’s revenue, to reflect the expected increases in healthcare spending per capita.

Inflation and devaluation of the Egyptian pound The Egyptian economy has been characterised by substantial inflation. Central Bank of Egypt core inflation has averaged approximately 7.9 per cent. since January 2011, standing at 8.4 per cent. in March 2016. Central Bank of Egypt headline inflation averaged 9.4 per cent. in that period and frequently rose substantially above 10 per cent. The inflation has largely reflected the Egyptian pound’s significant devaluation over the last five years. Between January 2011 and January 2015 the Egyptian pound fell 23 per cent. against the US dollar, between January 2015 and December 2015 it fell 8 per cent. and in the first four months of 2016 it fell 14 per cent., according to the Central Bank of Egypt. This inflation has negatively affected the Group’s revenue and margins. The Group endeavours to preserve its margins by enhancing operational efficiencies and increasing its bargaining power with suppliers and contract customers in order to reduce costs. When possible, the Group passes inflation related cost increases on to its customers.

102 Seasonality The Group’s revenue, in particular revenue derived from outpatient clinics, is affected by seasonality during the summer holidays, which fall in the second half of the year. Travellers from the Gulf region and elsewhere in the Middle East seek medical treatment in Egypt during their summer holidays due to the relatively low cost of treatment. On average, revenue in the second half of the year is approximately 10 per cent. higher than the first half of the year. The Group’s revenue is generally lower during the month of Ramadan, as Egyptians tend not to attend hospitals for voluntary procedures during this month. In recent years, Ramadan has fallen in the summer months, offsetting the aforementioned seasonality.

Presentation of Financial Information and Comparability of Results The Company directly operates the Cleopatra hospital in Egypt and also has three main operating subsidiaries—Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company—each of which operates a hospital in Egypt. The Company was beneficially acquired by Abraaj NAH in July 2014. Also in July 2014, Abraaj NAH acquired a majority beneficial stake in Cairo Specialized Hospital Company, which it subsequently made a subsidiary of the Company in September 2015 as part of a corporate restructuring. Nile Badrawi Hospital Company and Al Shorouk Hospital Company were acquired by the Company in September 2015 and January 2016, respectively. Together, the Group’s four hospitals constitute all of the business undertakings of the Company as at the date of this Offering Memorandum. For more detail about the financial information included in this Offering Memorandum, see ‘‘Presentation of financial information’’ in Part 2 (Presentation of Financial and Other Information). Going forward, the Group will report its results of operations on a fully consolidated basis. This will differ from the presentation of financial information in this Offering Memorandum. Further, there can be no guarantee that the Group’s historic performance will be repeated in the future, particularly given the competitive nature of the industry in which it operates, and its sales, profit and cash flow may significantly underperform market expectations.

Key Performance Indicators The following table sets forth certain key operational performance indicators that the Group uses to manage its business. Year ended 31 December Key Operational Performance Indicator(1) 2015 2014 2013 Inpatient revenue per inpatient (EGP)(2) Cleopatra ...... 4,171 3,639 3,186 Cairo Specialized Hospital ...... 2,986 2,639 2,504 Nile Badrawi ...... 5,565 5,661 3,980 Al Shorouk ...... 4,546 4,105 3,798 Outpatient revenue per outpatient clinic visit (EGP)(3) Cleopatra ...... 204 180 168 Cairo Specialized Hospital ...... 84 106 146 Nile Badrawi ...... 272 308 145 Al Shorouk ...... 378 271 263 Operating revenue per bed (EGP thousands)(4) Cleopatra ...... 2,012 1,759 1,475 Cairo Specialized Hospital ...... 747 616 570 Nile Badrawi ...... 873 773 624 Al Shorouk ...... 1,155 980 821

(1) Figures include data for periods during which the Company did not own the respective hospitals. (2) Defined as the operating revenue generated by inpatients (defined as patients admitted to an accommodation room) divided by the number of inpatients. (3) Defined as the operating revenue generated by outpatient clinic visits (defined as the total number of visits to the outpatient clinics made by patients during the period) divided by the number of outpatient clinic visits. (4) Defined as operating revenue divided by total number of beds.

103 The following table sets forth certain key financial performance indicators that the Group uses to manage its business.

Year ended 31 December Key Financial Performance Indicator(1) 2015 2014 2013 Gross profit (EGP millions) Cleopatra ...... 117.6 85.7 71.7 Cairo Specialized Hospital ...... 37.5 32.9 31.9 Nile Badrawi ...... 39.7 31.4 17.8 Al Shorouk ...... 38.7 31.7 22.5 Gross profit margin(2) (%) Cleopatra ...... 35.4 29.5 29.5 Cairo Specialized Hospital ...... 25.1 26.7 28.0 Nile Badrawi ...... 32.7 29.2 20.5 Al Shorouk ...... 27.9 27.0 22.8 Adjusted profit for the year(3) (EGP millions) Cleopatra ...... 64.7 64.1 41.8 Cairo Specialized Hospital ...... 24.2 18.5 22.1 Nile Badrawi ...... 15.5 18.2 6.7 Al Shorouk ...... 12.0 11.4 6.8 EBITDA(4) (EGP millions) Cleopatra ...... 99.4 72.8 59.2 Cairo Specialized Hospital ...... 33.5 30.3 30.2 Nile Badrawi ...... 27.1 28.9 13.4 Al Shorouk ...... 22.6 20.7 14.1 Adjusted EBITDA(5) (EGP millions) Cleopatra ...... 99.4 93.1 62.3 Cairo Specialized Hospital ...... 33.5 30.3 30.2 Nile Badrawi ...... 27.1 28.9 13.4 Al Shorouk ...... 22.6 20.7 14.1 EBITDA margin(6) (%) Cleopatra ...... 30.0 25.1 24.3 Cairo Specialized Hospital ...... 22.4 24.6 26.5 Nile Badrawi ...... 22.3 26.9 15.5 Al Shorouk ...... 16.3 17.6 14.3 Adjusted EBITDA margin(7) (%) Cleopatra ...... 30.0 32.1 25.6 Cairo Specialized Hospital ...... 22.4 24.6 26.5 Nile Badrawi ...... 22.3 26.9 15.5 Al Shorouk ...... 16.3 17.6 14.3

Key Pro Forma Financial Performance Indicator(8) Pro forma gross profit (EGP millions)...... 234.0 Pro forma gross profit margin (%)...... 31.6 Pro forma EBITDA(9) (EGP millions)...... 182.6 Pro forma EBITDA margin(10) (%)...... 24.6

(1) Figures include data for periods during which the Company did not own the respective hospitals. (2) Defined as gross profit divided by operating revenue. (3) See ‘‘Non-GAAP financial measures’’ in Part 2 (Presentation of Financial and Other Information) for a reconciliation of profit for the year to adjusted profit for the year. (4) Defined as profit for the year adjusted for finance income, finance costs, current tax, deferred tax, fixed asset depreciation and write-offs, provisions, (loss)/gain on currency translation differences and impairment of trade receivables. For a reconciliation of profit for the year to EBITDA, see ‘‘Non-GAAP financial measures’’ in Part 2 (Presentation of Financial and Other Information) of this Offering Memorandum. (5) Defined as EBITDA excluding a non-recurring donation to a university in Cairo and a non-recurring liquidation of Cleopatra’s employee fund. The liquidation occurred because the Group no longer plans to operate the fund.

104 (6) Defined as EBITDA divided by operating revenue. (7) Defined as adjusted EBITDA divided by operating revenue. (8) Pro forma to show the effect of the Company’s ownership of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as if the acquisition of each of those companies had occurred on 1 January 2015. (9) Defined as pro forma profit for the year adjusted for pro forma finance income, pro forma finance costs, pro forma (loss)/gain on currency translation differences, pro forma current tax, pro forma deferred tax, pro forma provisions, pro forma fixed asset depreciation and write-offs and pro forma impairment of trade receivables. (10) Defined as pro forma EBITDA divided by pro forma operating revenue.

Current Trading and Prospects The Group’s overall operational performance remained positive during the first quarter in 2016. Sales volume and operating revenue both increased compared with the same period in 2015 and gross profit remained strong and in line with management’s projections. Management is therefore confident in the operational and financial ability of the Group to execute its strategy as set forth in this Offering Memorandum and is confident in the Group’s long-term outlook.

Egyptian Tax Considerations The applicable corporate tax rate on all Egyptian corporations is currently 22.5 per cent., effective from 2015. In 2014, the applicable corporate tax rate on Egyptian corporations was 25 per cent., plus an additional 5 per cent. surtax applicable on income in excess of EGP 1 million. Prior to 2014, the applicable corporate tax rate on all Egyptian corporations was 25 per cent. In 2013, the applicable corporate tax rate for Egyptian corporations was 20 per cent. on the first EGP 10 million of income and 25 per cent. on the income in excess of EGP 10 million.

Description of Key Line Items Operating revenue Operating revenue comprises fees received by the Group for medical services. Operating revenue is measured at the fair value of the consideration received or receivable, including cash and balances and trade and notes receivable arising from rendering medical services and sale of medicine throughout the Group’s ordinary course of business, net of sales taxes, deductions or discounts. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits related to the sale process or service provision will flow to the Group; and when other specific criteria have been met for the Group’s activities as described below. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Medical services revenue The Group renders several medical services, including surgeries, accommodation, medical supervision, laboratories, tests, different types of radiology, emergency room services and outpatient clinics and services. Revenue from medical services is recognised when the service is rendered to the patient.

Sale of medicine revenue The Group sells medicine through the hospital pharmacies and its outpatient clinics, in addition to using medicine for treatment when providing inpatient services. Revenue is recognised once the medicine is received by the patient or used during the patient’s stay in the hospital.

Operating costs Operating costs consist mainly of medicines and other medical supplies, fees paid to consultant doctors, salaries of medical staff, lease payments for medical equipment, depreciation charges for medical assets, licensing and compliance expenses, other regulatory expenses and certain other direct operational costs.

105 General and administrative expenses General and administrative expenses consist mainly of non-medical staff costs (including management costs), non-medical consumables, professional and consulting fees, depreciation charges for non-medical assets and certain other expenses such as utilities and IT.

Provisions Provisions consist mainly of provisions set aside to settle expected or potential obligations relating to legal, tax and other claims and employee benefits.

Other income Other income consists mainly of rental income from the leasing of facilities to third parties, cafeteria sales, gift sales and sales of scrap materials.

Finance income Finance income consists mainly of interest receivable on deposits and favourable currency translation differences.

Finance costs Finance costs consist mainly of interest payable on loans and facilities.

(Loss)/gain on currency translation differences (Loss)/gain on currency translation differences consists of favourable or unfavourable currency translation differences at Nile Badrawi Hospital Company.

Current tax Current tax is calculated on the basis of the tax laws enacted at the balance sheet date on profit before tax adjusted for expenses not deductible for tax purposes.

Deferred tax Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial information and the corresponding tax bases used in the computation of the taxable profit.

Results of Operations Cleopatra’s results of operations

Year ended 31 December 2015 2014 2013 (audited) (EGP thousands) Operating revenue ...... 332,003 290,295 243,293 Operating costs ...... (214,407) (204,608) (171,606) Gross profit ...... 117,595 85,687 71,687 General and administrative expenses ...... (27,859) (20,671) (20,556) Provisions ...... (2,974) (2,887) (761) Other income ...... 1,029 679 732 Profit for the year before finance income and income tax ...... 87,791 62,808 51,101 Finance income ...... 5,104 2,087 1,573 Finance cost ...... (8,488) (3) — Profit for the year before income tax ...... 84,407 64,891 52,674 Current tax ...... (20,603) (21,372) (13,997) Deferred tax ...... 886 283 11 Profit for the year ...... 64,690 43,802 38,688

106 Operating revenue Operating revenue increased by EGP 41.7 million, or 14.4 per cent., from EGP 290.3 million in 2014 to EGP 332.0 million in 2015. Operating revenue increased by EGP 47.0 million, or 19.3 per cent., from EGP 243.3 million in 2013 to EGP 290.3 million in 2014. The radiology, physiotherapy, endoscopy and laboratory departments’ revenue witnessed significant growth in 2014 compared to 2013. The revenue of the outpatient clinics, physiotherapy and endoscopy departments grew in 2015 compared to 2014. These increases were primarily a result of an increase in both number of surgeries, as well as revenue per surgery resulting from price increases. The hospital also targeted more advanced procedures commanding higher prices. The emergency room had an increase in revenue, as simple procedures were reallocated from the operating room to the emergency room. This was done in order to free up capacity in the operating rooms where more complex procedures commanding higher fees can be performed. Management’s efforts to improve the efficiency and optimisation of the hospital’s outpatient clinics resulted in an increase in the number of outpatient clinic visits.

Operating costs

Year ended 31 December 2015 2014 2013 (audited) (EGP thousands) Doctor fees ...... 81,388 67,449 56,457 Salaries, wages and benefits ...... 61,643 68,307 51,123 Medical and pharmaceutical supplies ...... 50,035 48,055 43,521 Food, beverage and consumables costs ...... 6,569 6,860 7,360 Maintenance, spare parts and energy costs ...... 6,324 5,321 4,743 Fixed assets depreciation and write-offs ...... 5,860 6,530 6,645 Other expenses ...... 2,589 2,086 1,757 214,407 204,608 171,606

Operating costs increased by EGP 9.8 million, or 4.8 per cent., from EGP 204.6 million in 2014 to EGP 214.4 million in 2015. This represented a decrease from 70.5 per cent. to 64.6 per cent. as a percentage of operating revenue. As a percentage of operating revenue, adjusted operating costs, which excludes fixed assets depreciation and write-offs, decreased from 68.2 per cent. in 2014 to 62.8 per cent. in 2015. The decrease was primarily due to a reduction of medical staff costs resulting from controlling and efficiently managing overtime shifts and linking their compensation to performance, as well as a one-time liquidation of the hospital’s employee fund in 2014. This liquidation, which amounted to a total payment to employees of EGP 20.3 million, was accounted for in part as an operating cost (EGP 14.5 million) and in part as a general and administrative expense (EGP 5.8 million). The liquidation occurred because the Group no longer intends to operate the fund. The more advanced procedures targeted by the hospital, which tend to have minimal recovery times as a result of medical improvements, resulted in a decreased average length of stay and therefore lower operating costs as a percentage of operating revenue. Further, a preliminary procurement strategy was put in place, which led to a decrease in medical supply costs as a percentage of operating revenue. Fees paid to consultant doctors increased slightly as a percentage of operating revenue due to renegotiated fee arrangements with outpatient clinic consultant doctors. Operating costs increased by EGP 33.0 million, or 19.2 per cent., from EGP 171.6 million in 2013 to EGP 204.6 million in 2014. As a percentage of operating revenue, the hospital’s operating costs remained flat at 70.5 per cent. As a percentage of operating revenue, adjusted operating costs increased from 67.8 per cent. in 2013 to 68.2 per cent. in 2014. This was primarily due to the aforementioned one-time liquidation of the hospital’s employee fund in 2014.

Gross profit Gross profit increased by EGP 31.9 million, or 37.2 per cent., from EGP 85.7 million in 2014 to EGP 117.6 million in 2015. Adjusted gross profit, which excludes fixed assets depreciation and write-offs, increased by 33.9 per cent. from EGP 92.2 million in 2014 to EGP 123.5 million in 2015. This increase was primarily due to an increase in both number of surgeries, as well as revenue per surgery resulting from price increases. Improvements to the hospital’s outpatient clinics, emergency room and a reduction of medical staff costs resulting from efficiently managing overtime shifts also contributed positively. Further,

107 a preliminary procurement strategy was put in place, which led to a decrease in medical supply costs as a percentage of operating revenue. Gross profit increased by EGP 14.0 million, or 19.5 per cent., from EGP 71.7 million in 2013 to EGP 85.7 million in 2014. Adjusted gross profit increased by 17.7 per cent. from EGP 78.3 million in 2013 to EGP 92.2 million in 2014. This increase was primarily due to an increased number of surgeries and higher revenue per surgery as a result of inflation related price increases.

General and administrative expenses

Year ended 31 December 2015 2014 2013 (audited) (EGP thousands) Salaries, wages and benefits ...... 17,159 16,200 12,456 Impairment of trade receivables ...... 2,130 (4) 71 Professional and consulting fees ...... 1,732 190 49 Food, beverage and consumables costs ...... 928 247 245 Rent...... 861 351 319 Donations ...... 696 586 3,738 Fixed assets depreciation ...... 691 622 633 Maintenance, spare parts and energy costs ...... 581 433 441 Government fees ...... 548 288 168 Other expenses ...... 2,533 1,757 2,436 27,859 20,671 20,556

General and administrative expenses increased by EGP 7.2 million, or 34.8 per cent., from EGP 20.7 million in 2014 to EGP 27.9 million in 2015. This represented an increase from 7.1 per cent. to 8.4 per cent. as a percentage of operating revenue. Adjusted general and administrative expenses, which excludes impairment of trade receivables and fixed assets depreciation, increased from 6.9 per cent. to 7.5 per cent. as a percentage of operating revenue. This increase was primarily due to increased non-medical staff costs relating to the newly hired corporate management team, offset in part by the EGP 5.8 million portion of the one-time liquidation of the hospital’s employee fund in 2014 that was accounted for in general and administrative expenses. The other main driver of general and administrative expenses for the period was professional and consulting fees relating to the Company’s acquisitions of Cairo Specialized Hospital Company and Nile Badrawi Hospital Company in 2015. General and administrative expenses increased by EGP 0.1 million, or 0.6 per cent., from EGP 20.6 million in 2013 to EGP 20.7 million in 2014. This represented a decrease from 8.4 per cent. to 7.1 per cent. as a percentage of operating revenue. Adjusted general and administrative expenses decreased from 8.2 per cent. to 6.9 per cent. as a percentage of operating revenue. This decrease was primarily due to a donation in 2013 to a university in Cairo of EGP 3.7 million, of which 3.1 million is considered to be non-recurring. The decrease was offset by the aforementioned one-time liquidation of the hospital’s employee fund in 2014.

Provisions Cleopatra Hospital Company made EGP 3.0 million of provisions in 2015, up EGP 0.1 million or 3.0 per cent., from EGP 2.9 million in 2014. Cleopatra Hospital Company made EGP 2.9 million of provisions in 2014, up EGP 2.1 million or 279.4 per cent., from EGP 0.8 million in 2013.

Other income Other income increased by EGP 0.4 million, or 51.5 per cent., from EGP 0.7 million in 2014 to EGP 1.0 million in 2015. This increase was primarily due to growth of cafeteria sales resulting from the increased number of patients and an increase of rental income. Other income decreased by EGP 0.1 million, or 7.3 per cent., from EGP 0.7 million in 2013 to EGP 0.7 million in 2014. This decrease was primarily due to losses on the sale of medical equipment.

108 Profit for the year before finance income and income tax Profit for the year before finance income and income tax increased by EGP 25.0 million, or 39.8 per cent., from EGP 62.8 million in 2014 to EGP 87.8 million in 2015. This increase was primarily due to increased gross profit, offset in part by impairment of trade receivables. Profit for the year before finance income and income tax increased by EGP 11.7 million, or 22.9 per cent., from EGP 51.1 million in 2013 to EGP 62.8 million in 2014. This increase was primarily due to increased gross profit in 2014 and a one-time donation in 2013 to a university in Cairo of EGP 3.7 million. Profit for the year before finance income and income tax was offset, in part, by the aforementioned one-time liquidation of the hospital’s employee fund in 2014.

Finance income Finance income increased by EGP 3.0 million, or 144.6 per cent., from EGP 2.1 million in 2014 to EGP 5.1 million in 2015. Finance income increased by EGP 0.5 million, or 32.7 per cent., from EGP 1.6 million in 2013 to EGP 2.1 million in 2014. These increases were primarily due to credit interest on cash balances.

Finance costs Finance costs increased by EGP 8.5 million, from EGP 3 thousand in 2014 to EGP 8.5 million in 2015. This increase was primarily due to a loan agreement entered into by Cleopatra Hospital Company related to the acquisitions of Cairo Specialized Hospital Company and Nile Badrawi Hospital Company in September 2015.

Current tax Current tax decreased by EGP 0.8 million, or 3.5 per cent., from EGP 21.4 million in 2014 to EGP 20.6 million in 2015. The hospital’s effective tax rate in 2015 was 23.2 per cent., compared to 32.5 per cent. in 2014. The decrease was primarily due to the reduction in the applicable corporate tax rate to 22.5 per cent. in 2015 from 30 per cent. in 2014. Current tax increased by EGP 7.4 million, or 52.7 per cent., from EGP 14.0 million in 2013 to EGP 21.4 million in 2014. The hospital’s effective tax rate in 2014 was 32.5 per cent., compared to 26.5 per cent. in 2013. The increase was primarily due to an increase in the applicable corporate tax rate on income over EGP 1 million from 25 per cent. in 2013 to 30 per cent. in 2014.

Deferred tax Deferred tax increased by EGP 0.6 million, or 213.1 per cent., from EGP 0.3 million in 2014 to EGP 0.9 million in 2015. Deferred tax increased by EGP 0.3 million, from EGP 0.01 million in 2013 to EGP 0.3 million in 2014.

Profit for the year Profit for the year increased by EGP 20.9 million, or 47.7 per cent., from EGP 43.8 million in 2014 to EGP 64.7 million in 2015. This increase was primarily due to increased profit for the year before finance income and income tax and a reduction of the applicable corporate tax rate in Egypt. Profit for the year increased by EGP 5.1 million, or 13.2 per cent., from EGP 38.7 million in 2013 to EGP 43.8 million in 2014. This increase was primarily due to increased profit for the year before finance income and income tax.

Adjusted profit for the year Cleopatra’s adjusted profit for the year is profit for the year excluding a non-recurring donation in 2013 to a university in Cairo and a non-recurring liquidation in 2014 of the hospital’s employee fund that the Group no longer operates. Adjusted profit for the year increased by EGP 0.6 million, or 0.9 per cent., from EGP 64.1 million in 2014 to EGP 64.7 million in 2015. This increase was primarily due to increased gross profit, offset in part by increased impairment of trade receivables and increased finance costs resulting from a loan agreement

109 entered into by Cleopatra Hospital Company related to the acquisitions of Cairo Specialized Hospital Company and Nile Badrawi Hospital Company in September 2015. Adjusted profit for the year increased by EGP 22.3 million, or 53.4 per cent., from EGP 41.8 million in 2013 to EGP 64.1 million in 2014. This increase was primarily due to increased gross profit in 2014.

Cairo Specialized Hospital’s results of operations

Operating revenue Operating revenue increased by EGP 26.1 million, or 21.2 per cent., from EGP 123.3 million in 2014 to EGP 149.4 million in 2015. Revenue in the endoscopy, laboratory, radiology and emergency room departments grew significantly from 2014 to 2015 as a result of efficiency initiatives. Inpatient revenue increased as a result of renegotiated higher fees from insurance providers and other contract customers in 2015. The number of surgeries per patient increased the number of overall surgeries performed at the hospital, and there was also an increase in revenue per surgery. Prior to the Company’s acquisition of Cairo Specialized Hospital, the outpatient clinics, pharmacy and blood bank were each rented to third- party doctors. Under the rental arrangements, the hospital collected fixed rental fees and the third-party doctors kept the revenue generated from procedures performed in that department, which had the effect of capping the hospital’s revenue. All of the rental agreements, other than the blood bank, were terminated during 2015 under the hospital’s new management, shifting revenue from other income to operating revenue. Operating revenue increased by EGP 9.3 million, or 8.1 per cent., from EGP 114.0 million in 2013 to EGP 123.3 million in 2014. This increase was primarily due to an increased number of surgeries from 8,040 in 2013 to 9,037 in 2014, increased revenue per surgery and an increase in the number of inpatients from 13,151 in 2013 to 13,771 in 2014.

Operating costs

Year ended 31 December 2014 2015 Restated 2013 (audited) (EGP thousands) Medical and pharmaceutical supplies ...... 47,548 40,231 36,385 Doctors’ fees ...... 26,045 20,440 19,940 Salaries, wages and benefits ...... 23,468 16,378 13,716 Fixed assets depreciation and write-offs ...... 3,643 3,603 3,037 Food, beverage and consumables costs ...... 3,424 2,525 2,124 Maintenance, spare parts and energy costs ...... 5,732 4,932 3,272 Other expenses ...... 1,989 2,296 3,647 111,849 90,405 82,120

110 Operating costs increased by EGP 21.4 million, or 23.7 per cent., from EGP 90.4 million in 2014 to EGP 111.8 million in 2015. This represented an increase from 73.3 per cent. to 74.9 per cent. as a percentage of operating revenue. As a percentage of operating revenue, adjusted operating costs increased from 70.4 per cent. in 2014 to 72.4 per cent. in 2015. The increase was primarily due to increases in medical staff salaries, which were previously considered to be relatively low. The hospital’s medical supply costs decreased as a percentage of operating revenue, despite devaluation of the Egyptian pound during the period, as a result of a preliminary cost control programme with respect to medical supply costs. Fees paid to consultant doctors increased slightly as a result of new consultant doctors. Operating costs increased by EGP 8.3 million, or 10.1 per cent., from EGP 82.1 million in 2013 to EGP 90.4 million in 2014. This represented an increase from 72.0 per cent. to 73.3 per cent. as a percentage of operating revenue. Adjusted operating costs increased as a percentage of operating revenue from 69.3 per cent. in 2013 to 70.4 per cent. in 2014. The increase was primarily due to a large increase in maintenance and energy costs in 2014 resulting from increased energy prices in Egypt, as well as smaller increases in medical supply costs and medical staff salaries as a percentage of operating revenue.

Gross profit Gross profit increased by EGP 4.7 million, or 14.2 per cent., from EGP 32.9 million in 2014 to EGP 37.5 million in 2015. Adjusted gross profit increased by 12.9 per cent. from EGP 36.5 million in 2014 to EGP 41.2 million in 2015. This increase was primarily due to higher prices from insurance providers and other contract customers that the Group was able to renegotiate in 2015, offset in part by higher medical staff salaries and doctor consultant fees. Gross profit increased by EGP 1.0 million, or 3.0 per cent., from EGP 31.9 million in 2013 to EGP 32.9 million in 2014. Adjusted gross profit increased by 4.4 per cent. from EGP 35.0 million in 2013 to EGP 36.5 million in 2014. This increase was primarily due to an increased number of surgeries, increase revenue per surgery and an increase in the number of inpatients.

General and administrative expenses

Year ended 31 December 2014 2015 Restated 2013 (audited) (EGP thousands) Salaries, wages and benefits ...... 8,591 6,703 6,673 Impairment of trade receivables ...... 2,682 737 — Professional and consulting fees ...... 1,822 1,531 103 Energy expenses ...... 236 205 105 Fixed assets depreciation and write-offs ...... 33 33 29 Other expenses ...... 843 848 886 14,207 10,058 7,795

General and administrative expenses increased by EGP 4.1 million, or 41.2 per cent., from EGP 10.1 million in 2014 to EGP 14.2 million in 2015. This represented an increase from 8.2 per cent. to 9.5 per cent. as a percentage of operating revenue, reflecting primarily a higher impairment of trade receivables in 2015 (for invoices not collected within 150 days). Adjusted general and administrative expenses increased as a percentage of operating revenue from 7.5 per cent. in 2014 to 7.7 per cent. in 2015. The remaining increase was primarily due to higher non-medical staff costs relating to the hospital’s new management team. General and administrative expenses increased by EGP 2.3 million, or 29.0 per cent., from EGP 7.8 million in 2013 to EGP 10.1 million in 2014. This represented an increase from 6.8 per cent. to 8.2 per cent. as a percentage of operating revenue. Adjusted general and administrative expenses increased as a percentage of operating revenue from 6.8 per cent. in 2013 to 7.5 per cent. in 2014. This increase was primarily due to professional and consultancy expenses incurred in 2014 relating to financial, auditing and legal services.

Provisions Cairo Specialized Hospital Company made EGP 6.9 million of provisions in 2015, up EGP 6.2 million, from EGP 0.7 million in 2014.

111 Cairo Specialized Hospital Company made EGP 0.7 million of provisions in 2014, compared to nil provisions made in 2013. The provisions made in 2014 primarily related to legal claims and balances kept in relation to retired employees’ vacation allowances.

Other income Other income increased by EGP 0.7 million, or 23.0 per cent., from EGP 3.1 million in 2014 to EGP 3.8 million in 2015. Prior to the Company’s acquisition of Cairo Specialized Hospital, some of the medical departments such as the pharmacy and blood bank, as well as the cafeteria, were rented to third parties. Under the rental arrangements, the hospital collected a fixed rental fee and the third parties kept the revenue generated from the department. The increase of other income reflects increases in the rental fees. All of these rental agreements, except the blood bank, were terminated during 2015 under the hospital’s new management. Other income increased by EGP 0.07 million, or 2.2 per cent., from EGP 3.0 million in 2013 to EGP 3.1 million in 2014. This increase was primarily due to increased rental income from the pharmacy and blood bank.

Profit for the year before finance income and income tax Profit for the year before finance income and income tax decreased by EGP 5.0 million, or 19.9 per cent., from EGP 25.2 million in 2014 to EGP 20.2 million in 2015. The decrease was primarily due to one-time provisions made in 2015, a higher non-recurring impairment of trade receivables in 2015 and higher non-medical staff costs relating to the hospital’s new management team, each of which offset the growth of the hospital’s gross profit. Profit for the year before finance income and income tax decreased by EGP 1.9 million, or 7.2 per cent., from EGP 27.2 million in 2013 to EGP 25.2 million in 2014. This decrease was primarily due to professional and consultancy expenses incurred in 2014 relating to financial, auditing and legal services.

Finance income Finance income increased by EGP 1.3 million, or 48.7 per cent., from EGP 2.7 million in 2014 to EGP 4.0 million in 2015. Finance income increased by EGP 0.4 million, or 19.7 per cent., from EGP 2.3 million in 2013 to EGP 2.7 million in 2014. These increases were primarily due to credit interest earned on cash balances.

Current tax Current tax decreased by EGP 1.3 million, or 15.0 per cent., from EGP 8.7 million in 2014 to EGP 7.4 million in 2015. The hospital’s effective tax rate in 2015 was 28.7 per cent., compared to 33.6 per cent. in 2014. This decrease was primarily due to the reduction in the applicable corporate tax rate to 22.5 per cent. in 2015 from 30 per cent. in 2014. Current tax increased by EGP 1.7 million, or 24.0 per cent., from EGP 7.0 million in 2013 to EGP 8.7 million in 2014. The hospital’s effective tax rate in 2014 was 33.6 per cent., compared to 24.7 per cent. in 2013. The increase was primarily due to an increase in the applicable corporate tax rate on income over EGP 1 million from 25 per cent. in 2013 to 30 per cent. in 2014.

Deferred tax Deferred tax decreased by EGP 1.1 million, or 162.1 per cent., from negative EGP 0.7 million in 2014 to EGP 0.4 million in 2015. Deferred tax increased by EGP 0.4 million, or 161.9 per cent., from negative EGP 0.3 million in 2013 to negative EGP 0.7 million in 2014.

Profit for the year Profit for the year decreased by EGP 1.3 million, or 6.9 per cent., from EGP 18.5 million in 2014 to EGP 17.2 million in 2015. The decrease was primarily due to decreased profit for the year before finance income and income tax. Profit for the year was positively affected by a reduction of the applicable corporate tax rate in Egypt.

112 Profit for the year decreased by EGP 3.6 million, or 16.3 per cent., from EGP 22.1 million in 2013 to EGP 18.5 million in 2014. The decrease was primarily due to decreased profit for the year before finance income and income tax.

Adjusted profit for the year Cairo Specialized Hospital’s adjusted profit for the year is profit for the year excluding provisions for claims incurred in 2015 but that are relevant to a prior period and the portion of impairment of trade receivables that does not pertain to 2015 (one per cent. of revenue is considered to be the recurring portion). Adjusted profit for the year increased by EGP 5.6 million, or 30.4 per cent., from EGP 18.5 million in 2014 to EGP 24.2 million in 2015. This increase was primarily due to higher prices from insurance providers and other contract customers that the Group was able to renegotiate in 2015, offset in part by higher medical staff salaries and doctor consultant fees. Adjusted profit for the year decreased by EGP 3.6 million, or 16.3 per cent., from EGP 22.1 million in 2013 to EGP 18.5 million in 2014. This decrease was primarily due to decreased profit for the year before finance income and income tax.

Nile Badrawi’s results of operations

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP) Operating revenue ...... 121,307,079 107,482,434 86,802,150 Operating costs ...... (81,601,341) (76,120,070) (69,045,206) Gross profit ...... 39,705,738 31,362,364 17,756,944 General and administrative expenses ...... (28,072,750) (9,245,588) (10,286,049) Provisions ...... (4,218,259) (722,700) — Other income ...... 1,856,750 3,460,673 871,475 Profit for the year before finance income and income tax ... 9,271,479 24,854,749 8,342,370 Finance income ...... — — 11,312 (Loss)/gain on currency translation differences ...... (6,087) 38,313 17,577 Profit for the year before income tax ...... 9,265,392 24,893,062 8,371,259 Current tax ...... (4,991,312) (7,017,881) (2,060,578) Deferred tax ...... (661,591) 282,104 417,112 Profit for the year ...... 3,612,489 18,157,285 6,727,793

Operating revenue Operating revenue increased by EGP 13.8 million, or 12.9 per cent., from EGP 107.5 million in 2014 to EGP 121.3 million in 2015. Revenue per surgery increased as a result of more complex surgeries being performed, in part due to receiving an organ transplantation license from the MoHP. Prior to the acquisition, the outpatient clinic revenue had been negatively affected by the hospital’s relatively weak infrastructure and equipment, which had resulted in a number of outpatient consultant doctors leaving the hospital or limiting the number of outpatients served. The radiotherapy department experienced an increased number of patients and, because of minimal competition at other hospitals, it was also able to increase prices. Revenue in the catheterisation laboratory in the cardiology department grew because a new head of the department was hired and globally renowned consultants were invited to perform operations at the hospital. Operating revenue increased by EGP 20.7 million, or 23.8 per cent., from EGP 86.8 million in 2013 to EGP 107.5 million in 2014. This increase was primarily due to higher outpatient revenue and higher revenue in the radiotherapy department resulting from acquisition of an advanced radiotherapy machine for which the hospital charged higher prices.

113 Operating costs

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP thousands) Medical and pharmaceutical supplies ...... 34,319 31,755 27,938 Salaries, wages and benefits ...... 16,995 13,810 12,762 Doctor fees ...... 14,242 11,990 9,293 Maintenance, energy, communication and facilities costs ...... 7,838 7,213 8,081 Rent...... 3,414 4,290 2,000 Food, beverage and consumables costs ...... 3,486 3,455 3,766 Fixed assets depreciation and write-offs ...... 1,197 3,462 3,851 Other expenses ...... 109 144 1,354 81,601 76,120 69,045

Operating costs increased by EGP 5.5 million, or 7.2 per cent., from EGP 76.1 million in 2014 to EGP 81.6 million in 2015. This represented a decrease from 70.8 per cent. to 67.3 per cent. as a percentage of operating revenue, primarily due to smaller fixed asset depreciation and write-offs of medical equipment and medical infrastructure as a result of a applying the Group’s depreciation policy that reflects industry standard rates and asset lifetimes. Adjusted operating costs as a percentage of operating revenue decreased from 67.6 per cent. in 2014 to 66.3 per cent. in 2015. This decrease was primarily due to a reduction of medical supply costs as a percentage of operating revenue. This reduction was offset, in part, by higher fees paid to consultant doctors as the hospital focused on more complex procedures for which consultant doctors charge higher fees. Operating costs increased by EGP 7.1 million, or 10.2 per cent., from EGP 69.0 million in 2013 to EGP 76.1 million in 2014. This represented a decrease from 79.5 per cent. to 70.8 per cent. as a percentage of operating revenue. Adjusted operating costs as a percentage of operating revenue decreased from 75.1 per cent. in 2013 to 67.4 per cent. in 2014, primarily due to effective management of the purchase and usage of medical and certain other supplies.

Gross profit Gross profit increased by EGP 8.3 million, or 26.6 per cent., from EGP 31.4 million in 2014 to EGP 39.7 million in 2015. Adjusted gross profit increased by 17.5 per cent. from EGP 34.8 million in 2014 to EGP 40.9 million in 2015. This increase was primarily due to an increase in revenue per surgery as a result of more complex surgeries being performed, in part due to receiving an organ transplantation license from the MoHP. The radiotherapy department experienced an increased number of patients and, because of minimal competition at other hospitals, it was also able to increase prices. Revenue in the catheterisation laboratory in the cardiology department, as well as in the emergency room and laboratory departments, grew significantly in the period. This revenue growth was offset in part by a number of outpatient consultant doctors ceasing to practise at the hospital as a result of weak infrastructure and equipment. Gross profit increased by EGP 13.6 million, or 76.6 per cent., from EGP 17.8 million in 2013 to EGP 31.4 million in 2014. Adjusted gross profit increased by 61.2 per cent. from EGP 21.6 million in 2013 to EGP 34.8 million in 2014. This increase was primarily due to higher outpatient revenue and higher revenue in the radiotherapy department resulting from acquisition of an advanced radiotherapy machine for which the hospital charged higher prices.

114 General and administrative expenses

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP thousands) Impairment of trade receivables ...... 12,417 (104) 1,230 Salaries, wages and benefits ...... 10,131 5,262 4,840 Maintenance, energy, communication and facilities costs ...... 1,303 1,301 1,697 Food, beverage and consumables costs ...... 787 688 37 Rent...... 539 547 539 Other expenses ...... 2,895 1,552 1,944 28,073 9,246 10,286

General and administrative expenses increased by EGP 18.8 million, or 203.6 per cent., from EGP 9.3 million in 2014 to EGP 28.1 million in 2015. This represented an increase from 8.6 per cent. to 23.1 per cent. as a percentage of operating revenue. The increase was a result of the net impact of a one-time impairment of trade receivables in 2015 of EGP 9.9 million resulting from the corrective accounting treatment of historically inaccurate impairment policies employed by the hospital’s previous management. Adjusted general and administrative expenses increased as a percentage of operating revenue from 8.7 per cent. in 2014 and 12.9 per cent. in 2015. The increase was primarily due to a patient service charge that was historically accounted for on the hospital’s balance sheet being moved onto the statement of income in 2015. The service charge is paid by all overnight patients at the hospital, and the hospital’s management spends it on employee incentivisation such as bonus payments or special events. As of 2015, those expenses are accounted for as general and administrative expenses. General and administrative expenses decreased by EGP 1.0 million, or 10.1 per cent., from EGP 10.3 million in 2013 to EGP 9.2 million in 2014. This represented a decrease from 11.8 per cent. to 8.6 per cent. as a percentage of operating revenue, primarily due to a reversal of an impairment of trade receivables in 2014. Adjusted general and administrative expenses decreased as a percentage of operating revenue from 10.4 per cent. in 2013 to 8.6 per cent. in 2014.

Provisions Nile Badrawi Hospital Company made EGP 4.2 million of provisions in 2015, up EGP 3.5 million, from EGP 0.7 million in 2014. Nile Badrawi Hospital Company made EGP 0.7 million of provisions in 2014, compared to nil provisions made in 2013.

Other income Other income decreased by EGP 1.6 million, or 46.3 per cent., from EGP 3.5 million in 2014 to EGP 1.9 million in 2015. This decrease was primarily due to a decrease in cafeteria sales in 2015 and to receipt by the hospital in 2014 of a EGP 1.8 million payment for a legal claim related to an outstanding balance from a customer. Other income increased by EGP 2.6 million, or 297.4 per cent., from EGP 0.9 million in 2013 to EGP 3.5 million in 2014. This increase was due to payment of an EGP 1.8 million legal claim to the hospital in 2014.

Profit for the year before finance income and income tax Profit for the year before finance income and income tax decreased by EGP 15.6 million, or 62.7 per cent., from EGP 24.9 million in 2014 to EGP 9.3 million in 2015. The decrease was primarily due to an impairment of trade receivables in 2015 resulting from the corrective accounting treatment of historically inaccurate impairment policies by the hospital’s previous management, as well as provisions made in 2015. Further, expenses relating to a patient service charge that were historically accounted for on the hospital’s balance sheet were moved onto the statement of income in 2015. These expenses offset the growth of the hospital’s gross profit. Profit for the year before finance income and income tax increased by EGP 16.5 million, or 198.0 per cent., from EGP 8.3 million in 2013 to EGP 24.9 million in 2014. This increase was primarily due to higher

115 outpatient revenue, higher revenue in the radiotherapy department resulting from acquisition of an advanced radiotherapy machine and a reversal of an impairment of trade receivables in 2014.

Current tax Current tax decreased by EGP 2.0 million, or 28.9 per cent., from EGP 7.0 million in 2014 to EGP 5.0 million in 2015. The hospital’s effective tax rate in 2015 was 61.0 per cent., compared to 27.1 per cent. in 2014. This increase was due to lower profit before income tax in 2015 coupled with higher expenses not deductible for tax purposes relating to higher impairment of trade receivables. These factors offset the positive effect of the reduction of the applicable corporate tax rate in Egypt in 2015. Current tax increased by EGP 5.0 million, or 240.5 per cent., from EGP 2.1 million in 2013 to EGP 7.0 million in 2014. The hospital’s effective tax rate in 2014 was 27.1 per cent., compared to 19.6 per cent. in 2013. The increase was primarily due to an increase in the applicable corporate tax rate on income over EGP 1 million from 25 per cent. in 2013 to 30 per cent. in 2014.

Deferred tax Deferred tax increased by EGP 0.9 million, or 334.7 per cent., from EGP 0.3 million in 2014 to negative EGP 0.7 million in 2015. Deferred tax decreased by EGP 0.1 million, or 32.4 per cent., from EGP 0.4 million in 2013 to EGP 0.3 million in 2014.

Profit for the year Profit for the year decreased by EGP 14.5 million, or 80.1 per cent., from EGP 18.2 million in 2014 to EGP 3.6 million in 2015. The decrease was primarily due to a decrease in profit for the year before finance income and income tax, offset in part by a reduction of the applicable corporate tax rate in Egypt. Profit for the year increased by EGP 11.4 million, or 169.9 per cent., from EGP 6.7 million in 2013 to EGP 18.2 million in 2014. This increase was primarily due to an increase in profit for the year before finance income and income tax.

Adjusted profit for the year Nile Badrawi’s adjusted profit for the year is profit for the year excluding provisions taken in 2015 that are related to receivables’ balances not pertaining to 2015 and provisions for claims incurred in 2015 but that are partially relevant to a prior period and such part not expected to be incurred in the future. Adjusted profit for the year decreased by EGP 2.7 million, or 14.9 per cent., from EGP 18.2 million in 2014 to EGP 15.5 million in 2015. This decrease was primarily due to expenses relating to a patient service charge that were historically accounted for on the hospital’s balance sheet being moved onto the statement of income in 2015. These expenses offset the growth of the hospital’s gross profit and a reduction of the applicable corporate tax rate in Egypt. Adjusted profit for the year increased by EGP 11.4 million, or 169.9 per cent., from EGP 6.7 million in 2013 to EGP 18.2 million in 2014. This increase was primarily due to an increase in profit for the year before finance income and income tax.

116 Al Shorouk’s results of operations

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP) Operating revenue ...... 138,642,178 117,592,072 98,524,206 Operating costs ...... (99,913,207) (85,850,554) (76,035,389) Gross profit ...... 38,728,971 31,741,518 22,488,817 General and administrative expenses ...... (25,581,868) (17,078,570) (14,540,905) Provisions ...... (5,070,124) — (6,676,913) Other income ...... 1,231,343 1,189,322 1,072,690 Profit for the year before finance income and income tax ... 9,271,479 24,854,749 8,342,370 Finance income ...... 128,342 113,062 72,973 Finance costs ...... (1,333,834) (55,125) (20,861) Profit for the year before income tax ...... 8,102,830 15,910,207 2,395,801 Current tax ...... (4,108,178) (4,491,563) (2,638,327) Deferred tax ...... 198,380 29,752 172,330 Profit for the year ...... 4,193,032 11,448,396 (70,196)

Operating revenue Operating revenue increased by EGP 21.1 million, or 17.9 per cent., from EGP 117.6 million in 2014 to EGP 138.6 million in 2015. Revenue per surgical patient increased as a result of the introduction of more complex procedures and specialties, and revenue per surgery also increased due to higher levels of medical supply cost increases being passed on to patients. The number of non-surgical patients also increased in the oncology department. Outpatient clinic visits increased due to an increase in demand and higher prices charged for check-ups of travellers to Gulf countries as part of the Gulf Approved Medical Centres Association programme, which the hospital is certified to conduct. Operating revenue increased by EGP 19.1 million, or 19.4 per cent., from EGP 98.5 million in 2013 to EGP 117.6 million in 2014. This increase was primarily due to an increased number of surgeries and higher revenue per surgery as a result of increases in price.

Operating costs

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP thousands) Medical and pharmaceutical supplies ...... 43,978 39,022 34,726 Physician fees ...... 23,808 19,245 14,824 Salaries, wages and benefits ...... 17,603 15,905 15,720 Fixed assets depreciation and write-offs ...... 3,794 4,758 5,042 Maintenance, spare parts and energy costs ...... 2,986 2,819 1,998 Food, beverage and consumables costs ...... 2,649 2,339 2,087 Rentals ...... 523 — — Others ...... 4,573 1,763 1,638 99,913 85,851 76,035

Operating costs increased by EGP 14.1 million, or 16.4 per cent., from EGP 85.9 million in 2014 to EGP 99.9 million in 2015. This represented a decrease from 73.0 per cent. to 72.1 per cent. as a percentage of operating revenue. As a percentage of operating revenue, adjusted operating costs which adjusts for depreciation of medical equipment and medical infrastructure, increased slightly from 69.0 per cent. in 2014 to 69.3 per cent. in 2015. Fees paid to consultant doctors increased as a result of increases in the number of outpatient clinic visits and complex surgeries that command higher fees. This was offset by medical staff costs decreasing as a percentage of operating revenue as salaries increased slightly while the

117 number of such staff stayed relatively constant. Medical supply costs also decreased as a percentage of operating revenue due to price increases that outpaced cost increases. Operating costs increased by EGP 9.8 million, or 12.9 per cent., from EGP 76.0 million in 2013 to EGP 85.9 million in 2014. This represented a decrease from 77.2 per cent. to 73.0 per cent. as a percentage of operating revenue. Adjusted operating costs decreased as a percentage of operating revenue from 72.1 per cent. in 2013 to 69.0 per cent. in 2014, primarily due to medical staff costs decreasing as a percentage of revenue.

Gross profit Gross profit increased by EGP 7.0 million, or 22.0 per cent., from EGP 31.7 million in 2014 to EGP 38.7 million in 2015. Adjusted gross profit increased by 16.5 per cent. from EGP 36.5 million in 2014 to EGP 42.5 million in 2015. This increase was primarily due to increasing revenue per patient as a result of the introduction of more complex procedures and specialties, and increasing revenue per surgery due to higher levels of medical supply cost increases being passed on to patients. Gross profit increased by EGP 9.3 million, or 41.1 per cent., from EGP 22.5 million in 2013 to EGP 31.7 million in 2014. Adjusted gross profit increased by 32.6 per cent. from EGP 27.5 million in 2013 to EGP 36.5 million in 2014. This increase was primarily due to an increased number of surgeries and higher revenue per surgery as a result of increases in price.

General and administrative expenses

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP thousands) Consultancy and legal fees ...... 5,851 4,198 3,700 Salaries, wages and benefits ...... 4,203 3,476 2,330 Impairment of trade receivables ...... 4,329 — 35 Food, beverage and consumables costs ...... 3,395 2,745 2,318 Maintenance, spare parts and energy costs ...... 1,733 1,673 1,317 BOD meeting allowance ...... 1,475 777 653 Rentals ...... 607 714 670 Fixed assets depreciation and write-offs ...... 48 131 — Others ...... 3,938 3,362 3,519 25,582 17,079 14,541

General and administrative expenses increased by 8.5 million, or 49.8 per cent., from EGP 17.1 million in 2014 to EGP 25.6 million in 2015. This represented an increase from 14.5 per cent. to 18.5 per cent. as a percentage of operating revenue, primarily due to a one-time impairment of trade receivables in 2015 resulting from the corrective accounting treatment of historically inaccurate impairment policies employed by the hospital’s previous management. Adjusted general and administrative expenses increased as a percentage of operating revenue from 14.4 per cent. in 2014 to 15.3 per cent. in 2015. Prior to January 2016, Al Shorouk Hospital Company paid professional and consulting fees to a management company established by the hospital’s previous owners. Payment of these fees ceased in January 2016 when Al Shorouk Hospital Company was acquired by the Company. Food and beverage costs also increased, as well. General and administrative expenses increased by EGP 2.5 million, or 17.5 per cent., from EGP 14.5 million in 2013 to EGP 17.1 million in 2014. This represented a relatively small decrease from 14.8 per cent. to 14.5 per cent. as a percentage of operating revenue. Adjusted general and administrative expenses remained relatively flat as a percentage of operating revenue from 14.7 per cent. in 2013 to 14.4 per cent. in 2014. Non-medical staff costs, food and beverage costs and professional and consulting fees all remained relatively flat as a percentage of operating revenue during the period.

118 Provisions Al Shorouk Hospital Company made EGP 5.1 million of provisions in 2015, up from nil in 2014. The provisions made in 2015 primarily relate to required provisions for retired employees’ remaining vacation allowance. Al Shorouk Hospital Company made no provisions in 2014, down from EGP 6.7 million in 2013. The provisions made in 2013 relate to required provisions.

Other income Other income increased by EGP 0.04 million, or 3.5 per cent., from EGP 1.19 million in 2014 to EGP 1.23 million in 2015. Other income increased by EGP 0.1 million, or 10.9 per cent., from EGP 1.1 million in 2013 to EGP 1.2 million in 2014.

Profit for the year before finance income and income tax Profit for the year before finance income and income tax decreased by EGP 6.5 million, or 41.3 per cent., from EGP 15.9 million in 2014 to EGP 2.3 million in 2015. This decrease was primarily due to an impairment of trade receivables in 2015 resulting from the corrective accounting treatment of historically inaccurate impairment policies by the hospital’s previous management, as well as provisions made in 2015. Profit for the year before finance income and income tax increased by EGP 13.5 million from EGP 2.3 million in 2013 to EGP 15.6 million in 2014. This increase was primarily due to an increased number of surgeries and higher revenue per surgery as a result of increases in price, as well as medical staff costs staying relatively flat and costs of medical consumables growing in line with revenue.

Current tax Current tax decreased by EGP 0.4 million, or 8.5 per cent., from EGP 4.5 million in 2014 to EGP 4.1 million in 2015. The hospital’s effective tax rate in 2015 was 47.0 per cent., compared to 28.0 per cent. in 2014. This increase was due to lower profit before income tax in 2015 coupled with higher expenses not deductible for tax purposes relating to higher impairment of trade receivables. These factors offset the positive effect of the reduction of the applicable corporate tax rate in Egypt in 2015. Current tax increased by EGP 1.9 million, or 70.2 per cent., from EGP 2.6 million in 2013 to EGP 4.5 million in 2014. The hospital’s effective tax rate in 2014 was 28.0 per cent., compared to 103.0 per cent. in 2013. This decrease was due to lower expenses not deductible for tax purposes, offset in part by the increase in the applicable corporate tax rate on income over EGP 1 million from 25 per cent. in 2013 to 30 per cent. in 2014.

Deferred tax Deferred tax increased by EGP 168.6 thousand, from EGP 29.8 thousand in 2014 to EGP 198.4 thousand in 2015. Deferred tax increased by EGP 142.6 thousand., from EGP 172.3 thousand in 2013 to EGP 30 thousand in 2014.

Profit for the year Profit for the decreased by EGP 7.3 million, or 63.4 per cent., from EGP 11.4 million in 2014 to EGP 4.2 million in 2015. This decrease was primarily due to an impairment of trade receivables in 2015 resulting from the corrective accounting treatment of historically inaccurate impairment policies by the hospital’s previous management, as well as provisions made in 2015. Profit for the year increased by EGP 11.5 million, from a loss of EGP 70.1 thousand in 2013 to a gain of EGP 11.4 million in 2014. This increase was primarily due to an increased number of surgeries and higher revenue per surgery as a result of increases in price, as well as medical staff costs staying relatively flat and costs of medical consumables growing in line with revenue.

Adjusted profit for the year Al Shorouk’s adjusted profit for the year is profit for the year excluding required provisions covering claims for the periods prior to when they were accounted for and the portion of impairment of trade receivables that does not pertain to 2015 (one per cent. of revenue is considered to be the recurring portion).

119 Adjusted profit for the year increased by EGP 0.6 million, or 4.9 per cent., from EGP 11.4 million in 2014 to EGP 12.0 million in 2015. This increase was primarily due to increasing revenue per patient as a result of the introduction of more complex procedures and specialties, and increasing revenue per surgery due to higher levels of medical supply cost increases being passed on to patients. Adjusted profit for the year increased by EGP 4.7 million, or 69.5 per cent., from EGP 6.8 million in 2013 to EGP 11.4 million in 2014. This increase was primarily due to an increased number of surgeries and higher revenue per surgery as a result of increases in price, as well as medical staff costs staying relatively flat and costs of medical consumables growing in line with revenue.

Liquidity and Capital Resources Capital expenditure The following table sets forth a breakdown of the Group’s capital expenditure in 2015, 2014 and 2013. Historically, the Group and its hospitals has financed capital expenditure primarily from cash flows generated from operating activities.

Year ended 31 December 2015 2014 2013 Capital Expenditure(1) (EGP million) Cleopatra ...... 5.6 3.5 1.9 Cairo Specialized Hospital ...... 7.4 1.5 2.4 Nile Badrawi ...... 1.2 4.0 2.9 Al Shorouk ...... 4.0 4.8 2.2 Capital Expenditure/operating revenue(1) (%) Cleopatra ...... 1.7 1.2 0.8 Cairo Specialized Hospital ...... 4.9 1.2 2.1 Nile Badrawi ...... 1.0 3.7 3.3 Al Shorouk ...... 2.9 4.0 2.2

(1) Figures include data for periods during which the Company did not own the respective hospitals. The Group has a well-defined short-term capital expenditure plan. Of its cash available for capital expenditure and operational activities, the Group is targeting to spend EGP 124 million in 2016 on short-term capital expenditure. The Group expects that of this EGP 124 million, EGP 64 million will be spent on medical capital expenditure such as new electric beds, ventilators, ambulances, interventional x-ray and other medical equipment; EGP 33 million will be spent on civil capital expenditure such as building infrastructure, electromechanical infrastructure and vehicles; and EGP 20 million will be spent on information technology systems, including the implementation of a new hospital information system and ERP system (see ‘‘Information Technology’’ in Part 6 (Business Description) of this Offering Memorandum). The remaining EGP 7 million is expected to be spent at Al Shorouk but has not been allocated to specific projects. Of the cash intended to be spent on medical capital expenditure, about half is expected to be spent at Cairo Specialized Hospital; of the cash intended to be spent on civil capital expenditure, the majority is expected to be spent at Cairo Specialized Hospital and Nile Badrawi; and of the cash intended to be spent on IT capital expenditure, the majority is expected to be spent at Cleopatra and Cairo Specialized Hospital. The Group may use part of this available cash, in addition to part or all of the net proceeds of the Closed Subscription, to fund its capital expenditure plans, including the development of extensions of Al Shorouk and Cleopatra, as well as the possible acquisition of a facility in New Cairo, as set forth below. In 2010 Al Shorouk Hospital Company acquired a facility on a 366.5 m2 plot of land adjacent to its existing hospital. The Group intends to utilise the adjacent facility as an extension offering general services, with a focus on ICU services, of which there is a current shortage in Cairo and which tend to be priced higher than other hospital beds. The extension is intended to house approximately 40 beds and is expected to be operational in 2017, subject to obtaining all necessary licenses and approvals. The cost of development of the extension is expected to be approximately EGP 150 million. This amount does not include the cost of acquiring the property, which Al Shorouk incurred in 2010. In 2006, the Company acquired a facility on a 1,176.25 m2 plot of land adjacent to Cleopatra, which the Group intends to utilise as an extension to Cleopatra. Since Cleopatra currently has a high bed occupancy

120 rate in certain departments such as outpatient clinics and ICU, the new facility is expected to serve as overflow for those departments, among others, as well as expanded radiology services. The extension is intended to house approximately 100 beds and is expected to be operational within 12–18 months after obtaining the necessary licenses and permits, all of which have been applied for. The cost of development of the extension is expected to be approximately EGP 250 million. This amount does not include the cost of acquiring the property, which the Company incurred in 2006. The Group is considering the acquisition of a facility in New Cairo with a total gross internal area of 21,604 m2. The facility would be expected to house approximately 200 beds, seven surgical rooms, one catheter laboratory, 20 outpatient clinics and 10 emergency room beds. The Group believes the facility would be operational within 12 months of acquisition and would cost approximately EGP 300–350 million, including the cost of the acquisition. Proximity to healthcare facilities is a main concern for Egyptian patients. The Group is aiming to implement a hub-and-spoke polyclinic business model in order to penetrate smaller neighbourhoods. Under this plan, the Group would open Cleopatra-branded polyclinics, which would act as extensions of the Group’s hospital platform, in key secondary urban developments where population density doesn’t economically justify opening a full hospital. The polyclinics, which would require relatively low capital expenditure to setup and operate, would have the capabilities to perform minor procedures, routine examinations and diagnostic testing. The polyclinics could leverage the Group’s size when referrals to a larger hospital are required for more complex procedures. Each polyclinic is expected to cost approximately EGP 3.5 million to open, which would be funded out of cash generated from operating activities. The Group expects to begin implementation of this strategy by the end of 2016, but does not expect any capital expenditure outlays to occur until 2017. The Group is targeting to open a total of 10 polyclinics over the next five years.

Cash flow Cleopatra Hospital Company The following table sets forth a summary of Cleopatra Hospital Company’s cash flow statement for 2015, 2014 and 2013.

Year ended 31 December 2015 2014 2013 (audited) (EGP millions) Net cash flows generated from operating activities ...... 148.8 76.2 45.0 Net cash flows used in investing activities ...... (381.6) (1.3) (0.03) Net cash flows generated from / (used in) financing activities ...... 202.7 (38.8) (44.2) Change in cash and cash equivalents during the year ...... (30.1) 36.1 0.8 Cash and cash equivalents at the end of the year ...... 23.6 53.6 17.5

Net cash flows generated from operating activities For 2015, Cleopatra’s net cash flows generated from operating activities were EGP 148.8 million, an increase of EGP 72.6 million, or 95.3 per cent., from EGP 76.2 million for 2014. This increase was primarily due to an increase in creditors and credit balances resulting from an interest-free shareholder loan of EGP 47 million from Care Healthcare to Cleopatra Hospital Company, which was converted to shareholders’ equity reserves in the second quarter of 2016 and will not be repaid. Cash generated from operating activities also increased because of an increase in working capital due to shorter delays in receiving payments from contract customers. For 2014, Cleopatra’s net cash flows generated from operating activities were EGP 76.2 million, an increase of EGP 31.2 million, or 69.3 per cent., from EGP 45.0 million for 2013. This increase was primarily due to a decrease in debtors and other debit balances.

Net cash flows used in investing activities In 2015, Cleopatra’s net cash flow used in investing activities was EGP 381.6 million, an increase of EGP 380.3 million, from EGP 1.3 million in 2014. This increase was primarily due to the acquisitions of

121 Cairo Specialized Hospital Company and Nile Badrawi Hospital Company in 2015, as well as a EGP 15 million cash deposit into an interest-generating savings account. In 2014, Cleopatra’s net cash flow used in investing activities was EGP 1.3 million, an increase of EGP 1.3 million, from EGP 0.03 million in 2013. This increase was primarily due to increased capital expenditure on medical equipment.

Net cash flows generated / (used in) financing activities In 2015, Cleopatra’s net cash flow generated from financing activities was EGP 202.7 million, an increase of EGP 241.5 million, from EGP 38.8 million used in 2014. This increase was primarily due to a cash inflow in 2015 of EGP 203 million from a secured loan facility, offset in part by EGP 38.8 million of dividends paid in 2014 compared to nil dividends paid in 2015. In 2014, Cleopatra’s net cash flow used in financing activities was EGP 38.8 million, a decrease of EGP 5.4 million, from EGP 44.2 million in 2013. This decrease was due to fewer dividends paid in 2014.

Cairo Specialized Hospital Company The following table sets forth a summary of Cairo Specialized Hospital Company’s cash flow statement for 2015, 2014 and 2013.

Year ended 31 December 2014 2015 Restated 2013 (audited) (EGP millions) Net cash flows generated from operating activities ...... 17.2 29.2 22.8 Net cash flows used in investing activities ...... (55.3) (1.5) (2.4) Net cash flows used in financing activities ...... (1.7) (18.9) (17.3) Change in cash and cash equivalents during the year ...... (39.8) 8.8 3.1 Cash and cash equivalents at the end of the year ...... 4.7 44.5 35.6

Note: Figures include data for periods during which the Company did not own the hospital.

Net cash flows generated from operating activities For 2015, Cairo Specialized Hospital’s net cash flows generated from operating activities were EGP 17.2 million, a decrease of EGP 12.0 million, or 41.1 per cent., from EGP 29.2 million for 2014. This reduction was primarily due to an increase in trade receivables resulting from inaccurate billing and claims procedures. The new centralised management have hired a medical error auditor to reduce similar issues in the future. For 2014, Cairo Specialized Hospital’s net cash flows generated from operating activities were EGP 29.2 million, an increase of EGP 6.4 million, or 28.1 per cent., from EGP 22.8 million for 2013. This increase was primarily due to a decrease in trade receivables of EGP 3.8 million and an increase in creditors and other credit balances of EGP 2.4 million.

Net cash flows used in investing activities In 2015, Cairo Specialized Hospital’s net cash flow used in investing activities was EGP 55.3 million, an increase of EGP 53.8 million, from EGP 1.5 million in 2014. This increase was primarily due to a EGP 47.9 million time deposit made with a maturity of six months and increased capital expenditure of EGP 7.4 million on machinery and equipment. In 2014, Cairo Specialized Hospital’s net cash flow used in investing activities was EGP 1.5 million, a decrease of EGP 0.9 million, or 37.5 per cent., from EGP 2.4 million in 2013. This decrease was primarily due to reduced capital expenditure on equipment and infrastructure.

122 Net cash flows used in financing activities In 2015, Cairo Specialized Hospital’s net cash flow used in financing activities was EGP 1.7 million, a decrease of EGP 17.2 million, from EGP 18.9 million in 2014. This decrease was due to a lower level of dividends paid in 2015. In 2014, Cairo Specialized Hospital’s net cash flow used in financing activities was EGP 18.9 million, an increase of EGP 1.6 million, or 9.2 per cent., from EGP 17.3 million in 2013. This increase was due to a purchase of treasury shares by the Company, which offset a decrease in the amount of dividends paid.

Nile Badrawi Hospital Company The following table sets forth a summary of Nile Badrawi Hospital Company’s cash flow statement for 2015, 2014 and 2013.

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP millions) Net cash flows generated from operating activities ...... 13.7 14.6 10.5 Net cash flows used in investing activities ...... (1.2) (4.0) (2.8) Net cash flows used in financing activities ...... — (7.2) (7.1) Change in cash and cash equivalents during the year ...... 12.4 3.4 0.5 Cash and cash equivalents at the end of the year ...... 18.8 6.4 3.0

Note: Figures include data for periods during which the Company did not own the hospital.

Net cash flows generated from operating activities For 2015, Nile Badrawi’s net cash flows generated from operating activities were EGP 13.7 million, a decrease of EGP 0.9 million, or 6.4 per cent., from EGP 14.6 million for 2014. This decrease was primarily due to a decrease in the hospital’s profit before tax and an increase in tax paid. For 2014, Nile Badrawi’s net cash flows generated from operating activities were EGP 14.6 million, an increase of EGP 4.2 million, or 39.7 per cent., from EGP 10.5 million for 2013. This increase was primarily due to an increase in the hospital’s profit before tax, offset in part by a decrease in trade receivables.

Net cash flows used in investing activities In 2015, Nile Badrawi’s net cash flow used in investing activities was EGP 1.2 million, a decrease of EGP 2.8 million, or 70.0 per cent., from EGP 4.0 million in 2014. This decrease was primarily due to a decrease in the amount of capital expenditure spent on both medical and non-medical equipment and infrastructure. In 2014, Nile Badrawi’s net cash flow used in investing activities was EGP 4.0 million, an increase of EGP 1.2 million, or 42.9 per cent., from EGP 2.8 million in 2013. This increase was primarily due to an increase in the amount of capital expenditure spent on both medical and non-medical equipment and infrastructure.

Net cash flows used in financing activities In 2015, Nile Badrawi’s net cash flow used in financing activities was nil, compared to EGP 7.2 million in 2014 primarily consisting of dividends paid. In 2014, Nile Badrawi’s net cash flow used in financing activities was EGP 7.2 million, an increase of EGP 0.1 million, or 1.7 per cent., from EGP 7.1 million in 2013. This increase was primarily due to an increase in dividends paid.

123 Al Shorouk Hospital Company The following table sets forth a summary of Al Shorouk Hospital Company’s cash flow statement for 2015, 2014 and 2013.

Year ended 31 December 2014 2013 2015 Restated Restated (audited) (EGP millions) Net cash flows generated from operating activities ...... 10.5 12.3 14.6 Net cash flows used in investing activities ...... (3.9) (4.7) (2.1) Net cash flows used in financing activities ...... (7.2) (7.0) (10.4) Change in cash and cash equivalents during the year ...... (0.7) 0.6 2.1 Cash and cash equivalents at the end of the year ...... 4.1 4.8 4.2

Note: Figures include data for periods during which the Company did not own the hospital.

Net cash flows generated from operating activities For 2015, Al Shorouk’s net cash flows generated from operating activities were EGP 10.5 million, a decrease of EGP 1.8 million, or 14.6 per cent., from EGP 12.3 million for 2014. This decrease was primarily due to prior management’s poor working capital management system and a failure to collect accounts receivable on a timely basis, which the Group has taken steps to correct. For 2014, Al Shorouk’s net cash flows generated from operating activities were EGP 12.3 million, a decrease of EGP 2.4 million, or 16.3 per cent., from EGP 14.6 million for 2013. This decrease was primarily due to prior management’s poor working capital management system and a failure to collect accounts receivable on a timely basis, which the Group has taken steps to correct.

Net cash flows used in investing activities In 2015, Al Shorouk’s net cash flow used in investing activities was EGP 3.9 million, an increase of EGP 0.8 million, or 17.0 per cent., from EGP 4.7 million in 2014. This increase was primarily due to an increase in interest payments of EGP 1.3 million, offset by a decrease in capital expenditure of EGP 700,000. In 2014, Al Shorouk’s net cash flow used in investing activities was EGP 4.7 million, an increase of EGP 2.6 million, or 123.8 per cent., from EGP 2.1 million in 2013. This increase was primarily due to large capital expenditures on new equipment and to maintain the facility’s overall infrastructure.

Net cash flows used in financing activities In 2015, Al Shorouk’s net cash flow used in financing activities was EGP 7.2 million, an increase of EGP 0.2 million, or 2.9 per cent., from EGP 7.0 million in 2014. This increase was primarily due to higher dividends paid and a change in facility loans that resulted in higher interest paid. In 2014, Al Shorouk’s net cash flow used in financing activities was EGP 7.0 million, a decrease of EGP 3.4 million, or 32.7 per cent., from EGP 10.4 million for 2013. This decrease was primarily due to fewer dividends paid and a decrease in facility loan payments resulting from a restructuring of the hospital’s finance lease from a long-term loan to a capital lease agreement.

124 Working capital The following table sets forth the Group’s working capital as at 31 December 2015.

As at 31 December 2015 Cleopatra Cairo Specialized Nile Badrawi Al Shorouk Hospital Hospital Hospital Hospital Company Company Company Company (unaudited) (EGP millions) Inventories ...... 7.9 3.1 4.5 8.7 Trade receivables ...... 39.9 24.7 25.3 20.3 Creditors and other credit balances ...... (42.2) (24.2) (26.2) (19.3) Working capital ...... 5.6 3.6 3.6 9.7

Many of the Group’s patients are covered by third-party payers such as health insurance providers. As a result of the payment structure for third-party payers, the Group generally collects fees from these payers around two months after a claim is submitted. Claims are submitted up to one month after a patient is discharged. This lengthy payment process diminishes the Group’s working capital reserves, and to date the Group has utilised cash received from out-of-pocket patients to cover this shortfall. The Group is aiming to shorten the average payment gap from third-party payers as it further integrates its hospitals and can take advantage of increased bargaining power with third-party payers. The Group is targeting implementation of a 45-day payment policy for its receivables. It is also targeting to extend payment of its payables to an average of 120 days. Prior to being acquired, the Group’s hospitals did not have effective inventory or working capital management systems. The Group has since implemented such systems to mitigate the risk of a working capital shortfall, and such implementation has been the key driver of working capital at the Group’s hospitals since each was acquired by the Company. Al Shorouk is exposed to some additional working capital risk because one of its key contract customers, a regional embassy, is sometimes unable to pay its fees on time due to political instability. In the opinion of the Company, taking into account the net proceeds receivable by the Company from the subscription for Closed Subscription Shares in the Closed Subscription, the Group has sufficient working capital for its present requirements, that is for at least the next 12 months following the date of this Offering Memorandum.

Indebtedness The following table sets forth a breakdown of the Group’s interest-bearing loans and borrowings as at 31 December 2015.

As at 31 December 2015 Cairo Cleopatra Specialized Nile Badrawi Al Shorouk Hospital Hospital Hospital Hospital Company Company Company Company (audited) (EGP thousands) Current liabilities: Borrowings ...... 40,600 — — 9,477 Non-current liabilities: Borrowings ...... 162,400 — — 892 Total interest bearing loans and borrowings ...... 203,000 — — 10,369

125 Contractual Obligations and Commitments The following table sets forth the Group’s contractual obligations and commitments as at 31 December 2015.

Within 1 to 5 More than Total 1 year years 5 years (EGP millions) Cleopatra Hospital Company Borrowings ...... 203.0 40.6 162.4 — Operating lease obligations ...... — — — — Total ...... 203.0 40.6 162.4 —

Within 1 to 5 More than Total 1 year years 5 years Cairo Specialized Hospital Company Borrowings ...... — — — — Operating lease obligations ...... — — — — Total ...... —— — —

Within 1 to 5 More than Total 1 year years 5 years Nile Badrawi Hospital Company Borrowings ...... — — — — Operating lease obligations ...... 5.3 2.5 2.8 — Total ...... 5.3 2.5 2.8 —

Within 1 to 5 More than Total 1 year years 5 years Al Shorouk Hospital Company Borrowings ...... 10.4 9.5 0.9 — Operating lease obligations ...... 2.0 1.3 0.8 — Total ...... 12.4 10.8 1.7 —

Credit Facilities CIB Medium Term Loan Agreements The Company is party to two medium term loan agreements with Commercial International Bank (CIB). The first agreement was entered into on 16 July 2015 for the purpose of financing the acquisition of Cairo Specialized Hospital Company and/or other hospitals. The second agreement was entered into on 19 January 2016 for the purpose of financing the acquisition of Al Shorouk Hospital Company. The maximum loan amount available under each agreement is EGP 203 million and EGP 230 million, respectively. As of 21 January 2016, the Company had fully utilised the first loan and had utilised EGP 208.7 million of the second loan. Interest on each loan is payable at a rate of 2.4 per cent. above the Central Bank of Egypt lending corridor rate, and the loans are scheduled to be fully repaid by 31 December 2020 and 20 January 2022, respectively. The loan agreements contain standard covenants and undertakings for transactions of this nature, in addition to the following: (i) to deposit with CIB as a custodian all of the shares of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company that are owned by the Company and (ii) to maintain ownership of, directly or indirectly, at all times, at least 51 per cent. of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company, Al Shorouk Hospital Company and/or any companies or hospitals acquired with financing through facility agreements granted by CIB, unless the prior written approval of CIB is obtained. Although not a party to the loan agreements, Care Healthcare, as the majority shareholder of the Company, has undertaken to (i) not approve any distribution of the Company’s profits in any given year

126 except after any due payment (including principal, interest, commission and expenses) under the loan and provided that such distribution does not result in breach of any of the financial covenants provided for under the loan agreements and (ii) cover any deficit in the debt service coverage ratio (1:1) through a capital increase and/or a subordinated shareholders’ loan, without obtaining a loan from any other bank. Pursuant to the second loan agreement, Care Healthcare has also undertaken to settle any difference between the final acquisition price of Al Shorouk Hospital Company shares and this loan amount through either a shareholders’ loan and/or cash funding, the repayment of which is to be subordinated to the CIB loans. The security packages for the loans include (i) promissory notes issued by the Company in the name of CIB covering the instalments payable under the loan agreements, which are released to the Company upon payment of each corresponding instalment; (ii) an insurance policy designating CIB as the sole beneficiary covering the Company’s owned fixed assets and inventory against the risk of fire and other certain risks for a minimum amount of EGP 127 million. The Company is entitled to use a maximum of EGP 25 million of any such insurance payments for the restoration of destroyed assets, while any amount over EGP 25 million must be used for the mandatory prepayment of the loan amounts; (iii) a pledge in favour of CIB of 100 per cent. of the Company’s Shares owned by Care Healthcare; (iv) a pledge in favour of CIB of 100 per cent. of the shares of Cairo Specialized Hospital Company and Al Shorouk Hospital Company that are owned by the Company (the pledge of shares of Al Shorouk Hospital Company is in the process of being finalised); (v) a pledge in favour of CIB of 51 per cent. of the shares of Nile Badrawi Hospital Company that are owned by the Company; and (vi) insurance policies designating CIB as the sole beneficiary covering all the fixed assets and inventory owned by Al Shorouk Hospital Company and Nile Badrawi Hospital Company. The loan agreements also provide that, if the Company’s resources are not sufficient to repay any outstanding amounts due under the loans, the Company undertakes to vote its shares in the general shareholders’ meeting of Al Shorouk Hospital Company, Cairo Specialized Hospital Company and Nile Badrawi Hospital Company in favour of distribution of dividends to the Company, which will in turn use such dividends to repay any outstanding amounts due to CIB. The loan agreements provide that the Company shall not sell, mortgage, grant a priority right and/or issue a power of attorney for the sale or pledge or waiver of any of the Company’s current or future tangible or intangible assets that would prejudice its obligations under the loan agreements unless it obtains prior written approval of CIB. For the purpose of the Combined Offer, CIB has approved the deposit of the Shares with MCDR and to release the pledge on 40,000,000 Shares (representing 25 per cent. of the issued share capital of the Company), provided that any Shares to be acquired by and/or issued and subscribed to fully by Care Healthcare in the Closed Subscription are immediately pledged to CIB following completion of the Closed Subscription.

Al Shorouk Hospital Company Overdrafts Al Shorouk Hospital Company has two overdraft credit facilities with a total value of EGP 8 million from Audi Bank and Societe Arabe Internationale de Banque (SAIB). The provisions of these agreements are standard and do not include any restrictions on the transfer of shares or change of control.

Audi Bank Al Shorouk Hospital Company has one overdraft credit facility with Audi Bank, with a value of EGP 5 million. The facility is subject to an interest rate of 3.25 per cent. above the Central Bank of Egypt’s mid-corridor rate with a minimum of 13 per cent. and a commission of 1/1000 on the highest monthly debit balance. To secure the repayment, Al Shorouk Hospital Company issued a promissory note covering the amount of the overdraft, which is to be paid upon request. As at 31 December 2015, Al Shorouk Hospital Company had borrowed EGP 5.6 million under the overdraft. Audi Bank commonly allows the Group to over-draw due to the Group’s credit history with the bank.

SAIB Al Shorouk Hospital Company has one overdraft credit facility with SAIB, with a value of EGP 3 million. The facility is subject to an interest of 3.25 per cent. above the Central Bank of Egypt’s mid-corridor rate with a minimum of 13 per cent. and a commission of 1/1000 on the highest monthly debit balance. To secure the repayment, Al Shorouk Hospital Company issued a promissory note covering the amount of the overdraft, which is to be paid upon request. As at 31 December 2015, EGP 2.9 million of the overdraft was utilised.

127 Financial Leases Financial Lease with the International Company for Leasing (Incolease) On 25 November 2014, Al Shorouk Hospital Company entered into a financial lease agreement with Incolease for the lease of a particular 366.45 m2 plot of land. The plot was initially valued at EGP 13.9 million (amended to EGP 19.3 million in December 2014), of which EGP 16.0 million was paid in advance by Al Shorouk Hospital Company to Incolease. The remaining amount is to be paid in monthly instalments that began on 25 November 2014 and end on 25 October 2017. The agreement includes an option for Al Shorouk Hospital Company to buy the plot of land. The lease agreement requires the prior written approval of Incolease in certain situations, including: (i) any changes or improvements to the leased plot of land, (ii) any merger or dissolution of Al Shorouk Hospital Company and (iii) any assignment or transfer of the shares of Al Shorouk Hospital Company by its shareholders at the time of the lease. Al Shorouk Hospital Company is required to maintain an all-risk insurance policy designating Incolease as the beneficiary, although such an insurance policy has not been concluded.

Financial Leases with Corplease for Financial Leasing (Corplease) Al Shorouk Hospital Company has entered into five financial lease agreements with Corplease, four of which are for the lease of medical equipment and one of which is for an ambulance vehicle. The total value of the five leases is EGP 1.8 million. The instalments are expected to be fully paid by July 2018. The financial leases contain standard terms and include certain restrictions, including (i) a prohibition on distributing profits, except after satisfying obligations under the agreements, (ii) a prohibition on obtaining loans or financial leases without the prior written approval of Corplease and (iii) a prohibition on changing the Al Shorouk Hospital Company shareholding structure without prior approval from Corplease. Pursuant to each of the five agreements, Al Shorouk Hospital Company is required to maintain an all-risk insurance policy designating Corplease as the beneficiary. Al Shorouk currently holds the required insurance policies under three out of the five aforementioned financial leases. In 2012, Nile Badrawi Hospital Company entered into two financial lease agreements with Corplease for the lease of medical equipment. The total value of the two leases is EGP 11.2 million. The instalments are expected to be fully paid by September 2018. The financial leases contain standard terms and include certain restrictions, including (i) a prohibition on distributing profits without the prior written approval of Corplease and provided that Nile Badrawi Hospital Company has settled its due instalments and (ii) a prohibition on changing the Nile Badrawi Hospital Company shareholding structure without prior approval from Corplease. Pursuant to the agreements, Nile Badrawi Hospital Company is required to maintain an all-risk insurance policy designating Corplease as the beneficiary.

Shareholder Loan As of 31 December 2015, Care Healthcare had an outstanding EGP 47 million loan to the Company on an interest-free basis. In April 2016, Care Healthcare agreed to amend the loan terms, such that the amount will be repayable to all of the Company’s Shareholders, pro rata, upon any future liquidation of the Company, and only after settlement of all other Company liabilities. As such, as of the date of the agreement, the loan was reclassified in the Company’s accounts from a non-current liability to the shareholders’ equity reserves.

Dividend Policy The Company may pay dividends only as permitted by law and the Statutes of the Company and subject to consideration of its investment requirements, financial condition (including its level of indebtedness and liquidity requirements) and its results of operations. The Directors expect to maintain a flexible dividend policy with a view to balance between growth opportunities and availability of funds for dividend distribution. The Directors currently expect that in accordance with the Group’s well-defined integration plan, no dividends will be paid in 2016 and 2017 as the reinvestment of cash surpluses into the business will have a better impact on long-term shareholder value than the distribution as dividends. There can be no assurance that any dividends will be paid in the future or as to the level of any such dividends.

128 The declaration, amount and payment of dividends is determined, subject to the limitations set forth above, by an absolute majority vote of the shareholders represented at an ordinary general assembly meeting on the recommendation of the Directors. For more detail on the distribution of dividends, see ‘‘Dividends’’ in paragraph 2 of Part 13 (Additional Information) of this Offering Memorandum. Future dividends will depend on the Group’s results of operations, financial position, dividends received from its subsidiaries and affiliates, cash requirements, legal reserve and minimum capital requirements, availability of opportunities that fit the Group’s scope and investment criteria, restrictive covenants in the Group’s finance agreements and other factors deemed relevant by the Directors and the Shareholders. If the Company defaults on its debt obligation, it will be limited in its ability to pay dividends. The Group intends to maintain, starting in 2018, a policy of distributing, subject to the liquidity and capital expenditure requirements of the business in each year, all excess cash. In the absence of viable expansion or investment opportunities that fit the Company’s scope and investment criteria, the expected payout ratio is 50 per cent. or higher of profits available for distribution.

Quantitative and qualitative disclosures about market risks Financial risk The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and fair value and cash flow interest rate risk), credit risk and liquidity risk. The Group is not exposed to price risk, as it does not have financial assets at fair value through profit and loss. The Group’s management aims to minimise potential adverse effects of such risks on the financial performance of the Group by the monitoring the processes undertaken by the finance department and general manager of each subsidiary company and the Company’s executive committee. The Group does not use any derivative financial instruments to hedge specific risks.

Market risk Currency risk Foreign currency risk represents the changes in foreign currency rates, which affect the payments and receipts denominated in foreign currencies, as well as the evaluation of foreign currency assets and liabilities. Given the nature of the Group’s activities, the Group does not undertake transactions denominated in foreign currencies as it carries out all purchases in Egyptian pounds. The Group’s very limited revenue in foreign currencies are generated from certain foreign embassies. Management is of the opinion that the foreign currency balances are considered immaterial. For more detail, see Note 3 in each of the audited financial statements of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as at and for the three years ended 31 December 2015, 2014 and 2013 and the audited consolidated financial statements for Cleopatra Hospital Company and its subsidiaries as at and for the year ended 31 December 2015.

Fair value and cash flow interest rate risk The Company obtained a long-term loan at an interest rate linked to the Central Bank of Egypt corridor rate and, therefore, it is not exposed to cash flow risks. For more detail on this loan, see ‘‘CIB Medium Term Loan Agreements’’ in this Part 9 (Operating and Financial Review).

Credit risk Credit risk arises from cash and bank balances, deposits with banks and credit exposures to the Group’s customers. The management of each Group company, as well as the Company’s centralised finance department and executive committee manage the credit risks of the Group. For bank credit risk, the Company transacts with banks that are regulated by the Central Bank of Egypt and that have high credit ratings and creditworthiness. For customer credit risk, the finance director and general manager of each hospital perform analyses on the credit risk for each potential credit customer in accordance with the Group’s policies. The Company’s executive committee follows up with credit terms and reviews default cases and the debt ageing report to take the necessary decisions whether to cancel the credit or to refer the defaulted customer to the Group’s legal department.

129 The Group maintains a provision for impairment equal to 100 per cent. of payments in default for more than 150 days from the invoice date, in addition to a provision based on historical default rates. Balances to credit risks are as follows:

As at 31 December Cleopatra Hospital Company 2015 2014 2013 (audited) (EGP) Cash at banks ...... 38,268,580 53,398,419 17,542,298 Trade receivables ...... 45,487,820 37,669,240 26,518,224

As at 31 December Cairo Specialized Hospital Company 2015 2014 2013 (audited) (EGP) Cash at banks ...... 52,522,621 44,324,486 35,485,917 Trade receivables ...... 29,834,092 19,342,116 17,868,139

As at 31 December Nile Badrawi Hospital Company 2015 2014 2013 (audited) (EGP) Cash at banks ...... 18,475,259 6,012,220 2,592,277 Trade receivables ...... 39,341,445 29,426,106 20,113,713

As at 31 December Al Shorouk Hospital Company 2015 2014 2013 (audited) (EGP) Cash at banks ...... 3,985,142 4,664,617 4,151,022 Trade receivables ...... 27,354,345 19,765,820 13,844,255

Liquidity risk Management makes cash flow projections on a monthly basis that are discussed with the executive committee. Management takes the necessary actions to negotiate with suppliers, follow-up the collection process and manage the inventory balances in order to ensure sufficient cash is maintained to discharge the Group’s liabilities. The table below sets forth the Group’s liabilities by maturity as at 31 December 2015.

Less than 3 months 1 to More than Cleopatra Hospital Company 3 months to 1 year 5 years 5 years (audited) (EGP) Trade and notes payable ...... 12,538,630 461,097 — — Due to related parties ...... 29,659,700 — — 54,095,303 Borrowings ...... — 40,600,000 162,400,000 —

Less than 3 months 1 to More than Cairo Specialized Hospital Company 3 months to 1 year 5 years 5 years (audited) (EGP) Trade and notes payable ...... 12,229,553 1,125,210 — — Accrued expenses ...... 8,946,150 — — —

Less than 3 months 1 to More than Nile Badrawi Hospital Company 3 months to 1 year 5 years 5 years (audited) (EGP) Trade and notes payable ...... 19,525,308 — — —

130 Less than 3 months 1 to More than Al Shorouk Hospital Company 3 months to 1 year 5 years 5 years (audited) (EGP) Trade and notes payable ...... 9,773,357 — — — Borrowings ...... 8,497,257 980,214 891,782 —

Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital, as is the case for other companies operating in the same field. The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is the sum of current portion of borrowings (which includes overdrafts), non-current portion of borrowings and creditors and other credit balances less cash on hand and at banks. Total capital is represented in net debt plus total equity as shown in the balance sheet. The following table sets forth the Group’s gearing ratio as at 31 December 2015 and 2014.

As at 31 December Cleopatra Hospital Company 2015 2014 2013 (audited) (EGP) Current portion of borrowings ...... 40,600,000 — — Non-current portion of borrowings ...... 162,400,000 — — Creditors and other credit balances ...... 96,293,633 29,852,391 21,568,924 Cash on hand and at banks ...... (38,557,392) (53,632,054) (17,542,298) Net debt ...... 260,736,241 (23,779,663) 4,026,626 Total equity ...... 200,022,401 135,332,196 130,345,832 Total capital ...... 460,758,642 111,552,533 134,372,458 Gearing ratio ...... 56.6% (21.3)% (3.0)%

As at 31 December Cairo Specialized Hospital Company 2015 2014 2013 (audited) (EGP) Current portion of borrowings ...... — — — Non-current portion of borrowings ...... — — — Creditors and other credit balances ...... 24,183,362 17,598,369 13,146,648 Cash on hand and at banks ...... (52,563,224) (44,458,748) (35,612,492) Net debt ...... (28,379,862) (26,860,379) (22,465,844) Total equity ...... 66,402,630 50,851,030 51,226,067 Total capital ...... 38,022,768 23,990,651 28,760,223 Gearing ratio ...... (74.6)% (112.0)% (78.1)%

131 As at 31 December Nile Badrawi Hospital Company 2015 2014 2013 (audited) (EGP) Current portion of borrowings ...... — — — Non-current portion of borrowings ...... — — — Creditors and other credit balances ...... 26,180,337 23,107,694 27,667,747 Cash on hand and at banks ...... (18,786,253) (6,356,681) (2,981,182) Net debt ...... 7,394,084 16,751,013 24,686,565 Total equity ...... 34,909,383 31,296,894 15,463,762 Total capital ...... 42,303,467 48,047,907 40,150,327 Gearing ratio ...... (17.5)% (34.9)% (61.5)%

As at 31 December Al Shorouk Hospital Company 2015 2014 2013 (audited) (EGP) Current portion of borrowings ...... 9,477,471 5,546,003 5,544,706 Non-current portion of borrowings ...... 891,782 1,871,996 3,533,974 Creditors and other credit balances ...... 19,294,023 19,117,460 17,875,947 Cash on hand and at banks ...... (4,089,819) (4,758,669) (4,205,873) Net debt ...... 25,573,457 21,776,790 22,748,754 Total equity ...... 42,544,092 47,216,168 41,084,259 Total capital ...... 68,117,549 68,992,958 63,833,013 Gearing ratio ...... 37.5% 31.6% 35.6% The gearing ratio changed due to the loan from CIB obtained by the Company during 2015.

Critical Accounting Policies and Estimates Estimates and assumptions are evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the actual results.

Provisions Provisions are recognised when there is a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount has been reliably estimated. The Group reviews the provision at each balance sheet date and adjusts it to reflect the current best estimate by using the appropriate advisory experience of experts.

Impairment of goodwill The Group’s management evaluates goodwill annually to determine any impairment in goodwill. The carrying amount of goodwill is reduced if it is higher than the expected recoverable amount. Any losses as a result of impairment of goodwill is charged to the statement of income and cannot be reversed subsequently.

Impairment of receivables and customer balances Impairment of receivables and customer balances is estimated by monitoring the ageing of receivables. The Group’s management examines the credit position and ability of debtors and customers to make payments for their past due debts. Impairment is recognised for amounts due from debtors and customers whose credit position, as assessed by management, does not allow them to pay their dues. In addition, the Group calculates impairment at a Group level for customers and balances that suffered impairment and such impairment was not determined by reference to historical default rates applicable to the Group companies.

132 Summary of Significant Difference Between IFRS and EAS Overview The Group prepares its financial statements in accordance with EAS. EAS differs in certain respects to IFRS and accordingly the following represents a narrative summary of significant differences between IFRS and EAS, as applied by the Group in preparing its financial statements as at and for the year ended 31 December 2015. The Group has not reconciled any differences between EAS and IFRS and does not undertake to do so or to identify all potential differences that may exist. The differences included below relate to the significant differences that may impact amounts recorded in the Group’s financial statements rather than differences that may arise as a result of financial statement presentation or disclosure. It should be noted that Mansour & Co. PricewaterhouseCoopers has not performed any audit, review or other procedures in respect of the narrative summary of differences included below.

Profit Sharing—Recognition and measurement The Group has a profit sharing scheme whereby profits are paid to employees and members of the Board in accordance with applicable laws. Under EAS, profit sharing payment to employees and members of the Board are recognised as a distribution of profits through equity and as a liability when approved at the Group’s annual meeting of shareholders. Under IFRS, these profit sharing arrangements would be considered to arise from employee service or Directors fees and not as a result of a transaction with the Group’s owners. Profit-sharing payments under IFRS would therefore be recognised as an expense in the period incurred.

Business combination—Accounting for transaction costs The Company has acquired two subsidiaries during the year ended 31 December 2015. Under EAS, transaction costs that are directly attributable to these acquisitions are capitalised. Accordingly, the Group has recorded the transactions’ costs within the investment in subsidiary account. Under IFRS, transaction costs that are directly attributable to a business combination are recognised as an expense within the income statement.

Leases—Accounting for finance leases The Group has assets (equipment) that are held under finance lease arrangements. Under EAS, these leased assets are recognised in the accounting records of the lessor and depreciated over their estimated useful lives. The Group, as lessee, recognises lease payments in the income statement in the period in which they are paid with the leased asset remaining in the accounting records of the lessor. Under IFRS, lease classification depends upon whether substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred from the lessor to the lessee. Therefore, under a finance lease arrangement, the leased assets would be derecognized by the lessor and instead accounted for as assets held under finance leases in the accounting records of the lessee with depreciation charged to the income statement over the estimated useful lives of the assets.

133 PART 10 Capitalisation and Indebtedness The tables below set out the consolidated capitalisation and indebtedness of the Company as at 31 December 2015. The capitalisation and indebtedness information has been sourced from the consolidated financial information as at 31 December 2015 and therefore does not include Al Shorouk Hospital Company.

As at 31 December 2015 (EGP) Total current debt ...... 40,600,000 Guaranteed ...... — Secured ...... 40,600,000 Unguaranteed/unsecured ...... — Total non-current debt (excluding current portion of long-term debt) ...... 162,400,000 Guaranteed ...... — Secured ...... 162,400,000 Unguaranteed/unsecured ...... — Shareholder’s equity Share capital ...... 80,000,000 Legal reserve ...... 13,827,660 Other reserves ...... (76,131,168) Total capitalisation ...... 17,696,492

Cash ...... 47,017,745 Cash equivalent(1) ...... 62,889,124

(1) Cash equivalent comprises time deposits of up to six months. Note: Cleopatra Hospital Company’s loans are secured by Care Healthcare’s Shares of the Company and Cleopatra Hospital Company’s shares of Cairo Specialized Hospital. Al Shorouk Hospital Company’s loans are secured by overdraft promissory notes and by the land subject to the Incolease loan. For more details, see ‘‘Credit Facilities’’ in Part 9 (Operating and Financial Review) of this Offering Memorandum. Note: The capitalisation and indebtedness of Al Shorouk Hospital Company as at 31 December 2015 is as follows:

As at 31 December 2015 (EGP) Total current debt ...... 9,477,471 Guaranteed ...... — Secured ...... 9,477,471 Total non-current debt (excluding current portion of long-term debt) ...... 891,782 Guaranteed ...... — Secured ...... 891,782 Unguaranteed/unsecured ...... — Shareholder’s equity Share capital ...... 25,000,000 Legal reserve ...... 6,324,923 Other reserves ...... 3,890,096 Total capitalisation ...... 35,215,019

On 19 January 2016 the Company entered into a medium term loan agreement with CIB for the purpose of financing the acquisition of Al Shorouk Hospital Company. The maximum loan amount available under the agreement is EGP 230 million, and as of 21 January 2016, the Company had utilised EGP 208.7 million. For more detail, see ‘‘Credit Facilities’’ in Part 9 (Operating and Financial Review) of this Offering Memorandum. The Company undertook a share split of its ordinary shares on 13 March 2016 at an extraordinary general meeting. Pursuant to the split, the par value of the Shares decreased from EGP 10 to EGP 0.5. As of the date of this Offering Memorandum, the issued share capital of the Company is EGP 80,000,000, consisting

134 of 160,000,000 ordinary shares of EGP 0.5 each. The Company’s authorised share capital is EGP 800,000,000. As of 31 December 2015, Care Healthcare had an outstanding EGP 47 million loan to the Company on an interest-free basis. In April 2016, Care Healthcare agreed to amend the loan terms, such that the amount will be repayable to all of the Company’s Shareholders, pro rata, upon any future liquidation of the Company, and only after settlement of all other Company liabilities. As such, as of the date of the agreement, the loan was reclassified in the Company’s accounts from a non-current liability to the shareholders’ equity reserves. Other than as set forth above, there has been no material change in the Company’s capitalisation since 31 December 2015. The aggregate expenses of, or incidental to, the Combined Offer and the Closed Subscription to be borne by the Company, including the Sole Global Coordinator’s commission, professional fees and expenses and the costs of printing and distribution of documents, are estimated to be approximately EGP 35 million (including all applicable taxes and assuming the Offer Price is at the mid-point of the Offer Price Range, all of the Offer Shares are sold in the Combined Offer and no Stabilisation), which the Company intends to pay out of the proceeds of the Closed Subscription. Following completion of the Closed Subscription, the Company’s issued share capital is expected to be EGP 100,000,000 divided into 200,000,000 ordinary shares of EGP 0.5 each (assuming all of the Offer Shares are sold on the Combined Offer and no Stabilisation).

135 PART 11 Unaudited Pro Forma Consolidated Financial Information The Unaudited Pro Forma Consolidated Financial Information includes the pro forma consolidated balance sheet of Cleopatra Hospital Company and its subsidiaries, which comprises Cairo Specialized Hospital Company and Nile Badrawi Hospital Company and Al Shorouk Hospital Company and the pro forma consolidated statement of income of the Company and Al Shorouk Hospital Company as at and for the year ended 31 December 2015. The Unaudited Pro Forma Consolidated Financial Information has been prepared using the audited consolidated financial statements of the Company as at and for the year ended 31 December 2015 and the audited financial statements of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company, each of them as at and for the three years ended 31 December 2015. The Unaudited Pro Forma Consolidated Financial Information has been prepared by applying the estimates, assumptions and adjustments as described in the accompanying notes to the Unaudited Pro Forma Consolidated Financial Information, which includes applying purchase accounting for the acquisitions of Nile Badrawi Hospital Company and Al Shorouk Hospital Company. The audited financial statements described above have been prepared in accordance with EAS. The Unaudited Pro Forma Consolidated Financial Information is based on certain preliminary estimates and assumptions and has been prepared to reflect adjustments to our Historical Financial Information that are: • directly attributable to the Cairo Specialized Hospital Company, Nile Badrawi Hospital Company, and Al Shorouk Hospital Company acquisitions; • factually supportable; and • with respect to the pro forma statement of income, expected to have a continuing impact on our results. The Unaudited Pro Forma Consolidated Financial Information does not include certain expenses, such as legal and advisory fees, related to the acquisitions described above and includes preliminary fair values of the net assets of both Al Shorouk Hospital Company and Nile Badrawi Hospital Company prior to the completion of their respective purchase price allocation exercises. All pro forma adjustments and their underlying assumptions are described in more detail in the notes to our unaudited Pro Forma Consolidated Financial Information. The Unaudited Pro Forma Consolidated Financial Information has been prepared on a voluntary basis, and has not necessarily been prepared in accordance with the requirements of the European Union Regulation under Regulation 809/2004, and with the content of the recommendation issued by the European Securities and Markets Authority (ESMA) for the consistent implementation of the aforementioned Regulation (ESMA/2013/319). The Unaudited Pro Forma Consolidated Financial Information has been prepared solely for illustrative purposes to reflect how the acquisition of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as if the acquisitions were completed on 1 January 2015 could have affected the consolidated balance sheet and the consolidated statement of income of the Company as at and for the year ended 31 December 2015. Accordingly, the Unaudited Pro Forma Consolidated Financial Information is hypothetical and does not purport to represent the actual financial position or the actual results of the Company subsequent to the acquisition of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company. The Unaudited Pro Forma Consolidated Financial Information also does not attempt to project the financial position of the Company subsequent to these acquisitions nor the results of their operations at a future date or for a period in the future. For pro forma purposes: • The unaudited pro forma consolidated balance sheet of the Company as at 31 December 2015 has been prepared as if the acquisition of Al Shorouk Hospital Company had been completed on 31 December 2015. The pro forma consolidated balance sheet of the Company includes the actual balance sheets of both Cairo Specialized Hospital Company and Nile Badrawi Hospital Company, as these two acquisitions were completed during 2015.

136 • The unaudited pro forma consolidated statement of income of the Company for the year ended 31 December 2015 has been prepared as if the acquisition of each hospital by Cleopatra Hospital Company had been completed on 1 January 2015. The final determination of fair values arising from the completed purchase price allocation exercise may result in changes to the pro forma adjustments below and in the pro forma information included elsewhere in this Offering Memorandum. Any changes to the final purchase price allocation exercise from the preliminary exercise may result in significant differences to this Unaudited Pro Forma Consolidated Financial Information. The Unaudited Pro Forma Consolidated Financial Information of Cleopatra Hospital Company and its accompanying notes must be read in conjunction with the audited consolidated financial statements of the Company as at and for the year ended 31 December 2015 and the audited financial statements of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company, each of them as at and for the three years ended 31 December 2015.

137 Pro forma balance sheet

Cleopatra Hospital Al Shorouk Company Hospital consolidated Company Pro Forma Pro Forma 2015 2015 Adjustments 2015 (unaudited) (EGP) Assets Non-current assets Property, plant and equipment ...... 267,049,952 50,782,837 59,626,596 (a) 377,459,385 Intangible assets ...... 97,195,020 — 180,657,595 277,852,615 Deferred tax ...... — 2,163,446 — 2,163,446 Total non-current assets ...... 364,244,972 52,946,283 240,284,191 657,475,446 Current assets Held to maturity investments ...... 38,080 — — 38,080 Inventories ...... 15,517,957 8,712,196 — 24,230,153 Trade receivables ...... 89,986,584 20,287,040 — 110,273,624 Other debit balances ...... 18,282,142 2,350,332 — 20,632,474 Cash and cash equivalents ...... 109,906,869 4,089,819 (71,000,000) (a) 42,996,688 Total current assets ...... 233,731,632 35,439,387 (71,000,000) 198,171,019 Current liabilities Provisions ...... 19,890,797 12,070,124 — 31,960,921 Other credit balances ...... 92,550,296 19,294,023 — 111,844,319 Current Portion Of Long Term Loans .... 40,600,000 9,477,471 — 50,077,471 Income tax liabilities ...... 32,136,609 4,108,178 — 36,244,787 Total current liabilities ...... 185,177,702 44,949,796 — 230,127,498 Working capital ...... 48,553,930 (9,510,409) (71,000,000) (31,956,479) Total investment ...... 412,798,902 43,435,874 169,284,191 625,518,967 Financed as follows: Equity Paid up capital ...... 80,000,000 25,000,000 (25,000,000) (a) 80,000,000 Legal reserve ...... (62,303,508) 10,215,019 (10,215,019) (a) (62,303,508) Retained earnings ...... 108,270,052 7,329,073 (7,329,073) (a) 108,270,052 Total Shareholder’s equity ...... 125,966,544 42,544,092 (42,544,092) 125,966,544 Non-Controlling interest ...... 33,250,055 — 2,828,283 (a) 36,078,338 Total Equity ...... 159,216,599 42,544,092 (39,715,809) 162,044,882 Long Term Loans ...... 162,400,000 891,782 209,000,000 (a) 372,291,782 Trade and other payables—Due to related parties ...... 47,379,723 — — 47,379,723 Deferred income tax liabilities ...... 43,802,580 — — 43,802,580 Total non-current liabilities ...... 253,582,303 891,782 209,000,000 463,474,085 Total equity and non-current liabilities ... 412,798,902 43,435,874 169,284,191 — 625,518,967

138 Pro forma statement of income

Cairo Nile Cleopatra Specialized Badrawi Al Shorouk Hospital Hospital Hospital Hospital Company Company Company Company Pro Forma Pro Forma 2015 2015 2015 2015 Adjustments 2015 Operating revenue ..... 332,002,699 149,377,454 121,307,079 138,642,178 — 741,329,410 Operating cost ...... (214,407,386) (111,849,380) (81,601,341) (99,913,207) 413,903 (c) (507,357,411) Gross profit ...... 117,595,313 37,528,074 39,705,738 38,728,971 413,903 233,971,999 — General and administrative expenses (27,859,422) (14,207,273) (28,072,750) (25,581,868) 0 (95,721,313) Provisions ...... (2,973,505) (6,945,188) (4,218,259) (5,070,124) 0 (19,207,076) Other income ...... 1,028,699 3,808,193 1,856,750 1,231,343 — 7,924,985 Profit before finance income & income tax .. 87,791,085 20,183,806 9,271,479 9,308,322 413,903 126,968,595 — Finance income ...... 5,104,232 4,021,134 — 128,342 — 9,253,708 Finance cost ...... (8,487,998) — — (1,333,834) (49,595,401) (b) (59,417,233) Foreign currency (Loss)/ gain ...... — — (6,087) — (6,087) Profit before income tax . 84,407,319 24,204,940 9,265,392 8,102,830 (49,181,498) 76,798,983 — Income tax ...... (20,603,310) (7,387,426) (4,991,312) (4,108,178) 11,158,965 (d) (25,931,261) Deferred tax ...... 886,196 430,841 (661,591) 198,380 0 853,826 Profit for the year ...... 64,690,205 17,248,355 3,612,489 4,193,032 (38,022,533) 51,721,548 Profit attributable to: Owners of the parent . . . 64,690,205 17,248,355 3,612,489 4,193,032 (46,202,559) (e) 43,541,522 Non-Controlling interests . — — — — 8,180,027 (e) 8,180,027 64,690,205 17,248,355 3,612,489 4,193,032 (38,022,533) — 51,721,548

139 Notes to the Unaudited Pro Forma Consolidated Financial Information 1. Description of the Cairo Specialized Hospital Company Acquisition and Preliminary Pro Forma Purchase Price Allocations The Unaudited Pro Forma Consolidated Financial Information reflects the acquisition by Cleopatra Hospital Company of 52.7% of the equity share capital of Cairo Specialized Hospital Company on 16 September 2015 for a purchase price of EGP 107 million. Cleopatra Hospital Company signed a 5-year financing facility with Commercial International Bank amounting to EGP 203 million, at an interest rate 2.4% plus a corridor specified by the Egyptian Central Bank, which corresponded to an average annual interest rate of 14.1% in 2015 to acquire Cairo Specialized Hospital Company. Unlike Al Shorouk Hospital Company and Nile Badrawi Hospital Company, the acquisition of Cairo Specialized Hospital Company by Cleopatra Hospital Company has not been accounted for under the acquisition accounting method, but has instead been accounted for as a common control transaction. The acquisition of Cairo Specialized Hospital Company has been excluded from the purchase method under EAS, based on the fact that this entity was previously held by the parent company of Cleopatra Hospital Company and therefore represents a business combination under common control, which is not required to be accounted for under the acquisition accounting method. These balances have instead been incorporated into the Unaudited Pro Forma Consolidated Financial Information at book value on a prospective basis, which reflects Cleopatra Hospital Company’s accounting policy for such transactions.

2. Description of the Nile Badrawi Hospital Company Acquisition and Preliminary Pro Forma Purchase Price Allocation The Unaudited Pro Forma Consolidated Financial Information reflects the acquisition by Cleopatra Hospital Company of 99.9% of the equity share capital of Nile Badrawi Hospital Company on 22 September 2015 for a purchase price of EGP 259 million, partially financed by EGP 96 million from the remainder of the loan taken out for the Cairo Specialized Hospital Company acquisition, together with an EGP 47 million loan from Care Healthcare, and the remaining EGP 116 million in cash.

3. Description of the Al Shorouk Hospital Company Acquisition and Pro Forma Purchase Price Allocation The Unaudited Pro Forma Consolidated Financial Information reflects the acquisition by Cleopatra Hospital Company of 99.4% of the equity share capital of Al Shorouk Hospital Company on 31 January 2016 for a purchase price of EGP 280 million, subject to closing accounts, partially financed through a 5 year financing facility amounting to EGP 209 million with Commercial International Bank, at an interest rate of 2.4% plus a corridor specified by the Egyptian Central Bank, which corresponded to an average annual interest rate of 14.1% in 2015. The remaining balance of EGP 71 million is assumed to be paid in cash. The Unaudited Pro Forma Consolidated Financial Information does not include adjustments relating to any potential restructuring liabilities. Certain costs relating to the integration of the three companies such as restructuring and training costs are expected to be incurred, however, any such costs will be recognized when incurred and have not been included within the pro forma adjustments above. Similarly, any potential synergies that may be derived from the transaction have also been excluded from this pro forma financial data save to the extent reflected in goodwill. The Group will have at its disposal final valuations prepared by independent experts for both Al Shorouk Hospital Company and Nile Badrawi Hospital Company within the twelve month period after the acquisition date which will be used to determine the final values to be assigned to the transaction related assets and liabilities.

4. Harmonisation of accounting policies The accounting policies applied by Cleopatra Hospital Company to prepare its audited consolidated financial statements in accordance with EAS have been used in the preparation of the unaudited Pro Forma Consolidated Financial Information. For the purpose of preparing this Pro Forma Consolidated Financial Information we have assumed that the accounting policies applied by Al Shorouk Hospital Company, Nile Badrawi Hospital Company and Cairo Specialized Hospital Company to prepare its audited financial statements in accordance with EAS as at and for the three years ended 31 December 2015 have no significant differences as compared to the accounting policies used to prepare the audited

140 consolidated financial statements of Cleopatra Hospital Company and its subsidiaries as at and for the year ended 31 December 2015.

5. Adjustments to the unaudited Pro Forma Consolidated Financial Information The unaudited pro forma consolidated balance sheet of Cleopatra Hospital Company has been prepared as if the acquisition of Al Shorouk Hospital Company occurred on 31 December 2015. The unaudited pro forma consolidated balance sheet of Cleopatra Hospital Company already includes balance sheet positions of Cairo Specialized Hospital Company and Nile Badrawi Hospital Company, as these two acquisitions were completed during 2015. The unaudited pro forma consolidated statement of income of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company, and Al Shorouk Hospital Company for the year ended 31 December 2015 has been prepared as if the acquisitions have been completed on 1 January 2015. Explanations of the aforementioned adjustments are as follows: a) This adjustment reflects a step up to fair value in property, plant and equipment of EGP 59.6 million for Al Shorouk Hospital Company relating to the preliminary third party valuation conducted in February 2016 as part of the acquisition accounting procedures. As part of purchase price accounting, this adjustment also removes the equity balance of Al Shorouk Hospital Company, and includes the balance of the EGP 280 million consideration paid for the 99.4% share of the business, the remaining portion of non-controlling interest, as well as EGP 180.7 million preliminarily goodwill arising on the acquisition. As this acquisition occurred subsequent to year-end, a purchase price allocation exercise has not yet been performed on the assets acquired. Therefore, it is assumed that, aside from property, plant and equipment, no other net assets will have a significant difference between their book values and fair values. b) This adjustment reflects the interest expense on the EGP 209 million that Cleopatra Hospital Company borrowed to finance the acquisition of Al Shorouk Hospital Company, as well as the loan of EGP 203 million on 16 September 2015 to finance the acquisitions of Cairo Specialized Hospital Company and Nile Badrawi Hospital Company. However, for purposes of calculating the interest expense within the pro forma statement of income, both loans were assumed to have originated as of 1 January 2015. The loans are assumed to have interest accruing from the date of acquisition, which is 1 January 2015, and without any grace period or upfront fees. The calculation also assumes that the EGP 47 million financing received from the parent company to finance the Nile Badrawi Hospital Company acquisition does not carry any interest. c) The adjustment in operating costs reflects adjustments to depreciation expense related to the fair value of and adjustments to the useful lives of property, plant and equipment assuming the Al Shorouk Hospital Company and Nile Badrawi Hospital Company acquisitions had been consummated on 1 January 2015. It was assumed that the amounts to be adjusted should be reflected within operating costs, as Nile Badrawi Hospital Company and Al Shorouk Hospital Company had insignificant depreciation charges in general & administrative expenses during the year. The final valuation for intangible assets has not yet been completed and allocated between intangible assets and goodwill, therefore no amortization is assumed for the purposes of this pro forma adjustment. Cairo Specialized Hospital Company assets would continue to be valued at cost post-acquisition, as discussed above. Additionally, there was no change to the useful lives of Cairo Specialized Hospital Company assets. Therefore, there is no impact on depreciation expense relating to Cairo Specialized Hospital Company assets. d) This adjustment reflects an income tax expense adjustment for the items noted in (b) and (c), calculated at a weighted statutory tax rate of 22.5%. Interest expense related to the loans in (b) and the acquisition costs in (c) would have been recognized within the separate financial statements of Cleopatra Hospital Company, reducing the income tax expense for the year due to the fact that income tax expense is calculated based on the separate financial statements of each legal entity. It is assumed that (d) would have no effect on the income tax expense, as fair value adjustments from the purchase price accounting exercises will only be reflected in the Company’s consolidated financial statements, and therefore will not result in a change in taxable income at each separate legal entity. e) This adjustment reflects the portion of net income for each of the three acquisitions that are attributable to the respective non-controlling interests in each business, as well as contemplating the effects for how the pro forma adjustments noted in (b) through (d) would be allocated to owners and non-controlling interests.

141 6. Pro Forma Non-GAAP Measures

Pro forma for the year ended 31 December 2015 (unaudited) (EGP thousands) Profit for the year ...... 51,722 Add back: Finance income ...... (9,254) Finance costs ...... 59,417 (Loss) / gain on currency translation differences ...... 6 Current tax ...... 25,931 Deferred tax ...... (854) Provisions ...... 19,207 Fixed asset depreciation ...... 14,852 Impairment of trade receivables ...... 21,560 EBITDA ...... 182,588 EBITDA margin ...... 24.6% Net debt ...... 538,597

142 Report on the Pro Forma Consolidated Financial Information Included in the Offering Memorandum To the Board of Directors of Cleopatra Hospital Company SAE We have completed our assurance engagement to report on the compilation of pro forma consolidated financial information of Cleopatra Hospital Company and its subsidiaries, which comprises Cairo Specialised Hospital Company (‘‘CSH’’) and Nile Badrawi Hospital Company (‘‘NBH’’) (the ‘‘Group’’) and Al Shorouk Hospital Company (‘‘ASH’’), and the related notes 1-6, as set out on pages 133 - 139 of the Offering Memorandum issued by the Company. This pro forma consolidated financial information has been prepared in relation to the international offering of ordinary shares of Cleopatra Hospital Company by Care Healthcare Limited (the ‘‘Offering Memorandum’’). The applicable criteria on the basis of which management has compiled the pro forma consolidated financial information is described in notes 1-6. The pro forma consolidated financial information has been compiled by management and prepared for illustrative purposes only to reflect the impact of the acquisition of CSH, NBH and ASH (the ‘‘Acquisitions’’) on the balance sheet and statement of income of Cleopatra Hospital Company as at and for the year ended 31 December 2015 had the Acquisitions taken place at 31 December 2015 and 1 January 2015, respectively. This pro forma consolidated financial information does not present, and is not meant to present, the Group’s past or future results of operations or financial position as detailed in the notes to the pro forma consolidated financial information. As part of this process, information about the financial position and financial performance of the Group, Cleopatra Hospital Company, CSH, NBH, and ASH has been extracted by management from the respective financial statements for the year ended 31 December 2015, on which audit reports have been published.

Management’s Responsibility for the Pro Forma Consolidated Financial Information Management is solely responsible for the criteria used to compile the pro forma consolidated financial information as detailed in notes 1-6 to the pro forma consolidated financial information. The pro forma consolidated financial information has been compiled by management and has not been prepared in accordance with the European Commission Regulation (EC) 809/2004 and ESMA recommendations published for the consistent implementation of that Commission Regulation (ESMA/2013/3/9).

Our Responsibilities Our responsibility is to express an opinion about whether the pro forma consolidated financial information has been compiled, in all material respects, in accordance with the criteria established by management as disclosed in the notes to the pro forma consolidated financial information. We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus, issued by the International Auditing and Assurance Standards Board. This standard requires that the practitioner comply with ethical requirements and plan and perform procedures to obtain reasonable assurance about whether management has compiled, in all material respects, the pro forma consolidated financial information on the basis of the criteria established for such compilation. For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma consolidated financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma consolidated financial information. The purpose of pro forma consolidated financial information included in a prospectus is solely to illustrate the impact of a significant event or transaction on unadjusted financial information of the entity as if the event had occurred or the transaction had been undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the event or transaction at either 1 January 2015 or 31 December 2015 would have been as presented. A reasonable assurance engagement to report on whether the pro forma consolidated financial information has been compiled, in all material respects, on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used by management in the compilation of the pro forma consolidated financial information provide a reasonable basis for presenting the significant effects directly attributable to the event or transaction, and to obtain sufficient appropriate evidence about whether: • the related pro forma adjustments give appropriate effect to those criteria used by management; and • the pro forma consolidated financial information reflects the application of those adjustments to the unadjusted financial information.

143 The procedures selected depend on the practitioner’s judgment, having regard to the practitioner’s understanding of the nature of the company, the event or transaction in respect of which the pro forma consolidated financial information has been compiled, and other relevant engagement circumstances. The engagement also involves evaluating the overall presentation of the pro forma consolidated financial information. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion In our opinion, the pro forma consolidated financial information has been compiled, in all material aspects, on the basis of the criteria described in notes 1-6 to the pro forma consolidated financial information.

Tamer Abdel Tawab Ahmed Gamal Hamadallah El-Atrees Member of Egyptian Society of Accountants & Member of Egyptian Society of Accountants & Auditors Auditors Member of AICPA Member of the Egyptian Tax Society R.A.A. 17996 R.A.A. 8784 EFSA Registration 136 Mansour & Co. PricewaterhouseCoopers Mansour & Co. PricewaterhouseCoopers

17 May 2016 Cairo

144 PART 12 Details of the Combined Offer Background The Selling Shareholder is offering up to 40,000,000 Offer Shares pursuant to the Combined Offer to raise gross proceeds of EGP 412.6 million (assuming no Stabilisation, all of the Offer Shares are sold in the Combined Offer and the Offer Price is set at the mid-point of the Offer Price Range). The Combined Offer is being made by way of: (i) an institutional offering of up to 34,000,000 International Offer Shares to certain institutional investors in a number of countries, including Egypt but excluding the United States; and (ii) an offering of up to 6,000,000 Egyptian Retail Offer Shares in a domestic retail offering in Egypt. Following completion of the Combined Offer, the Company will offer to the Selling Shareholder by way of the Closed Subscription the right to subscribe for up to 40,000,000 Closed Subscription Shares at the Offer Price. The number of Closed Subscription Shares will equal the number of Offer Shares less any Shares repurchased by the Selling Shareholder pursuant to Stabilisation. Pursuant to the Closed Subscription, the Company will issue and allot the Closed Subscription Shares to the Selling Shareholder and the Selling Shareholder will pay to the Company the Offer Price multiplied by the number of Closed Subscription Shares. The Closed Subscription will be available only to the Selling Shareholder and the Selling Shareholder has undertaken to exercise the Closed Subscription. The purpose and effect of the Combined Offer and the Closed Subscription is to raise capital for the Company through an increase of its share capital. The Shares were listed on the EGX on 13 April 2016, but trading of the Shares is conditional on the satisfaction of certain conditions set out in the EGX Listing Rules including, without limitation, completion of the Combined Offer. Trading of the Shares is expected to commence on the EGX on 2 June 2016. All dealings before Commencement of Trading will be of no effect if Commencement of Trading does not take place. Those dealings will be at the sole risk of the parties concerned. The Shares are registered with ISIN number EGS729J1C018 under the symbol ‘‘CLHO.CA’’. Following completion of the Closed Subscription, it is expected that at least 80 per cent. of the Company’s issued ordinary share capital will be held by Shareholders other than the Selling Shareholder. The Company, the Selling Shareholder and the Sole Global Coordinator are not bound to proceed with the Combined Offer. Completion of the Combined Offer will be subject to the determination of the Offer Price and each of the Company’s, the Selling Shareholder’s and the Sole Global Coordinator’s decisions to proceed with the Combined Offer. It will also be subject to the satisfaction of certain conditions contained in the Underwriting Agreement, which are typical for an agreement of this nature, including Commencing of Trading occurring no later than 10:00 a.m. Cairo time on 2 June 2016 and on the Underwriting Agreement not having been terminated prior to Commencement of Trading. The Combined Offer cannot be terminated once trading of the Shares has commenced on the EGX. Further details of the Underwriting Agreement are set out below under the heading ‘‘Underwriting Arrangements’’. The rights attaching to the Shares will be uniform in all respects, including the right to vote and the right to receive all dividends and other distributions declared, made or paid in respect of the Company’s share capital after Commencement of Trading. The Offer Shares will, immediately on and from Commencement of Trading, be freely transferable under the Company’s Statutes. In connection with the International Offer, the Sole Global Coordinator and any of its affiliates, acting as investors for their own accounts, may acquire Offer Shares and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such Shares and other securities of the Company or related investments in connection with the Combined Offer or otherwise. Accordingly, references in this Offering Memorandum to the Offer Shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any or issue, offer, subscription, acquisition, dealing or placing by, the Sole Global Coordinator and any of its affiliates acting as investors for their own accounts. The Sole Global Coordinator does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

145 The Egyptian Retail Offer The Egyptian Retail Offer consists of a domestic offering by the Selling Shareholder of up to 6,000,000 Shares to the public in Egypt. The Egyptian Retail Offer is pursuant to the Capital Market Law, the EGX Listing Rules and regulations promulgated by EFSA and is expected to be open from 22 May 2016 to 30 May 2016. Although it is expected that 34,000,000 Shares will be sold pursuant to the International Offer and 6,000,000 Shares will be sold pursuant to the Egyptian Retail Offer, Offer Shares may be reallocated from the International Offer to the Egyptian Retail Offer depending on the level and nature of demand for the Offer Shares. The Right of Reallocation will be at the discretion of the Company and the Sole Global Coordinator. This Offering Memorandum relates to the International Offer only. Prospective Egyptian retail investors should refer to, and will be purchasing Egyptian Retail Offer Shares solely in reliance on, the Public Offering Notice and may not rely on this Offering Memorandum. All information included in this Offering Memorandum relating to the Egyptian Retail Offer has been included for information purposes only. Investors purchasing International Offer Shares may not purchase Egyptian Retail Offer Shares.

Reasons for the Combined Offer and Use of Proceeds All of the proceeds from the Combined Offer will be received by the Selling Shareholder. The Selling Shareholder has undertaken to use the gross proceeds of the Combined Offer (less any amount reclaimed by purchasers of Egyptian Retail Offer Shares pursuant to Stabilisation) to subscribe for the Closed Subscription Shares at the Offer Price pursuant to the Closed Subscription. The Company intends to use the net proceeds from the Closed Subscription, in addition to a portion of cash available for capital expenditure and operational activities, to fund its capital expenditure plans, including development of extensions of Al Shorouk and Cleopatra. The Group is also considering the acquisition of a facility in New Cairo that it would develop into a new hospital facility. In 2010 Al Shorouk Hospital Company acquired a facility on a 366.5 m2 plot of land adjacent to its existing hospital. The Group intends to utilise the adjacent facility as an extension offering general services, with a focus on ICU services, of which there is a current shortage in Cairo and which tend to be priced higher than other hospital beds. The extension is intended to house approximately 40 beds and is expected to be operational in 2017, subject to obtaining all necessary licenses and approvals. The cost of development of the extension is expected to be approximately EGP 150 million. This amount does not include the cost of acquiring the property, which Al Shorouk incurred in 2010. In 2006, the Company acquired a facility on a 1,176.25 m2 plot of land adjacent to Cleopatra, which the Group intends to utilise as an extension to Cleopatra. Since Cleopatra currently has a high bed occupancy rate in certain departments such as outpatient clinics and ICU, the new facility is expected to serve as overflow for those departments, among others, as well as expanded radiology services. The extension is intended to house approximately 100 beds and is expected to be operational within 12–18 months after obtaining the necessary licenses and permits, all of which have been applied for. The cost of development of the extension is expected to be approximately EGP 250 million. This amount does not include the cost of acquiring the property, which the Company incurred in 2006. The Group is considering the acquisition of a facility in New Cairo with a total gross internal area of 21,604 m2. The facility would be expected to house approximately 200 beds, seven surgical rooms, one catheter laboratory, 20 outpatient clinics and 10 emergency room beds. The Group believes the facility would be operational within 12 months of acquisition and would cost approximately EGP 300–350 million, including the cost of the acquisition. The Directors believe that the Combined Offer and the Closed Subscription will further increase the Group’s profile, brand recognition and credibility with its customers, suppliers and employees, as well as assist in recruiting, retaining and incentivising key management, doctors and employees. The aggregate expenses of, or incidental to, the Combined Offer and the Closed Subscription to be borne by the Company, including the Sole Global Coordinator’s commission, professional fees and expenses and the costs of printing and distribution of documents, are estimated to be approximately EGP 35 million (including all applicable taxes and assuming the Offer Price is at the mid-point of the Offer Price Range, all of the Offer Shares are sold in the Combined Offer and no Stabilisation), which the Company intends to pay out of the proceeds of the Closed Subscription.

146 Offer Price, Bookbuilding and Allocations The Offer Price is expected to be between EGP 8.75 and EGP 11.88 per Share. The Offer Price Range has been set by the Selling Shareholder and the Company (in consultation with the Sole Global Coordinator), and it is currently expected that the Offer Price will be set within the Offer Price Range. The Offer Price Range is indicative only and the Offer Price may be set within or below, but not above, the Offer Price Range. All Offer Shares will be sold at the Offer Price, which will be determined by the Selling Shareholder and the Company following a bookbuilding process and consultation with the Sole Global Coordinator. A number of factors will be considered in determining the Offer Price and the basis of allocation, including the level and nature of demand for the Offer Shares during the bookbuilding process, prevailing market conditions and the objective of establishing an orderly after market in the Shares, as well as the Company’s historical performance, estimates of its business potential and earnings prospects and consideration of these factors in relation to the market valuation of companies in related businesses. The Pricing Statement containing the Offer Price and related disclosures will be published on or about 26 May 2016 and will be available on the Company’s website at http://investors.cleopatrahospitals.com. Although it is expected that 34,000,000 Shares will be sold pursuant to the International Offer and 6,000,000 Shares will be sold pursuant to the Egyptian Retail Offer, Offer Shares may be reallocated from the International Offer to the Egyptian Retail Offer depending on the level and nature of demand for the Offer Shares. The Right of Reallocation will be at the discretion of the Company and the Sole Global Coordinator. In the event that demand for the International Offer Shares exceeds the number of International Offer Shares, allocations may be scaled down in any manner determined by the Selling Shareholder and the Company, after consultation with the Sole Global Coordinator. Participants in the International Offer will be notified of the number of International Offer Shares that they have been allocated as soon as practicable following pricing and allocation. Each prospective investor in the International Offer will be contractually committed to acquire the number of International Offer Shares allocated to it at the Offer Price and, to the fullest extent permitted by law, will be deemed to have agreed that it will not be entitled to exercise any rights to rescind or terminate or, subject to any statutory withdrawal rights, otherwise withdraw from, such commitment.

Settlement and Clearance of the International Offer Shares on the EGX and MCDR A computerised trading system at the EGX allows for automatic electronic matching of bids and offers. The electronic trading system allows brokers remote access to the trading floor and links all independent bookkeeping activities to the Misr for Central Clearing, Depositary and Registry (MCDR), which helps ensure greater speed and efficiency in the settlement process. Trading on the EGX takes place between 10:00 a.m. and 2:30 p.m. Cairo time, Sunday through Thursday, excluding official public holidays. During each trading session, the price of a share is generally restricted from moving up or down by more than five per cent. from the previous day’s closing price. Such restriction can be removed by the EGX pricing committee at the request of a broker if such broker is willing to effect a transaction outside the price window. The closing price of traded shares is determined by calculating a volume weighted average

147 price of the traded shares for the session. Cumulative transactions less than 100 shares do not affect the closing price of the relevant underlying security. All investors in the International Offer Shares must have established a valid client-specific custody account with a local custodian within Egypt authorised by EFSA (a Local Custodian) and must have a unique, personalised stock exchange code for the EGX (a Unified Code). Investors will need to provide, among other things, information as to their legal name and any sub-account details, together with details of their custody account and their Unified Code when submitting a request for an allocation of International Offer Shares. Accordingly, requests for an allocation of International Offer Shares can only be taken from an investor if such investor already has a valid custody account open with a Local Custodian. Investors should contact their global custodian to set up a custody account in Egypt. It can take up to two weeks to set up such an account. All transfers of ownership of the International Offer Shares must be effected on the EGX by an EFSA-licensed broker. Ownership of the International Offer Shares will be shown on the MCDR. The transfer of ownership will be executed at the EGX and will be effected through the records of the MCDR. Transfer of the International Offer Shares will settle in the same day funds. Settlement of share transfers on the EGX occurs on a delivery-versus-payment basis, with transfers of dematerialised securities such as the International Offer Shares settling at T+2. Non-Egyptian purchasers of International Offer Shares must arrange for their International Offer Shares to be delivered to a Local Custodian to hold in dematerialised form. The Local Custodian designated by the purchaser will hold the International Offer Shares in accordance with the purchaser’s instructions. Subject to compliance with the transfer restrictions set forth herein, purchasers of the International Offer Shares wishing to sell their International Offer Shares must instruct an EGX-licensed broker to block such International Offer Shares. The broker then effects such sale through the EGX, which will register such transfer on the registry. None of the Company, the Selling Shareholder or the Sole Global Coordinator will have any responsibility for the performance by the Local Custodians or their agents of their respective obligations under the rules and procedures governing their operations. Brokerage commissions for transactions are not fixed by the EGX or other regulatory bodies and vary depending on the size of the transaction and the brokerage house executing the trade.

Underwriting Arrangements The Company, the Selling Shareholder and the Sole Global Coordinator will enter into the Underwriting Agreement with respect to the International Offer on or around the date of publication of the Pricing Statement. Subject to the satisfaction of certain conditions, the Sole Global Coordinator will agree to use reasonable endeavors to procure purchasers for, or in the event of failure of any purchaser that has committed to purchase, to purchase itself the number of International Offer Shares set forth in the Pricing Statement at the Offer Price. In the Underwriting Agreement, the Company and the Selling Shareholder will make certain representations and warranties and will agree to indemnify the Sole Global Coordinator against certain liabilities. The Underwriting Agreement will contain provisions entitling the Sole Global Coordinator to terminate the Combined Offer (and the arrangements associated with it) at any time prior to Commencement of Trading in certain circumstances. If this right is exercised, the Combined Offer and these arrangements will lapse and any moneys received in respect of the Combined Offer will be returned to applicants without interest. The Underwriting Agreement will provide for the Company to pay the Sole Global Coordinator a commission in respect of the Offer Shares sold and to reimburse it for certain expenses incurred in connection with the Combined Offer. Any commissions received by the Sole Global Coordinator may be retained, and any Shares acquired by it may be retained or dealt in, by it, for its own benefit. The Underwriting Agreement does not relate to the Egyptian Retail Offer and the Sole Global Coordinator is not under any obligation to procure purchasers for, or to purchase any, Egyptian Retail Offer Shares offered in the Egyptian Retail Offering.

148 Lock-up Arrangements Pursuant to the EGX Listing Rules, the Company is required to lock-up 51 per cent. of the Shares held by the Selling Shareholder until the later of (i) the publication of the second annual financial statements following Commencement of Trading or (ii) 24 months following Commencement of Trading, subject to certain exceptions as set forth below. During the Mandatory Lock-up period, the Company can increase its share capital, but the Selling Shareholder must maintain the percentage of locked-up Shares, except for any bonus shares. During the Mandatory Lock-up period, after obtaining approval from EFSA and a resolution from an ordinary general shareholders’ meeting of the Company, the Selling Shareholder may dispose of all or part of its Shares to (i) banks, (ii) insurance companies, (iii) direct investment fund, (iv) specialized investment companies, or (v) any judicial person having expertise in the same field of the Company, conditional upon obtaining an undertaking from the purchaser that it will uphold the Mandatory Lock-Up restriction. Pursuant to the Underwriting Agreement, the Company will agree that, subject to certain exceptions including the Closed Subscription, during the period of 180 days from Commencement of Trading, it will not, without the prior written consent of the Sole Global Coordinator, issue, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce an offer of any Shares (or any interest therein or in respect thereof) or enter into any transaction with the same economic effect as any of the foregoing. Pursuant to the Underwriting Agreement, the Selling Shareholder will agree that, subject to certain exceptions, during the period of 180 days from Commencement of Trading, it will not, without the prior written consent of the Sole Global Coordinator, offer, sell or contract to sell, or otherwise dispose of, directly or indirectly, or announce an offer of any Shares (or any interest therein in respect thereof) or enter into any transaction with the same economic effect as any of the foregoing.

Selling Restrictions The distribution of this Offering Memorandum and the offer of International Offer Shares in certain jurisdictions may be restricted by law and therefore persons into whose possession this Offering Memorandum comes should inform themselves about and observe any restrictions, including those set out in the paragraphs that follow. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. No action has been or will be taken in any jurisdiction that would permit a public offering of the International Offer Shares, or possession or distribution of this Offering Memorandum or any other offering material in any country or jurisdiction where action for that purpose is required. Accordingly, the International Offer Shares may not be offered or sold, directly or indirectly, and neither this Offering Memorandum nor any other offering material or advertisement in connection with the International Offer Shares may be distributed or published in or from any country or jurisdiction except in circumstances that will result in compliance with any and all applicable rules and regulations of any such country or jurisdiction. Persons into whose possession this Offering Memorandum comes should inform themselves about and observe any restrictions on the distribution of this Offering Memorandum and the offer of International Offer Shares contained in this Offering Memorandum. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This Offering Memorandum does not constitute an offer to subscribe for or purchase any of the International Offer Shares to any person in any jurisdiction to whom it is unlawful to make such offer of solicitation in such jurisdiction.

European Economic Area In relation to each Member State of the European Economic Area, the Bookrunner has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in a Member State (the ‘‘Relevant Implementation Date’’) it has not made and will not make an offer of any International Offer Shares to the public in a Member State, except that it may, with effect from and including the Relevant Implementation Date, make an offer of International Offer Shares in a Member State: a) to any legal entity which is a qualified investor as defined in the Prospectus Directive; b) to fewer than 150 natural or legal persons (other than ‘‘qualified investors’’ as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the Bookrunner for any such offer; or

149 c) in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of International Offer Shares shall require the Company or the Sole Global Coordinator to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive. Each person in a Member State who receives any communication in respect of, or who acquires any International Offer Shares will be deemed to have represented, warranted and agreed to and with the Sole Global Coordinator and the Company that: a) it is a qualified investor within the meaning of the law in a Member State implementing Article 2(1)(e) of the Prospectus Directive; and b) in the case of any International Offer Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, (i) the International Offer Shares acquired by it have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Member State other than qualified investors, as that term is defined in the Prospectus Directive, or in the circumstances in which the prior consent of the representative(s) of the Bookrunner has been given to the offer or resale or (ii) where International Offer Shares have been acquired by it on behalf of persons in any Member State other than qualified investors, the offer of such shares to it is not treated under the Prospectus Directive as having been made to such persons. For the purposes of the provisions and representations above, the expression ‘‘an offer to the public’’ in relation to any shares in any Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase or subscribe for any International Offer Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Member State), and includes any relevant implementing measure in the Member State and the expression ‘‘2010 PD Amending Directive’’ means Directive 2010/73/EU.

United Kingdom This Offering Memorandum is for distribution only to persons who: (i) are outside the United Kingdom; or (ii) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the ‘‘Financial Promotion Order’’); or (iii) are persons falling within Article 49(2)(a) to (d) (‘‘high net worth companies, unincorporated associations etc’’) of the Financial Promotion Order; or (iv) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as ‘‘relevant persons’’). This Offering Memorandum is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this Offering Memorandum relates is available only to relevant persons and will be engaged in only with relevant persons. The Bookrunner has represented and agreed that: a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the Company; and b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

Canada The International Offer Shares may be sold only to purchasers in the Canadian provinces other than Manitoba and Newfoundland and Labrador purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the International Offer Shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

150 Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this Offering Memorandum contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser’s province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser’s province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (‘‘NI 33-105’’), the Bookrunner is not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with the Combined Offer.

Egypt No International Offer Shares may be offered or sold in any form of general solicitation or general advertising or in a public offering in Egypt, unless the pre-approval of EFSA and/or the EGX has been obtained. International Offer Shares offered and sold in the Combined Offer may only be offered or sold in Egypt: (a) in connection with the Egyptian Retail Offer pursuant to the Public Offering Notice; and/or (b) by way of a private placement to Egyptian QIBs or High Net Worth Investors (each as defined herein) whose ordinary activities involve them in acquiring, holding, managing or disposing of investments for the purposes of their business and only in accordance with applicable Egyptian laws and regulations. Each purchaser of International Offer Shares offered in Egypt will be deemed to have represented that it is either an Egyptian QIB or High Net Worth Investor within the meaning of the Egyptian Law No. 95 of 1992 (the Capital Market Law), its Executive Regulations and the Egyptian Capital Market Authority’s (the CMA) Directive no. 31 of the year 2002 and guidelines concerning private placements.

United States The International Offer Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States and the International Offer Shares may not be offered, sold, or otherwise transferred, directly or indirectly, in or into the United States. There will be no public offer of the International Offer Shares in the United States. The International Offer Shares are being offered and sold outside the United States in reliance on Regulation S under the U.S. Securities Act. Until 40 days after the commencement of the International Offer, an offer or sale of the International Offer Shares within the United States by any dealer (whether or not participating in the International Offer) may violate the registration requirements of the U.S. Securities Act. Each purchaser of International Offer Shares in the International Offer will be deemed by its acceptance of the International Offer Shares to have represented and agreed, on its own behalf and on behalf of any investor accounts for which it is purchasing the International Offer Shares, that: a) either: i. it is, or at the time the International Offer Shares are sold will be, the beneficial owner of the purchased International Offer Shares and (a) it is located outside the United States and has acquired, or has agreed to acquire and will have required, the International Offer Shares outside of the United States, (b) it is not an affiliate of the Company or a person acting on behalf of such an affiliate and (c) it is not in the business of buying and selling securities or, if it is in such business, it did not acquire the International Offer Shares from the Company or any affiliate thereof in the initial distribution of International Offer Shares; or ii. it is a broker-dealer acting on behalf of its customer, its customer has confirmed to it that such customer is, or at the time the International Offer Shares are sold will be, the beneficial owner of the purchased International Offer Shares and (a) it is located outside the United States and has acquired, or has agreed to acquire and will have required, the International Offer Shares outside of the United States, (b) it is not an affiliate of the Company or a person acting on behalf of such an affiliate and (c) it is not in the business of buying and selling securities or, if it is in such business, it did not acquire the International Offer Shares from the Company or any affiliate thereof in the initial distribution of International Offer Shares;

151 b) the International Offer Shares have not been offered to it by means of any ‘‘directed selling efforts’’ as defined in Regulation S; c) the purchaser is aware that the International Offer Shares have not been nor will be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold in the United States absent registration or in a transaction exempt from registration under the U.S. Securities Act; and d) it acknowledges that the Company and others will rely upon the truth and accuracy of the foregoing acknowledgements, representations and warranties and agrees that if any such acknowledgements, representations and warranties deemed to have been made by virtue of its purchase of the International Offer Shares are no longer accurate, it will promptly notify the Company, and if it is purchasing International Offer Shares as a fiduciary or agent for one or more accounts, it represents that it has sole discretion with respect to each such account and full power to make the foregoing acknowledgements, representations and warranties on behalf of each account.

United Arab Emirates (excluding the Dubai International Financial Centre) This Offering Memorandum is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose. If you are in any doubt about the contents of this Offering Memorandum, you should consult an authorised financial adviser. By receiving this Offering Memorandum, the person or entity to whom it has been issued understands, acknowledges and agrees that this Offering Memorandum has not been approved by or filed with the UAE Central Bank, the UAE Securities or Commodities Authority (the ‘‘SCA’’) or any other authorities in the UAE, nor has the Bookrunner received authorisation or licencing from the UAE Central Bank, SCA or any other authorities in the UAE to market or sell securities or other investments within the UAE. No marketing of any financial products or services has been or will be made from within the UAE other than in compliance with the laws of the UAE and no subscription to any securities or other investments may or will be consummated within the UAE. It should not be assumed that the Bookrunner is a licenced broker, dealer or investment advisor under the laws applicable in the UAE, or that any of them advise individuals resident in the UAE as to the appropriateness of investing in or purchasing or selling securities or other financial products. The International Offer Shares may not be offered or sold directly or indirectly to the public in the UAE. This does not constitute a public offer of securities in the UAE in accordance with the Companies Law or otherwise. Nothing contained in this Offering Memorandum is intended to constitute investment, legal, tax, accounting or other professional advice. This Offering Memorandum is for your information only and nothing in this Offering Memorandum is intended to endorse or recommend a particular course of action. Any person considering acquiring securities should consult with an appropriate professional for specific advice rendered based on their respective situation.

Dubai International Financial Centre The International Offer Shares have not been offered and will not be offered to any persons in the Dubai International Financial Centre except on that basis that an offer is: (i) an ‘‘Exempt Offer’’ in accordance with the Markets Rules (MKT) module of the Dubai Financial Services Authority (the ‘‘DFSA’’); and (ii) made only to persons who meet the Professional Client criteria set out in Rule 2.3.2 of the DFSA Conduct of Business Module.

Kingdom of Saudi Arabia This Offering Memorandum may not be distributed in the Kingdom of Saudi Arabia (‘‘KSA’’), except to such persons as are permitted under the Offers of Securities Regulations (the ‘‘Saudi Regulations’’) issued by the Board of the Capital Market Authority (the ‘‘Capital Market Authority’’) resolution number 2-11-2004 dated 4 October 2004 and amended by the Board of the Capital Market Authority resolution number 1-28-2008 dated 18 August 2008. The Capital Market Authority does not make any representations as to the accuracy or completeness of this Offering Memorandum, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this Offering Memorandum. Prospective investors of the

152 International Offer Shares should conduct their own diligence on the accuracy of the information relating to the International Offer Shares. If a prospective purchaser does not understand the contents of this Offering Memorandum, he or she should consult an authorised financial adviser. The International Offer Shares must not be advertised, offered or sold and no memorandum, information circular, brochure or any similar document has or will be distributed, directly or indirectly, to any person in the KSA other than to Sophisticated Investors within the meaning of Article 10 of the Saudi Regulations. The offer of International Offer Shares in the KSA shall not, therefore, constitute a ‘‘public offer’’ pursuant to the Saudi Regulations. Prospective investors are informed that Article 17 of the Saudi Regulations places restrictions on secondary market activity with respect to the International Offer Shares. Any resale or other transfer, or attempted resale or other transfer, made other than in compliance with the above stated jurisdictions shall not be recognised by the Company.

Lebanon This Offering Memorandum does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any International Offer Shares in the Company in the Lebanese territory, nor shall it (or any part of it), nor the fact of its distribution, form the basis of, or be relied on in connection with, any subscription. The Company has not been, and will not be, authorised or licenced by the Central Bank of Lebanon and its International Offer Shares cannot be marketed and sold in Lebanon. No public offering of the International Offer Shares is being made in Lebanon and no mass-media means of contact are being employed. This Offering Memorandum is aimed at institutions and sophisticated, high net worth individuals only, and this Offering Memorandum will not be provided to any person in Lebanon except upon the written request of such person. Recipients of this Offering Memorandum should pay particular attention to the section titled ‘‘Risk Factors’’ in this Offering Memorandum. Investment in the International Offer Shares is suitable only for sophisticated investors with the financial ability and willingness to accept the risks associated with such an investment, and said investors must be prepared to bear those risks.

Oman This Offering Memorandum does not constitute a public offer of securities in the Sultanate of Oman, as contemplated by the Commercial Companies Law of Oman (Royal Decree No. 4/1974) or the Capital Market Law of Oman (Royal Decree No. 80/1998) and Ministerial Decision No.1/2009 or an offer to sell or the solicitation of any offer to buy non-Omani securities in the Sultanate of Oman. This Offering Memorandum is strictly private and confidential. It is being provided to a limited number of sophisticated investors solely to enable them to decide whether or not to make an offer to the Company to enter into commitments to invest in the International Offer Shares outside of the Sultanate of Oman, upon the terms and subject to the restrictions set out herein and may not be reproduced or used for any other purpose or provided to any person other than the original recipient. Additionally, this Offering Memorandum is not intended to lead to the making of any contract within the territory or under the laws of the Sultanate of Oman. The Capital Market Authority and the Central Bank of Oman take no responsibility for the accuracy of the statements and information contained in this Offering Memorandum or for the performance of the Company with respect to the International Offer Shares nor shall they have any liability to any person for damage or loss resulting from reliance on any statement or information contained herein.

Bahrain The International Offer Shares have not been offered or sold, and will not be offered or sold to any person in the Kingdom of Bahrain except on a private placement basis to persons who are ‘‘accredited investors’’. For this purpose, an ‘‘accredited investor’’ means: (i) an individual holding financial assets (either singly or jointly with a spouse) of USD 1,000,000 or more; (ii) a group, partnership, trust or other commercial undertaking which has financial assets available for investment of not less than USD 1,000,000; or

153 (iii) a government, supranational organisation, central bank or other national monetary authority or a state organisation whose main activity is to invest in financial instruments (such as a state pension fund).

Kuwait The International Offer Shares have not been and will not be offered, sold, promoted or advertised in Kuwait except on the basis that an offer is made in compliance with Decree Law No. 31 of 1990 and the implementing regulations thereto, as amended, and Law No. 7 of 2010 and the bylaws thereto, as amended governing the issue, offering and sale of securities. No private or public offering of the International Offer Shares is being made in Kuwait, and no agreement relating to the sale of the International Offer Shares will be concluded in Kuwait. No marketing or solicitation or inducement activities are being used to offer or market the International Offer Shares in Kuwait.

Qatar The International Offer Shares have not been offered or sold, and will not be offered or sold or delivered, directly or indirectly, in the State of Qatar including the Qatar Financial Centre, other than on the basis that an offer is made: (i) in compliance with all applicable laws and regulations of the State of Qatar including the Qatar Financial Centre; and (ii) through persons or corporate entities authorised and licenced to provide investment advice and/or engage in brokerage activity and/or trade in respect of foreign securities in the State of Qatar.

Jordan Any marketing of the International Offer Shares to Jordanian investors shall be done by way of private placement only. The International Offer Shares are being offered in Jordan on a cross border basis based on one-on-one contacts to no more than 30 potential investors and accordingly the International Offer Shares will not be registered with the Jordanian Securities Commission and a local prospectus in Jordan will not be issued.

South Africa Due to restrictions under the securities laws of South Africa, the International Offer Shares are not offered, transferred, sold, made, renounced or delivered in South Africa or to a person with an address in South Africa and the Combined Offer is not made, offered, transferred, sold, renounced or delivered in South Africa or to a person with an address in South Africa, unless such person falls within one or more of the exemptions to the securities laws relating to offers to the public set out in Section 96 of the Companies Act, No. 71 of 2008 (as amended). The exemptions include: • offers made only to the following persons, namely (i) persons whose ordinary business, or part of whose ordinary business, is to deal in securities, whether as principals or agents; (ii) the Public Investment Corporation as defined in the Public Investment Corporation Act, No. 23 of 2004 (as amended); (iii) persons regulated by the Reserve Bank of South Africa; (iv) authorised financial services providers as defined in the Financial Advisory and Intermediary Services Act, No. 37 of 2002 (as amended); (v) financial institutions as defined in the Financial Services Board Act, No. 97 of 1990; (vi) wholly owned subsidiaries of the persons contemplated in (iii), (iv) and (v), acting as agent in the capacity of authorised portfolio manager for a pension fund registered in terms of the Pension Funds Act, No. 24 of 1956 or as a manager for a collective investment scheme registered in terms of the Collective Investment Schemes Control Act, No. 45 of 2002; (vii) any combination of the persons contemplated in (i) to (vi); and • offers made to a single addressee acting as principal where the contemplated acquisition cost of the International Offer Shares is equal to or greater than R1,000,000. The Combined Offer does not constitute an offer for the sale of or subscription for, or the solicitation of an offer to buy and subscribe for, International Offer Shares to the public as defined in the Companies Act, No. 71 of 2008 (as amended) and will not be distributed to any person in South Africa in any manner which could be construed as an offer to the public in terms of the Companies Act, No. 71 of 2008 (as amended) and should any person who does not fall into any of the above exemptions receive this Offering Memorandum they should not and will not be entitled to acquire any International Offer Shares or otherwise act thereon. This Offering Memorandum does not, nor is it intended to, constitute a prospectus prepared and registered under the Companies Act, No. 71 of 2008 (as amended).

154 PART 13 Additional Information 1. Incorporation and Share Capital 1.1 The Company was established as an Egyptian limited partnership company under the Egyptian Investment Law on 6 November 1979. On 28 July 2005, the Company changed its legal form to a joint stock company. The Company’s registration number is 199393. 1.2 The Company’s registered office is at 39–41 Cleopatra Street, Heliopolis, Cairo, Egypt and its telephone number is +20(2) 24143-931. 1.3 The share capital history of the Company is as follows: 1.3.1 On incorporation as a joint stock company in 2005, the share capital of the Company was EGP 109,320,000 divided into 10,932,000 ordinary shares of EGP 10 each. 1.3.2 On 14 May 2008, pursuant to a decree issued by the Egyptian government, the Company decreased its issued capital to EGP 80,000,000 divided into 8,000,000 ordinary shares of EGP 10 each. 1.3.3 The Company undertook a share split of its ordinary shares on 13 March 2016 at an extraordinary general meeting. Pursuant to the split, the par value of the Shares decreased from EGP 10 to EGP 0.5. As of the date of this Offering Memorandum, the issued share capital of the Company is EGP 80,000,000, consisting of 160,000,000 ordinary shares of EGP 0.5 each. The Company’s authorised share capital is EGP 800,000,000. 1.3.4 Following completion of the Closed Subscription, the Company’s issued share capital is expected to be EGP 100,000,000 divided into 200,000,000 ordinary shares of EGP 0.5 each (assuming all of the Offer Shares are sold in the Combined Offer and no Stabilisation).

2. Statutes of the Company and Applicable Egyptian Law The following is a summary of the Company’s Statutes and certain applicable Egyptian law relevant to the corporate governance of the Company. It is intended only as a summary and does not purport to contain a full description of the Statutes or of all applicable law.

Duration The duration of the Company is 25 years from 28 July 2005. The duration of the Company may be extended by a Shareholder resolution, with the approval of the General Authority for Investment and Free Zones (GAFI), an affiliate of the Egyptian Ministry of Investment.

Limitation of Liability Pursuant to the Companies Law, a shareholder’s liability for the losses of an Egyptian joint stock company is limited to the amount of his or her investment in the shares.

Voting Rights and Shareholders’ Meetings Shareholders wishing to attend general meetings of the Company are required to deposit their shares with the bookkeeping company holding their shares or at the company’s headquarters and to present evidence of such deposit at least three days prior to the date of the general meeting. No transfer of ownership of such deposited shares may be recorded until the meeting closes. The Company’s general meetings may take place in Cairo or Dubai, and they may not be held during EGX trading sessions. General meetings can be convened by the Chairman of the Board, the Directors, the Company’s auditors or Shareholders representing at least five per cent. of the Company’s outstanding share capital. Shareholders representing at least 50 per cent. of the issued share capital will constitute a quorum at general meetings. Resolutions voted upon at a validly convened general meeting are passed by an absolute majority vote of the Shares represented at the meeting. If a quorum is not met, the meeting is adjourned for a maximum of 30 days. Upon recommencement of the adjourned meeting, there is no quorum requirement for the meeting to be valid. The invitation to the meeting may refer to the date and time of this second meeting, and the Statutes provide that the second meeting shall be deemed valid regardless of

155 the number of Shares present or represented in the meeting. A general meeting must be convened at least once a year within three months of the end of each fiscal year. An extraordinary general meeting can be called upon the request of the Board or Shareholders representing ten per cent. or more of the Company’s outstanding share capital. Resolutions voted upon therein are passed by a two-thirds majority of the Shares represented at the meeting. Resolutions pertaining to an increase or decrease of the share capital, mergers of the Company and any other entity, amendments to the Company’s stated objectives or its dissolution require a super majority of 75 per cent. of the Shares represented at the meeting. If a quorum is not present, the meeting is adjourned for a maximum of 30 days. Upon recommencement of the adjourned meeting, a quorum is constituted and the meeting is valid by the presence of Shareholders (or their representatives) representing at least 25 per cent. of the outstanding share capital. At least three Directors must attend any Shareholders’ meeting in order for such meeting to be considered valid. Any Shareholder may attend a Shareholders’ meetings in person or by proxy. The proxy must be in writing and must be given to a Shareholder. Shareholders that are not represented by a Director on the Board may not give a proxy to a Director. A Shareholder may not represent by proxy more than ten per cent. of the total number of Shares in the Company or 20 per cent. of the Shares represented at the meeting. The minutes of any Shareholders’ meetings must be ratified by GAFI and disclosed to EFSA and the EGX. Minutes are available for review by Shareholders, the Company’s auditor and certain administrative authorities, but they are not available to the public. The resolutions are required to be disclosed to EFSA and the EGX, and material resolutions will be published on the EGX’s website. Shareholders who have objected to a particular resolution or who did not attend the meeting (for a valid reason) where a particular resolution was passed, are entitled to request the suspension or nullity of such resolution if the resolution is found to favour or disfavour a certain group of Shareholders or provides a special benefit to the Directors or others without considering the Company’s benefit. GAFI may act on behalf of the Shareholders if so requested.

Dividends Dividends are declared by Shareholder resolution at general meetings. They must be distributed within one month from the date of such general meeting. Dividends are payable to the Shareholders of record whose names are recorded in the Shareholders’ ledger or the MCDR records. According to the Statutes, the annual net profits of the Company, after deducting all general expenses and other charges, are distributed as follows: a) A sum equal to five per cent. of the net profits must be deducted and allocated as a legal reserve. Such deduction shall cease when the aggregate legal reserve reaches an amount equivalent to 50 per cent. of the issued share capital. When the reserve falls below that amount, deductions shall resume. b) A sum equal to ten per cent. of the net profits, but not exceeding the total annual salaries of the Company’s employees, is to be distributed to the employees, as recommended by the Directors and approved by the Shareholders. c) An initial distribution of a minimum of five per cent. of the net profits is to be paid to the Shareholders, distributed on a pro rata basis. d) If the company has founding quotas, the founding shareholder shall receive payment of their portion in the dividends, but in all cases not exceeding ten per cent. of the remaining amount. e) A maximum of five per cent. of the remaining amount is to be allocated to the Directors as remuneration. The remaining net profits, if any, may be (i) paid to the Shareholders as additional dividends or (ii) upon the proposal of the Directors, carried forward to the following year as retained earnings or allocated to an extraordinary reserve or an extraordinary depreciation reserve. The shareholders may decide at an ordinary general meeting to distribute all or part of the profits declared by the quarterly financial statements, provided such accounts are accompanied by a report from the Company’s auditor.

156 Increases and Reductions in Capital The Company’s share capital may be decreased or increased only by a Shareholder resolution by a three- quarters majority of the Shares represented at the general meeting. The approval of EFSA is required for the issuance of any new Shares or the reduction of share capital. Any amendment to Articles 6 and 7 of the Statues in connection with an increase or decrease of the authorised and/or issued share capital of the Company requires the approval of the Chairman of GAFI, as the Company is incorporated pursuant to the Egyptian Investment Law. An increase in the issued share capital of the Company that does not exceed the approved authorised share capital may be made by a resolution adopted at a duly convened Board meeting. Increases in the share capital must be made at fair value at the time of issuance of the Shares in accordance with a fair valuation report issued by an independent financial adviser (an IFA), provided that the rights issue allocated among existing shareholders of the Company may be made at par value, subject to the approval by a general meeting. An IFA report is required if any new Shares are offered to a new investor at fair value. In the case of a rights issuance, the subscription rights may be traded by the holders of the Shares independently from the Shares following the commencement of the subscription period. According to the EGX Listing Rules, the Company may not increase or decrease its share capital, or publish the invitation to an Extraordinary General Assembly Meeting to consider the same or carry out the required procedures, without submitting a disclosure report in the prescribed form to the EFSA together with the relevant Board minutes approving the increase or decrease and the EFSA’s approval of such report and its publication on the EGX trading screens. The invitation to the Extraordinary General Assembly Meeting and/or the commencement of capital increase or decrease procedures must be made within one week from the date of EFSA’s approval of the disclosure report and its publication on the EGX trading screens, and the relevant Board minutes must include an authorisation to the Chairman to undertake the same.

Certificates, Registry and Transfer The Shares are dematerialised and registered on the MCDR system, and they cannot be held in certificated form. According to the EGX Listing Rules and the Capital Market Law, each Shareholder acquiring, including through its related parties, five per cent. or multiples thereof of the Shares or subscription rights of the Company must disclose its holding. Shareholders must also disclose the decrease of their shareholdings, including through its related parties, by five per cent. or multiples thereof. Directors and employees, and their respective related parties, must abide by the aforementioned disclosure requirements when their shareholdings increase or decrease by multiples of three per cent. In the event that the stake acquired by the shareholder, including its related parties, represents 25.0% or more of the Shares or voting rights, the purchasing shareholder must disclose its future investment plan and any plans regarding the Company’s management. In each of the above cases, disclosure must be made to EGX. EGX publishes such disclosures on the trading screens and its website. A person may acquire, independently or together with related parties, less than one-third of the share capital or voting rights of the Company through open market transactions (i.e., by applying the normal applicable EGX trading rules) or through a voluntary tender offer. The obligation to launch a mandatory tender offer for the acquisition of 100 per cent. of the Shares, voting securities and convertible securities of the Company would arise in any of the following situations: a) if a person acquires, independently or together with related parties, one-third or more of the share capital or voting rights of the Company; provided, however, that EFSA may temporarily exempt such person from this obligation if the excess percentage does not exceed three per cent. of the share capital or voting rights of the Company, such excess is disposed of within six months from reaching the one-third threshold and the excess Shares do not entitle the holder to any voting rights within such period (i.e., until the disposal of the excess percentage takes place); b) if a person that holds, independently or together with related parties, between one-third and one-half of the share capital or voting rights of the Company, independently or together with related parties, and (i) acquires more than an additional two per cent. of the share capital or voting rights within 12 consecutive months or (ii) exceeds one-half of the share capital or voting rights at any point in time; or c) if a person that holds, independently or together with related parties, between one-half and three- quarters of the share capital or voting rights of the Company, independently or together with related parties, and (i) acquires more than an additional two per cent. of the share capital or voting rights within 12 consecutive months or (ii) exceeds three-quarters of the share capital or voting rights at any point in time.

157 The foregoing provisions do not apply in the case of a decrease of share capital due to the cancellation of treasury shares or the increase of share capital in cash or through debt-to-equity swaps. The provisions will apply if a Shareholder purchases subscription rights.

Liquidation Rights and Other Distributions In the event of the liquidation, dissolution or winding-up of the Company, the assets of the Company are to be applied to satisfy its liabilities. Shareholders will receive any remaining surplus on a pro rata basis. If, during any financial year, the losses of the Company exceed 50 per cent. of its capital, an extraordinary general meeting must be convened to decide whether to dissolve the Company or to continue its activities. Resolutions of the extraordinary general meeting in relation to dissolution or continuation are adopted by a three-quarters majority of the Shares represented at the meeting.

Pre-emptive Rights If there is an increase in the share capital of the Company’s by the issuance of new shares, the Egyptian Companies Law and the Statutes provide that the existing Shareholders have a right to subscribe for up to their pro rata share in the new Share issue, unless a meeting of Shareholders resolves, by a three-quarters majority of the Shares represented at the meeting, to offer part or all of the new Shares in a public subscription without applying the pre-emptive rights.

Acquisition of Company’s Own Shares The Company may purchase its own Shares pursuant to a Board resolution in order to reduce its outstanding share capital, to make a distribution to its employees in the form of an employee share scheme or in connection with delisting from the EGX. In accordance with the Egyptian Companies Law, if the Company acquires its own Shares, it must either resell or cancel those Shares within one year, but it must hold such Shares in treasury for a minimum period of three months. Any buyback of Shares by the Company must be made in compliance with EGX directives guaranteeing equality among investors and market stability. The Company may not acquire or own more than ten per cent. of its listed share capital in the form of treasury Shares. The Company must notify the EGX of its plan to acquire treasury Shares at least three business days before carrying out the acquisition. The notice must include the reasons for the acquisition, the source of financing, the expected impact on the Company’s performance indicators, the purchase price, the quantity, the envisaged period of implementation and the Company’s broker. The minutes of the Board meeting approving the buyback must be attached to the notice.

3. Directors’ and Senior Managers’ interests 3.1 As at the date of this Offering Memorandum, no Directors or members of senior management own, or will own immediately following the Combined Offer or the Closed Subscription, any Shares. 3.2 Insofar as is known to the Directors, the following are the interests which represent, or will represent, directly or indirectly, 3 per cent. or more of the issued share capital of the Company assuming no Stabilisation:

Immediately prior to Immediately following Immediately following Commencement of Trading Commencement of Trading Closed Subscription Percentage Percentage Percentage of issued of issued of issued Number of share Number of share Number of share Shareholder Shares capital Shares capital Shares capital Care Healthcare . . 159,999,960 99.99% 119,999,960(1) 74.99%(1) 159,999,960 79.99%(1)

(1) Assuming all of the Offer Shares are sold in the Combined Offer and no Stabilisation. Save as disclosed above, insofar as is known to the Directors, there is no other person who is or will be immediately following Commencement of Trading, directly or indirectly, interested in 3 per cent. or more of the issued share capital of the Company, or of any other person who can, will or could, directly or indirectly, jointly or severally, exercise control over the Company. The Directors have no knowledge of any arrangements the operation of which may at a subsequent date result in a change

158 of control of the Company. None of the Company’s major shareholders have or will have different voting rights attached to the shares they hold in the Company. 3.3 No Director has or has had any interest in any transactions which are or were unusual in their nature or conditions or are or were significant to the business of the Company or any of its subsidiaries and which were effected by the Company or any of its subsidiaries during the current or immediately preceding financial year or during an earlier financial year and which remain in any respect outstanding or unperformed. 3.4 There are no outstanding loans or guarantees granted or provided by any member of the Group to or for the benefit of any of the Directors.

4. Directors’ terms of appointment 4.1 The Directors and their functions are set out in Part 7 (Directors, Senior Management and Corporate Governance). Below is a summary of their terms of appointment. 4.2 Executive Directors 4.2.1 Executive Directors are appointed for terms of three years. They do not receive any compensation for their role as a Director in addition to their compensation for their services as a senior manager. 4.3 Non-Executive Directors 4.3.1 Non-Executive Directors are appointed for terms of three years. Non-Executive Directors receive EGP 10,000 for each Board meeting they physically attend, except that Non-Executive Directors representing Abraaj NAH do not receive any compensation. The Directors currently representing Abraaj NAH are Ahmed Adel Badreldin and Walid Fayez Said Bakr. 4.4 Senior Management Remuneration In 2015, the aggregate remuneration to the senior management who served each of Cleopatra, Cairo Specialized Hospital and Nile Badrawi during 2015 was EGP 8,016,797, EGP 1,750,000 and EGP 1,335,000, respectively. These figures include remuneration paid to members of the Group’s senior management who are no longer employed by the Group. In 2015, Al Shorouk was managed by a management company comprising four of the hospital’s previous owners. This management agreement was terminated prior to the Company acquiring Al Shorouk. 4.5 Directors’ current and past directorships and partnerships Set out below are the directorships and partnerships held by the Directors (other than, where applicable, directorships held in the Company and its subsidiaries), in the five years prior to the date of this Offering Memorandum:

Name Current directorships / partnerships Past directorships / partnerships Dr. Ahmed Ezzeldin Mahmoud Abdelaal . . . . — —Johnson & Johnson Egypt S.A.E. —Johnson & Johnson Middle East FZ LLC —GlaxoSmithKline S.A.E.

Ahmed Adel Badreldin . . . —ABRAAJ Aqua SPV Limited —Minnow Marine Projects Limited —Abraaj Viking Holdco Limited —Stanford Asia Holding Company —Abraaj Viking Management Limited —Stanford Mermaid Limited —Abraaj Viking Partners Limited —Stanford Caracara Limited —Al Shorouk Hospital Company S.A.E —Stanford Condor Limited —Aqua Consortium Limited —Stanford Gold Limited —Assad —Stanford Kestrel Limited —Bisco Invest for Trading and Investment —Stanford Kite Limited —Bisco Invest for Trading and Investment S.A.E. —Stanford Merlin Limited —Cairo for Investment in Real Estate Development S.A.E —Stanford Osprey Limited —Cairo Specialized Hospital Company S.A.E —Abraaj Partners Holding Company —Cleopatra Hospital Company S.A.E —Cairo Medical Tower Laboratory (Al Borg Laboratory) —Clinique Taoufik Group —ECCO Outsourcing —Eclipse Holdings Limited —Eclipse Holdings Limited —Enshaa PSC —Fresh Quick Service Restaurants BV —Fresh Quick Service Restaurants, Ltd —Gray Mackenzie Retail Management Limited —Integrated Diagnostics Group Limited —Integrated Diagnostics Holdings Limited —Integrated Diagnostics Investments Limited

159 Name Current directorships / partnerships Past directorships / partnerships —Integrated Diagnostics TopCo Limited —Kantara Investments Limited —KEC SPV Limited —Kuwait Energy plc —MediaquestCorp Enterprises Incorporated —Nile Badrawi Hospital Company S.A.E —OMS —Oncology Diagnostics Morocco —RED Entertainer SPV Limited —Riyada Enterprise Development Limited —Riyada Managers Limited —Saham Finances —Saham Finances —Societ´ e´ d’Articles Hygieniques´ —Spinneys Algeria Limited —Spinneys Egypt Limited —Spinneys Group Limited —Spinneys Group Operations Limited —Spinneys Holdings Limited —Spinneys IP Limited —Spinneys Iraq Limited —Spinneys Jordan Limited —Spinneys Kazakhstan Limited —Spinneys KSA Limited —Spinneys Levant Limited —Spinneys Qatar Limited —Spinneys Syria Limited —Stanford Marine Group Inc. —Stanford Marine Group Inc. —Tiba Cayman Limited —Tiba Cayman Limited —Viking

Walid Fayez Said Bakr . . . —Cairo for Investment and Real Estate Development —Arab Directory Services Company —OMS —ECCO —Nymgo SA —Eclipse Technologies —D1G Limited —Eclipse Holdings Limited

Dr. Mohamed Awad Tag El Din...... —Arab Company for Drug Industries and Medical Appliances (ACDIMA International) —Egyptian International Pharmaceutical Industry Company (EPICO)

Nabil Walid Kamhawi . . . . Delta Brokerage Co S.A.E. —Middle East Glass Manufacturing Company ESC —Prime Holdings ESC —Rasmala Egypt Securities ESC —Rasmala Egypt Asset Management ESC —Delta Rasmala Investment Company ESC

Omar Atef Kinawy ..... — —

Sameh Mahmoud Mohsen . — — 4.6 Within the period of five years preceding the date of this Offering Memorandum, none of the Directors: a) has had any convictions in relation to fraudulent offences; b) has been a member of the administrative, management or supervisory bodies or director or senior manager (who is relevant in establishing that a company has the appropriate expertise and experience for management of that company) of any company at the time of any bankruptcy, receivership or liquidation of such company; or c) has received any official public incrimination and/or sanction by any statutory or regulatory authorities (including designated professional bodies) or has ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of affairs of a company.

5. Employee Funds and Profit-Sharing Distributions Profit-Sharing Distributions Under Egyptian law, in any particular year, companies are required to make profit-sharing distributions to their employees if they pay dividends to their shareholder in that year. The amount of the employee distributions must be the lesser of (i) 10 per cent. of the distributed net profits or (ii) 100 per cent. of the Company’s total salaries and wages paid in that year.

160 Employee Long Term Incentive Plan The Company intends to explore implementation of an employee long term incentive plan (LTIP) following Commencement of Trading, for the benefit of employees, senior management and the Executive Directors. Such a plan shall be reviewed by the Board and, upon the Board’s acceptance, shall be submitted to an extraordinary general shareholders meeting for approval. The Statutes of the Company may have to be amended, and regulatory approvals may have to be obtained in accordance with applicable law and the EGX Listing Rules, in order to implement the LTIP.

6. Subsidiaries, investments and principal establishments The Company is, in addition to the operating company of the Cleopatra hospital, the holding company of the Group. The principal subsidiaries of the Company are as follows: 6.1 Subsidiaries

Country of Ownership incorporation interest and Name and operations voting power Field of activity Al Shorouk Hospital Company ...... Egypt 99.9% Hospital operating company Cairo Specialized Hospital Company ...... Egypt 52.7% Hospital operating company Nile Badrawi Hospital Company ...... Egypt 99.9% Hospital operating company 6.2 Principal establishments The following are the principal establishments of the Group:

Name and location Type of facility Tenure Cleopatra, Heliopolis, Cairo, Egypt ...... Hospital Owned Cairo Specialized Hospital, Heliopolis, Cairo, Egypt ...... Hospital Owned Nile Badrawi, Maadi, Cairo, Egypt ...... Hospital Owned(1) Al Shorouk, Mohandesin, Giza, Egypt ...... Hospital Owned

(1) It was discovered in the 1980s that part of the Nile Badrawi facility was erected on state-owned property. In 2003, all parties involved and the Ministerial Committee for Settlement of Investment Disputes reached an agreement that Nile Badrawi Hospital Company would pay compensation to the River Transport Authority and ownership of the relevant land would be transferred to Nile Badrawi Hospital Company. The terms of the transfer have not yet been agreed with the River Transport Authority. For more detail, see ‘‘Legal and Administrative Proceedings’’ in Part 6 (Business Description) of this Offering Memorandum.

7. Material contracts The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by the Company or another member of the Group: (a) within the two years immediately preceding the date of this Offering Memorandum which are, or may be, material to the Company or any member of the Group, and (b) at any time and contain provisions under which the Company or any member of the Group has an obligation or entitlement which is, or may be, material to the Company or any member of the Group as at the date of this Offering Memorandum: 7.1 Underwriting Agreement See ‘‘Underwriting Arrangements’’ in Part 12 (Details of the Combined Offer) of this Offering Memorandum. 7.2 Credit and Financing Arrangements See ‘‘Credit and Financing Arrangements’’ in Part 9 (Operating and Financial Review) of this Offering Memorandum.

8. Egyptian Taxation The statements herein regarding Egyptian taxation are based on the laws in effect in Egypt as of the date of this Offering Memorandum and are subject to any changes of law occurring after such date, which changes could be made on a retroactive basis.

161 The following is a summary of the principal tax consequences for corporate holders of Shares who are not resident in Egypt (‘‘non-residents’’). This summary addresses only the tax consequences for non-resident corporate investors who hold Shares as capital assets, and this summary does not address the tax consequences which may be relevant to other classes of non-resident investors, such as dealers in securities. The summary is not intended to be an authoritative or complete statement of the applicable laws. Prospective investors are referred to ‘‘The Egyptian income tax regime has recently changed’’ in Part 1 (Risk Factors) of this Offering Memorandum. Prospective investors must seek their own tax advice in relation to their specific tax position.

Acquisition of Shares There is currently no stamp duty or other transaction tax levied on the acquisition of Shares.

Dividends Dividends were not previously taxable in Egypt, but the Egyptian Income Tax Law introduced a 10 per cent. dividend withholding tax. The Egyptian Income Tax Law defines dividends as any income resulting from shares, including preferred shares, founding shares or any other instruments giving their holders an entitlement to participate in the profits of an Egyptian company. According to the Egyptian Income Tax Law, dividends distributed by Egyptian companies to non-residents are subject to a 10 per cent. withholding tax, without deducting any costs or expenses. Dividends in the form of shares (i.e. stock dividends) are not subject to dividend withholding tax. The withholding tax rate is reduced to five per cent., without deducting any costs or expenses, provided that (i) the non-resident to which dividends will be distributed holds more than 25 per cent. of the company’s capital or voting rights and (ii) the non-resident holds such shareholding for no less than two years. A relevant double taxation treaty may reduce the withholding tax rate applicable on dividends paid by an Egyptian company to its non-resident shareholders. The Company should be entitled to a 90 per cent. participation exemption on the dividend income received from its Egyptian subsidiaries. That is, 10 per cent. of the dividend income received by the Company from its Egyptian subsidiaries would be subject to corporate tax at 22.5 per cent. The withholding tax already deducted cannot be used as a tax credit to satisfy this corporate tax liability.

Disposal of Shares According to the Egyptian Income Tax Law, capital gains realised from the sale of Egyptian shares listed on the EGX by both resident and non-resident shareholders are subject to a 10 per cent. withholding tax. However, the application of this tax is suspended for two years starting 17 May 2015 (i.e. the date of the official announcement made by the Cabinet of Ministers regarding this exemption). A relevant double taxation treaty may eliminate non-resident taxation in Egypt on the disposal of shares in the Company.

Inheritance Tax There is currently no tax on inheritances in Egypt. Accordingly, no inheritance taxes in Egypt will be chargeable on the death of an owner of the Shares. THE DISCUSSION ABOVE IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISER ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN THE SHARES IN LIGHT OF THE INVESTOR’S OWN CIRCUMSTANCES.

9. Enforcement of arbitral decisions and civil liabilities in Egypt Egypt is a party to the New York Convention. Consequently, Egyptian courts should recognise and enforce in Egypt a valid arbitral award made in the United Kingdom and other signatories of the New York Convention, on the basis of the rules of the New York Convention, subject to qualifications provided for in

162 the New York Convention and compliance with Egyptian procedural regulations and arbitration law. However, in practice, it may be difficult to enforce arbitral awards in Egypt due to: a) the relatively limited experience of Egyptian courts in enforcing international commercial arbitral awards; b) the Egyptian courts’ inability or unwillingness to enforce those awards; and/or c) legal grounds (e.g., the concept of ‘‘public order’’) and/or technical grounds (e.g., the lack of capacity of the parties or the invalidity of an arbitration clause). In addition, the Company is an Egyptian joint stock company and the liability of its shareholders is limited to their respective capital contributions. All of the executive officers and a majority of the Directors are residents of Egypt, and all of the assets of the Company are located in Egypt. It may not be possible for investors to effect service of process within the United Kingdom or elsewhere on the Company or any of those persons or to enforce against any of them judgments obtained in courts outside of Egypt predicated on the civil liability provisions of the securities laws of those other jurisdictions. Enforcement of foreign judgments in Egypt is subject to the following conditions: a) the foreign courts rendering the relevant judgment offer reciprocal treatment to judgments obtained in the courts of Egypt. If reciprocal treatment is not offered by the court where judgment is obtained, then the Egyptian courts will re-examine the merits of the case in the same manner as that adopted by those courts; b) the courts of Egypt are not exclusively competent to hear the dispute which constituted the object of the foreign judgment while the foreign courts are shown to have been competent to hear the dispute in accordance with their own respective laws; c) the parties to the dispute were duly notified and properly represented in the proceedings; d) the foreign judgment is final and conclusive in accordance with the relevant law; and e) the foreign judgment does not conflict with a prior Egyptian judgment in the same case and is not contrary to public order or morality in Egypt. Judgments of the courts of foreign jurisdictions may not be enforceable in Egypt because there may be no bilateral treaties between Egypt and the relevant jurisdiction on the enforcement of judgments and the foreign courts may be deemed not to offer reciprocal treatment to judgments obtained in the courts of Egypt.

10. Litigation Save as described in ‘‘Legal and Administrative Proceedings’’ in Part 6 (Business Description) of this Offering Memorandum, there are no governmental, legal or arbitration proceedings (including such proceedings which are pending or threatened of which the Company is aware) during the 12 months preceding the date of this Offering Memorandum, which may have, or have had, a significant effect on the Company’s and/or the Group’s financial position or profitability.

11. Related party transactions The Company leases from Lashin for Plastic Industries S.A.E. (Lashin) a 2000 m2 space in a warehouse. After approval from Lashin, the Company sublet 532 m2 of space to Cairo Specialized Hospital beginning on 1 November 2014 for 14 months with automatic renewal unless either party notifies the other of its intention to terminate at least one month prior to expiration of the current term. Save as described above and in the Company’s audited consolidated financial information for the year ended 31 December 2015 and the audited financial information for each of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company for the three years ended 31 December 2015, 2014 and 2013 set out in Part 14 (Historical Financial Information), there are no other related party transactions between the Company or members of the Group that were entered into during the three financial years ended 31 December 2015, 2014 and 2013 and during the period between 31 December 2015 and 12 May 2016 (the latest practicable date prior to the publication of this Offering Memorandum).

163 12. No significant change There has been no significant change in the financial or trading position of the Company since 31 December 2015, the date as of which the last audited consolidated financial statements of the Group were prepared.

13. Fees and expenses The aggregate expenses of, or incidental to, the Combined Offer and the Closed Subscription to be borne by the Company, including the Sole Global Coordinator’s commission, professional fees and expenses and the costs of printing and distribution of documents, are estimated to be approximately EGP 35 million (including all applicable taxes and assuming the Offer Price is at the mid-point of the Offer Price Range, all of the Offer Shares are sold in the Combined Offer and no Stabilisation), which the Company intends to pay out of the proceeds of the Closed Subscription. Dated: 18 May

164 PART 14 Historical Financial Information Cleopatra Hospital Company Auditor’s report To: The Shareholders of Cleopatra Hospital Company S.A.E.

Report on the separate financial statements We have audited the accompanying separate financial statements of Cleopatra Hospital Company S.A.E. which comprise the separate balance sheet as at 31 December 2015, 2014 and 2013 and the separate statements of income, changes in equity and cash flows for the fiscal year then ended, and a summary of significant accounting policies and other notes.

Management’s responsibility for the separate financial statements These separate financial statements are the responsibility of the Company’s management. Management is responsible for the preparation and fair presentation of these separate financial statements in accordance with Egyptian Accounting Standards and in light of the prevailing Egyptian laws. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Management’s responsibility also includes selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility Our responsibility is to express an opinion on these separate financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the separate financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the separate financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the separate financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the separate financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the separate financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these separate financial statements.

Opinion In our opinion, the separate financial statements referred to above present fairly, in all material respects, the separate financial position of Cleopatra Hospital Company S.A.E. as at 31 December 2015, 2014 and 2013 its financial performance, and its separate cash flows for the fiscal year then ended in accordance with the Egyptian Accounting Standards and in light of the related Egyptian laws and regulations.

Tamer Abdel Tawab Ahmed Gamal El-Atrees Member of Egyptian Society of Accountants & Fellow of Egyptian Society of Accountants & Auditors Auditors Member of AICPA R.A.A. 8784 R.A.A. 17996 E.F.S.A. 136 Mansour & Co. PricewaterhouseCoopers Mansour & Co. PricewaterhouseCoopers 6 April 2016 Cairo

165 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Balance sheet At 31 December 2013, 2014 and 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Non-current assets Fixed assets ...... 5 61,804,067 62,787,629 66,494,758 Investments in subsidiaries ...... 6 366,047,399 — — Total non-current assets ...... 427,851,466 62,787,629 66,494,758 Current assets Held-to-maturity investments ...... 7 38,080 38,080 38,080 Inventories ...... 8 7,869,572 6,337,822 8,335,984 Trade receivables ...... 9 39,935,176 34,246,704 23,091,203 Debtors and other debit balances ...... 10 13,258,191 35,179,584 53,750,980 Cash on hand and at banks ...... 11 38,557,392 53,632,054 17,542,298 Total current assets ...... 99,658,411 129,434,244 102,758,545 Current liabilities Provisions ...... 12 6,179,017 3,367,352 761,088 Creditors and other credit balances ...... 13 42,198,330 29,852,391 21,568,924 Current portion of borrowings ...... 14 40,600,000 — — Current income tax liabilities ...... 23 20,603,310 21,372,222 13,996,640 Total current liabilities ...... 109,580,657 54,591,965 36,326,652 (Deficit) / surplus in working capital ...... (9,922,246) 74,842,279 66,431,893 Total investment ...... 417,929,220 137,629,908 132,926,651 Financed as follows: Shareholders’ equity Issued and paid up capital ...... 15 80,000,000 80,000,000 80,000,000 Reserves ...... 16 13,827,660 11,637,554 9,594,619 Retained earnings ...... 106,194,741 43,694,642 40,751,213 Total shareholders’ equity ...... 200,022,401 135,332,196 130,345,832 Non-current liabilities Creditors and other credit balances—due to related parties . 13 54,095,303 — — Non-current portion of borrowings ...... 14 162,400,000 — — Deferred tax liabilities ...... 24 1,411,516 2,297,712 2,580,819 Total non-current liabilities ...... 217,906,819 2,297,712 2,580,819 Total funding of working capital and non-current liabilities . 417,929,220 137,629,908 132,926,651

Mr. Khalid Ahmed Hassan Mr. Ahmad Ezz El Din Mahmoud Head of Finance Chairman and Managing Director 6 April 2016 Auditor’s report attached

The accompanying notes form an integral part of these financial statements.

166 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of income For the year ended 31 December 2013, 2014 and 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Operating revenue ...... 17 332,002,699 290,294,814 243,293,152 Less: Operating costs ...... 18 (214,407,386) (204,608,154) (171,606,030) Gross profit ...... 117,595,313 85,686,660 71,687,122 Add / (Less) General and administrative expenses ...... 19 (27,859,422) (20,670,525) (20,556,280) Provisions ...... 12 (2,973,505) (2,886,902) (761,088) Other income ...... 20 1,028,699 678,591 731,740 Profit for the year before finance income and income tax ...... 87,791,085 62,807,824 51,101,494 Finance income ...... 22 5,104,232 2,086,651 1,572,705 Finance costs ...... (8,487,998) (3,235) — Profit for the year before income tax ...... 84,407,319 64,891,240 52,674,199 Current tax ...... 23 (20,603,310) (21,372,222) (13,996,640) Deferred tax ...... 24 886,196 283,107 10,596 Profit for the year ...... 64,690,205 43,802,125 38,688,155

The accompanying notes form an integral part of these financial statements.

167 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of changes in shareholders’ equity For the year ended 31 December 2013, 2014 and 2015 (All amounts in Egyptian Pounds)

Retained Share capital Reserve earnings Total Balance at 1 January 2013 as previously issued . 80,000,000 7,268,881 46,514,757 133,783,638 Effect of correction of prior years’ errors ...... — — 2,063,058 2,063,058 Balance at 1 January 2013 as restated ...... 80,000,000 7,268,881 48,577,815 135,846,696 Transfer to reserves ...... — 2,325,738 (2,325,738) — Dividends distribution for 2012 ...... — — (44,189,019) (44,189,019) Profit for the year ...... — — 38,688,155 38,688,155 Balance at 31 December 2013 ...... 80,000,000 9,594,619 40,751,213 130,345,832 Balance at 1 January 2014 ...... 80,000,000 9,594,619 40,751,213 130,345,832 Transfer to reserves ...... — 2,042,935 (2,042,935) — Dividends distribution for 2013 ...... — — (38,815,761) (38,815,761) Profit for the year ...... — — 43,802,125 43,802,125 Balance at 31 December 2014 ...... 80,000,000 11,637,554 43,694,642 135,332,196 Balance at 1 January 2015 ...... 80,000,000 11,637,554 43,694,642 135,332,196 Transfer to reserves ...... — 2,190,106 (2,190,106) — Profit for the year ...... — — 64,690,205 64,690,205 Balance at 31 December 2015 ...... 80,000,000 13,827,660 106,194,741 200,022,401

The accompanying notes form an integral part of these financial statements.

168 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of cash flows For the year ended 31 December 2013, 2014 and 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Cash flows from operating activities Profit before tax ...... 84,407,319 64,891,240 52,674,199 Adjustments to reconcile net income to cash flows from operating activities Fixed assets depreciation and write-off ...... 5 6,550,928 7,152,719 7,278,349 Loss / (gain) on sale of fixed assets ...... 15,970 (39,112) (100,671) Provisions ...... 12 2,973,505 2,886,902 761,088 Impairment of customers’ balances ...... 9 2,282,745 555,915 143,576 Provisions no longer required ...... 9 (152,634) (560,400) (72,902) Finance costs ...... 8,487,998 — — Finance income ...... (5,000,274) (2,068,573) (1,538,525) Operating profits before changes in working capital 99,565,557 72,818,691 59,145,114 Changes in working capital Change in inventories ...... (1,531,750) 1,998,163 (1,353,166) Change in trade receivables ...... (7,818,583) (11,151,016) 7,329,182 Change in debtors and other debit balances ...... 21,921,393 18,571,396 (7,437,812) Change in creditors and other credit balances ...... 58,219,742 8,283,466 2,985,978 Provisions utilized ...... 12 (161,840) (280,638) — Income tax paid ...... (21,372,222) (13,996,640) (15,660,360) Net cash flows generated from operating activities . 148,822,297 76,243,422 45,008,936 Cash flows from investing activities Proceeds from sale of fixed assets ...... 10,860 62,300 332,910 Payments to purchase fixed assets ...... (5,594,200) (3,468,778) (1,896,438) Finance income received ...... 5,000,274 2,068,573 1,538,525 Payments to investments in subsidiaries ...... (366,047,399) — — Deposits with maturity of more than 3 months from the date of placement ...... (15,000,000) — — Net cash flows used in investing activities ...... (381,630,465) (1,337,905) (25,003) Cash flows from financing activities Dividends paid ...... — (38,815,761) (44,189,019) Proceeds from borrowings ...... 203,000,000 — — Finance cost paid ...... (266,494) — — Net cash flows generated from / (used in) financing activities ...... 202,733,506 (38,815,761) (44,189,019) Change in cash and cash equivalents during the year . (30,074,662) 36,089,756 794,914 Cash and cash equivalents at the beginning of the year 53,632,054 17,542,298 16,747,375 Cash and cash equivalents at the end of the year .... 11 23,557,392 53,632,054 17,542,289

The accompanying notes form an integral part of these financial statements.

169 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

1. General information Cleopatra Hospital (Lasheen & Co.) was initially incorporated as a limited liability company on 19 July 1979. On 27 June 2005, a resolution no. 4092 of 2005 was issued by the Chairman of the General Authority For Investment (GAFI) authorizing Cleopatra Hospital (Lasheen & Co.), ‘‘a limited partnership company’’, to transform its legal form to Cleopatra Hospital Company S.A.E (‘‘the company ‘‘). in accordance with the provisions of Law No. 8 for 1997 and Law No. 95 for 1992. The purpose of the Company is establishing a private hospital with the aim to offer modern and high quality medical services and medical care and treatment for patients. The Company may have interest or participate in any manner in companies or other firms which carry on similar activities in Egypt or abroad. The Company may acquire such entities or merge therewith as approved by GAFI. The Company is located at 39 Cleopatra Street, Heliopolis, Cairo. Care Healthcare LTD (the parent company) holds a percentage of 99.99% of the issued share capital On 16 September 2015, Cleopatra Hospital Company S.A.E. acquired 52.7% of the shares of Cairo Specialized Hospital. On 22 September 2015, Cleopatra Hospital Company S.A.E. acquired 99.92% of the shares of Nile Badrawi Hospital. These separate financial statements have been approved for issuance by the management on 6 April 2016, considering the fact that the Shareholders’ Ordinary General Assembly have the authority to amend the separate financial statements after being issued.

2. Accounting policies The following are the accounting policies applied in the preparation of these separate financial statements:

A. Basis of preparation for the separate financial statement The separate financial statements have been prepared in accordance with Egyptian Accounting Standards (EASs) and relevant laws, which have all been applied consistently throughout the fiscal year except when otherwise indicated. The separate financial statements have been prepared under the historical cost convention. The preparation of the separate financial statements in conformity with EASs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas where the most significant accounting estimates and judgements applied in preparation of the separate financial statements are disclosed in Note 4. The EASs require the reference to the International Financial Reporting Standard when there is no EAS, or legal requirements that explain the treatment of specific balances and transactions.

Subsidiaries The subsidiaries are the entities (including special purpose entities) over which the Company has the power to directly or indirectly govern its financial and operating policies. This usually happens when the Company usually has a shareholding of more than one half of voting rights. The effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Parent Company controls the subsidiary. Separate financial statements are prepared in accordance with the local related regulations. Consolidated financial statements have also prepared for the Company and related subsidiaries in accordance with the

170 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) EAS. In order to get a complete understanding of the financial position of the Company and related results of operations, cash flows and changes in equity, the separate financial statements are to be read along with the consolidated financial statements issued at and for the year ended 31 December 2015. The subsidiaries and associates are accounted for in the Parent Company’s separate financial statements using the cost method. Under this method, the investments are recognised at the acquisition cost, including any goodwill less any impairment losses, and the dividends are recognised in the statement of income when such dividends are approved and the Parent Company’s right to receive them is established.

New standards and amendments not yet adopted In accordance with the Minister of Investment Decree No. 110/2015 issued on July 2015, Egyptian Accounting Standards previously issued by the Ministerial Decree on 2006 are replaced by the standards attached to the Decree No 110 referred to above starting from 1 January 2016. Those standards are applicable to all financial years starting on or after 1 January 2016. None of the new and amended standards, when adopted, will have significant effect on the values presented in the Group financial statements. Amendments applicable on the Group’s activities and financial statements are summarised in the presentation and disclosure. According to the new standards balance sheet will be presented differently and working capital will not be presented in the financial statements. Results of operations will be presented in two statements; the first will present income and expenses for the year (statement of income), and the second will start by the net income (loss) for the year and will include income and expenses items recognised in equity to present the comprehensive income (statement of comprehensive income). The new standards will require more disclosure on the financial risk management.

B. Foreign currency translation (1) Functional and presentation currency Items included in the separate financial statements are measured using the currency of the primary economic environment in which the Company operates (the ‘‘functional currency’’). The separate financial statements are presented in Egyptian Pounds, which is the Company’s functional and presentation currency.

(2) Transactions and balances Foreign currency transactions during the year are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the revaluation of monetary assets and liabilities denominated in foreign currencies at balance sheet date are recognised in the statement of income.

171 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) All repair and maintenance costs are charged to the statement of income during the fiscal year in which they are incurred. Major renovation costs are capitalised and included in the asset’s cost when they are expected to increase future economic benefits beyond the estimated original benefits when the asset was initially acquired. And the costs of such additions can be reliably measured. These costs will be depreciated at the lower of the asset’s remaining useful life and the expected useful life of these renovations. The straight line method is used to calculate the depreciation by reducing the asset’s value to its salvage value over the estimated useful life except the land that is not considered a depreciable asset. The fixed assets’ salvage value and useful life are reviewed annually, and adjusted if appropriate. The depreciation rates by type of asset are as follows:

Buildings ...... 2.5% Machinery, equipment & devices ...... 10% Furniture and fixtures ...... 15% Vehicles ...... 10% Computers ...... 25% An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the realisable value with the net carrying amount, and the difference is recognised in the statement of income.

D. Inventories Inventories are measured at the lower of actual cost and net realisable value. Cost is determined using the weighted average method and includes purchase cost and other direct costs. The net realisable value comprises the estimated selling price in the ordinary course of business, less selling expenses. Allowance is made for slow moving inventories based on management’s assessment of inventory movements.

E. Financial assets (1) Classification The Company classifies its financial assets into the following categories at initial recognition depending on the purpose for which the financial assets are acquired:

Loans and receivables: Loans and receivables are non-derivative financial assets with fixed or determinable values that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date. In this case, they are classified as non-current assets. Loans and receivables include trade receivables, cash on hand and at banks, and due from related parties.

(2) Initial and subsequent measurement: 1. The financial assets are measured on acquisition at fair value plus transaction costs. 2. The financial assets are derecognised when the right to receive cash flows from such assets has expired or has been transferred and the Company has transferred substantially all risks and rewards of ownership.

172 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) 3. Loans and receivables are subsequently measured at amortised cost using the effective interest method. (3) Impairment of financial assets: Assets recognised at amortised cost The Company assesses, at end of reporting period, whether there is evidence that a financial asset or a group of financial assets is impaired. Impairment of a financial asset or group of financial assets is recognised if an impairment indicator exists as a result of one or more events that occurred after the initial recognition (a ‘‘loss event’’) and if the loss event (or events) has an impact on the future cash flows of the financial asset or group of financial assets that can be reliably measured. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing financial difficulty, default or delinquency in payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a decrease in the estimated future cash flows, such as future changes or economic conditions that correlate with the impairment evidence. Financial assets’ impairment loss is measured at amortised cost, which is the difference between the asset’s carrying amount and the present value of the estimated future cash flows (after eliminating future losses that have not occurred) discounted at the original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of income. If, in a subsequent period, the amount of the impairment decreases and the decrease is related to an event occurring after the initial recognition (such as an improvement in the debtor’s credit rating), the reversal of the impairment is recognised in the statement of income.

F. Issued and paid up capital Ordinary shares are classified as equity.

G. Legal Reserve As required by the Company’s Articles of Association, 5% of the net profit shall be transferred to a legal reserve, and such transfer may be discontinued when the reserve equals 50% of the issued and paid up capital. Whenever this reserve is lower than this percentage, the deduction should be continued. This reserve is not available for distribution.

H. Provisions Provisions are recognised when the Company has a (legal or constructive) obligation as a result of past events; it is expected that this settlement will result in an outflow of the Company’s resources which ensures that economic benefits will arise; and it is probable that outflow resources will be required to settle the obligation and a reliable estimate of the amount of this obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

173 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) I. Suppliers and notes payables Suppliers and notes payables are obligations to pay for goods and services that have been acquired in the Company’s ordinary course of business. Suppliers and notes payables are initially recognised at fair value of products and services received from third parties, whether they have been billed or not. Long term liabilities are recognised at their present value, suppliers and notes payables are subsequently shown at amortised cost using the effective interest method.

J. Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost using the effective interest method; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the statement of income over the period of the borrowings using the effective interest method. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the costs of those assets. Borrowing cost to be capitalised is determined based on actual borrowing cost incurred by the Company during the year after deducting any revenue recognised from temporary investing the borrowed fund. Borrowings are classified as current liabilities unless the Company has an unconditional right to postpone the settlement of borrowings for a period not less than 12 months from the financial statements date

K. Employee benefits (1) Employees’ share of profit According to the Companies law, the Company pays 10% of its cash dividends to its employees up to a maximum equal to the total salaries of the latest fiscal year before distribution. Employees’ share of profit is recognised as dividends in equity and as a liability when approved by the Shareholders’ General Assembly. No liability is recognised for employees’ share of profit relating to undistributed profits.

(2) Pension and insurance scheme The Company pays contributions to the Public Authority for Social Insurance on a mandatory basis in accordance with the rules of Social Security Law. The Company has no further payment obligations other than those which have been paid. The regular contributions are recognised as periodic costs for the year in which they are due and as such are included in staff costs.

L. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, including cash balances and trade and notes payable for rendering medical services and sale of medicine throughout the Company’s ordinary course of business, net of sales taxes, deductions or discounts. The Company recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits related to the sale process or service provision will flow to the Company; and when other specific criteria have been met for each of the Company’s activities as described below. The revenue amount is not considered as reliably measurable unless all contingent liabilities are settled. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

174 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) Medical services revenue The Company, through Cleopatra Hospital, provides several medical services, including surgeries, accommodation, medical supervision, laboratories, tests, different types of radiology and outpatient clinics. Revenue from medical service is recognised when the service is rendered to the patient.

Sale of medicine revenue The Company sells medicine through the hospital pharmacy or uses them for treatments of inpatients admitted in the Hospital. Revenue is recognised once the medicine is received by the patient or used during the patient’s stay in hospital.

Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable generated from the recognition of interest is impaired, the carrying amount will be reduced to its recoverable amount.

M. Leases Leases in which the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases net of any discounts received from the lessor are recognised as expense in the statement of income on a straight-line basis over the period of the lease.

N. Current and deferred income tax The income tax for the year is calculated based on the tax laws enacted at the balance sheet date. Management periodically evaluates the company tax situation through tax returns, taking into account the differences that may arise from some interpretations issued by administrative or regulatory authorities, and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authority. Deferred income tax is fully recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the separate financial statements. The deferred income taxes are not accounted for if it arises from initial recognition of an asset or liability other than those arising from a business combination that at the time of the transaction affects neither accounting nor taxable income. Deferred income tax is determined using tax rates in accordance with the law prevailing at the balance sheet date that are expected to apply when the deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

O. Dividends Dividends are recognised in the Company’s separate financial statements in the period in which the dividends are approved by the Company’s General Assembly of Shareholders.

P. Cash on hand and at banks For the purpose of preparation of statement of cash flows, cash on hand and at banks include cash on hand, bank current accounts and term deposits with maturities of three months.

Q. Corresponding figures Where necessary, corresponding figures have been reclassified to conform to changes in presentation in the current year.

175 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management 3.1 Financial risk factors The Company’s activities expose it to a variety of financial risks: market risk (including risks of fluctuations in foreign currency and interest rates), credit risk and liquidity risk. The Company is not exposed to any price risk as it does not have financial assets at fair value through profit and loss. The Company’s management aims to minimise potential adverse effects of such risks on the financial performance of the Company through monitoring by the Finance Department and the General Manager of the Company, and the Finance Department and the Executive Committee at the level of the Parent Company. The Company does not use any derivative financial instruments to hedge specific risks.

(A) Market risk i. Risk of fluctuations in foreign currency rates Foreign currency risk represents the fluctuations in foreign currency rates, which impact the payments and receipts denominated in foreign currencies, as well as the evaluation of foreign currency assets and liabilities. Given the nature of the Company’s activities, the Company does not undertake transactions denominated in foreign currencies as it carries out all purchases in Egyptian Pound. The Company’s very limited revenue in foreign currencies are generated from certain foreign embassies. Management is of the opinion that the foreign currency balances are considered immaterial. At the end of the year, the net foreign currency financial assets denominated in EGP was as follows:

2015 2014 2013 US Dollars ...... 37,933 1,071,459 885,748 Euros ...... — 118,678 130,680

ii. Fair value and cash flow interest rate risk The Company obtained a long-term loan at interest rate corridor declared by the Central Bank of Egypt, and therefore it is exposed to cash flow risks. Management believe the effect is not material due to the amount and maturities of these balances.

(B) Credit risk Credit risk arises from cash at banks, as well as credit exposures to customers. Credit risks are managed for the Company’s as a whole by its Executive Management, Central Finance Department and Executive Committee at the Parent Company level. For banks, the Company deals with banks with high credit ratings and creditworthiness that are regulated by the Central Bank of Egypt. For customers, the Hospital’s Financial Director and General Manager perform analysis on the credit risk for each potential credit customer in accordance with the Group’s policies, including Cleopatra Hospital or its subsidiaries. The Parent Company’s Executive Committee follows up on the compliance with credit terms, and reviews default cases and debt ageing report to take the necessary decisions whether to cancel the credit or to refer the defaulted customer to the Legal Department for their necessary actions. Note (9) to these financial statements provides more detailed information with respect to this matter.

176 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (Continued) The management establishes a provision for impairment of 100% of customers defaulted for more than 150 days from the invoice date, in addition to a category-based provision at historical default rates. Balances exposed to credit risks are as follows:

2015 2014 2013 Cash at banks ...... 38,268,580 53,398,419 17,542,298 Trade receivables ...... 45,487,820 37,669,240 26,518,224

(C) Liquidity risk The management makes cash flow projections on a monthly basis, which are discussed during the Executive Committee’s meeting, and takes the necessary actions to negotiate with suppliers, follow-up the collection process and manage the inventory balances in order to ensure sufficient cash is maintained to discharge the Company’s liabilities. The table below shows the Company’s liabilities at the balance sheet date by maturity:

Less than 3 months More than 3 months to 1 year 1 to 5 years 5 years Suppliers and notes payables ...... 12,538,630 461,097 — — Due to related parties ...... 29,659,700 — — 54,095,303 Borrowings ...... — 40,600,000 162,400,000 —

3.2 Capital risk management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital consistent with other companies operating in the same field. The Company’s management monitors capital on the basis of the net debt to total capital ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings and creditors and other credit balances less cash on hand and at banks. Capital is represented by shareholder ‘equity’ as shown in the balance sheet plus net debt. Net debt to total capital ratio as at 31 December 2015, 31 December 2014 and 31 December 2013 is as follows:

2015 2014 2013 Creditors and other credit balances ...... 96,293,633 29,852,391 21,561,539 Borrowings ...... 203,000,000 — — Less: Cash at banks and on hand ...... (38,557,392) (53,632,054) (17,542,298) Net debt ...... 260,736,241 (23,779,663) 4,019,241 Total shareholders’ equity ...... 200,022,401 135,332,196 130,345,832 Total capital ...... 460,758,642 111,552,533 134,365,073 Net debt to total capital ratio ...... 56.58% (21.32)% 3% Significant change in the above ratio is due to acquisition of the term loan obtained during the year ended 31 December 2015.

177 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (Continued) 3.3 Fair value estimation The fair value of current financial assets and liabilities approximates their carrying amounts after taking into account the impairment. The Company obtained a long-term loan from an Egyptian bank, and the management believes that the fair value of the loan is equivalent to its carrying amount as it was issued at a variable rate linked to the interest rate corridor declared by the Central Bank of Egypt.

4. Critical accounting estimates, assumptions and judgements Estimates and assumptions are evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. Due to the nature of the estimates, resulting accounting estimates will rarely equal the actual results.

(A) Provisions Provisions are recognised when the Company has a (legal or constructive) obligation as a result of past events; it is expected that this settlement will result in an outflow of the Company’s resources which ensures that economic benefits will arise; it is probable that outflow resources will be required to settle the obligation and a reliable estimate of the amount of this obligation can be made. At end of each reporting period, the Company reviews and adjusts provisions in using external subject matter experts.

(B) Impairment of trade receivables Impairment of trade receivables is estimated by monitoring ageing of receivables. The Company’s management examines the credit position and ability of debtors and customers to make payments for their past due debts. Impairment is recognised for amounts due from debtors and customers whose credit position does not allow them to pay their dues as estimated by the management. Further appropriate allowance is made for losses incurred but not yet identified by reference to historical loss rate to the Company and other companies within the group.

178 — (246,475) (431,077) (219,645) (306,090) 5,594,200 6,425,945 Projects 5,532,870 — — — (5,532,870) Originally issued in Arabic CLEOPATRA HOSPITAL COMPANY HOSPITAL CLEOPATRA S.A.E. For the year ended 31For December 2015, 2014 and 2013 Notes to the separate financial statements (Continued) devices fixtures Land Buildings Vehicles Computers improvement construction 2015 Total (226,675) (19,800) — — — — — — (155,252) (226,389) — (2,754) (429) (46,253) — — (199,845) (19,800) — — — — — — 3,898,311 864,038 — — — 444,898 386,953 — 2,179,284 983,148 — 2,999,782 154,626 40,247 68,858 — Machinery, 63,302,346 4,470,834 14,967,000 38,024,987 2,276,72266,818,730 817,117 5,088,683 14,967,000 43,555,103 — 2,276,293 1,215,762 5,532,870 386,953 129,391,876 — 134,308,524 50,857,667 3,056,303 — 10,854,674 1,086,725 748,878 — — 66,604,247 52,751,121 3,830,78214,067,609 1,257,901 14,967,000 29,702,478 — 1,035,156 13,852,625 1,241,137 455,828 318,095 759,934 68,858 — 61,804,067 — 72,504,457 equipment & Furniture & Leasehold under . (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — — ...... 2015 5. Fixed assets Disposals Transfers Fixed assets write-off Balance at 31 December 2015 Balance at 1 January 2015 Additions Accumulated depreciation at 1 January 2015 Accumulated depreciation of disposals Accumulated depreciation of assets write-offAccumulated .Charge for the year Accumulated depreciation at 31 (85,985) December (188,869) — (1,831) (214) (29,191) — — Net book value at 31 December 2015

179 3,468,778 7,152,719 (1,206,063) (1,182,875) Projects Originally issued in Arabic CLEOPATRA HOSPITAL COMPANY HOSPITAL CLEOPATRA S.A.E. For the year ended 31For December 2015, 2014 and 2013 Notes to the separate financial statements (Continued) 2,561,205 220,3103,030,767 — 620,825 — 620,640 — 2,919,284 66,623 170,123 411,720 — — — — equipment Furniture & Leasehold under Machinery, and devices fixtures Land Buildings Vehicles Computers improvement construction 2015 Total (1,025,363) (74,770)(1,012,163) (64,782) — — — (105,930) — — (105,930) — — — — — 61,766,504 4,325,294 14,967,000 38,024,98763,302,346 1,762,012 4,470,83448,839,063 750,494 14,967,000 2,500,260 38,024,987 2,276,722 — 817,11750,857,667 — 3,056,30312,444,679 5,532,870 7,935,390 1,414,531 — 127,129,161 1,022,532 14,967,000 337,158 27,170,313 5,532,870 — 1,189,997 10,854,674 129,391,876 1,086,725 68,239 — 748,878 — — — 5,532,870 60,634,403 62,787,629 — 66,604,247 . (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... 2014 5. Fixed assets (Continued) Additions Disposals Balance at 31 December 2014 Accumulated depreciation at 1 January 2014 depreciation of disposals Accumulated Charge for the year Accumulated depreciation at 31 December Net book value at 31 December 2014 Balance at 1 January 2014

180 (577,657) (345,419) 1,896,439 7,278,349 (4,425,559) (13,737,023) Projects Originally issued in Arabic (338,413) —(130,099) — — — — (239,244) — — (215,320) — — — devices fixtures Land Buildings Vehicles Computers construction 2015 Total 1,644,331 167,915 —5,726,107 331,527 — 31,250 — 52,943 760,504 389,193 — 71,018 — Machinery, (3,213,644) (1,200,145) — — (11,770) — — 63,674,230 5,357,524 14,967,000 38,024,987 1,981,776 697,551 5,532,870 130,235,938 61,766,504 4,325,294 14,967,000 38,024,987 1,762,012 750,494 5,532,870 127,129,161 55,142,893 3,450,01648,839,063 — 2,500,260 7,088,127 1,229,111 528,349 — 7,935,390 1,022,532 — 337,158 67,438,496 — 60,634,403 12,927,441 1,825,034 14,967,000 30,089,597 739,480 413,336 5,532,870 66,494,758 equipment & Furniture & under (11,899,838) (1,281,283) — 86,759 (380,452) (262,209) — CLEOPATRA HOSPITAL COMPANY HOSPITAL CLEOPATRA S.A.E. For the year ended 31For December 2015, 2014 and 2013 Notes to the separate financial statements (Continued) ...... (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... 5. Fixed assets (Continued) Balance at 1 January 2013 Additions Adjustments on cost Adjustments Disposals Balance at 31 December 2013 Accumulated depreciation at 1 January 2013 depreciation of adjustments Accumulated Charge for the year Accumulated depreciation at 31 December 2013 Accumulated depreciation of disposals Accumulated Net book value at 31 December 2013

181 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

6. Investments in subsidiaries

% Country 2015 2014 2013 Investment in Cairo Specialized Hospital ...... 52.7 Egypt 107,042,452 — — Investment in Nile Badrawi Hospital ...... 99.92 Egypt 259,004,947 — — 366,047,399 — —

During the year of 2015, the Company pledged its whole interest in the Cairo Specialized Hospital amounting to 52.7% of the total shares in favour of the Commercial International Bank as a security for the borrowing granted to Cleopatra Hospital.

7. Held-to-maturity investments Held-to-maturity investments comprise investments in public housing bonds (compulsory) issued by the Ministry of Finance in favour of the Central Bank, which shall be recoverable on 11 July 2015. Such bonds have been collected on 13 January 2016.

8. Inventories

2015 2014 2013 Medical supplies inventory ...... 6,767,528 5,206,952 6,951,692 Medical supplies inventory-cardiac catheterization ...... 602,666 484,556 606,417 Pharmacy inventory ...... 499,378 646,314 777,875 7,869,572 6,337,822 8,335,984

9. Trade receivables

2015 2014 2013 Due from customers ...... 44,246,714 38,179,376 27,371,361 Income / (prepayments) from inpatients ...... 1,241,109 (510,136) (853,137) Less: Impairment of receivables ...... (5,552,647) (3,422,536) (3,427,021) Net trade receivables ...... 39,935,176 34,246,704 23,091,203

The income from inpatients comprises the revenues that have not been billed at the balance sheet date for their stay because the procedures of the medical services have not been completed. Such income is calculated net of amounts collected in advance during the period of their stay. The movement of the provision for impairment is as follows:

2015 2014 2013 Balance at 1 January ...... 3,422,536 3,427,021 3,356,347 Provision formed during the year ...... 2,282,745 555,915 143,576 Provisions no longer required ...... (152,634) (560,400) (72,902) Balance at 31 December ...... 5,552,647 3,422,536 3,427,021

• Trade receivable balances, which have not been due till the balance sheet date and for which no impairment indicators have existed, amounted to EGP 35,433,463 (2014: EGP 29,062,479).

182 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

9. Trade receivables (Continued) • At the balance sheet date, the balances that were past due but not impaired amounted to EGP 4,547,741 (2014: EGP 5,694,361) regarding customers or transactions with no history of default. The analysis of the ageing of these balances as follows:

2015 2014 2013 Less than one month ...... 3,593,436 1,888,459 2,813,690 From one to five months ...... 954,305 501,996 937,897

10. Debtors and other debit balances

2015 2014 2013 Due from employees ...... 6,785,832 6,785,832 4,767,358 Withholding taxes ...... 3,788,548 3,016,415 2,693,214 Prepaid expenses ...... 1,439,113 441,235 102,782 Advances to suppliers ...... 279,250 220,263 4,800 Deposits with others ...... 115,293 69,629 69,549 Due from related parties ...... 11,730 24,622,611 46,011,430 Sundry debtors ...... 838,425 23,599 101,847 13,258,191 35,179,584 53,750,980

11. Cash on hand and at banks

2015 2014 2013 Cash on hand ...... 202,262 233,634 138,353 Current accounts ...... 23,355,130 32,583,452 17,403,945 Deposits ...... 15,000,000 20,814,968 — 38,557,392 53,632,054 17,542,298

Term deposits are held with local banks in EGP and have maturity from 3 to 6 months from the date of placement with fixed rate ranging from 7% to 9% (2014: 7% to 9%). Current accounts are maintained with banks regulated by Central Bank of Egypt. For the purpose of preparation of statement of cash flows, cash and cash equivalents balance comprises of:

2015 2014 2013 Cash on hand and at banks ...... 38,557,392 53,632,054 17,542,298 Deposits with a maturity of more than 3 months from the date of placement ...... (15,000,000) — — Cash and cash equivalents ...... 23,557,392 53,632,054 17,542,298

183 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

12. Provisions

2015 2014 2013 Provision for claims ...... 5,065,668 2,758,668 — Provision against employees benefits ...... 910,057 552,484 712,888 Provision for stamp duty ...... 56,200 56,200 48,200 Employees leave provision ...... 147,092 — — 6,179,017 3,367,352 761,088

The movement of provisions during the year is as follows:

2015 Balance at Provision Utilised Balance at 1 January made during balance during 31 December 2015 the year the year 2015 Provision for claims ...... 2,758,668 2,307,000 — 5,065,668 Provision against employees’ benefits ...... 552,484 519,413 (161,840) 910,057 Employees leave provision ...... — 147,092 — 147,092 Provision for stamp duty ...... 56,200 — — 56,200 Total ...... 3,367,352 2,973,505 (161,840) 6,179,017

2014 Balance at Provision Utilised Balance at 1 January made during balance during 31 December 2014 the year the year 2014 Provision for claims ...... — 2,758,668 — 2,758,668 Provision against employees’ benefits ...... 712,888 120,234 (280,638) 552,484 Provision for stamp duty ...... 48,200 8,000 — 56,200 Total ...... 761,088 2,886,902 (280,638) 3,367,352

2013 Balance at Provision Utilised Balance at 1 January made during balance during 31 December 2013 the year the year 2014 Provision against employees’ benefits over 60 years . — 712,888 — 712,888 Provision for stamp duty ...... — 48,200 — 48,200 Total ...... — 761,088 — 761,088

184 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

13. Creditors and other credit balances

2015 2014 2013 Due to related parties ...... 54,095,303 — — Suppliers and notes payable ...... 12,999,727 10,033,842 8,847,321 Accrued expenses ...... 9,899,406 4,736,837 3,287,749 Doctor fees ...... 8,732,694 7,541,479 5,844,975 Payroll tax ...... 7,596,817 5,519,768 263,188 Social insurance ...... 551,895 434,449 397,710 Sundry creditors ...... 2,417,791 1,586,016 2,927,981 96,293,633 29,852,391 21,568,924 Less: Due to related parties- non-current portion ...... (54,095,303) — — 42,198,330 29,852,391 21,568,924

Due to related parties is repayable to the Parent company and a subsidiary. In accordance with an undertaking given by the Parent company and the subsidiary, these amounts are not repaid until five years after the balance sheet date, provided that sufficient cash shall be maintained. Such amounts do not carry interest.

14. Borrowings The Company obtained a loan facility of EGP 203,000,000 from the Commercial International Bank to finance 100% of acquisition cost of Cairo Specialized Hospital. The loan will be due for repayment through ten equal semi-annual instalments commencing 30 June 2016 until 31 December 2020 at an interest rate of 2.4% in addition to the interest rate corridor declared by the Central Bank of Egypt. The borrowing balance is as follows:

2015 2014 2013 Total loan amount ...... 203,000,000 — — Less: Current portion of borrowing ...... (40,600,000) — — Non-current portion of borrowing ...... 162,400,000 — —

Main guarantees • The Company has pledged its shares represents 52.7% in the Cairo Specialized Hospital S.A.E. in favour of the Commercial International Bank. • Care Healthcare Ltd pledged 51% of its shares in Cleopatra Hospital Company in favour of the Commercial International Bank. • Subsequently on 19 January 2016, The Company obtained another loan from the Commercial International Bank amounting to EGP 230 million. Care Healthcare Ltd pledged the rest of its owned shares as a guarantee to the loan. The total pledged percentage reached 99.99%. • In addition, Cleopatra Hospital Company pledged its share in Al Shorouk Hospital Company as a guarantee to the same loan.

185 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

15. Issued and paid up capital The Company’s issued and paid up share capital comprise 8 million shares of EGP 10 each, totalling EGP 80 million. The share capital was subscribed as follows:

Percentage Number of shares Nominal value Ahmed Mohamed Mahmoud Lashin ...... 15.75% 1,260,000 12,600,000 Mahmoud Mohamed Mahmoud Lashin ...... 15.75% 1,260,000 12,600,000 Mohamed Mahmoud Lashin ...... 12.9% 1,032,000 10,320,000 Huda Mohamed Mahmoud ...... 7.87% 630,000 6,300,000 Somaia Mahmoud Hassan ...... 5.62% 450,000 4,500,000 Mohamed Sameh Mahmoud Hassan ...... 5.25% 420,000 4,200,000 Mahmoud Ahmed Mahmoud ...... 5.25% 420,000 4,200,000 Sameh Mahmoud Hassan ...... 4.3% 344,000 3,440,000 Ahmed Mohamed Younis Lashin ...... 4.3% 344,000 3440,000 Amal Ahmed Mahmoud ...... 2.62% 210,000 2,100,000 Dalia Mohamed Mahmoud ...... 2.62% 210,000 2,100,000 Lobna Mohamed Mahmoud ...... 2.62% 210,000 2,100,000 Ola Sameh Mahmoud...... 2.62% 210,000 2,100,000 Walaa Sameh Mahmoud ...... 2.62% 210,000 2,100,000 Doaa Sameh Mahmoud ...... 2.62% 210,000 2,100,000 Sohir Mohamed Abdel Magid ...... 1.87% 150,000 1,500,000 Magda Mohamed Said El Gamal ...... 1.87% 150,000 1,500,000 Ahmed Wael Abdel Kader Ahmed ...... 1% 80,000 800,000 Amr Ahmed Wael Abdel Kader ...... 1% 80,000 800,000 Ragaa Mahmoud Younis ...... 0.5% 40,000 400,000 Manal Ahmed Wael Abdel Kader ...... 0.5% 40,000 400,000 Noha Ahmed Wael Abdel Kader ...... 0.5% 40,000 400,000 Total ...... 100% 8,000,000 80,000,000

Number of Nominal Percentage shares value Care Healthcare ltd ...... 99.99% 7,999,998 79,999,980 Amr Abdul Kareem Tawheed Hilal ...... 0.05% 1 10 Walid Fayez Said Bakr ...... 0.05% 1 10 Total ...... 8,000,000 80,000,000

16. Reserves Legal Reserve In accordance with the Law No. 159 of 1981 and the Company’s Articles of Association, 5% of the net profit for the year shall be transferred to the legal reserve. As proposed by the Board of Directors, this transfer may be partially discontinued if the legal reserve reaches 50% of the issued capital. This reserve is not available for distribution to shareholders.

186 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

17. Operating revenue

2015 2014 2013 Surgeries revenue ...... 64,772,580 56,476,361 47,919,249 Outpatient clinics revenue ...... 63,421,381 49,733,100 41,941,137 Inpatient and medical supervision revenue ...... 59,279,340 52,961,487 45,254,639 Laboratories revenue ...... 30,194,258 26,915,816 20,590,956 Cardiac catheterization revenue ...... 26,904,367 24,939,813 21,830,363 Emergency revenue ...... 26,420,781 23,356,619 20,315,482 Radiology revenue ...... 20,250,650 18,707,928 15,205,688 Service charge revenue ...... 14,822,602 13,043,092 10,859,981 Dentistry revenue ...... 8,294,276 8,603,861 7,127,631 Pharmacy revenue ...... 5,463,251 5,478,787 5,098,483 Physiotherapy revenue ...... 5,397,768 3,985,220 3,031,910 Heart tests revenue ...... 4,154,537 3,937,833 2,956,912 Endoscopy revenue ...... 2,626,908 2,154,897 1,160,721 332,002,699 290,294,814 243,293,152

18. Operating costs

2015 2014 2013 Doctor fees ...... 81,387,514 67,449,039 56,457,439 Salaries, wages and benefits ...... 61,643,486 68,307,192 51,122,619 Medical and pharmaceutical supplies ...... 50,034,811 48,054,531 43,521,387 Food, beverage and consumables costs ...... 6,569,015 6,859,972 7,359,690 Maintenance, spare parts and energy costs ...... 6,323,971 5,320,526 4,742,534 Fixed assets depreciation and write-off ...... 5,860,002 6,530,433 6,645,132 Other expenses ...... 2,588,587 2,086,461 1,757,229 214,407,386 204,608,154 171,606,030

19. General and administrative expenses

2015 2014 2013 Salaries, wages and benefits ...... 17,159,347 16,200,474 12,456,109 Impairment of customers’ balances ...... 2,130,112 (4,485) 70,674 Professional and consulting fees ...... 1,731,886 189,522 49,039 Food, beverage and consumables costs ...... 928,489 246,913 244,730 Rent...... 861,106 351,384 319,440 Donations ...... 695,930 586,190 3,738,028 Fixed assets depreciation ...... 690,926 622,286 633,219 Maintenance, spare parts and energy costs ...... 580,527 432,889 441,310 Government fees ...... 548,333 288,476 167,549 Other expenses ...... 2,532,766 1,756,876 2,436,182 27,859,422 20,670,525 20,556,280

187 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

20. Other income

2015 2014 2013 Buffet income and cafeteria concession ...... 772,107 361,687 311,039 Rent...... 141,840 33,580 12,500 Gift corner revenue ...... 33,225 216,862 235,480 Sale of rags (scrap) revenue ...... 22,500 27,350 72,050 (Loss) / gain on sale of fixed assets ...... (15,970) 39,112 100,671 Other income ...... 74,997 — — 1,028,699 678,591 731,740

21. Expense by nature

2015 2014 2013 Doctor fees ...... 81,387,514 67,449,039 56,457,439 Salaries, wages and benefits* ...... 78,802,833 84,507,666 63,578,728 Medical and pharmaceutical supplies ...... 50,034,811 48,054,531 43,521,387 Food, beverage and consumables costs ...... 7,497,503 7,106,885 7,604,420 Maintenance, spare parts and energy costs ...... 6,904,499 5,753,414 5,183,844 Fixed assets depreciation and write-off ...... 6,550,928 7,152,719 7,278,351 Impairment of customers’ balances ...... 2,130,112 (4,485) 70,674 Other expenses** ...... 8,958,608 5,258,910 8,467,467 242,266,808 225,278,679 192,162,310

* Salaries, wages and benefits

2015 2014 2013 Salaries and wages ...... 55,116,933 65,175,930 53,575,703 Social insurance ...... 4,291,978 3,509,394 4,281,331 Employees’ benefits ...... 11,404,024 9,593,184 5,486,046 Bonuses and incentives ...... 7,989,898 6,229,158 235,648 78,802,833 84,507,666 63,578,728

** Other expenses include EGP 50,000 (2014: EGP 75,000) Board of Directors Meeting allowance fees.

22. Finance income

2015 2014 2013 Interest income ...... 5,000,274 2,068,573 1,538,525 Gain on currency translation ...... 103,958 18,078 34,180 5,104,232 2,086,651 1,572,705

188 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

23. Income taxes Income tax for the year comprise of:

2015 2014 2013 Current tax ...... 20,603,310 21,372,222 13,996,640 Deferred tax ...... (886,196) (283,107) (10,596) 19,717,114 21,089,115 13,986,044

The tax on profit before tax theoretically differs from the amount expected to be paid by applying the average tax rate applicable to the Company’s profits as follows:

2015 2014 2013 Net profit before tax ...... 84,407,319 64,891,240 52,674,199 Income tax calculated based on the applicable local tax rate .... 18,991,646 19,417,372 13,168,550 Add / (less): Expenses not deductible for tax purposes ...... 955,239 1,671,743 817,494 Effect of change of applicable tax rate ...... (229,771) — — Income tax ...... 19,717,114 21,089,115 13,986,044 Effective tax rate ...... 23.3% 32.5% 26.5%

2015 2014 2013 Current income tax liabilities Balance at 1 January ...... 21,372,222 13,996,640 15,660,360 Payments during the year ...... (21,372,222) (13,996,640) (15,660,360) Current tax incurred during the year ...... 20,603,310 21,372,222 13,996,640 20,603,310 21,372,222 13,996,640

24. Deferred tax

2015 2014 2013 Deferred tax assets Provisions (other than claims provision) ...... 769,579 — — Deferred tax liabilities Depreciation fixed assets ...... (2,181,095) (2,297,712) (2,580,819) Deferred tax liabilities ...... (1,411,516) (2,297,712) (2,580,819)

189 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

24. Deferred tax (Continued) The movement on the deferred tax liabilities account is as follows:

2015 2014 2013 Deferred tax assets Balance at 1 January ...... ——— Charged on statement of income ...... 769,579 — — Balance at 31 December ...... 769,579 — — Deferred tax liabilities Balance at 1 January ...... (2,297,712) (2,580,819) (2,591,415) Charged on statement of income ...... 116,617 283,107 10,596 Balance at 31 December ...... (2,181,095) (2,297,712) (2,580,819) Net deferred tax liabilities ...... (1,411,516) (2,297,712) (2,580,819)

25. Earnings per share Basic earnings per share is calculated by dividing the net profit for the year by the number of outstanding shares during the year, after excluding the employees share in dividends related to year ended 31 December 2015, in accordance with the proposed dividends approved by the board of Directors. However in 2014, the employees dividends have been excluded in accordance with the General Assembly of Shareholders, since that the board of directors did not propose dividends distribution for the year ended 31 December 2014, the earnings per share is LE 8.09 (2014: LE 5.20).

2015 2014 2013 Net profit available for distribution ...... 64,690,205 41,612,019 34,934,185 Number of issued and paid shares (Note 15) ...... 8,000,000 8,000,000 8,000,000 Earnings per share ...... 8.09 5.20 4.36

The company does not have dilutive potential shares to basic earnings per share.

190 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

26. Related party transactions The Company deals with certain related parties during the year. The balances with related parties at the date of financial statements as well as the transactions during the years are as follows:

Balance sheet balances

31 December 31 December Nature of transaction 2015 2014 Related parties Care Healthcare Ltd (Parent Company) Accounts and other payables (Note 13) ...... Finance 47,379,723 — Nile Badrawi Hospital (subsidiary) Accounts and other payables (Note 13) ...... Finance 6,715,580 — Cairo Specialized Hospital (subsidiary) Other receivables (Note 10) ...... Salaries and wages 785,787 — Employees incentive 179,500 — Rent expense 102,840 — Other expenses 23,355 — Collected during the year (1,079,752) — Balance at 31 December 11,730 — Cairo Specialized Hospital (subsidiary) Trade and other payables ...... Medical services 4,640 —

27. Tax position (1) Corporate tax • The Company was inspected till 31 December 2013. • Tax returns are regularly submitted on time. • A tax clearance certificate was obtained from the tax authority up to 2013. • The Company was not inspected for the years 2014 and 2015.

(2) Sales tax • The Company was inspected till 31 December 2004. • The Company was not inspected for the years from 2005 to 2015.

(3) Salaries tax • The Company was inspected up to 31 December 2013, and settlement was made till the last inspection for the year 2013. • A tax clearance certificate was obtained from the tax authority up to 2013. • The Company was not inspected for the years from 2014 to 2015.

(4) Stamp duty tax • The Company was inspected till 31 July 2006 and settlement was made.

191 CLEOPATRA HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the separate financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

27. Tax position (Continued) • The Company was inspected during the period from 1 August 2006 to 31 December 2013. The Company was notified, through a form No. 19s dated 23 April 2015, of tax assessment of EGP 72.966 for this period. The Company filed an objection to the assessment. The internal Committee is in the process of fixing a date to resolve this issue. • The Company was not inspected for the years from 2014 to 2015.

28. Subsequent events On 24 January 2016, Cleopatra Hospital Company acquired of 99% stake in Al Shorouk Hospital Company for an acquisition cost of EGP 280 million. Actual control over operational and financial performance is transferred on 31 January 2016. The legal formalities to record this acquisition in the commercial registration of Al Shorouk Hospital Company are under process. Accordingly financial statements of Al Shorouk Hospital will be consolidated in the financial statements of Cleopatra Hospital Company in the first consolidated financial statements after 31 January 2016.

192 Cairo Specialized Hospital Company Auditor’s report To: The shareholders of Cairo Specialized Hospital Company S.A.E.

Report on the financial statements We have audited the accompanying financial statements of Cairo Specialized Hospital Company S.A.E. which comprise the balance sheet as at 31 December 2015, 2014 and 2013 and the statements of income, changes in shareholders’ equity and cash flows for the fiscal year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statements These financial statements are the responsibility of the Company’s management. Management is responsible for the preparation and fair presentation of these financial statements in accordance with Egyptian Accounting Standards (EAS) and in light of the prevailing Egyptian laws. Management responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Management responsibility also includes selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in light of the prevailing Egyptian Laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these financial statements.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Cairo Specialized Hospital Company S.A.E. as at 31 December 2015, 2014 and 2013 its financial performance, and its cash flows for the fiscal year then ended in accordance with the Egyptian Accounting Standards and in light of the related Egyptian laws and regulations.

Tamer Abdel Tawab Member of Egyptian Society of Accountants & Auditors Member of AICPA R.A.A. 17996 Mansour & Co. PricewaterhouseCoopers 10 April 2016 Cairo

193 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Balance sheet At 31 December 2015 (All amounts in Egyptian Pounds)

Restated Note 2015 2014 2013 Non-current assets Fixed assets ...... 5 25,678,386 21,981,202 24,125,879 Investment in affiliates ...... — — 13,790 Total non-current assets ...... 25,678,386 21,981,202 24,139,669 Current assets Inventories ...... 7 3,114,263 2,299,922 2,612,120 Trade receivables ...... 8 24,732,065 16,642,891 15,906,065 Debtors and other debit balances ...... 9 2,383,807 2,352,565 2,301,537 Cash on hand and at banks ...... 10 52,563,224 44,458,748 35,612,492 Total current assets ...... 82,793,359 65,754,126 56,432,214 Current liabilities Provisions ...... 11 8,770,821 8,438,733 7,728,733 Creditors and other credit balances ...... 12 24,183,362 17,598,369 13,146,648 Current income tax liabilities ...... 19 7,387,426 8,688,849 7,006,480 Total current liabilities ...... 40,341,609 34,725,951 27,881,861 Surplus in working capital ...... 42,451,750 31,028,175 28,550,353 Total investment ...... 68,130,136 53,009,377 52,690,022 Financed as follows: Shareholders’ equity Issued and paid up capital ...... 13 27,000,000 27,000,000 27,000,000 Treasury shares ...... 13/2 (3,615,822) (3,615,822) — Reserves ...... 14 17,112,403 17,112,403 10,624,094 Retained earnings ...... 25,906,049 10,354,449 13,601,973 Total shareholders’ equity ...... 66,402,630 50,851,030 51,226,067 Non-current liabilities Deferred tax liabilities ...... 20 1,727,506 2,158,347 1,463,955 Total non-current liabilities ...... 1,727,506 2,158,347 1,463,955 Total funding of working capital and non-current assets . 68,130,136 53,009,377 52,690,022

Mr. Ahmed Abbas Dr. Hasan Shaker Dr. Mohamed Tarek Zahed Finance Manager CEO and Managing Director Chairman

2016 Auditor’s report attached

The accompanying notes form an integral part of these financial statements.

194 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of income For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Operating revenue ...... 15 149,377,454 123,280,745 114,040,779 Less: Operating costs ...... 16 (111,849,380) (90,405,164) (82,119,996) Gross profit ...... 37,528,074 32,875,581 31,920,783 Add / (Less) General and administrative expenses ...... 17 (14,207,273) (10,058,402) (7,794,833) Provisions ...... 11 (6,945,188) (710,000) — Other income ...... 21 3,808,193 3,096,473 3,027,518 Profit for the year before finance income and income tax ...... 20,183,806 25,203,652 27,153,468 Finance income ...... 4,021,134 2,704,661 2,259,506 Profit for the year before income tax ...... 24,204,940 27,908,313 29,412,974 Current tax ...... 19 (7,387,426) (8,688,849) (7,006,480) Deferred tax ...... 20 430,841 (694,392) (265,067) Profit for the year ...... 17,248,355 18,525,072 22,141,427

The accompanying notes form an integral part of these financial statements.

195 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of changes in shareholders’ equity For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Treasury Retained Note Share capital shares Reserves earnings Total Balance at 1 January 2013 as previosuly issued ...... 27,000,000 — 9,658,648 16,370,939 53,029,587 Effect of correction of prior years errors ...... 23 — — — (6,613,100) (6,613,100) Balance at 1 January 2013 as restated ...... 27,000,000 — 9,658,648 9,757,839 46,416,487 Transfer to legal reserve ...... — — 915,446 (915,446) — Transfer to general reserve ...... — — 50,000 (50,000) — Dividends distribution for 2012 .... — — — (17,331,847) (17,331,847) Profit for the year ...... — — — 22,141,427 22,141,427 Balance at 31 December 2013 ..... 27,000,000 — 10,624,094 13,601,973 51,226,067 Balance at 1 January 2014 ...... 27,000,000 — 10,624,094 13,601,973 51,226,067 Transfer to reserves ...... — — 6,488,309 (6,488,309) — Purchase of treasury shares ...... — (3,615,822) — — (3,615,822) Dividends distribution for 2013 .... — — — (15,284,287) (15,284,287) Profit for the year ...... — — — 18,525,072 18,525,072 Balance at 31 December 2014 ..... 27,000,000 (3,615,822) 17,112,403 10,354,449 50,851,030 Balance at 1 January 2015 ...... 27,000,000 (3,615,822) 17,112,403 10,354,449 50,851,030 Dividends distribution for 2014 .... — — — (1,696,755) (1,696,755) Profit for the year ...... — — — 17,248,355 17,248,355 Balance at 31 December 2015 ..... 27,000,000 (3,615,822) 17,112,403 25,906,049 66,402,630

The accompanying notes form an integral part of these financial statements.

196 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of cash flows For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Cash flows from operating activities Profit before tax ...... 24,204,940 27,908,313 29,412,974 Adjustments to reconcile net income to cash flows from operating activities Fixed assets depreciation and write-off ...... 5 3,675,803 3,636,467 3,065,227 Provisions ...... 11 6,945,188 710,000 — Impairment of customers’ balances ...... 8 3,308,714 737,151 — Reversal of provision for doubtful debts ...... 8 (626,233) — — Provision for impairment of investments ...... — 13,790 — Operating profits before changes in working capital . 37,508,412 33,005,721 32,478,201 Changes in working capital Change in inventories ...... (814,341) 312,198 (605,073) Change in trade receivables ...... (10,771,655) (1,473,977) (5,244,887) Change in debtors and other debit balances ...... (31,242) (51,028) (678,549) Change in creditors and other credit balances ...... 6,584,993 4,451,721 2,021,738 Provisions utilized ...... 11 (6,613,100) — — Income tax paid ...... (8,688,849) (7,006,480) (5,129,195) Net cash flows generated from operating activities .... 17,174,218 29,238,155 22,842,235 Cash flows from investing activities Payments to purchase fixed assets ...... 5 (7,372,987) (1,491,790) (2,442,473) Deposits with a maturity of more than 3 months from the date of placement ...... 10 (47,889,123) — — Net cash flows used in investing activities ...... (55,262,110) (1,491,790) (2,442,473) Cash flows from financing activities Dividends paid ...... (1,696,755) (15,284,287) (17,331,847) Purchase of treasury shares ...... — (3,615,822) — Net cash flows used in financing activities ...... (1,696,755) (18,900,109) (17,331,847) Change in cash and cash equivalents during the year .. (39,784,647) 8,846,256 3,067,915 Cash and cash equivalents at the beginning of the year . 44,458,748 35,612,492 32,544,577 Cash and cash equivalents at the end of the year ..... 10 4,674,101 44,458,748 35,612,492

The accompanying notes form an integral part of these financial statements.

197 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

1. General Information Cairo Specialized Hospital Company S.A.E. (the ‘‘Company’’) was incorporated on 31 December 1987 in accordance with investments law No. 43 for 1974 and No. 159 for 1981, and was registered in commercial register No. 249898 dated 31 December 1987 for the purpose of establishing and operating integrated hospitals, including internal medical and curative services. The Company is located at 4 Abo Obaida Street, Roxy, Heliopolis, Cairo, Egypt. The purpose of the Company is establishing, managing and operating the Cairo Specialized Hospital, and performing all related services. The Company may have interest or participate in any manner in companies or other firms which carry on similar activities in Egypt or abroad. The Company may also acquire such entities or merge therewith as approved by GAFI, in addition to establishing laboratories & pharmacy attached to the hospital premises. The Company’s authorised share capital amounted to EGP 50.000.000, and the Company’s paid up share capital amounted to EGP 27,000,000. Cleopatra Hospital Company S.A.E (the Parent Company) holds a percentage of 52.7% of the issued share capital. These financial statements have been approved for issuance by the management on 21 March 2016, considering the fact that the Shareholders’ Ordinary General Assembly have the authority to amend the financial statements after being issued.

2. Accounting policies The following are the accounting policies applied in the preparation of these financial statements:

A. Basis of preparation The financial statements have been prepared in accordance with Egyptian Accounting Standards (EASs) and relevant laws, which have all been applied consistently throughout the fiscal year except when otherwise indicated. The financial statements have been prepared under the historical cost convention. The preparation of the financial statements in conformity with Egyptian Accounting Standards (EASs) requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas where the most significant accounting estimates and judgements applied in preparation of the financial statements are disclosed in note 4. The EASs require the reference to the international financial reporting standard when there is no EAS, or legal requirements that explain the treatment of specific balances and transactions.

198 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) presented in two statements; the first will present income and expenses for the year (statement of income), and the second will start by the net income (loss) for the year and will include income and expenses items recognised in equity to present the comprehensive income (statement of comprehensive income). The new standards will require more disclosure on the financial risk management.

B. Foreign currency translation (1) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (‘the functional currency’). The financial statements are presented in Egyptian Pounds (‘‘EGP’’), which is the Company’s functional and presentation currency.

C. Fixed assets Fixed assets are stated at historical cost less accumulated depreciation. Historical cost includes all expenses that are attributable to the acquisition of the asset and bringing it to a ready-for-use condition. All expenses incurred by the Company to acquire or construct fixed assets are recognised within ‘‘projects under construction’’. When the fixed asset is commissioned and brought to ready-for-use condition, the asset’s value is be transferred to the fixed assets. All repair and maintenance costs are charged to the statement of income during the fiscal year in which they are incurred. Major renovation costs are capitalised and included in the asset’s cost when they are expected to raise the expected pattern of the Company’s future economic benefits beyond the estimated original benefits when the asset was acquired and the costs of such additions can be reliably measured. These costs will be depreciated at the lower of the asset’s remaining useful life or the expected useful life of these renovations. The straight line method is used to calculate the depreciation by reducing the asset’s value to its salvage value over the estimated useful life except the land that is not considered a depreciable asset. The fixed assets’ salvage value and useful life are reviewed annually, and adjusted if appropriate. The depreciation rates by type of asset are as follows:

Buildings ...... 2.5% Machinery, equipment and devices ...... 10% Tools and instruments ...... 25% Furniture and fixtures ...... 15% Vehicles ...... 10% Computers ...... 25% An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

199 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) Gains and losses on disposals are determined by comparing the realisable value with the net carrying amount, and the difference is recognised in the statement of income.

D. Inventories Inventories are measured at the lower of actual cost or net realisable value. Cost is determined using the weighted average method and includes purchase cost and other direct costs. The net realisable value comprises the estimated selling price in the ordinary course of business, less selling expenses. Allowance is made for slow moving inventories based on management’s assessment of inventory movements.

E. Financial assets (1) Classification The Company classifies its financial assets into loans and receivables at initial recognition. This classification depends on the purpose for which the financial assets are acquired:

(2) Initial and subsequent measurement • The financial assets are measured on acquisition at fair value plus transaction costs. • The financial assets are derecognised when the right to receive cash flows from such assets has expired or has been transferred and the Company has transferred substantially all risks and rewards of ownership. • Loans and receivables are subsequently measured at amortised cost using the effective interest method.

(3) Impairment of financial assets: Assets recognised at amortised cost The Company assesses, at end of reporting period, whether there is evidence that a financial asset or a group of financial assets is impaired. Impairment of a financial asset or group of financial assets is recognised if an impairment indicator exists as a result of one or more events that occurred after the initial recognition (a ‘‘loss event’’) and if the loss event (or events) has an impact on the future cash flows of the financial asset or group of financial assets that can be reliably measured. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing financial difficulty, default or delinquency in payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a decrease in the estimated future cash flows, such as future changes or economic conditions that correlate with the impairment evidence.

200 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) Fixed assets’ impairment loss is measured at amortised cost, which is the difference between the asset’s carrying amount and the present value of the estimated future cash flows (after eliminating future losses that have not occurred) discounted at the original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of income. If, in a subsequent period, the amount of the impairment decreases and the decrease can be related to an event occurring after the initial recognition (such as an improvement in the debtor’s credit rating), the reversal of the impairment is recognised in the statement of income.

F. Issued and paid up capital Ordinary shares are classified as equity. Where the Company purchases its equity share capital (treasury shares), the consideration paid, including any expenses directly attributable to the purchase (net of taxes), is deducted from equity until the shares are cancelled or reissued. Where such shares are reissued, the consideration received, net of any expenses directly attributable to the issuance, is included in equity. Where treasury shares are written off, they are written off at their nominal value, and the difference is included in the reserves.

G. Legal reserve As required by the Company’s articles of association, 5% of the net profit shall be transferred to a legal reserve, and such transfer may be discontinued when the reserve equals 20% of the issued and paid up capital. Whenever this reserve is lower than this percentage, the deduction should be continued. This reserve is not available for distribution.

I. Suppliers and notes payable Suppliers and notes payable are obligations to pay for goods and services that have been acquired in the Company’s ordinary course of business. Suppliers and notes payable are initially recognised at fair value of products and services received from third parties, whether they have been billed or not. Long term liabilities are recognised at their present value, and suppliers and notes payable are subsequently shown at amortised cost using the effective interest method.

J. Employee benefits (1) Employees’ share of profit According to the Companies Law, the Company pays 10% of its cash dividends to its employees up to a maximum equal to the total salaries of the latest fiscal year before distribution. Employees’ share of profit is recognised as dividends in equity and as a liability when approved by

201 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) the shareholders’ general assembly. No liability is recognised for employees’ share of profit relating to undistributed profits.

(2) Pension and insurance scheme The Company pays contributions to the public authority for social insurance on a mandatory basis in accordance with the rules of Social Security Law. The Company had no further payment obligations once it discharged its obligations. The regular contributions are recognised as periodic costs for the year in which they are due and as such are included in staff costs.

K. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, including cash balances and trade and notes receivables arising from rendering medical services and sale of medicine throughout the Company’s ordinary course of business, net of sales taxes, deductions or discounts. The Company recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits related to the sale process or service provision will flow to the Company; and when other specific criteria have been met for each of the Company’s activities as described below. The revenue amount is not considered as reliably measurable unless all contingent liabilities are settled. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

1. Medical services revenue The Company, through Cairo Specialized Hospital, provides medical services, including surgeries, accommodation, medical supervision, laboratories, tests, different types of radiology and outpatient clinics. Revenue from medical service is recognised when the service is rendered to the patient.

2. Sale of medicine revenue The Company sells medicine through the hospital pharmacy or uses them for treatment of inpatients admitted in the Hospital. Revenue is recognised once the medicine is received by the patient or used during the patient’s stay in hospital.

3. Rental income The Company leases out spaces to third parties, and such rental is recognised in the statement of income over the period of the lease.

4. Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable generated from the recognition of interest is impaired, the carrying amount will be reduced to its recoverable amount.

L. Current and deferred income tax The income tax for the year is calculated based on the tax laws enacted at the balance sheet date. Management periodically evaluates the company’s tax situation through tax returns, taking into account the differences that may arise from some interpretations issued by administrative or regulatory authorities, and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authority.

202 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) Deferred income tax is fully recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The deferred income taxes are not accounted for if they arise from initial recognition of an asset or liability other than those arising from a business combination that at the time of the transaction affects neither accounting nor taxable income. Deferred income tax is determined using tax rates in accordance with the law prevailing at the balance sheet date that are expected to apply when the deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

M. Dividends Dividends are recognised in the Company’s financial statements in the period in which the dividends are approved by the Company’s general assembly of shareholders.

N. Cash and cash equivalents For the purpose of preparation of statement of cash flows, cash and cash equivalents include cash on hand, bank current accounts and term deposits with maturities of three months from the date of placement, if any.

O. Corresponding figures Where necessary, corresponding figures have been reclassified to conform to changes in presentation in the current year.

3. Financial risk management 3.1 Financial risk factors The Company’s ordinary activities expose it to a variety of financial risks: credit risk and liquidity risk. The Company is not exposed to interest rate risk, price risk, or foreign currency risk as it has neither interest bearing financial assets and liabilities with long term maturities, financial assets at fair value through profit and loss, nor balances and transactions denominated in foreign currency. The Company’s management aims to minimise potential adverse effects of such risks on the financial performance of the Company through monitoring by the finance department and the general manager of the Company, and the finance department and the executive committee at the level of the Parent Company. The Company does not use any derivative financial instruments to hedge specific risks.

(A) Credit risk Credit risk arises from cash at banks, as well as credit exposures to customers. Credit risk is managed by its executive management, Central Finance Department and Executive Committee at the Parent Company. The Company deals with banks with high credit ratings and creditworthiness that are regulated by the Central Bank of Egypt. The hospital’s financial director and general manager perform analysis on the credit risk for each potential credit customer in accordance with the Parent Company’s policies. The Parent Company’s Central Finance Department and Executive Committee follow up on the compliance

203 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (Continued) with credit terms, and review the debt ageing report to take the necessary decisions whether to cancel the credit or to refer the defaulted customer to the Legal Department for their necessary actions. Note (8) to these financial statements provides more detailed information with respect to this matter. The management establishes a provision for impairment of 100% of customers defaulted for more than 150 days from the invoice date. In addition, the management makes a category-based provision for impairment at historical default rates of the Group. Balances exposed to credit risks are as follows:

2015 2014 2013 Cash at banks ...... 52,522,621 44,324,486 35,485,917 Trade receivables ...... 29,834,092 19,342,116 17,868,139

(B) Liquidity risk The management makes cash flow projections on a monthly basis, which are discussed during the Parent Company Executive Committee’s meetings, and takes the necessary actions to negotiate with suppliers, follow-up the collection process and manage the inventory balances in order to ensure sufficient cash is maintained to discharge the Company’s obligations when due. The Company does not depend on loans to discharge its obligations given the nature of its activity and the appropriate rate of the cash receipts. The table below shows the Company’s liabilities at the balance sheet date by contractual maturity:

Less than 3 months to 3 months 1 year Suppliers and notes payables ...... 12,229,553 1,125,210 Accrued expenses ...... 8,946,150 —

4. Critical accounting estimates, assumptions and judgements Estimates and assumptions are evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the actual results.

A. Provisions Provisions are recognised when the Company has a legal or constructive obligation as a result of past events; it is probable that outflow resources will be required to settle the obligation; and a reliable estimate of the amount of this obligation can be made. The Company reviews and adjusts the provision at each balance sheet date to present the current best estimate using an expert’s appropriate advisory expertise.

204 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

4. Critical accounting estimates, assumptions and judgements (Continued) B. Impairment of trade receivables Impairment of trade receivables is estimated by monitoring ageing of receivables. The Company’s management examines the credit position and ability of debtors and customers to make payments for their past due debts. Impairment is recognised for amounts due from debtors and customers whose credit position does not allow them to pay their dues as estimated by the management.

205 (727,458) (432,207) 7,372,987 3,380,552 Machinery (525) (16,961) — (8,091) (383,700) (22,930) (2,027) (54,230) — (26,742) (613,771) (30,688) 406,700 2,140,876 — 9,053 695,096 128,827 — 1,459,635 14,151,099 41,300,290 426,001 2,171,692— 7,288,976 1,406,209 68,203,902 — — 8,488,826 29,040,368 426,000 2,144,864 — 4,865,479 8,895,001 1,257,163 31,164,283 46,222,700 426,000 2,145,826 5,176,875 1,363,060 49,171,045 Originally issued in Arabic 1,550,4301,550,430 1,459,635 — 14,149,072 45,518,605 426,001 2,158,282 7,770,443 — 1,816,963 4,272,5451,550,430 74,849,431 1,459,635 5,254,071 — 14,354,322 13,332 1,095,238 1 441,442 12,456 2,593,568 453,903 25,678,386 construction Land Buildings devices Vehicles instruments fixtures Computers 2015 Total Projects under equipment & and Tools Furniture & Notes to the financial statements (Continued) For the year ended 31For December 2015, 2014 and 2013 CAIRO SPECIALIZED HOSPITAL COMPANY SPECIALIZED HOSPITAL CAIRO S.A.E...... — — (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — ...... — — ...... Fixed assets write-off Balance at 31 December 2015 Accumulated depreciation at 31 December 2015 Balance at 1 January 2015 5. Fixed assets Additions Accumulated depreciation at 1 January 2015 Charge for the year Net book value at 31 December 2015 Accumulated depreciation of assets write-off Accumulated

206 (597,689) 1,491,790 3,217,444 (1,016,712) (380,975) — (20,690) (591,467)(233,824) (23,580) — (4,577) (345,818) (13,470) 1,100,360 — 46,390 265,606 79,434 Machinery 417,176 2,073,396 — 9,434 655,245 62,193 — 1,459,635 14,151,099 40,580,905 426,001— 2,145,992 1,459,635— 7,614,837 14,151,099 1,350,355 41,300,290 67,728,824 426,001 2,171,692— 7,288,976 — 1,406,209— 8,071,650 68,203,902 27,200,796 1,459,635 426,000 2,140,007 5,662,273 — 12,259,922 4,556,052 8,488,826 1,208,440 29,040,368 43,602,945 426,000 2,144,864 1 4,865,479 1,257,163 26,828 46,222,700 2,423,497 149,046 21,981,202 Originally issued in Arabic construction Land Buildings devices Vehicles instrument fixtures Computers 2014 Total Projects under equipment & and Tools Furniture & Notes to the financial statements (Continued) For the year ended 31For December 2015, 2014 and 2013 CAIRO SPECIALIZED HOSPITAL COMPANY SPECIALIZED HOSPITAL CAIRO S.A.E...... — — — (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — — ...... — — ...... — — — Fixed assets write-off Balance at 31 December 2014 Accumulated depreciation at 31 December 2014 Balance at 1 January 2014 5. Fixed assets (Continued) Additions Accumulated depreciation at 1 January 2014 Charge for the year Net book value at 31 December 2014 Accumulated depreciation of assets write off Accumulated

207 2,442,473 3,065,227 Machinery 357,265 1,983,261 49,728 25,022 599,057 50,894 — 1,459,635— 14,151,099 40,580,905 426,001— 2,145,992 7,614,837 —— 1,350,355 7,714,385 67,728,824 1,459,635 25,217,535 6,079,449 — 376,272 13,380,109 2,114,985 8,071,650 3,956,995 27,200,796 426,000 1,157,546 40,537,718 2,140,007 1 4,556,052 1,208,440 43,602,945 5,985 3,058,785 141,915 24,125,879 Originally issued in Arabic 306,302 1,459,635 14,040,239 39,388,755 426,001 2,139,565 6,255,683 1,270,171 65,286,351 (306,302) — 110,860 1,192,150 — 6,427 1,359,154 80,184 construction Land Buildings devices Vehicles instruments fixtures Computers 2014 Total Projects under equipment & and Tools Furniture & Notes to the financial statements (Continued) For the year ended 31For December 2015, 2014 and 2013 CAIRO SPECIALIZED HOSPITAL COMPANY SPECIALIZED HOSPITAL CAIRO S.A.E...... (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — Balance at 1 January 2013 5. Fixed assets (Continued) / (transfers) Additions Balance at 31 December 2013 Accumulated depreciation at 31 December 2013 Accumulated depreciation at 1 January Charged for the year Net book value at 31 December 2013

208 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

6. Investment in affiliates The Company has a stake in Cairo Specialized Hospital for Cardiac Catheterization & Surgery amounting to 23.58%. The hospital received its entire share of capital of Cairo Specialized Hospital for Cardiac Catheterization & Surgery as a result of the liquidation commenced 31 May 2012. Because there are no indicators of collection of the remaining balance of the investment in associates as at 31 December 2014 amounting to EGP 13,790 of the hospital’s share in the residual value of net equity of the Cairo Specialized Hospital for Cardiac Catheterization & Surgery, a provision for impairment was made for the residual value until the completion of the liquidation.

7. Inventories

2015 2014 2013 Medical supplies inventory ...... 2,925,675 2,108,209 2,416,378 Maintenance inventory ...... 188,588 191,713 195,742 Balance at 31 December ...... 3,114,263 2,299,922 2,612,120

8. Trade receivables

2015 2014 2013 Due from customers ...... 29,259,121 18,104,660 15,494,612 Income from inpatients ...... 574,971 457,463 703,834 Trade notes receivable ...... — 779,993 1,669,693 29,834,092 19,342,116 17,868,139 Less: Impairment of receivables ...... (5,102,027) (2,699,225) (1,962,074) 24,732,065 16,642,891 15,906,065

2015 2014 2013 Balance at 1 January ...... 2,699,225 1,962,074 1,962,074 Provision formed during the year ...... 3,308,714 737,151 — Reversals during the year ...... (626,233) — — Write-off during the year ...... (279,679) — — Balance at 31 December ...... 5,102,027 2,699,225 1,962,074

• Trade notes receivable comprise checks collected from customers that have not yet been deposited in banks. • Trade receivable balances, which are not past due as of the balance sheet date and for which no impairment indicators exist, amounted to EGP 19,243,296 (2014: EGP 14,933,487) (2013: EGP 13,698,374).

209 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

8. Trade receivables (Continued) • At the balance sheet date, the balances that were past due but not impaired amounted to EGP 5,719,750 (2014: EGP 651,294) (2013: EGP 535,274) regarding customers and transactions with no history of default. The analysis of the ageing of these balances as follows:

2015 2014 2013 Less than month ...... 3,861,673 651,294 535,274 From one to five months ...... 1,858,077 — —

9. Debtors and other debit balances

2015 2014 2013 Withholding tax ...... 1,677,558 1,491,612 1,310,340 Due from employees ...... 341,614 92,482 82,183 Deposits with others ...... 211,539 150,827 150,827 Prepaid expenses ...... 107,663 150,850 198,419 Advances to suppliers ...... 40,793 186,904 147,128 Due from related parties ...... 4,640 — — Accrued interest ...... — 268,890 401,640 Sundry debtors ...... — 11,000 11,000 2,383,807 2,352,565 2,301,537

10. Cash on hand and at banks

2015 2014 2013 Deposits ...... 47,889,123 37,011,497 32,330,302 Current accounts ...... 4,633,498 7,312,989 3,155,615 Cash on hand ...... 40,603 134,262 126,575 52,563,224 44,458,748 35,612,492

Current accounts are maintained with banks regulated by the central bank of Egypt. Term deposits are held with local banks in EGP with fixed rate ranging from 8% to 9% (2014: 9%). For the purpose of preparation of statement of cash flows, cash on hand and at banks balance comprises of:

2015 2014 2013 Cash on hand and at banks ...... 52,563,224 44,458,748 35,612,492 Deposits with a maturity of more than 3 months from the date of placement ...... (47,889,123) — — Cash and cash equivalents ...... 4,674,101 44,458,748 35,612,492

210 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

11. Provisions

Utilised Balance at Provision balance Balance at 1 January made during during 31 December 2015 the year the year 2015 Provision for claims ...... 7,428,733 6,000,000 (6,613,100) 6,815,633 Provision for lawsuits ...... 760,000 600,000 — 1,360,000 Employees leave provision ...... 250,000 345,188 — 595,188 Total ...... 8,438,733 6,945,188 (6,613,100) 8,770,821

Utilised Balance at Provision balance Balance at 1 January made during during 31 December 2014 the year the year 2014 Provision for claims ...... 7,428,733 — — 7,428,733 Provision for lawsuits ...... 300,000 460,000 — 760,000 Employees leave provision ...... — 250,000 — 250,000 Total ...... 7,728,733 710,000 — 8,438,733

Utilised Balance at Provision balance Balance at 1 January made during during 31 December 2013 the year the year 2013 Provision for claims ...... 7,428,733 — — 7,428,733 Provision for lawsuits ...... 300,000 — — 300,000 Total ...... 7,728,733 — — 7,728,733

12. Creditors and other credit balances

2015 2014 2013 Suppliers ...... 10,129,446 7,559,930 4,924,063 Accrued expenses ...... 8,946,150 6,249,655 4,779,120 Notes payable ...... 3,225,317 2,211,313 2,017,325 Insurance to others ...... 723,121 521,197 556,787 Social insurance authority ...... 149,636 144,692 103,663 Due to related parties ...... 11,730 — — Sundry creditors ...... 997,962 911,582 765,690 24,183,362 17,598,369 13,146,648

211 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

13. Issued and paid up capital 13.1 Issued and paid-up capital The Company’s issued and paid up share capital comprise 2,700,000 shares of EGP 10 each, totalling EGP 27 million. Prior to 30 September 2015, the share capital was subscribed as follows:

Number Nominal Percentage of shares value Cleopatra Hospital Company / Creed Healthcare ltd ...... 52.7% 1,423,348 14,233,480 Mr. Hassan Mousa ...... 13.1% 354,361 3,543,610 Faisal Islamic Bank of Egypt ...... 6.7% 181,242 1,812,420 Mahmoud Kamel Mohamed Mohamed Abu Shouk ...... 6% 162,836 1,628,360 Others ...... 21.5% 578,213 5,782,130 Total ...... 100% 2,700,000 27,000,000

Number Nominal Percentage of shares value El Sayed El Sayed Hassan Mousa ...... 15.36% 414,715 4,147,150 Dr. Mohamed Tarek Hassan Zaher ...... 12.90% 348,314 3,483,140 Dr. Mahmoud Kamel Abo Shouk ...... 7.06% 190,688 1,906,880 Faasel Islamic Bank ...... 5.53% 149,366 1,493,660 Others* ...... 59.15% 1,596,917 15,969,170 Total ...... 100% 2,700,000 27,000,000

Pursuant to the decision taken in the ordinary general meeting dated 30 September 2015, Cleopatra Hospital Company acquired the shares of Creed Healthcare ltd, and the shareholders structure was adjusted to reflect this step. Accordingly, Cleopatra Hospital Company became the Parent Company for Cairo Specialized Hospital Company. On 30 September 2015, Cleopatra Hospital Company pledged its whole interest in the Company amounting to 52.7% of the total shares in favour of the Commercial International Bank as a security for the borrowing granted to Cleopatra Hospital Company on 30 September 2015.

13.2 Treasury shares Treasury shares are an entity’s own equity instruments that are maintained by the entity and deducted from equity without recognising any gain or loss on purchase, sale, issue, or cancellation of the entity’s equity instruments. The consideration paid or received is recognised directly in shareholders equity. On 23 November 2014, the Company purchased 48.034 treasury shares amounting to EGP 3,615,822. Pursuant to the decision taken in the extra-ordinary general meeting convened on 30 September 2015, it was decided to write off those shares as a result of passage of more than one year without being disposed of. The legal formalities to write off such shares and record this write-off in the Company’s commercial registration are under process.

14. Reserves 14.1 Legal reserve In accordance with the law no. 159 of 1981 and the Company’s Articles of Association, 5% of the net profit for the year shall be transferred to the legal reserve. As proposed by the Board of Directors, this transfer

212 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

14. Reserves (Continued) may be partially discontinued if the legal reserve reaches 20% of the issued capital. This reserve is not available for distribution to shareholders.

14.2 General reserve As proposed by the board of directors in prior years and based on the General Assembly’s approval, a general reserve was made to prevent unexpected risks.

14.3 Capital reserve Based on the instructions of the board of directors in prior years and the general assembly’s approval, capital reserve was formed for the future investment and development plans in the machinery and equipment of the hospital.

Balance at Reserves Balance at 1 January made during 31 December 2013 the year 2013 Legal reserve ...... 5,021,834 915,446 5,937,280 General reserve ...... 4,550,000 50,000 4,600,000 Capital reserve ...... 86,814 — 86,814 Total ...... 9,658,648 965,446 10,624,094

Balance at Reserves Balance at 1 January made during 31 December 2014 the year 2014 Legal reserve ...... 5,937,280 1,088,309 7,025,589 General reserve ...... 4,600,000 5,400,000 10,000,000 Capital reserve ...... 86,814 — 86,814 Total ...... 10,624,094 6,488,309 17,112,403

Balance at Reserves Balance at 1 January made during 31 December 2015 the year 2015 Legal reserve ...... 7,025,589 — 7,025,589 General reserve ...... 10,000,000 — 10,000,000 Capital reserve ...... 86,814 — 86,814 Total ...... 17,112,403 — 17,112,403

213 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

15. Operating revenue

2015 2014 2013 Surgeries revenue ...... 33,694,608 28,732,631 22,070,311 Cardiac catheterization revenue ...... 25,625,442 22,839,919 25,715,052 Inpatient and medical supervision revenue ...... 41,409,600 36,346,539 32,933,164 Pharmacy revenue ...... 501,329 523,137 564,363 Outpatient clinics revenue ...... 16,107,867 10,137,123 10,687,452 Laboratories revenue ...... 11,659,647 8,730,869 8,352,883 Service charge revenue ...... 9,203,295 7,214,014 5,949,613 Radiology revenue ...... 4,937,632 3,685,624 3,807,311 Emergency revenue ...... 2,295,281 1,797,500 1,645,845 Heart tests revenue ...... 1,529,718 1,385,716 1,130,235 Endoscopy revenue ...... 1,514,825 1,067,035 806,081 Physiotherapy revenue ...... 480,320 416,487 378,469 Dentistry revenue ...... 417,890 404,151 — 149,377,454 123,280,745 114,040,779

16. Operating costs

2015 2014 2013 Medical and pharmaceutical supplies ...... 47,547,532 40,231,216 36,385,448 Doctors’ fees ...... 26,044,930 20,439,650 19,939,742 Salaries, wages and benefits ...... 23,467,926 16,378,222 13,716,014 Fixed assets depreciation and write-off ...... 3,643,267 3,603,093 3,036,646 Food, beverage and consumables costs ...... 3,424,470 2,525,218 2,124,054 Maintenance, spare parts and energy costs ...... 5,732,464 4,931,860 3,271,521 Other expenses ...... 1,988,791 2,295,905 3,646,571 111,849,380 90,405,164 82,119,996

17. General and administrative expenses

2015 2014 2013 Salaries, wages and benefits ...... 8,591,371 6,703,487 6,672,506 Impairment of trade receivables ...... 2,682,481 737,151 — Professional and consulting fees ...... 1,821,669 1,531,339 102,702 Maintenances, spare parts and energy costs ...... 235,892 205,458 104,812 Fixed assets depreciation and write-off ...... 32,536 33,374 28,581 Other expenses ...... 843,324 847,593 886,232 14,207,273 10,058,402 7,794,833

214 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

18. Expense by nature

2015 2014 2013 Salaries, wages and benefits* ...... 32,059,297 23,081,709 20,388,520 Medical and pharmaceutical supplies ...... 47,547,532 40,231,216 36,385,448 Doctors’ fees ...... 26,044,930 20,439,650 19,939,742 Maintenance, spare parts and energy costs ...... 5,968,356 5,137,318 3,376,333 Fixed assets depreciation and write-off ...... 3,675,803 3,636,467 3,065,227 Food, beverage and consumables costs ...... 3,424,470 2,525,218 2,124,054 Impairment of trade receivables ...... 2,682,481 737,151 — Professional and consulting fees ...... 1,821,669 1,531,339 102,702 Other expenses** ...... 2,832,115 3,143,498 4,532,803 126,056,653 100,463,566 89,914,829

* Salaries, wages and benefits 2015 2014 2013 Salaries and wages ...... 25,730,079 18,893,890 16,954,830 Social insurance ...... 1,159,030 959,921 788,313 Employees’ benefits ...... 1,341,989 322,550 298,180 Bonuses and incentives ...... 3,828,199 2,905,348 2,347,197 32,059,297 23,081,709 20,388,520

** Other expenses item includes an amount of EGP 47,000 (2014: EGP 60,500) which represents the meeting allowances for directors.

19. Income taxes The income tax for the year comprises of:

2015 2014 2013 Current tax ...... 7,387,426 8,688,849 7,006,480 Deferred tax ...... (430,841) 694,392 265,067 6,956,585 9,383,241 7,271,547

The tax on profit before tax differs from the amount expected to be earned by applying the average tax rate applicable to the Company’s profits as follows:

2015 2014 2013 Net profit before tax ...... 24,204,940 27,908,313 29,412,974 Income tax calculated based on the applicable local tax rate .... 5,446,112 8,322,494 7,353,242 Add / (less): Expenses not deductible for tax purpose ...... 1,726,308 1,060,747 1,276,871 Effect of change in applicable tax rate ...... (215,835) — — — — (1,358,566) Income tax ...... 6,956,585 9,383,241 7,271,547 Effective tax rate ...... 28.74% 33.62% 24.72%

215 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

19. Income taxes (Continued)

2015 2014 2013 Current income tax liabilities Balance at 1 January ...... 8,688,849 7,006,480 4,073,745 Payments during the year ...... (8,688,849) (7,006,480) (4,073,745) Current tax incurred during the year ...... 7,387,426 8,688,849 7,006,480 7,387,426 8,688,849 7,006,480

20. Deferred tax Deferred income tax assets and liabilities are provided on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

2015 2014 2013 Deferred tax assets: Provisions (other than provision for claims) ...... 439,917 — — 439,917 — — Deferred tax liabilities: Fixed assets depreciation ...... (2,167,423) (2,158,347) (1,463,955) (2,167,423) (2,158,347) (1,463,955) (1,727,506) (2,158,347) (1,463,955)

2015 2014 2013 Deferred tax assets: Balance at 1 January ...... ——— Charged to the statement of income ...... 439,917 — — Balance at 31 December ...... 439,917 — — Deferred tax liabilities: Balance at 1 January ...... (2,158,347) (1,463,955) (769,563) Charged to the statement of income ...... (9,076) (694,392) (694,392) Balance at 31 December ...... (2,167,423) (2,158,347) (1,463,955) Net deferred tax liabilities ...... (1,727,506) (2,158,347) (1,463,955)

21. Other income

2015 2014 2013 Pharmacy rent ...... 2,728,338 2,404,582 2,113,148 Blood bank rent ...... 456,000 376,000 333,000 Cafeteria rent ...... 229,000 219,500 226,000 Hospital premises usufruct right (Kidney Department) ...... 106,445 77,846 104,194 Others ...... 288,410 18,545 251,176 3,808,193 3,096,473 3,027,518

216 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

22. Tax position (1) Corporate tax • The Company was inspected from inception till 2008 and all differences were settled. • The Company was not inspected for the years between 2009 and 2015 and tax returns were annually submitted on time.

(2) Salaries tax • The Company was inspected from inception till 2009 and all differences were settled. • The Company was not inspected for the years from 2010 till the end of 2015.

(3) Stamp duty tax • The Company was inspected from inception till 31 July 2006 and all differences were settled. • The Company was inspected from august 2006 till 2014, and filed an objection to the due date. No inspection took place for the year 2015.

(4) Withholding tax • The Company was not inspected from inception till 2015.

23. Social insurance position The Company contributes on a monthly and regular basis to the national organization for social insurance (Heliopolis Office).

24. Legal position There are several lawsuits filed by/against the Company which are still pending before the courts. The Company charged the required provisions for several cases. However, the Company’s Legal Counsel expected that the other cases will not lead to any potential financial consequences.

25. Related party transactions The Company deals with the related parties in the normal course of business. The balances with related parties at the date of financial statements during the year are as follows:

Balance sheet balances

Nature of transaction 2015 2014 2013 Related parties Cleopatra Hospital Company (52.7% shareholding) Receivables and other debit balances ...... Customer 4,640 — — Trade and other payables ...... Supplier 11,730 — —

217 CAIRO SPECIALIZED HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

25. Related party transactions (Continued) The movement of related party accounts at the financial statements date during the year is as follows:

2015 2014 2013 Debtors and other debit balances: Operating revenue ...... 4,640 — — Total charge to the statement of income ...... 4,640 — —

2015 2014 2013 Balance at 1 January ...... — — — Total charge to the statement of income ...... 4,640 — — Balance at 31 December ...... 4,640 — —

2015 2014 2013 Creditors and other credit balances ...... — Salaries and wages ...... 785,787 — — Employee incentive expenses ...... 179,500 — — Rental expenses ...... 102,840 — — Other expenses ...... 23,355 — — Total charge to the statement of income ...... 1,091,482 — — Balance at 1 January ...... — Total charge to the statement of income ...... 1,091,482 — — Repaid during the year ...... (1,079,752) — — Balance at 31 December ...... 11,730 — —

26. Correction of material errors The management did not previously make provisions against the additional taxes for the years from the inception to 2008 despite the claims raised by the tax authority in this regard. During the year, the management has retrospectively corrected this error in accordance with EAS No. (5) ‘‘Accounting Policies and Changes in Accounting Estimates and Errors’’ through making the provision in the year in which the claim was received from the tax authority. Adjustment effects on balance sheet and retained earnings are as follows:

Balance before Balance after adjustment adjustment 2013 Adjustment 2013 Provisions ...... 1,115,633 6,613,100 7,728,733 Retained earnings ...... 53,029,587 (6,613,100) 46,416,487

218 Nile Badrawi Hospital Company Auditors’ report To: The Shareholders of Nile Badrawi Hospital Company S.A.E.

Report on the financial statements We have audited the accompanying financial statements of Nile Badrawi Hospital Company S.A.E. which comprise the balance sheet as at 31 December 2015, 2014 and 2013 and the statements of income, changes in equity and cash flows for the fiscal year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s responsibility for the financial statements These financial statements are the responsibility of the Company’s management. Management is responsible for the preparation and fair presentation of these financial statements in accordance with Egyptian Accounting Standards (EASs) and in light of the prevailing Egyptian laws. Management responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Management responsibility also includes selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditors’ responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these financial statements.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nile Badrawi Hospital Company S.A.E. as at 31 December 2015, 2014 and 2013, its financial performance, and its cash flows for the fiscal year then ended in accordance with the Egyptian Accounting Standards and in light of the related Egyptian laws and regulations.

Tamer Abdel Tawab R.A.A 17996 Mansour & Co. PricewaterhouseCoopers 14 April 2016 Cairo

219 NILE BADRAWI HOSPITAL COMPANY S.A.E. Originally issued in Arabic Balance sheet At 31 December 2013, 2014 and 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Non-current assets Fixed assets ...... 5 9,451,247 9,591,312 9,058,300 Deferred tax assets ...... 19 2,718,133 3,379,724 3,097,620 Debtors and other debit balances—due from related parties ...... 8 6,715,580 — — Total non-current assets ...... 18,884,960 12,971,036 12,155,920

Current assets Inventories ...... 6 4,534,122 4,051,112 4,431,784 Trade receivables ...... 7 25,319,343 27,228,492 17,812,240 Debtors and other debit balances ...... 8 2,651,874 10,422,602 7,810,961 Cash on hand and at banks ...... 9 18,786,253 6,356,681 2,981,182 Total current assets ...... 51,291,592 48,058,887 33,036,167 Current liabilities Provisions ...... 10 4,940,959 722,700 — Creditors and other credit balances ...... 11 26,180,337 23,107,694 27,667,747 Current income tax liabilities ...... 20 4,145,873 5,902,635 2,060,578 Total current liabilities ...... 35,267,169 29,733,029 29,728,325 Surplus in working capital ...... 16,024,423 18,325,858 3,307,842 Total investment ...... 34,909,383 31,296,894 15,463,762 Financed as follows: Shareholders’ equity Issued and paid up capital ...... 12 20,000,000 20,000,000 15,000,000 Reserves ...... 13 5,105,247 5,105,247 4,719,765 Retained earnings ...... 9,804,136 6,191,647 (4,256,003) Total shareholders’ equity ...... 34,909,383 31,296,894 15,463,762 Total funding of working capital and non-current assets .. 34,909,383 31,296,894 15,463,762

Mr. Ahmed Nabeel Mr. Ahmed Ezz Dr. Nadia Badrawi Finance Director Managing Director Chairman 2016 Auditors’ report attached

The accompanying notes form an integral part of these financial statements.

220 NILE BADRAWI HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of income For the year ended 31 December 2013, 2014 and 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Operating revenue ...... 14 121,307,079 107,482,434 86,802,150 Less: Operating costs ...... 15 (81,601,341) (76,120,070) (69,045,206) Gross profit ...... 39,705,738 31,362,364 17,756,944 Add / (Less) General and administrative expenses ...... 16 28,072,750 (9,245,588) (10,286,049) Provisions ...... 10 4,218,259 722,700 — Other income ...... 17 1,856,750 3,460,673 871,475 Net profit for the year before finance income, currency translation differences and income tax . 9,271,479 24,854,749 8,342,370 Finance income ...... — — 11,312 (Loss) / gain on currency translation differences ..... (6,087) 38,313 17,577 Profit for the year before income tax ...... 9,265,392 24,893,062 8,371,259 Current tax ...... 20 (4,991,312) (7,017,881) (2,060,578) Deferred tax ...... 19 661,591 282,104 417,112 Profit for the year ...... 3,612,489 18,157,285 6,727,793

The accompanying notes form an integral part of these financial statements.

221 NILE BADRAWI HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of changes in equity For the year ended 31 December 2013, 2014 and 2015 (All amounts in Egyptian Pounds)

Share Retained Note capital Reserves earnings Total Balance at 1 January 2013 as previously issued ...... 15,000,000 4,345,512 7,343,857 26,689,369 Effect of correction of prior years errors . . . 23 — — (10,842,588) (10,842,588) Balances at 1 January 2013 as restated .... 15,000,000 4,345,512 (3,498,731) 15,846,781 Transfer to reserves ...... — 374,253 (374,253) — Dividends distribution for 2012 ...... — — (7,110,812) (7,110,812) Profit for the year as previously issued ..... — — 7,717,265 Effect of correction of last year’s errors .... — — (989,472) Profit for the year as restated ...... — — 6,727,793 6,727,793 Balance at 31 December 2013 ...... 15,000,000 4,719,765 (4,256,003) 15,463,762 Balance at 1 January 2014 ...... 15,000,000 4,719,765 (4,256,003) 15,463,762 Increase in share capital ...... 5,000,000 — — 5,000,000 Transfer to reserves ...... — 385,482 (385,482) — Dividends distribution for 2013 ...... — — (7,324,153) (7,324,153) Profit for the year ...... — — 18,157,285 18,157,285 Balance at 31 December 2014 ...... 20,000,000 5,105,247 6,191,647 31,296,894 Balance at 1 January 2015 ...... 20,000,000 5,105,247 6,191,647 31,296,894 Profit for the year ...... — — 3,612,489 3,612,489 Balance at 31 December 2014 ...... 20,000,000 5,105,247 9,804,136 34,909,383

The accompanying notes form an integral part of these financial statements.

222 NILE BADRAWI HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of cash flows For the year ended 31 December 2013, 2014 and 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Cash flows from operating activities Profit before tax ...... 9,265,392 24,893,062 8,371,259 Adjustments to reconcile net income to cash flows from operating activities Fixed assets depreciation and write-off ...... 1,197,093 3,462,114 3,850,966 Impairment of inventories ...... — 58,706 — Provisions ...... 4,218,259 722,700 — Loss on sale of fixed assets ...... 176,567 — (49,900) Impairment (reversal of impairment) of customers’ balances ...... 11,824,488 (103,859) 1,230,000 Impairment of receivables and other debit balances .... 592,842 — — Operating profits before changes in working capital .. 27,274,641 29,032,723 13,402,325 Changes in working capital Change in inventories ...... 483,010 321,966 (473,388) Change in trade receivables ...... 9,915,339 (9,312,393) (3,477,837) Change in debtors and other debit balances ...... 462,306 (2,611,641) (4,884,588) Change in creditors and other credit balances ...... 3,072,643 350,037 7,864,319 Income tax paid ...... 6,748,074 (3,175,824) (1,977,003) Cash flow generated from operating activities ...... 13,663,167 14,604,868 10,453,828 Cash flows from investing activities Proceeds from sale of fixed assets ...... — — 49,900 Payments to purchase fixed assets ...... (1,233,595) (3,995,126) (2,852,330) Net cash flows used in investing activities ...... (1,233,595) (3,995,126) (2,802,430) Cash flows from financing activities Dividends paid ...... — (7,324,153) (7,110,812) Payment for Capital Increase ...... — 89,910 — Net cash flows used in financing activities ...... — (7,234,243) (7,110,812) Change in cash and cash equivalents during the year ... 12,429,572 3,375,499 540,586 Cash and cash equivalents at beginning of the year ..... 6,356,681 2,981,182 2,440,596 Cash and cash equivalents at the end of the year ...... 9 18,786,253 6,356,681 2,981,182

The accompanying notes form an integral part of these financial statements.

223 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

1. General information Nile Badrawi Hospital Company S.A.E was initially incorporated as a Limited Liability Company on 1 January 1986 in accordance with Law No. (43) of 1974 as amended by Law No. (230) of 1989. As approved by the General Authority for Investment and Free Zones (GAFI), the Company’s legal form was changed to an Egyptian Joint Stock Company by Resolution No. (6261) dated 9 September 1988. The purpose of the Company is providing ultrasound treatment, neonatal treatment (premature treatment), gynaecological surgery, obstetrics, and general surgery. Cleopatra Hospital Company S.A.E (the Parent Company) holds a percentage of 99.9% of the issued share capital. The Company is located at Cornish El Nile St., Maadi, Cairo. These financial statements have been approved for issuance by the management on 27 March 2016 considering the fact that the Shareholders’ Ordinary General Assembly have the authority to amend the financial statements after being issued.

2. Accounting policies The following are the accounting policies applied in the preparation of these financial statements:

A. Basis of preparation The financial statements have been prepared in accordance with Egyptian Accounting Standards (EASs) and relevant laws, which have all been applied consistently throughout the fiscal year except when otherwise indicated. The financial statements have been prepared under the historical cost convention. The preparation of the financial statements in conformity with EASs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The areas where the most significant accounting estimates and judgements applied in preparation of the financial statements are disclosed in Note 4. The EASs require the reference to the International Financial Reporting Standard when there is no EAS, or legal requirements that explain the treatment of specific balances and transactions.

Change in accounting policy During the year, the Company has changed its accounting policy for inventory pricing from first-in first-out (FIFO) method to weighted average method to be consistent with the policies adopted by the Parent Company ‘‘Cleopatra Hospital Company’’ and other group companies. This change has not resulted in any significant impact on inventories at the end of the accounting period or operating costs during the period due to the higher inventory turnover ratio.

224 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) and working capital will not be presented in the financial statements. Results of operations will be presented in two statements; the first will present income and expenses for the year (statement of income), and the second will start by the net income (loss) for the year and will include income and expenses items recognised in equity to present the comprehensive income (statement of comprehensive income). The new standards will require more disclosure on the financial risk management.

B. Foreign currency translation (1) Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates (‘‘the functional currency’’). The financial statements are presented in Egyptian Pounds (‘‘EGP’’), which is the Company’s functional and presentation currency.

Property, plant and equipment The depreciation rates by type of asset are as follows:

Buildings and construction ...... 2.5% Machinery, equipment and devices ...... 10% Tools and instrument ...... 25% Furniture and fixtures ...... 15% Vehicles ...... 10% Computers ...... 25%

225 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the realisable value with the net carrying amount, and the difference is recognised in the statement of income.

(2) Initial and subsequent measurement The financial assets are measured on acquisition at fair value plus transaction costs. The financial assets are derecognised when the right to receive cash flows from such assets has expired or has been transferred and the Company has transferred substantially all risks and rewards of ownership. Loans and receivables are subsequently measured at amortised cost using the effective interest method.

(3) Impairment of financial assets Assets recognised at amortised cost The Company assesses, at end of reporting period, whether there is evidence that a financial asset or a group of financial assets is impaired. Impairment of a financial asset or group of financial assets is recognised if an impairment indicator exists as a result of one or more events that occurred after the initial recognition (a ‘‘loss event’’) and if the loss event (or events) has an impact on the future cash flows of the financial asset or group of financial assets that can be reliably measured. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing financial difficulty, default or delinquency in payments, the probability that they will

226 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) enter bankruptcy or other financial reorganisation and where observable data indicate that there is a decrease in the estimated future cash flows, such as future changes or economic conditions that correlate with the impairment evidence. Fixed assets’ impairment loss is measured at amortised cost, which is the difference between the asset’s carrying amount and the present value of the estimated future cash flows (after eliminating future losses that have not occurred) discounted at the original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of income. If, in a subsequent period, the amount of the impairment decreases and the decrease can be related to an event occurring after the initial recognition (such as an improvement in the debtor’s credit rating), the reversal of the impairment is recognised in the statement of income.

F. Issued and paid up capital Ordinary shares are classified as equity.

G. Legal reserve As required by the Company’s Articles of Association, 5% of the net profit shall be transferred to a legal reserve, and such transfer may be discontinued when the reserve equals 50% of the issued and paid up capital. Whenever this reserve is lower than this percentage, the deduction should be continued. This reserve is not available for distribution.

I. Suppliers and notes payable Suppliers and notes payable are obligations to pay for goods and services that have been acquired in the Company’s ordinary course of business. Suppliers and notes payable are recognised at fair value of products and services received from third parties, whether they have been billed or not. Long-term liabilities are recognised at their present value, and suppliers and notes payable are subsequently shown at amortised cost using the effective interest method.

J. Projects under construction Projects under construction are stated at cost and transferred to fixed assets when they meet all the fixed assets recognition conditions and ready for use. When the projects under construction cost exceed the value expected to be refundable, it is reduced to the expected refundable cost and the difference is recognized directly to the statement of income.

227 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) K. Impairment of non-financial assets Property, plant and equipment, and other non-current assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level, for which there are separately identifiable cash flows. Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each balance sheet date.

L. Employee benefits (1) Employees’ share of profit According to the Companies Law, the Company pays 10% of its cash dividends to its employees up to a maximum equal to the total salaries of the latest fiscal year before distribution. Employees’ share of profit is recognised as dividends in equity and as a liability when approved by the Shareholders’ General Assembly. No liability is recognised for employees’ share of profit relating to undistributed profits.

(2) Pension and insurance scheme The Company pays contributions to the Public Authority for Social Insurance on a mandatory basis in accordance with the rules of Social Security Law. The Company had no further payment obligations once it discharged its obligations. The regular contributions are recognised as periodic costs for the year in which they are due and as such are included in staff costs.

M. Leases (1) Finance lease Leases contracted in accordance with Law number 95/1995 where: the leasee have the right to purchase the asset under lease at a specific amount on a specific date and is not obliged to purchase the asset after completion of the lease period, where the agreement is registered in the related lease register in EFSA, where the lease period equals or more than 75% of the useful life of the asset, or the net present value of the lease period equals or more than 90% of the asset value, is classified as finance lease.

(2) Operating lease Leases where the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases net of any discounts received from the lessor are recognised as expense in the income statement on a straight-line basis over the period of the lease.

N. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, including cash balances and trade and notes payable arising from rendering medical services and sale of medicine throughout the Company’s ordinary course of business, net of sales taxes, deductions or discounts.

228 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) The Company recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits related to the sale process or service provision will flow to the Company; and when other specific criteria have been met for each of the Company’s activities as described below. The revenue amount is not considered as reliably measurable unless all contingent liabilities are settled. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Medical services revenue The Company, through Nile Badrawi Hospital, renders several medical services, including surgeries, accommodation, medical supervision, laboratories, tests, different types of radiology and outpatient clinics. Revenue from medical service is recognised when the service is rendered to the patient.

O. Current and deferred income tax The income tax for the year is calculated based on the tax laws enacted at the balance sheet date. Management periodically evaluates tax situation through tax returns, taking into account the differences that may arise from some interpretations issued by administrative or regulatory authorities, and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authority. Deferred income tax is fully recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The deferred income taxes are not accounted for if it arises from initial recognition of an asset or liability other than those arising from business combination that at the time of the transaction affects neither accounting nor taxable income. Deferred income tax is determined using tax rates in accordance with the law prevailing at the balance sheet date that are expected to apply when the deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

P. Dividends Dividends are recognised in the Company’s financial statements in the period in which the dividends are approved by the Company’s General Assembly of Shareholders.

229 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) Q. Cash and cash equivalents For the purpose of preparation of statement of cash flows, cash and cash equivalents include cash on hand, bank current accounts and term deposits with maturities of three months from the date of placement, if any.

R. Corresponding figures Where necessary, corresponding figures have been reclassified to conform to changes in presentation in the current year.

3. Financial risk management 3.1 Financial risk factors The Company’s activities expose it to a variety of financial risks: market risk (including risks of fluctuations in foreign currency), credit risk and liquidity risk. The Company is not exposed to interest rate risk or price risk as it has neither interest bearing financial assets and liabilities nor financial assets at fair value through profit and loss. The Company’s management aims to minimise potential adverse effects of such risks on the financial performance of the Company through monitoring by the Finance Department and the General Manager of the Company, and the Finance Department and the Executive Committee at the level of the Parent Company. The Company does not use any derivative financial instruments to hedge specific risks.

(A) Market risk Risk of fluctuations in foreign currency rates Foreign currency risk represents the changes in foreign currency rates, which impact the payments and receipts denominated in foreign currencies, as well as the evaluation of foreign currency assets and liabilities. Given the nature of the Company’s activities, the Company does not undertake transactions denominated in foreign currencies as it carries out all purchases in Egyptian Pound. The Company’s very limited revenue in foreign currencies are generated from certain foreign embassies. Management is of the opinion that the foreign currency balances are considered immaterial. At the end of the year, the net foreign currency financial assets denominated in EGP was as follows:

2015 2014 2013 US Dollars ...... 18,783 28,991 120,600 Euros ...... 18,896 16,491 45,650

(B) Credit risk Credit risk arises from cash at banks, as well as credit exposures to customers. Credit risks are managed for the Company’s as a whole by its Executive Management and the Central Finance Department and Executive Committee at the level of the Parent Company. For banks, the Company deals with banks with high credit ratings and creditworthiness that are regulated by the Central Bank of Egypt. For trade receivables, the Hospital’s Financial Director and General Manager perform analysis on the credit risk for each potential credit customer in accordance with the Parent Company’s

230 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (Continued) policies. The Central Finance Department follows up the compliance with credit terms and collection from customers, and manages the inventory balances, while the Parent Company’s Executive Committee reviews the default cases and debt ageing report to take the necessary decisions whether to cancel the credit or to refer the defaulted customer to the Legal Department for their necessary actions. Note (7) to these financial statements provides more detailed information in respect of this matter. The management establishes a provision for impairment of 100% for customers defaulted for more than 150 days from the invoice date, in addition to a category-based provision for impairment at historical default rates. Balances exposed to credit risks are as follows:

2015 2014 2013 Cash at banks ...... 18,475,259 6,012,220 2,592,277 Trade receivables ...... 39,341,445 29,426,106 20,113,713

(C) Liquidity risk Executive Committee’s meeting, and takes the necessary actions to negotiate with suppliers in order to ensure sufficient cash is maintained to discharge the Company’s obligations. The Company does not depend on loans to discharge its obligations given the nature of its activity and the appropriate rate of the cash receipts. The table below shows the Company’s liabilities at the balance sheet date by maturity:

Less than 3 months to More than 3 months 1 year 1 to 5 years 5 years Suppliers and notes payable ...... 19,525,308 — — —

4. Critical accounting estimates, assumptions and judgments Estimates and assumptions are evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the actual results.

(A) Provisions Provisions are recognised when the Company has a (legal or constructive) obligation as a result of past events; it is expected that this settlement will result in an outflow of the Company’s resources which ensures that economic benefits will arise; and it is probable that outflow resources will be required to settle the obligation and a reliable estimate of the amount of this obligation can be made. At end of each reporting period, the Company review and adjust provisions in using external subject matter experts.

231 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

4. Critical accounting estimates, assumptions and judgments (Continued) (B) Impairment of trade receivables Impairment of trade receivables is estimated by monitoring ageing of receivables. The Company’s management examines the credit position and ability of debtors and customers to make payments for their past due debts. Impairment is recognised for amounts due from debtors and customers whose credit position does not allow them to pay their dues as believed by the management. Further appropriate allowance is made for loss incurred but not yet identified by reference to historical loss rate to the Company and other companies within the group.

232 d in depreciation for the year of ing to the Egyptian Accounting Standard ing to the Egyptian Accounting 568,111 8,238 158,116 361,324 40,493 1,136,282 (184,831) — (57,104) (48,256) — (290,191) — —— 12,766,944 40,963,193 1,290,956 2,682,480 — 4,820,737 12,766,944 1,135,763 41,346,473 63,660,073 1,299,194 2,783,492 5,133,805 1,176,256 64,506,164 Originally issued in Arabic 49,491 2,274,116 — 5,201,619 57,662 246,363 1,509,522 112,474 9,451,247 49,491 2,274,116 12,766,944 46,548,092 1,356,856 3,029,855 6,643,327 1,288,730 73,957,411 under Buildings & equipment & Tools & Furniture & 736,357 — — 404,078 — 53,041 6,325 33,794 1,233,595 Projects Machinery, (176,567) — — (213,228) — (81,149) (56,625) — (527,569) 1,442,567 2,274,116 12,766,944 44,404,376 1,356,856 3,057,963 6,693,627 1,254,936 73,251,385 construction Land construction devices Vehicles instrument fixtures Computers Total (1,952,866) — — 1,952,866 — — — — — Notes to the financial statements (Continued) NILE BADRAWI HOSPITAL COMPANY S.A.E COMPANY HOSPITAL NILE BADRAWI For the year ended 31For December 2015, 2014 and 2013 ...... — — — (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — — ...... 5. Fixed assets Charge for the year depreciation of assets write-off Accumulated Accumulated depreciation at 31 December 2015 Net book value 31 December 2015 The company has revised the useful lives for its’ fixed assets, based on that life revision of such assets. Accord No. policies changes in accounting estimates and errors, The remaining useful lives these assets the that resulte (5) Accounting EGP 1,624,724 compared to depreciation calculated based on useful lives before the revision of lives. Balance at 1 January 2015 Additions Transfers Fixed assets write-off Balance at 31 December 2015 Accumulated depreciation Balance at 1 January 2015

233 (78,000) (78,000) 2,852,330 3,850,966 3,995,126 3,462,114 (78,000) — — — (78,000) — — — 2,857,814 34,550 286,107 563,326 109,169 1,776,038 — 162,348 816,851 97,093 2,377,030 34,278 209,616 704,760 136,430 2,274,116 12,766,944 43,310,564 1,356,856 2,877,611 5,560,737 1,109,431 69,256,259 Originally issued in Arabic — 2,274,116 12,766,944 43,310,564 1,356,856 2,877,611 5,560,737 1,109,431 69,256,259 —— — 12,766,944 38,586,163 1,256,678 — 2,472,864 12,766,944 4,115,977 40,963,193 1,290,956 2,682,480 999,333 60,197,959 4,820,737 1,135,763 63,660,073 — 2,274,116 12,766,944 41,534,526 1,434,856 2,715,263 4,743,886— 1,012,338 66,481,929 — —— 12,766,944 35,728,349 1,300,128 2,274,116 2,186,757 — 3,552,651 12,766,944 38,586,163 890,164 1,256,678 56,424,993 — 2,472,864 4,115,977 4,724,401 100,178 999,333 60,197,959 404,747 1,444,760 110,098 9,058,300 under equipment &under Tools & Furniture & equipment & Tools & Furniture & Projects Machinery, Projects Machinery, 1,442,567 — — 1,093,812 — 180,352 1,132,890 145,505 1,442,567 2,274,116 12,766,944 44,404,376 1,356,856 3,057,963 6,693,627 1,254,9361,442,567 73,251,385 2,274,116 — 3,441,183 65,900 375,483 1,872,890 119,173 9,591,312 construction Land Buildings devices Vehicles instrument fixtures Computersconstruction Total Land Buildings devices Vehicles instrument fixtures Computers Total Notes to the financial statements (Continued) NILE BADRAWI HOSPITAL COMPANY S.A.E COMPANY HOSPITAL NILE BADRAWI For the year ended 31For December 2015, 2014 and 2013 ...... — — — — (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — — ...... — — — ...... — — — — — — — 5. Fixed assets (Continued) plant and equipment Property, Additions Additions Disposals Balance at 31 December 2013 Accumulated depreciation Balance at 1 January 2013 Charge for the year depreciation of assets write-off Accumulated Accumulated depreciation at 31 December 2013 Net book value at 31 December 2013 Balance at 1 January 2014 Balance at 1 January 2013 Balance at 31 December 2014 Accumulated depreciation Balance at 1 January 2014 Charge for the year Accumulated depreciation at 31 December 2014 Net book value at 31 December 2014

234 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

6. Inventories

2015 2014 2013 Medical supplies inventory ...... 3,236,102 2,853,269 3,080,087 Pharmacy inventory ...... 829,418 781,118 787,117 Literature and publicity ...... 143,762 163,924 202,366 Hospitality and food inventory ...... 232,442 219,653 278,127 Maintenance inventory ...... 92,398 91,854 84,087 4,534,122 4,109,818 4,431,784 Provision for obsolete, defective and slow-moving inventory ...... — (58,706) — 4,534,122 4,051,112 4,431,784

The movement of the provision for obsolete, defective and slow-moving inventory is as follows:

2015 2014 2013 Balance at 1 January ...... 58,706 — — (Write-off) / Provision during the year ...... (58,706) 58,706 — Balance at 31 December ...... — 58,706 —

7. Trade receivables

2015 2014 2013 Due from customers ...... 32,516,274 23,467,986 18,558,564 Trade notes receivable ...... 6,318,639 5,894,307 1,040,287 Income from inpatients ...... 506,532 63,813 514,862 39,341,445 29,426,106 20,113,713 Less: Impairment of receivables ...... (14,022,102) (2,197,614) (2,301,473) 25,319,343 27,228,492 17,812,240

• Trade notes receivable comprise checks collected from customers that have not yet been deposited at banks. • The income from inpatients comprises the revenues that have not been billed at the balance sheet date for their stay because the procedures of the medical services have not been completed, such income is calculated net of amounts collected in advance during the period of their stay. The movement of the provision for impairment is as follows:

2015 2014 2013 Balance at 1 January ...... 2,197,614 2,301,473 1,071,473 Provision formed / (reversed) during the year ...... 11,824,488 (103,859) 1,230,000 Balance at 31 December ...... 14,022,102 2,197,614 2,301,473

• Trade receivable balances, which have not been due till the balance sheet date and no impairment indicators have existed, amounted to EGP 16,504,839 (2014: EGP 12,105,090). • At the balance sheet date, the balances that were past due but not impaired amounted to EGP 3,171,231 (2014: EGP 2,546,493) regarding customers and transactions with no history of default.

235 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

7. Trade receivables (Continued) • The analysis of the ageing of these balances is as follows:

2015 2014 2013 Less than one month ...... 1,712,395 1,605,801 4,494,487 From one to five months ...... 1,458,836 940,692 4,134,907

8. Debtors and other debit balances

2015 2014 2013 Due from related parties (Note 24) ...... 6,715,580 6,770,596 1,918,933 Prepaid expenses ...... 1,523,129 1,849,167 2,484,126 With-holding tax ...... 1,207,015 1,055,552 958,534 Advances to contractors and suppliers ...... 399,083 601,913 2,192,579 Deposits with others ...... 143,198 143,198 138,998 Due from employees ...... 115,123 109,414 155,699 Sundry debtors ...... 119,186 154,780 224,110 10,222,314 10,684,620 8,072,979 Less: Due from related parties- non-current portion ...... (6,715,580) — — Impairment of debtors and other debit balances ...... (854,860) (262,018) (262,018) 2,651,874 10,422,602 7,810,961

Due from related parties is due from the parent company will not be claimed before 5 years and passed on the availability of cash of the parent and subject to an annual interest rate of 2.4% in addition to Corridor rate announced by the Central Bank of Egypt. The movement of the provision for impairment during the year is as follows:

2015 2014 2013 Balance at 1 January ...... 262,018 262,018 262,018 Provision formed during the year ...... 592,842 — — 854,860 262,018 262,018

9. Cash on hand and at banks

2015 2014 2013 Cash on hand ...... 310,994 344,461 388,905 Current accounts ...... 18,475,259 6,012,220 2,592,277 18,786,253 6,356,681 2,981,182

Current accounts are maintained with banks regulated by the Central Bank of Egypt.

236 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

10. Provisions

2015 2014 2013 Provision for lawsuits ...... 1,925,000 — — Provision for claims ...... 2,722,700 722,700 — Employees leave provision ...... 293,259 — — 4,940,959 722,700 —

The movement of provisions is as follows:

2015 Provision Balance at made during Utilised balance Balance at 1 January 2015 the year during the year 31 December 2015 Provision for lawsuits ...... — 1,925,000 — 1,925,000 Provision for claims ...... 722,700 2,000,000 — 2,722,700 Employees leave provision ...... — 293,259 — 293,259 Total ...... 722,700 4,218,259 — 4,940,959

2014 Provision Balance at made during Utilised balance Balance at 1 January 2014 the year during the year 31 December 2014 Provision for claims ...... — 722,700 — 722,700 Total ...... — 722,700 — 722,700

2013 Provision Balance at made during Utilised balance Balance at 1 January 2013 the year during the year 31 December 2013 Provision for claims ...... — — — — Total ...... —— — —

11. Creditors and other credit balances

2015 2014 2013 Suppliers ...... 12,505,665 8,832,938 9,333,290 Notes payable ...... 7,019,643 7,458,721 4,595,258 Accrued expenses ...... 3,514,610 4,684,626 4,024,253 Payroll tax ...... 479,523 135,057 128,302 Deposits from others ...... 458,250 286,002 283,717 Social insurance ...... 409,939 18,569 108,452 Deferred revenue ...... 181,300 98,000 82,788 Dividends payable ...... 149,217 250,468 5,951,872 Due to related parties ...... — 216,271 192,237 Sundry creditors ...... 1,462,190 1,127,042 2,967,578 26,180,337 23,107,694 27,667,747

237 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

12. Issued and paid up capital The Company’s issued and paid up capital consists of 1.500.000 Shares of EGP 10 each, totaling EGP 15.000.000. At 20 November 2014, it has been decided by the president of Egyptian Financial Supervisory Authority to increase the company’s capital by EGP 5.000.000; EGP 4.910.090 from retained earnings and EGP 89.910 cash increase. Before the 7th of September 2015, Company’s capital structure was as follows:

Number of Nominal Percentage shares value Mrs. Nafisa Hassan El Zeiny—Egyptian ...... 16% 334,997 3,349,970 Nile Badrawi Holding Company for Development & Investment S.A.E...... 24% 473,637 4,736,370 Dr. Hossam Hassan Badrawi—Egyptian national ...... 18% 354,270 3,542,700 Dr. Mohamed Hassan Hamdi Badrawi—Egyptian national ...... 6% 126,095 1,260,950 Others—Egyptian Nationals ...... 36% 711,001 7,110,010 Total ...... 100% 2,000,000 20,000,000

Pursuant to the decision taken in the Extraordinary General Assembly Meeting dated 7 September 2015, the shareholders structure was amended to be as follows:

Number of Nominal Percentage shares value Cleopatra Hospital S.A.E...... 99.915% 1,998,392 19,983,920 Mr. Mohamed Amro Mohamed Nabeel Lotfi—Egyptian National . . 0.084% 1,607 16,070 Mrs. Nafisa Hassan El Zeiny—Egyptian National ...... 0.001% 1 10 Total ...... 100% 2,000,000 20,000,000

13. Reserves A. General reserve The general reserve is established as approved by the Hospital’s General Assembly, and used based on a decision thereby and as proposed by the Board of Directors.

B. Legal reserve As required by the Company’s Articles of Association, 5% of the net profit shall be transferred to a legal reserve, and such transfer may be discontinued when the reserve equals 50% of the issued and paid up capital. Whenever this reserve is lower than this percentage, the deduction should be continued. This reserve is not available for distribution. The movement of other reserves is as follows:

Legal General reserve reserve Total Balance at 1 January 2014 ...... 2,219,765 2,500,000 4,719,765 Provision made during the year ...... 385,482 — 385,482 Balance at 31 December 2014 ...... 2,605,247 2,500,000 5,105,247

238 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

14. Operating revenue

2015 2014 2013 Inpatient and medical supervision revenue ...... 47,459,952 45,793,977 36,281,066 Surgeries revenue ...... 25,318,203 17,005,313 21,178,096 Outpatient clinics revenue ...... 11,056,386 13,507,921 6,619,667 Laboratories revenue ...... 9,515,497 8,267,700 6,983,683 Oncology Center revenue ...... 9,107,295 6,681,192 2,303,819 Cardiac catheterization revenue ...... 7,322,274 5,370,882 4,393,052 Service revenue ...... 5,307,015 4,750,727 3,853,212 Radiology revenue ...... 2,265,707 2,104,909 2,225,642 Pharmacy revenue ...... 1,427,048 1,767,412 1,185,759 Emergency revenue ...... 1,259,639 952,740 735,667 Heart tests revenue ...... 315,258 269,054 206,349 Physiotherapy revenue ...... 273,002 331,906 332,193 Other departments revenue ...... 679,803 678,701 503,945 121,307,079 107,482,434 86,802,150

15. Operating costs

2015 2014 2013 Medical and pharmaceutical supplies ...... 34,319,399 31,755,309 27,938,499 Salaries, wages and benefits ...... 16,995,133 13,809,733 12,762,168 Doctor fees ...... 14,242,475 11,990,166 9,292,737 Maintenance, energy, communication and facilities costs ...... 7,838,109 7,213,340 8,081,018 Rent...... 3,414,278 4,290,025 1,999,821 Food, beverage and consumables costs ...... 3,486,074 3,455,318 3,766,427 Fixed assets depreciation and write-off ...... 1,197,093 3,462,114 3,850,966 Other expenses ...... 108,780 144,065 1,353,570 81,601,341 76,120,070 69,045,206

16. General and administrative expenses

2015 2014 2013 Impairment of trade receivables and other debit balances ...... 12,417,330 (103,859) 1,230,000 Salaries, wages and benefits ...... 10,131,213 5,261,626 4,840,113 Maintenance, energy, communication and facilities costs ...... 1,302,747 1,300,769 1,696,560 Food, beverage and consumables costs ...... 787,429 688,319 36,613 Rent...... 539,100 546,700 539,000 Other expenses ...... 2,894,931 1,552,033 1,943,763 28,072,750 9,245,588 10,286,049

239 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

17. Other income

2015 2014 2013 Buffet income of cafeteria concession ...... 870,593 1,010,747 446,035 Rent...... 565,887 253,857 97,200 Gift corner revenue ...... 173,421 167,895 — Sale of rags (scrap) revenue ...... 152,146 — — Other income ...... 94,703 2,028,174 328,240 1,856,750 3,460,673 871,475

18. Expense by nature

2015 2014 2013 Salaries, wages and benefits* ...... 41,368,821 31,061,525 26,895,018 Medical and pharmaceutical supplies ...... 34,319,399 31,755,309 27,938,499 Impairment of trade receivables and other debit balances ..... 12,417,330 (103,859) 1,230,000 Maintenance, energy, communication and facilities costs ...... 9,140,856 8,514,109 9,777,578 Rent...... 3,953,378 4,836,725 2,538,821 Food, beverage and consumables costs ...... 4,273,503 4,143,637 3,803,040 Fixed assets depreciation and write-off ...... 1,197,093 3,462,114 3,850,966 Other expenses ...... 3,003,711 1,696,098 3,297,333 109,674,091 85,365,658 79,331,255

* Salaries, wages and benefits

2015 2014 2013 Salaries and wages ...... 25,648,423 17,846,607 16,178,581 Doctor fees ...... 14,242,475 11,990,166 9,292,737 Social insurance ...... 1,045,422 869,402 837,633 Others ...... 432,501 355,350 586,067 41,368,821 31,061,525 26,895,018

19. Income taxes Income tax for the year comprises of:

2015 2014 2013 Current tax ...... 4,991,312 7,017,881 2,060,578 Deferred tax ...... 661,591 (282,104) (417,112) 5,652,903 6,735,777 1,643,466

240 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

19. Income taxes (Continued) The tax on profit before taxation theoretically differs from the amount expected to be earned by applying the average tax rate applicable to the Company’s profits as follows:

2015 2014 2013 Net profit before ...... 9,265,392 24,893,062 8,371,259 Income tax calculated based on the applicable local tax rate ..... 2,084,713 7,417,919 2,092,815 Add/ Less Expenses not deductible for tax purposes ...... 3,230,217 102,713 307,500 Effect of change in applicable tax rate ...... 337,973 — (12,475) Prior years adjustments ...... — (784,855) (744,374) Income tax ...... 5,652,903 6,735,777 1,643,466 Effective tax rate ...... 61.01% 27.06% 19.63%

Current income tax liabilities

2015 2014 2013 Balance at 1 January ...... 5,902,635 2,060,578 1,997,003 Payments during the year ...... (6,748,074) (3,175,824) (1,997,003) Charge during the year ...... 4,991,312 7,017,881 2,060,578 Balance at 31 December ...... 4,145,873 5,902,635 2,060,578

20. Deferred tax

2015 Fixed assets Provisions Total Balance at the beginning of the year ...... 3,379,724 — 3,379,724 Movement during the year—(liability) / asset ...... (1,160,699) 499,108 (661,591) Balance at the end of the year—(liability) / asset ...... 2,219,025 499,108 2,718,133

2014 Fixed assets Provisions Total Balance at the beginning of the year ...... 3,097,620 — 3,097,620 Movement during the year—asset ...... 282,104 — 282,104 Balance at the end of the year—asset ...... 3,379,724 — 3,379,724

2013 Fixed assets Provisions Total Balance at the beginning of the year ...... 2,680,508 — 2,680,508 Movement during the year—asset ...... 417,112 — 417,112 Balance at the end of the year—asset ...... 3,097,620 2013 3,097,620

241 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

21. Commitments (A) Capital commitments: The capital commitments, which are related to the fixed assets at the end of the year and have not yet been due, amounted to EGP nil (2014: EGP 517,310).

(B) Lease commitments The lease commitments at the end of the year that have not yet been due comprise of:

2015 2014 2013 Less than 1year ...... 3,115,658 3,934,630 3,101,191 1 to 3 years ...... 2,083,019 4,553,413 5,478,886 Over 3 years ...... — 766,112 2,841,404

22. Tax position (1) Withholding tax • Settlement was made till 2009 and all outstanding amounts till the end of 2009 were paid. • The form 19 for the years 2010, 2011 and 2012 was issued under No. 13833 and sent to the Company on 18 August 2015. The Company filed an objection within the due date. The internal Committee is now in the process of resolving this issue. • The Company has not been selected for tax inspection with respect to years from 2013 till 2015.

(2) Salaries tax • The inspection was completed and settlement was made till 2011. No outstanding amounts for the years till 2011 exist. • Tax settlement for the years 2012, 2013 and 2015 is under process.

(3) Stamp duty tax • The Company was inspected for the years till 2005 and settlement was made for the same years. • The Company is being inspected for the years from 2006 till 2015.

23. Correction of material errors and changes in the application of accounting policies During the year, management has corrected accounting errors related to prior periods were those errors have been corrected after taking into account the tax effect in accordance with the requirements of the EAS (5) ‘‘Accounting policies, changes in accounting estimates and errors.’’ The errors that have been corrected are as follows:

Fixed assets Management did not calculate depreciation charge for some of the prior years in accordance to adopted depreciation rates for those years. Management have corrected this error in the current year by revising the calculation of depreciation charge for these years as if the management have applied the accounting policy as appropriate with regards to these years, in addition to that, management have recognized some of repair and maintenance expenses as fixed assets the thing that contradicts with Egyptian accountings standards ‘‘10’’ ‘‘Fixed assets and depreciation’’, management have corrected this error by derecognizing those assets with all related depreciation charges retrospectively.

242 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

23. Correction of material errors and changes in the application of accounting policies (Continued) Debtors and other debit balances and other credit balances During previous years, management has booked some post-dated checks issued in favor of certain parties as prepaid expenses and equal amount to the notes payable. Given that these checks do not represent prepaid expenses and do not meet the conditions to be recognized as assets in accordance to financial statement preparation and presentation, Also, those post-paid checks shall not be recognized as liabilities before the due date, management has have corrected this error in the current year by derecognizing these assets and liabilities. In addition, some of the assets owned by some of the shareholders have been recorded as assets owned by the hospital, this has been corrected by management by delisting those assets and booked as due from shareholders.

Provisions Management did not book provision for claims according to the Egyptian accounting standard ‘‘28’’ ‘‘provisions, assets and contingent liabilities’’ despite that the Company have actually received some claims and evidences that require the booking of such provisions during prior years. During this year, management have recorded those provisions that are supported by strong evidence requires the booking of these provisions retrospectively.

Operating revenue The management revised the presentation for some revenues to be presented gross of all related costs as management have presented revenues net of related costs in the prior years the thing that contradicts with Egyptian accounting standard ‘‘11’’ ‘‘Revenue’’ that have resulted in the presentation of some revenues, also beginning balance of retained earnings have been adjusted to the reflect those changes after changing the presentation of such revenue in the current year.

Operating costs The management adjusted the presentation of some expenses as they were presented as net, which resulted in adjustments to the operating revenue and costs, in order to be shown separately.

1. Adjustments effect on balance sheet

Balance Balance before after adjustment adjustment 2013 Adjustment 2013 Fixed assets ...... 26,397,952 (17,339,652) 9,058,300 Investments in affiliates ...... 120,000 (120,000) — Debtors and other debit balances ...... 13,523,705 (5,712,744) 7,810,961 Creditors and other credit balances ...... (33,946,925) 6,279,178 (27,667,747) Deferred tax assets ...... (848,292) 3,945,912 3,097,620 Current tax ...... (3,175,824) 1,115,246 (2,060,578) Retained earnings at 1 January 2014* ...... (7,343,857) 10,842,588 3,498,731

243 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

23. Correction of material errors and changes in the application of accounting policies (Continued) 2. Adjustments effect on statement of income

Balance Balance before after adjustment adjustment 2013 Adjustment 2013 Operating revenue ...... (57,810,606) (28,991544) (86,802,150) Operating costs ...... 37,755,391 31,289,815 69,045,206 General and administrative expenses ...... 10,249,459 36,590 10,286,049 Current tax ...... 3,175,824 (1,115,246) 2,060,578 Deferred tax ...... (186,969) (230,143) (417,112)

* The effect correction of material errors and changes in the application of accounting policies on the retained earnings is illustrated as follows:—

Adjustment Retained earnings balance at 1 January 2013 as previously stated ...... (7,343,857) Adjustments effect on depreciation expenses ...... 17,384,346 Adjustments effect on revenue ...... (2,825,989) Adjustments effect on deferred income tax ...... (3,715,769) Gross effect of retrospective adjustments on retained earnings ...... 10,842,588 Profit after income tax after adjustment ...... 3,498,731

The effect on the results is as follows:

2013 Profit after income tax as previously stated as at 31 December 2013 ...... 7,717,265 Correction of material errors ...... (989,472) Profit after income tax after adjustment ...... 6,727,793

3. Comparative figures Comparative figures have been re-classed to be in line with parent’s classification, reclassification conducted neither affected the net assets of the company nor the Company’s net income.

244 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

24. Related party transactions The Company deals with the related parties in an arm’s length transaction. The balances with related parties at the date of financial statements during the year are as follows:

Balance sheet balances

Nature of transaction 2015 2014 2013 Related parties Debtors and other debit balances Cleopatra Hospital (Parent Company) ...... Parent Company 6,715,580 — — Medicare Company ...... Owned by one of — 1,138,992 1,009,991 the shareholders The Egyptian Company for Contracting ...... Owned by one of — 444,528 444,528 the shareholders Shareholders’ current accounts ...... Owned by one of — 5,187,076 464,414 the shareholders 6,715,580 6,770,596 1,918,933

Nature of transaction 2015 2014 2013 Related parties Trade and other payables Shareholders’ current accounts ...... Shareholder — 216,271 192,237 — 216,271 192,237

Below is an illustration of transactions with related parties in the date of financial statements during the year:—

2015 2014 2013 Debtors and other debit balances Finance ...... 6,715,580 — — Rent...... — 382,992 97,200 Withdrawals ...... — 4,722,662 400,673 Medical services revenue ...... — 5,575,174 5,324,974 Collections ...... — (5,829,165) (5,881,425) 6,715,580 4,851,663 (58,578)

Movement on debtors and other debit balances is represented as follows:—

2015 2014 2013 Balance as of 1 January ...... — 1,918,933 1,977,511 Finance ...... 6,715,580 — — Total charged to income statement ...... — 5,958,166 5,422,174 Collections ...... — (5,829,165) (5,881,425) Total withdrawals ...... — 4,722,662 400,673 Balance as at 31 December ...... 6,715,580 6,770,596 1,918,933

245 NILE BADRAWI HOSPITAL COMPANY S.A.E Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2015, 2014 and 2013 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

24. Related party transactions (Continued)

2015 2014 2013 Creditors and other credit balances Doctor fees ...... — 578,519 425,582 Payments ...... — (554,485) (314,555) — 24,034 111,027

Movement creditors and other credit balances is represented as follows:—

2015 2014 2013 Balance as of 1 January ...... — 192,237 81,210 Total charged to income statement ...... — 578,519 425,582 Total paid ...... — (554,485) (314,555) Balance as at 31 December ...... — 216,271 192,237

246 Al Shorouk Hospital Company Auditor’s report To: The Shareholders of Al Shorouk Hospital Company S.A.E.

Report on the financial statements We have audited the accompanying financial statements of Al Shorouk Hospital Company S.A.E. (the Company) which comprise the balance sheet as at 31 December 2013, 2014 and 2015 and the statements of income, changes in equity and cash flows for the fiscal year then ended, and a summary of significant accounting policies and other notes.

Management’s responsibility for the financial statements These financial statements are the responsibility of the Company’s management. Management is responsible for the preparation and fair presentation of these financial statements in accordance with Egyptian Accounting Standards and in light of the prevailing Egyptian laws. Management responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Management responsibility also includes selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these financial statements.

Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Al Shorouk Hospital Company S.A.E. as at 31 December 2013, 2014 and 2015, its financial performance, and its cash flows for the fiscal year then ended in accordance with the Egyptian Accounting Standards and in light of the related Egyptian laws and regulations.

Tamer Abdel Tawab Member of Egyptian Society of Accountants & Auditors Member of AICPA R.A.A. 17996 Mansour & Co. PricewaterhouseCoopers 21 April 2016 Cairo

247 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Balance sheet At 31 December 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Non-current assets Fixed assets ...... 5 50,782,837 51,132,018 51,285,593 Deferred tax assets ...... 21 2,163,446 1,965,066 1,935,314 Total non-current assets ...... 52,946,283 53,097,084 53,220,907 Current assets Inventories ...... 6 8,712,196 8,349,492 6,953,594 Trade receivables ...... 7 20,287,040 17,028,372 11,106,807 Debtors and other debit balances ...... 8 2,350,332 2,759,573 2,940,032 Cash on hand and at banks ...... 9 4,089,819 4,758,669 4,205,873 Total current assets ...... 35,439,387 32,896,106 25,206,306 Current liabilities Provisions ...... 10 12,070,124 7,000,000 7,000,000 Creditors and other credit balances ...... 11 19,294,023 19,117,460 17,875,947 Current portion of borrowings ...... 12 9,477,471 5,546,003 5,544,706 Current income tax liabilities ...... 20 4,108,178 5,241,563 3,388,327 Total current liabilities ...... 44,949,796 36,905,026 33,808,980 Deficit in working capital ...... (9,510,409) (4,008,920) (8,602,674) Total investment ...... 43,435,874 49,088,164 44,618,233 Financed as follows: Shareholders’ equity Issued and paid up capital ...... 13 25,000,000 25,000,000 25,000,000 Reserves ...... 14 10,215,019 9,229,950 8,667,170 Retained earnings ...... 7,329,073 12,986,218 7,417,089 Total shareholders’ equity ...... 42,544,092 47,216,168 41,084,259 Non-current liabilities Non-current portion of borrowings ...... 12 891,782 1,871,996 3,533,974 Total non-current liabilities ...... 891,782 1,871,996 3,533,974 Total funding of working capital and non-current assets .. 43,435,874 49,088,164 44,618,233

The accompanying notes form an integral part of these financial statements.

248 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of income For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Restated Restated Note 2015 2014 2013 Operating revenue ...... 15 138,642,178 117,592,072 98,524,206 Less: Operating costs ...... 16 (99,913,207) (85,850,554) (76,035,389) Gross profit ...... 38,728,971 31,741,518 22,488,817 Add / (Less) General and administrative expenses ...... 17 (25,581,868) (17,078,570) (14,540,905) Provisions ...... (5,070,124) — (6,676,913) Other income ...... 18 1,231,343 1,189,322 1,072,690 Profit for the year before finance income and income tax ...... 9,308,322 15,852,270 2,343,689 Finance income ...... 19 128,342 113,062 72,973 Finance costs ...... (1,333,834) (55,125) (20,861) Profit for the year before income tax ...... 8,102,830 15,910,207 2,395,801 Current tax ...... 20 (4,108,178) (4,491,563) (2,638,327) Deferred tax ...... 21 198,380 29,752 172,330 Profit for the year ...... 4,193,032 11,448,396 (70,196)

The accompanying notes form an integral part of these financial statements.

249 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of changes in shareholders’ equity For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Share Retained Note capital Reserves earnings Total Balance at 1 January 2013 as previously issued ...... 25,000,000 7,682,468 16,774,793 49,457,261 Effect of correction of prior years errors .... 23 — — (1,483,644) (1,483,644) Balance at 1 January 2013 as restated ..... 25,000,000 7,682,468 15,291,149 47,973,617 Transfer to reserves ...... — 984,702 (984,702) — Dividends distribution for 2012 ...... — — (6,819,162) (6,819,162) Profit for the year as previously issued ..... — — 5,627,800 5,627,800 Effect of correction of last year’s errors .... — — (5,697,996) (5,697,996) Profit for the year as restated ...... — — (70,196) — Balance at 31 December 2013 ...... 25,000,000 8,667,170 7,417,089 41,084,259 Balance at 1 January 2014 ...... 25,000,000 8,667,170 7,417,089 41,084,259 Transfer to reserves ...... — 562,780 (562,780) — Dividends distribution for 2013 ...... — — (5,316,487) (5,316,487) Profit for the year ...... — — 11,448,396 11,448,396 Balance at 31 December 2014 ...... 25,000,000 9,229,950 12,986,218 47,216,168 Balance at 1 January 2015 ...... 25,000,000 9,229,950 12,986,218 47,216,168 Transfer to reserves ...... — 985,069 (985,069) — Dividends distribution for 2014 ...... — — (8,865,108) (8,865,108) Profit for the year ...... — — 4,193,032 4,193,032 Balance at 31 December 2015 ...... 25,000,000 10,215,019 7,329,073 42,544,092

The accompanying notes form an integral part of these financial statements.

250 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Statement of cash flows For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 2013 Cash flows from operating activities Profit before tax ...... 8,102,830 15,910,207 2,395,801 Adjustments to reconcile net income to cash flows from operating activities Fixed assets depreciation and write-off ...... 3,995,216 4,889,082 5,151,374 Loss on sale of fixed assets ...... 318,419 11,496 1,134 Provisions ...... 5,070,124 — 6,823,071 Impairment of customers’ balances ...... 4,329,857 — 34,679 Provisions no longer required ...... — — (255,195) Finance costs ...... 1,333,834 55,125 20,861 Finance income ...... (24,263) (67,862) (72,973) Operating profits before changes in working capital .. 23,126,017 20,798,048 14,098,752 Changes in working capital Change in inventories ...... (362,704) (1,395,898) (1,551,118) Change in trade receivable ...... (7,588,525) (5,921,565) 9,140,140 Change in debtors and other debit balances ...... 409,241 180,459 140,827 Change in creditors and other credit balances ...... 176,563 1,241,513 (1,044,651) Income tax paid ...... (5,241,563) (2,638,327) (3,673,461) Provisions utilized ...... — — (2,523,071) Net cash flows generated from operating activities ..... 10,519,029 12,264,230 14,587,418 Cash flows from investing activities Proceeds from sale of fixed assets ...... 27,662 10,030 6,182 Payments to purchase fixed assets ...... (3,992,116) (4,757,033) (2,205,492) Finance income received ...... 24,263 67,862 72,973 Net cash flows used in investing activities ...... (3,940,191) (4,679,141) (2,126,337) Cash flows from financing activities Dividends paid ...... (8,865,108) (5,316,487) (6,819,162) Proceeds from borrowings ...... 2,951,254 (1,660,681) (3,542,774) Finance costs paid ...... (1,333,834) (55,125) (20,861) Net cash flows used in financing activities ...... (7,247,688) (7,032,293) (10,382,797) Change in cash and cash equivalents during the year ... (668,850) 552,796 2,078,284 Cash and cash equivalents at the beginning of the year . . 4,758,669 4,205,873 2,127,589 Cash and cash equivalents at the end of the year ...... 9 4,089,819 4,758,669 4,205,873

The accompanying notes form an integral part of these financial statements.

251 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

1. General information Al Shorouk Hospital Company S.A.E. is incorporated as an Egyptian Joint Stock Company in accordance with the provisions of law No. 8 of 1997 concerning Investment Guarantees and Incentives, Law No. 95 of 1992, and the Company’s Memorandum and Articles of Association. The Company was incorporated pursuant to the Decision No. 56661 of the Chairman of the General Authority for Investment and Free Zones’ No. 190 of 1997 issued on 10 July 1997 under the Commercial Registration—Giza Investment. The Company’s head office is located at 3 and 5 Bahr El Ghazal St. Ahmed Orabi, Mohandeseen, Cairo. The purpose of the Company is establishing a hospital to provide treatment for patients, and perform surgeries, radiology, physical therapy, laboratories, and dehydration treatment. The Hospital has a Neonatal Department to offer treatment for children not fully developed, along with General Medical Examination. Also, the Hospital consists of the following departments: ICU, artificial kidney, obstetrics and gynaecology, laparoscopic surgery, kindergartens, central sterilization, medical gas systems, 3 operating theatres, urological procedures, otolaryngology (ENT), eye surgery, vascular surgery, cerebral surgery, neurosurgery and plastic surgery. In addition, the Hospital includes a specialized unit departments, such as dental, conjunctivitis, ENT, obstetrics and gynaecology, orthopaedic, and internal medicine. These financial statements have been approved for issuance by the management on 13 April 2016, considering the fact that the Shareholders’ Ordinary General Assembly have the authority to amend the financial statements after being issued.

2. Accounting policies The following are the accounting policies applied in the preparation of these financial statements:

A. Basis of preparation The financial statements have been prepared in accordance with Egyptian Accounting Standards (EASs) and relevant laws, which have all been applied consistently throughout the fiscal year except when otherwise indicated. The financial statements have been prepared under the historical cost convention. The preparation of the financial statements in conformity with EASs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the company’s accounting policies. The areas where the most significant accounting estimates and judgements applied in preparation of the financial statements are disclosed in Note 4. The EASs require the reference to the International Financial Reporting Standard when there is no EAS, or legal requirements that explain the treatment of specific balances and transactions.

252 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) and the second will start by the net income (loss) for the year and will include income and expenses items recognised in equity to present the comprehensive income (statement of comprehensive income). The new standards will require more disclosure on the financial risk management.

Buildings ...... 2.5% Machinery, equipment and devices ...... 10% Furniture and fixtures ...... 15% Vehicles ...... 10% Computers ...... 25% An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the realisable value with the net carrying amount, and the difference is recognised in the statement of income.

253 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) D. Inventories Inventories are measured at the lower of actual cost or net realisable value. Cost is determined using the weighted average method and includes purchase cost and other direct costs. The net realisable value comprises the estimated selling price in the ordinary course of business, less selling expenses. Allowance is made for slow moving inventories based on management’s assessment of inventory movements.

(2) Initial and subsequent measurement: • The financial assets are measured on acquisition at fair value plus transaction costs. • The financial assets are derecognised when the right to receive cash flows from such assets has expired or has been transferred and the Company has transferred substantially all risks and rewards of ownership. • Loans and receivables are subsequently measured at amortised cost using the effective interest method.

254 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) eliminating future losses that have not occurred) discounted at the original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of income. If, in a subsequent period, the amount of the impairment decreases and the decrease can be related to an event occurring after the initial recognition (such as an improvement in the debtor’s credit rating), the reversal of the impairment is recognised in the statement of income.

F. Issued and paid capital Ordinary shares are classified as equity.

G. Legal reserves As required by the Company’s Articles of Association, 5% of the net profit shall be transferred to a legal reserve and another 5% to be transferred to general reserve. Once the financial statements are approved by the Company’s Ordinary General Assembly Meeting. Transfers to legal reserve may be discontinued when the reserve equals 50% of the issued and paid up capital. Whenever this reserve is lower than this percentage, the deduction should be continued. This reserve is not available for distribution.

I. Suppliers and notes payables Suppliers and notes payables are obligations to pay for goods and services that have been acquired in the ordinary course of business. The suppliers and notes payables are recognised at fair value of products and services received from others, whether they have been billed or not. Long term liabilities are recognised at their present value, and suppliers and notes payables are subsequently shown at amortised cost using the effective interest method.

J. Borrowings Borrowings are recognised initially at the amount of the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of income over the period of the borrowings using the effective yield method. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the costs of those assets. The cost of borrowing, which is capitalised, is determined based on actual borrowing costs, which are incurred by the Group during the year due to borrowing process, less any income realised from the temporary investment of funds borrowed. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the date of the financial statements.

255 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) K. Employee benefits (1) Employees’ share of profit According to the Companies Law, the Company pays 10% of its cash dividends to its employees up to a maximum equal to the total salaries of the latest fiscal year before distribution. Employees’ share of profit is recognised as dividends in equity and as a liability when approved by the Shareholders’ General Assembly. No liability is recognised for employees’ share of profit relating to undistributed profits.

(2) Pension and insurance scheme The Company pays contributions to the Public Authority for Social Insurance on a mandatory basis in accordance with the rules of Social Security Law. The Company had no further payment obligations other than those have been paid. The regular contributions are recognised as periodic costs for the year in which they are due and as such are included in staff costs.

L. Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, including cash balances and trade and notes payable arising from rendering medical services and sale of medicine throughout the Company’s ordinary course of business, net of sales taxes, deductions or discounts. Revenues are recognised when the amount of revenue can be reliably measured; when it is probable that future economic benefits related to the sale process or service provision will flow to the Company; and when other specific criteria have been met for each of the Company’s activities as described below. The revenue amount is not considered as reliably measurable unless all contingent liabilities are settled. The Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(1) Medical services revenue The Company, through Al Shorouk Hospital, renders several medical services, including surgeries, accommodation, medical supervision, laboratories, tests, different types of radiology and outpatient clinics. Revenue from medical service is recognised when the service is rendered to the patient.

(2) Sale of medicine revenue The Company sells medicine through a hospital pharmacy or uses them for treatment of patients admitted in the Hospital. Revenue is recognised once the medicine is received by the patient or used during the patient’s stay in hospital.

(3) Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable generated from the recognition of interest is impaired, the carrying amount will be reduced to its recoverable amount.

M. Leases Leases in which the lessor retains the risks and rewards of ownership are classified as operating leases. Payments made under operating leases net of any discounts received from the lessor are recognised as expense in the statement of income on a straight-line basis over the period of the lease.

256 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) N. Current and deferred income tax The income tax for the year is calculated based on the tax laws enacted at the balance sheet date. Management periodically evaluates tax situation through tax returns, taking into account the differences that may arise from some interpretations issued by administrative or regulatory authorities, and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authority. Deferred income tax is fully recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. The deferred income taxes are not accounted for if it arises from initial recognition of an asset or liability other than those arising from business combination that at the time of the transaction affects neither accounting nor taxable income. Deferred income tax is determined using tax rates in accordance with the law prevailing at the balance sheet date that are expected to apply when the deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

O. Dividends Dividends are recognised in the Company’s financial statements in the period in which the dividends are approved by the Company’s General Assembly of Shareholders.

P. Cash and cash equivalents For the purpose of preparation of statement of cash flows, cash and cash equivalents include cash on hand, bank current accounts and term deposits with maturities of three months from the date of placement, if any.

Q. Corresponding figures Where necessary, corresponding figures have been reclassified to conform to changes in presentation in the current year.

3. Financial risk management 3.1 Financial risk factors The Company’s activities expose it to a variety of financial risks: market risk (including risks of fluctuations in foreign currency), credit risk and liquidity risk. The Company is not exposed to interest rate risk or price risk as it has neither interest bearing financial assets and liabilities nor financial assets at fair value through profit and loss. The Company’s management aims to minimise potential adverse effects of such risks on the financial performance of the Company through monitoring by the Finance Department and the General Manager of the Company, and the Finance Department and the Executive Committee at the level of the Parent Company. The Company does not use any derivative financial instruments to hedge specific risks.

257 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (Continued) (A) Market risk i. Risk of fluctuations in foreign currency rates Foreign currency risk represents the changes in foreign currency rates, which impact the payments and receipts denominated in foreign currencies, as well as the evaluation of foreign currency assets and liabilities. Given the nature of the Company’s activities, the Company does not undertake transactions denominated in foreign currencies as it carries out all purchases in Egyptian Pound. The Company’s limited revenue in foreign currencies are generated from certain foreign embassies. Management is of the opinion that the foreign currency balances are considered immaterial. At the end of the year, the net foreign currency financial assets denominated in EGP was as follows:

2015 2014 2013 US Dollars ...... 2,597,835 1,727,106 383,162 British Pounds ...... 14,189 14,266 12,824 There are not financial liabilities denominated in foreign currencies as at 31 December 2015.

ii. Fair value and cash flow interest rate risk The Company obtained a long-term loan from one of the lease companies and bank overdraft facilities at interest rate linked to the corridor declared by the Central Bank of Egypt, and therefore, it is exposed to cash flow risks. Management believe the effect is not material due to the amount and maturities of those balances.

(B) Credit risk Credit risk arises from cash at banks, as well as credit exposures to customers. Credit risks are managed for the Company’s as a whole by its Executive Management, Central Finance Department and Executive Committee at the level of the Parent Company (Cleopatra Hospital Company S.AE.). For banks, the Company deals with banks with high credit ratings and creditworthiness that are regulated by the Central Bank of Egypt. For customers, the Hospital’s Financial Director and General Manager perform analysis on the credit risk for each potential credit customer in accordance with the Parent Company’s policies. The Central Finance Department follows up the compliance with credit terms and collection from customers, and manages the inventory balances, while the Parent Company’s Executive Committee reviews the default cases and debt ageing report to take the necessary decisions whether to cancel the credit or to refer the defaulted customer to the Legal Department for their necessary actions. Note (7) to these financial statements provides more detailed information in respect of this matter. The management establishes a provision for impairment of 100% for customers defaulted for more than 150 days from the invoice date, in addition to a category-based provision for impairment at historical default rates.

258 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (Continued) Balances exposed to credit risks are as follows:

2015 2014 2013 Cash at banks ...... 3,985,142 4,664,617 4,151,022 Trade receivables ...... 27,354,345 19,765,820 13,844,255

(C) Liquidity risk The management makes cash flow projections on a monthly basis, follows up the collection process and manages the inventory balances, which are discussed during the Executive Committee’s meeting, and takes the necessary actions to negotiate with suppliers, follow-up the collection process and manage the inventory balances in order to ensure sufficient cash is maintained to discharge the Company’s liabilities. The table below shows the Company’s liabilities at the balance sheet date by maturity:

Less than 3 months to 3 months 1 year 1 to 5 years Suppliers and notes payables ...... 9,773,357 — — Borrowings ...... 8,497,257 980,214 891,782

3.2 Capital risk management The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital as is the case for other companies operating in the same field. The Company’s management monitors capital structure using the net debt to total capital ratio. Net debt ratio is calculated as total borrowings, creditors and other credit balances less cash on hand and at banks. Capital is represented by ‘total equity’ as shown in the balance sheet plus net debt. Net debt to total capital ratio as at 31 December 2015, 31 December 2014 and 31 December 2013 is as follows:

2015 2014 2013 Creditors and other credit balances ...... 19,294,023 19,117,460 17,875,947 Borrowings ...... 10,369,253 7,417,999 9,078,680 Less: Cash on hand and at banks ...... (4,089,819) (4,758,669) (4,205,873) Net debt ...... 25,573,457 21,776,790 22,748,754 Total shareholders’ equity ...... 42,544,092 47,216,168 41,084,259 Total capital ...... 68,117,549 68,992,958 63,833,013 Net debt to total capital ratio ...... 37.54% 31.56% 35.64%

3.3 Fair value estimation The fair value of current financial assets and liabilities approximates their carrying amounts after taking into account the impairment. The Parent Company availed a long-term loan from an Egyptian bank, and the management believes that the fair value of the loan approximates its carrying amount as it was issued at a variable rate linked to the interest rate corridor declared by the Central Bank of Egypt.

259 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

4. Critical accounting estimates, assumptions and judgements Estimates and assumptions are evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the actual results.

(A) Provisions Provisions are recognised when there is a present legal or constructive obligation as a result of past events, and it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. The Company reviews the provision at each balance sheet date, and adjusts it to reflect the current best estimate by using the appropriate advisory experience of experts.

(B) Impairment of trade receivables Impairment of trade receivables is estimated by monitoring ageing of receivables. The Company’s management examines the credit position and ability of debtors and customers to make payments for their past due debts. Impairment is recognised for amounts due from debtors and customers whose credit position does not allow them to pay their dues as believed by the management. Further appropriate allowance is made for loss incurred but not yet identified by reference to applicable historical loss rate.

260 (862,031) (702,259) (515,950) (549,274) 3,992,116 3,842,231 licies, change in accounting ed at EGP 1,818,856 lower that the (705,179) (155,492) — (1,360) — (363,712) (150,879) — (1,359) — 3,109,138 603,872 65,450 177,856 35,800 Machinery, Furniture Projects equipment & and under (2,933) (243,135) (380,041) (1,675) (74,475) — (2,359) (179,733) (307,718) (1,675) (57,789) — 534,340 1,889,214 1,142,405 7,896 268,376 — — 15,313,452 26,609,503 6,566,182 459,974 1,765,188 — 50,714,299 — 15,845,433 27,955,272 7,249,990 466,195 1,974,416 — 53,491,306 Land Buildings devices fixtures Vehicles Computers construction Total 24,286,415 29,207,013 37,948,135 8,991,488 530,801 2,295,095 1,015,196 104,274,143 24,286,415 29,209,946 35,787,311 8,923,149 467,026 2,193,074 979,396 101,846,317 24,286,415 13,361,580 9,992,863 1,741,498 64,606 320,679 1,015,196 50,782,837 Originally issued in Arabic Notes to the financial statements (Continued) AL SHOROUK HOSPITAL COMPANYAL SHOROUK HOSPITAL S.A.E. For the year ended 31For December 2013, 2014 and 2015 ...... — (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — ...... — ...... — ...... — — ...... — — 5. Fixed assets Fixed assets write-off Balance at 31 December 2015 Accumulated depreciation at 1 January 2015 Balance at 1 January 2015 Additions Charge for the year Disposals depreciation of disposals Accumulated depreciation of assets write-off Accumulated Accumulated depreciation at 31 December 2015 Net book value at 31 December 2015 po 5 ‘‘Accounting During the current year, Company reviewed and changed useful life of fixed assets. In accordance with EAS depreciation expense for the year is report estimates and errors’’ changed remaining useful lives of those assets. Accordingly, depreciation if charged in accordance with the same useful lives before change.

261 (140,133) (118,607) 4,757,033 4,889,082 (34,668) (81,145) — (24,320) — (19,497) (80,659) — (18,451) — 4,122,390 286,188 — 228,455 120,000 Machinery, Furniture Projects equipment & and under 1,460,497 2,521,492 688,977 5,868 212,248 — — 15,313,452 26,609,503 6,566,182 459,974 1,765,188 — 50,714,299 — 13,852,955 24,107,508 5,957,864 454,106 1,571,391 — 45,943,824 Land Buildings devices fixtures Vehicles Computers construction Total 24,286,415 29,209,946 31,699,589 8,718,10624,286,415 467,026 29,209,946 1,988,939 35,787,311 859,396 8,923,149 467,026 97,229,417 2,193,074 979,39624,286,415 101,846,317 13,896,494 9,177,808 2,356,967 7,052 427,886 979,396 51,132,018 Originally issued in Arabic Notes to the financial statements (Continued) AL SHOROUK HOSPITAL COMPANYAL SHOROUK HOSPITAL S.A.E. For the year ended 31For December 2013, 2014 and 2015 ...... (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — ...... — ...... — — — — 5. Fixed assets (Continued) Balance at 1 January 2014 (restated) Additions Disposals Balance at 31 December 2014 Accumulated depreciation at 1 January 2014 depreciation of disposals Accumulated Accumulated depreciation at 31 December 2014 Net book value at 31 December 2014 Charge for the year

262 (138,405) (109,037) (129,411) 2,205,492 5,042,337 (109,037) (76,543) (60,464) — (1,398) — (69,194) (58,879) — (1,303) — 1,237,439 211,958 9,300 179,803 566,992 Machinery, Furniture Projects equipment & and under 1,460,458 2,666,499 678,371 18,936 218,073 — — 12,392,532 21,510,203 5,338,372— 435,170 13,852,955 1,354,621 24,107,508 5,957,864 454,106 — 1,571,391 41,030,898 — 45,943,824 24,286,415 29,209,946 30,538,693 8,566,612 457,726 1,810,53424,286,415 29,209,946 401,441 31,699,589 95,271,367 8,718,106 467,026 1,988,939 859,396 97,229,417 24,286,415 15,356,991 7,592,081 2,760,242 12,920 417,548 859,396 51,285,593 Originally issued in Arabic Notes to the financial statements (Continued) AL SHOROUK HOSPITAL COMPANYAL SHOROUK HOSPITAL S.A.E. For the year ended 31For December 2013, 2014 and 2015 ...... — (35) (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — — — — — ...... — ...... — — ...... — — 5. Fixed assets (Continued) Disposals Fixed assets written-off Balance at 31 December 2013 Balance at 1 January 2013 31 December 2013Additions Accumulated depreciation at 1 January 2013 Land Buildings devices fixtures Vehicles Computers construction Total Charge for the year depreciation of assets write-off Accumulated Accumulated depreciation at 31 December 2013 Net book value at 31 December 2013

263 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

6. Inventories

2015 2014 2013 Pharmacy inventory ...... 5,217,512 4,879,660 3,551,702 Medical supplies inventory ...... 3,494,684 3,469,832 3,401,892 8,712,196 8,349,492 6,953,594

7. Trade receivables

Restated Restated 2015 2014 2013 Due from customers ...... 26,871,885 19,287,805 13,512,731 Income from inpatients ...... 482,460 478,015 331,524 27,354,345 19,765,820 13,844,255 Less: Impairment of receivables ...... (7,067,305) (2,737,448) (2,737,448) 20,287,040 17,028,372 11,106,807

Restated Restated 2015 2014 2013 Balance at 1 January ...... 2,737,448 2,737,448 2,702,769 Provision formed during the year ...... 4,329,857 — 34,679 7,067,305 2,737,448 2,737,448

8. Debtors and other debit balances

Restated Restated 2015 2014 2013 Withholding tax ...... 903,563 753,289 616,049 Due from employees ...... 751,046 518,684 504,068 Prepaid expenses ...... 339,351 261,262 288,954 Advances to suppliers ...... 163,100 218,050 128,020 Deposits with others ...... 110,575 104,075 104,075 Due from related parties—shareholders ...... — 59,470 95,739 Sundry debtors ...... 293,431 1,055,477 1,413,861 2,561,066 2,970,307 3,150,766 Impairment of debtors and other debt balances ...... (210,734) (210,734) (210,734) 2,350,332 2,759,573 2,940,032

264 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

9. Cash on hand and at banks

2015 2014 2013 Current accounts ...... 3,985,142 4,664,617 4,151,022 Cash on hand ...... 104,677 94,052 54,851 4,089,819 4,758,669 4,205,873

Current accounts are deposited with local banks, which are regulated by the Central Bank of Egypt.

10. Provisions

Restated Restated 2015 2014 2013 Provision for claims ...... 11,370,000 6,500,000 6,500,000 Provision for lawsuits ...... 500,000 500,000 500,000 Employees leave provision ...... 200,124 — — Total ...... 12,070,124 7,000,000 7,000,000

The movement of provisions during the year is as follows:

Balance at Provision Provision Balance at 1 January made during utilised during 31 December 2015 the year the year 2015 Provision for claims ...... 6,500,000 4,870,000 — 11,370,000 Provision for lawsuits ...... 500,000 — — 500,000 Employees leave provision ...... — 200,124 — 200,124 Total ...... 7,000,000 5,070,124 — 12,070,124

Balance at Provision Provision Balance at 1 January made during utilised during 31 December 2014 the year the year 2014 Provision for claims ...... 6,500,000 — — 6,500,000 Provision for lawsuits ...... 500,000 — — 500,000 Total ...... 7,000,000 — — 7,000,000

Balance at Provision Provision Balance at 1 January made during utilised during 31 December 2013 the year the year 2013 Provision for claims ...... 2,200,000 6,823,071 (2,523,071) 6,500,000 Provision for lawsuits ...... 500,000 — — 500,000 Total ...... 2,700,000 6,823,071 (2,523,071) 7,000,000

265 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

11. Creditors and other credit balances

Restated Restated 2015 2014 2013 Supplies and notes payable ...... 9,773,357 10,403,824 11,088,720 Accrued expenses ...... 8,464,370 6,706,513 4,958,647 Due to related parties (Note 22) ...... 117,206 1,151,809 740,949 Sundry creditors ...... 939,090 855,314 1,087,631 19,294,023 19,117,460 17,875,947

12. Borrowings

Bank Burrowing overdraft Total 2015 Current portion ...... 980,214 8,497,257 9,477,471 Non-current portion ...... 891,782 — 891,782 2014 Current portion ...... 890,596 4,655,407 5,546,003 Non-current portion ...... 1,871,996 1,871,996 2013 Current portion ...... 4,543,740 1,000,966 5,544,706 Non-current portion ...... 3,533,974 — 3,533,974 On 25 November 2014, the Company sold their land and buildings (Plot No. 11, Area C) as per a preliminary contract with the International Company for Finance Lease (Incolease). This sale contract can not be executed unless a lease agreement over the land takes place. On the same date, the Company entered a lease contract for 3 years—where the Company has the right to buy the asset after the end of the lease period with 1 EGP. The amounts due to Faisal Bank, which represent the remaining amount of the total land price amounting to 2,902,945 were paid by Incolease and leased back to Al Shorouk Hospital Company for 3 years with a predetermined net amount equalling the amount paid to Faisal Bank after calculating the interest for 3 years. Due to the substance of this transaction, it is not considered a sale and instead considered as a loan guaranteed by the asset. Such a transaction is outside of the scope of the Egyptian Accounting Standard 20 ‘‘Finance Lease’’. Accordingly, the transaction was not considered as a sale and lease-back agreement but it was considered as a loan from Incolease for 36 months—where each monthly instalment amounts to 93,160 EGP with a variable interest based on the corridor rates announced by the Central Bank of Egypt. The average interest rate on bank overdrafts in EGP was 10% (2014: 9.5%).

13. Issued and paid up capital The issued and paid up capital comprises 25,000 shares of EGP 100 each, totalling EGP 25 million.

266 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

14. Reserves

Legal General Balance at the reserve reserve end of the year Balance at 1 January 2013 restated ...... 5,058,647 2,623,821 7,682,468 Additions during the year ...... 492,351 492,351 984,702 Balance at 31 December 2013 restated ...... 5,550,998 3,116,172 8,667,170 Balance at 1 January 2014 restated ...... 5,550,998 3,116,172 8,667,170 Additions during the year ...... 281,390 281,390 562,780 Balance at 31 December 2014 restated ...... 5,832,388 3,397,562 9,229,950 Balance at 1 January 2015 ...... 5,832,388 3,397,562 9,229,950 Additions during the year ...... 492,535 492,534 985,069 Balance at 31 December 2015 ...... 6,324,923 3,890,096 10,215,019

Legal reserve In accordance with the Law No. 159 of 1981 and the Company’s Articles of Association, 05% of the net profit for the year shall be transferred to the legal reserve. As proposed by the Board of Directors, this transfer may be partially discontinued if the legal reserve reaches 50% of the issued capital. This reserve is not available for distribution to shareholders.

General reserve As proposed by the Board of Directors recommendation and in accordance with the Company’s Articles of Association, 05% of the net profit for the year shall be transferred to the general reserve.

15. Operating revenue

Restated Restated 2015 2014 2013 Inpatient and medical supervision revenue ...... 48,405,311 42,987,097 38,517,410 Surgeries revenue ...... 27,867,090 24,026,725 18,159,094 Outpatient clinics revenue ...... 23,838,567 15,129,358 13,419,969 Service revenue ...... 9,744,266 8,534,629 6,768,528 Laboratories revenue ...... 9,682,656 9,240,787 7,458,511 Radiology revenue ...... 5,916,306 5,528,323 4,032,742 Pharmacy revenue ...... 5,475,139 5,279,496 4,605,209 Emergency revenue ...... 3,268,115 2,959,402 2,278,642 Endoscopy revenue ...... 1,839,168 1,477,311 1,431,641 Dialysis revenue ...... 1,385,343 1,322,977 1,113,036 Physiotherapy ...... 749,230 554,825 319,234 Dentistry revenue ...... 470,987 551,142 420,190 138,642,178 117,592,072 98,524,206

267 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

16. Operating costs

Restated Restated 2015 2014 2013 Medical and pharmaceutical supplies ...... 43,977,641 39,022,064 34,725,575 Physician fees ...... 23,808,150 19,244,771 14,823,979 Salaries, wages and benefits ...... 17,602,524 15,904,924 15,719,894 Fixed assets depreciation and write-off ...... 3,794,141 4,757,639 5,042,337 Maintenance, spare parts and energy costs ...... 2,986,078 2,819,231 1,998,245 Food, beverage and consumables costs ...... 2,648,821 2,338,918 2,087,328 Rent...... 522,859 — — Others ...... 4,572,993 1,763,007 1,638,031 99,913,207 85,850,554 76,035,389

17. General and administrative expenses

Restated Restated 2015 2014 2013 Consultancy and legal fees ...... 5,851,110 4,198,167 3,700,069 Salaries, wages and benefits ...... 4,203,627 3,476,122 2,329,751 Impairment of customers’ balances ...... 4,329,857 — 34,679 Food, beverage and consumables costs ...... 3,395,730 2,745,407 2,317,886 Maintenance, spare parts and energy costs ...... 1,733,091 1,673,736 1,317,162 BOD meeting allowance ...... 1,475,000 777,000 652,500 Rent...... 607,264 714,443 669,881 Fixed assets depreciation and write-off ...... 48,090 131,444 — Others ...... 3,938,099 3,362,251 3,518,977 25,581,868 17,078,570 14,540,905

18. Other income

Restated Restated 2015 2014 2013 Buffet income and cafeteria concession ...... 1,333,135 998,246 908,608 Loss on sale of fixed assets ...... (318,419) (11,496) (1,134) Others ...... 216,627 202,572 165,216 1,231,343 1,189,322 1,072,690

268 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

19. Expense by nature

Restated Restated 2015 2014 2013 Medical and pharmaceutical supplies ...... 43,977,641 39,022,064 34,725,575 Physician fees ...... 23,808,150 19,244,771 14,823,979 Salaries, wages and benefits* ...... 21,806,151 19,381,046 18,049,645 Food, beverage and consumables costs ...... 6,044,551 5,084,325 4,405,214 Consultancy and legal fees ...... 5,851,110 4,198,167 3,700,069 Maintenance, spare parts and energy costs ...... 4,719,169 4,492,967 3,315,407 Impairment of customers’ balances ...... 4,329,857 — 34,679 Fixed assets depreciation and write-off ...... 3,842,231 4,889,083 5,042,337 BOD meeting allowance ...... 1,475,000 777,000 652,500 Rent...... 1,130,123 714,443 669,881 Others ...... 8,511,092 5,125,258 5,157,008 125,495,075 102,929,124 90,576,294

* Salaries, wages and benefits

Restated Restated 2015 2014 2013 Salaries and wages ...... 17,435,003 15,799,878 14,717,177 Bonuses and incentives ...... 1,656,209 1,448,917 1,383,695 Employees’ benefits ...... 1,403,273 1,068,169 865,943 Social insurance ...... 1,311,666 1,064,082 1,082,830 21,806,151 19,381,046 18,049,645

20. Finance income

Restated Restated 2015 2014 2013 Gains on currency translation differences ...... 104,079 45,200 21,147 Interest income ...... 24,263 67,862 51,826 128,342 113,062 72,973

21. Income taxes Income tax for the year is comprises of:

2015 2014 2013 Income tax ...... 4,108,178 4,491,563 2,638,327 Deferred tax ...... (198,380) (29,752) (172,330) 3,909,798 4,461,811 2,465,997

269 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

21. Income taxes (Continued) The tax on profit before taxation theoretically differs from the amount expected to be earned by applying the average tax rate applicable to the Company’s profits as follows:

2015 2014 2013 Net profit before taxation ...... 8,317,555 15,910,207 2,395,801 Income tax calculated based on the applicable local tax rate ..... 1,871,450 3,579,797 539,055 Add / (less): Non-deductible expenses ...... 2,038,348 882,014 1,926,942 Income tax ...... 3,909,798 4,461,811 2,465,997 Effective tax rate ...... 47% 28% %

2015 2014 2013 Current income tax liability Balance at the beginning of the year ...... 5,241,563 3,388,327 4,423,461 Income tax for the year ...... 4,108,178 4,491,563 2,638,327 Tax paid ...... (5,241,563) (2,638,327) (3,673,461) Balance at the end of the year ...... 4,108,178 5,241,563 3,388,327

22. Deferred tax

Balance at Movement for Balance at 1 January the year 31 December 2015 (asset) (asset) 2015 (asset) Fixed assets ...... 1,965,066 40,852 2,005,918 Provisions ...... — 157,528 157,528 1,965,066 198,380 2,163,446

Balance at Movement for Balance at 1 January the year 31 December 2014 (asset) (asset) 2014 (asset) Fixed assets ...... 1,935,314 29,752 1,965,066 1,935,314 29,752 1,965,066

Balance at Movement for Balance at 1 January the year 31 December 2013 (asset) (asset) 2013 (asset) Fixed assets ...... 1,762,984 172,330 1,935,314 1,762,984 172,330 1,935,314

270 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

23. Related party transactions

Nature of Nature of Volume of relationship transaction transaction 2015 2014 2013 Cairo Specialized Hospital ...... Under same Administrative 15,124,404 13,997 1,084,513 523,144 management expenses Ibn Sina ...... Under same Purchases 4,351,661 103,209 67,296 217,805 management 117,206 1,151,809 740,949

24. Tax position (1) Corporate tax • The Company was inspected, and differences were settled from inception till 31 December 2004. The limitation period was applied to the years from 2005 till 2009. The inspection of the years from 2010 to 2014 is in progress. • Tax returns are regularly submitted on time.

(2) Income tax • The Company was inspected till 31 December 2004 • There are tax differences for the years 2001 till 2004 which are still disputed. Such differences are being considered by the Committee of Appeal. • The inspection for the years from 2005 till 2013 is now in progress. • No inspection took place for the years 2014 and 2015 • The Company makes payments for different periods, but not in accordance with the fixed legal schedule.

(3) Stamp duty tax • The Company was inspected till 31 July 2006, and settlement was made. • No inspection took place for the years from 2007 till 2015 • The Company regularly submits the tax returns on time.

25. Correction of prior years’ errors During the year, management corrected accounting errors related to prior periods net of tax as required by the Egyptian Accounting Standard EAS 5 ‘‘Accounting policies, change in accounting estimates and errors’’. Errors corrected during the year are as follows:

Fixed assets, receivables and other debit balances, other credit balances, general and administrative expenses, and interest expenses During prior years, management recognised the agreement with the International Company for Finance Lease (Incolease) to settle the remaining value of Plot No 11’s sale price acquired from Faisal Bank by recording the whole amount as debit and credit balances and amortizing the amount on the income statement instead of recognizing these amounts as loans and fixed assets. This does not comply with the

271 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

25. Correction of prior years’ errors (Continued) Egyptian Accounting Standards 10 ‘‘Fixed assets and depreciation’’ and 20 ‘‘Finance Lease’’. This had a material impact on the above mentioned accounts.

Provisions Management did not recognise claims provision for income tax inspection differences, while received claims and evidences requires such provisions which is not in compliance with Egyptian Accounting Standard 28 (Provisions and contingent assets and liabilities).

Income tax Managements records the differences identified by the corporate tax inspection on 2014 income statements, and this amount has been adjusted to be reflected on prior year retained earnings.

Projects under progress Management did not make impairment for projects under construction for the Dialysis Center Project while it was clear that this project will not continue because appropriate authorities approvals were not obtained. Accordingly, it was evidenced that the expected residual value from usage or sale of the fixed asset had exceeded the net book value. The mentioned treatment does not comply with requirements of Egyptian Accounting Standards 31 ‘‘Impairment of assets’’.

Debtors and other debit balances Management did not make a provision for impairment of withholding tax receivables while it was clear during the prior periods that such balances are uncollectable due to lack of supporting documents, which does not comply with requirements of Egyptian Accounting Standards 31 ‘‘Impairment of assets’’ and 26 ‘‘Financial instruments, recognition and measurement’’.

272 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

25. Correction of prior years’ errors (Continued) Other All other adjustments are reclassification between balances and items of the balance sheet and statement of income, to agree of current year presentation.

Balance at Balance at 31 December 31 December 2013 before 2013 after Adjustments effect on balance sheet: adjustment Adjustment adjustment Fixed assets ...... 50,426,198 859,395 51,285,593 Intangible assets ...... 1,334,103 (1,334,103) — Projects under construction ...... 3,856,635 (916,603) 2,940,032 Debtors and other debit balances ...... 9,651,823 1,454,984 11,106,807 Trade receivables ...... — (3,388,327) (3,388,327) Current income tax ...... (1,195,935) 1,195,935 — Borrowings ...... (11,306,521) 11,306,521 — Suppliers and notes payable ...... (18,748) 18,748 — Advances from customers ...... (9,498,723) (8,377,224) (17,875,947) Trade and other payables ...... — (5,544,706) (5,544,706) Current portion ...... — (3,533,974) (3,533,974) Non-current portion of borrowings ...... (4,543,740) 4,543,740 — Long-term notes payable ...... (3,533,974) 3,533,974 — Provision for claims ...... — (7,000,000) (7,000,000) Reserves ...... — (8,667,170) (8,667,170) General reserve ...... (3,116,172) 3,116,172 — Legal reserve ...... (5,550,998) 5,550,998 — Retained earnings ...... (14,598,729) 7,181,640 (7,417,089)

273 AL SHOROUK HOSPITAL COMPANY S.A.E. Originally issued in Arabic Notes to the financial statements (Continued) For the year ended 31 December 2013, 2014 and 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

25. Correction of prior years’ errors (Continued) The effect on retained earnings is as follows:

2013 Total adjustments on prior years ...... 1,483,644 Adjustments on 2013 ...... 5,697,996 Net adjustments ...... 7,181,640

Balance at Balance at 31 December 31 December 2013 before 2013 after Adjustments effect on statement of income: adjustment Adjustment adjustment Operating revenue ...... (98,757,786) 233,580 (98,524,206) Operating costs ...... 70,982,173 5,053,216 76,035,389 General and administrative expenses ...... 13,634,428 906,477 14,540,905 Selling and marketing expenses ...... 116,585 (116,585) — Fixed assets depreciation ...... 5,042,338 (5,042,338) — Depreciation of Intangible assets ...... 652,500 (652,500) — Finance lease expenses ...... 134,450 (134,450) — Board of Directors allowance ...... — 6,676,913 6,676,913 Donations ...... 323,071 (323,071) — Other income ...... 34,679 (34,679) — Finance income ...... (184,245) (888,445) (1,072,690) Gains on currency translation differences ...... (51,826) (21,147) (72,973) Reversal of Impairment of assets’ value ...... (21,147) 21,147 — Capital gains ...... 983 (983) — Finance expenses ...... — 20,861 20,861 The effect on the business results is as follows:

2013 Net profit after income tax as previously issued at 31 December 2013 ...... 5,627,800 Prior years adjustments ...... (6,623,041) Net profit after income tax after adjustment ...... (995,241)

26. Subsequent events On 24 January 2016, Cleopatra Hospital Company acquired of 99% stake in Al Shorouk Hospital Company for an acquisition cost of EGP 280 million. Actual control over operational and financial performance is transferred on 31 January 2016. The legal formalities to record this acquisition in the commercial registration of Al Shorouk Hospital Company are under process. Accordingly financial statements of Al Shorouk Hospital will be consolidated in the financial statements of Cleopatra Hospital Company in the first consolidated financial statements after 31 January 2016.

274 Cleopatra Hospital Company and its subsidiaries Auditor’s report To: The Shareholders of Cleopatra Hospital Company S.A.E. and its subsidiaries

Report on the consolidated financial statements We have audited the accompanying consolidated financial statements of Cleopatra Hospital Company S.A.E. and its subsidiaries (the ‘‘Group’’), which comprise the consolidated balance sheet as at 31 December 2015 and the consolidated statements of income, changes in equity and cash flows for the fiscal year then ended, and a summary of significant accounting policies and other notes.

Management’s responsibility for the consolidated financial statements These consolidated financial statements are the responsibility of the Group’s management. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Egyptian Accounting Standards and in light of the prevailing Egyptian laws. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Management responsibility also includes selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance that the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on these consolidated financial statements.

Opinion In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cleopatra Hospital Company S.A.E. and its subsidiaries as at 31 December 2015, its consolidated financial performance, and its consolidated cash flows for the fiscal year then ended in accordance with the Egyptian Accounting Standards and in light of the related Egyptian laws and regulations.

Tamer Abdel Tawab Ahmed Gamal Hamadallah El-Atrees Member of Egyptian Society of Accountants & Member of Egyptian Society of Accountants & Auditors Auditors Member of AICPA Member of the Egyptian Tax Society R.A.A. 17996 R.A.A. 8784 Mansour & Co. PricewaterhouseCoopers EFSA Registration 136 Mansour & Co. PricewaterhouseCoopers 6 April 2016 Cairo

275 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Consolidated balance sheet At 31 December 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 Non-current assets Fixed assets ...... 6 267,049,952 62,787,629 Intangible assets ...... 7 97,195,020 — Total non-current assets ...... 364,244,972 62,787,629 Current assets Held-to-maturity investments ...... 8 38,080 38,080 Inventories ...... 9 15,517,957 6,337,822 Trade receivables ...... 10 89,986,584 34,246,704 Debtors and other debit balances ...... 11 18,282,142 35,179,584 Cash on hand and at banks ...... 12 109,906,869 53,632,054 Total current assets ...... 233,731,632 129,434,244 Current liabilities Provisions ...... 13 19,890,797 3,367,352 Creditors and other credit balances ...... 14 92,550,296 29,852,391 Current portion of borrowings ...... 15 40,600,000 — Current income tax liabilities ...... 25 32,136,609 21,372,222 Total current liabilities ...... 185,177,702 54,591,965 Surplus in working capital ...... 48,553,930 74,842,279 Total investment ...... 412,798,902 137,629,908 Financed as follows: Shareholders’ equity Paid-up capital ...... 16 80,000,000 80,000,000 Reserves ...... 17 (62,303,508) 11,637,554 Retained earnings ...... 108,270,052 43,694,642 Total shareholders’ equity ...... 125,966,544 135,332,196 Minority interest ...... 18 33,250,055 — Total equity ...... 159,216,599 135,332,196 Non-current liabilities Non-current portion of borrowings ...... 15 162,400,000 — Creditors and other credit balances—due to related parties ...... 14 47,379,723 — Deferred income taxes liabilities ...... 26 43,802,580 2,297,712 Total non-current liabilities ...... 253,582,303 2,297,712 Total funding of working capital and non-current liabilities ...... 412,798,902 137,629,908

The accompanying notes form an integral part of these financial statements.

276 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Consolidated statement of income For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 Operating revenue ...... 19 409,589,789 290,294,814 Less: Operating costs ...... 20 (269,828,593) (204,608,154) Gross profit ...... 139,761,196 85,686,660 Add / (Less) General and administrative expenses ...... 21 (40,673,242) (20,670,525) Provisions ...... 13 (3,422,585) (2,886,902) Other income ...... 22 2,521,355 678,591 Profit for the year before finance income and income tax ...... 98,186,724 62,807,824 Finance income ...... 24 6,253,536 2,086,651 finance expenses ...... 24 (8,487,998) (3,235) Profit for the year before income tax ...... 95,952,262 64,891,240 Current tax ...... 25 (24,889,872) (21,372,222) Deferred tax ...... 25 (2,166,243) 283,107 Profit for the year ...... 68,896,147 43,802,125 Distributed as follows: Equity of the parent’s shareholders ...... 66,765,516 43,802,125 Minority Interest ...... 18 2,130,631 — Profit for the year ...... 68,896,147 43,802,125

The accompanying notes form an integral part of these financial statements.

277 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Consolidated statement of changes in shareholders’ equity For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Retained Shareholders Minority Share capital Reserve earnings equity interest Total equity Balance at 1 January 2014 ..... 80,000,000 9,594,619 40,751,213 130,345,832 — 130,345,832 Transfer to reserves ...... — 2,042,935 (2,042,935) — — — Dividends distribution for 2013 . . — — (38,815,761) (38,815,761) — (38,815,761) Profit for the year ...... — — 43,802,125 43,802,125 — 43,802,125 Balance at 31 December 2014 ... 80,000,000 11,637,554 43,694,642 135,332,196 — 135,332,196 Balance at 1 January 2015 ..... 80,000,000 11,637,554 43,694,642 135,332,196 — 135,332,196 Transfer to reserves ...... — 2,190,106 (2,190,106) — — — Share of minority interests from the acquisition of subsidiaries . . — ——— 31,119,424 31,119,424 Acquisition reserve ...... — (76,131,168) — (76,131,168) — (76,131,168) Profit for the year ...... — — 66,765,516 66,765,516 2,130,631 68,896,147 Balance at 31 December 2015 ... 80,000,000 (62,303,508) 108,270,052 125,966,544 33,250,055 159,216,599

The accompanying notes form an integral part of these financial statements.

278 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Consolidated statement of cash flows For the year ended 31 December 2015 (All amounts in Egyptian Pounds)

Note 2015 2014 Cash flows from operating activities Profit before tax ...... 95,952,262 64,891,240 Adjustments to reconcile net income to cash flows from operating activities Fixed assets depreciation and write-off ...... 6 9,410,849 7,152,719 Loss / (gain) on sale of fixed assets ...... 15,970 (39,112) Provisions ...... 13 3,422,585 2,886,902 Impairment in customers’ balances ...... 21 7,852,192 555,915 Provisions no longer required ...... — (560,400) Finance Cost ...... 8,487,998 — Finance income ...... (6,160,009) (2,068,573) Operating profits before changes in working capital ...... 118,981,847 72,818,691 Changes in working capital Change in inventories ...... (2,003,182) 1,998,163 Change in trade receivables ...... (12,425,803) (11,151,016) Change in debtors and other debit balances ...... 29,038,137 18,573,585 Change in creditors and other credit balances ...... 67,405,516 8,281,299 Provisions utilised ...... 13 (6,774,940) (280,638) Income tax paid ...... 25 (21,372,222) (13,996,640) Net cash flows generated from operating activities ...... 172,849,353 76,243,444 Cash flows from investing activities Proceeds from sale of fixed assets ...... 10,859 62,300 Payments to purchase fixed assets ...... (10,398,432) (3,468,799) Payments to acquisition of subsidiaries ...... (306,858,975) — Deposits with a maturity of more than 3 months from the date of placement ...... (62,889,123) — Finance gain collected ...... 6,160,009 2,068,573 Net cash flows used in investing activities ...... (373,975,662) (1,337,926) Cash flows from financing activities Dividends paid ...... — (38,815,761) Proceeds from borrowings ...... 203,000,000 — Finance cost paid ...... (8,487,998) — Net cash flows generated from / (used in) financing activities .... 194,512,002 (38,815,761) Change in cash and cash equivalents during the year ...... (6,614,307) 36,089,757 Cash and cash equivalents at the beginning of the year ...... 53,632,054 17,542,298 Cash and cash equivalents at the end of the year ...... 12 47,017,747 53,632,055

The accompanying notes form an integral part of these financial statements.

279 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

1. Introduction Cleopatra Hospital (Lashin & Co.) is a limited partnership company incorporated on 19 July 1979. On 27 June 2005, a resolution no. 4092 of 2005 was issued by the Chairman of the General Authority for Investment (GAFI) to authorize the Cleopatra Hospital (Lashin & Co.) ‘‘Limited Liability Company’’ to transform its legal form to Cleopatra Hospital Company S.A.E. in accordance with the provisions of law No. 8 for 1997 and law No. 95 for 1992. The purpose of the Company is establishing a private hospital with the aim to offer modern and high quality medical services and provide medical care and treatment for patients. The Company may have interest or participate in any manner in companies or other firms, which carry on similar activities in Egypt or abroad. The Company may acquire such entities or merge therewith. The Company is located at 39 Cleopatra Street, Masr Al Jadidah, Cairo. The parent Company is Care Healthcare Ltd., which owns 99.99% of the Company’s share capital. On 16 September 2015, Cleopatra Hospital Company S.A.E. acquired 52.7% of the total shares of Cairo Specialized Hospital. On 22 September 2015, Cleopatra Hospital Company S.A.E. acquired 99.92% of the total shares of Nile Badrawi Hospital. These consolidated financial statements have been approved for issuance by the management of the Parent Company on 6 April 2016, considering the fact that the Shareholders of the Company have the authority to amend the consolidated financial statements after being issued.

2. Accounting policies The following are the accounting policies applied in the preparation of these consolidated financial statements:

A) Basis of preparation of consolidated financial statements The consolidated financial statements have been prepared in accordance with Egyptian Accounting Standards (EASs) and relevant laws, which have all been applied consistently throughout the fiscal year except when otherwise indicated. The consolidated financial statements have been prepared under the historical cost convention. The preparation of the consolidated financial statements in conformity with EASs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas where the most significant accounting estimates and judgements applied in preparation of the consolidated financial statements are disclosed in Note 4. The EAS’s require the reference to the International Financial Reporting Standards when there is no EAS, or legal requirements that explain the treatment of specific balances and transactions.

280 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) Amendments applicable on the Group’s activities and financial statements are summarised in the presentation and disclosure. According to the new standards balance sheet will be presented differently and working capital will not be presented in the financial statements. Results of operations will be presented in two statements; the first will present income and expenses for the year (statement of income), and the second will start by the net income (loss) for the year and will include income and expenses items recognised in equity to present the comprehensive income (statement of comprehensive income). The new standards will require more disclosure on the financial risk management.

B) Basis of consolidation 1. Subsidiaries Subsidiaries are the companies (including special purpose entities) over which the Group has the power to govern the financial and operating policies, by usually having more than one half of the voting rights. The effect of potential voting rights that are currently exercisable or convertible are considered when assessing the extent of the Group’s control. The Group uses the acquisition method of accounting to account for the acquisition of subsidiaries from entities not under common control. The consideration transferred for the acquisition of a subsidiary is the fair values of assets transferred, equity instruments issued, liabilities incurred by the Company, and/or the liabilities accepted on behalf of the acquiree at the date of exchange plus any costs that are directly attributable to the acquisition. Identifiable assets acquired and liabilities assumed in a business combination are initially measured at fair value at the acquisition date. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the mentioned net assets, the difference is recognised directly in the statement of income. In case the acquisition process is carried out by an entity under joint control, subsidiaries are fully consolidated from the date on which control is transferred to the Group using the predecessor accounting method. Under this method, assets and liabilities are transferred at book values of the consolidated financial statements of highest consolidating entity. If this is not possible, assets and liabilities are transferred at the same book value stated in the transferred company’s accounting records. The difference between the carrying value of the net assets and the cost of acquisition is recognised in equity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases. Transactions, balances and unrealised gains on transactions between Group companies are excluded. Unrealised losses are eliminated, and will be considered as an indication of the impairment of the transferred assets. Subsidiaries including, companies which were under common control before business combination, are consolidated in these financial statements from date of acquisition. Accordingly, comparative figures reflects the Parent Company only. Accounting policies of subsidiaries are changed, where necessary, to ensure consistency with the policies adopted at the Group’s level.

281 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) The consolidated financial statements include the financial statements of the following subsidiaries:

Country of Percentage of incorporation Ownership Nile Badrawi Hospital Co. S.A.E...... Egypt 99.92% Cairo Specialized Hospital Co. S.A.E...... Egypt 52.7%

2. Sale, acquisition and minority interests The Group recognises sales and acquisitions made with the minority, as transactions with parties outside the Group. Gains or losses on disposal of equity to the minority, are recognised in the consolidated equity. Where purchase is made from minority, the difference between the consideration paid and the carrying value of the share purchased in the subsidiary’s assets is recognised as a reserve in the consolidated equity. If the share of minority interest in the retained losses of a subsidiary exceeded their equity in that subsidiary, such increase is stated within majority’s equity, except for those losses, which the minority is obliged to cover, provided they have the ability to make additional investments to cover such losses. If the subsidiary subsequently made profits, these profits are added to the equity of the majority to the extent of covering the losses that have already been covered by the majority’s on behalf of the minority.

3. Associates • Associates are entities over which the Group has significant influence but not control, generally accompanying a shareholding in these entities of between 20% and 50% of the voting rights. • Investments in associates are accounted for using the equity method of accounting. Investments are measured on initial recognition at cost. • Goodwill arising from investment in associates is stated within investment cost net of accumulated impairment. • The Group’s share of its associates’ post-acquisition profit and loss is recognised in the statement of income, and its share of post-acquisition movements in reserves is recognised in reserves. The carrying value of investment is adjusted against the Group’s share in post-acquisition changes in equity. • When the Group’s share of losses in associates equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate. • Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Company’s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies applied in the associates are adjusted when necessary to ensure consistency with the policies adopted by the Group.

282 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) C) Segment reporting Business segments are reported in line with the reports provided internally to the senior management, which makes decisions related to resources allocation and evaluation of segments’ performance in the Group. The senior management is represented in Group’s executive management committee. The segment reports are provided to the Group based on each company, as each subsidiary is considered a separate business segment.

D) Foreign currency translation (1) Functional and presentation currency Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which the Group operates (the ‘‘functional currency’). The consolidated financial statements are presented in Egyptian Pounds (‘‘EGP’’), which is the Group’s functional and presentation currency.

(2) Transactions and balances Foreign currency transactions during the year are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the revaluation of monetary assets and liabilities denominated in foreign currencies at the consolidated balance sheet date are recognised in the consolidated statement of income.

E) Fixed assets Fixed assets are stated at historical cost less accumulated depreciation. Historical cost includes all expenses that are attributable to the acquisition of the asset and bringing it to a ready-for-use condition. All expenses incurred by the Company to acquire or construct fixed assets are recognised within ‘‘projects under construction’’. When the fixed asset is commissioned and brought to ready-for-use condition, the asset’s value is be transferred to the fixed assets. All repair and maintenance costs are charged to the statement of income during the fiscal year in which they are incurred. Major renovation costs are capitalised and included in the asset’s cost when they are expected to raise the expected pattern of the Company’s future economic benefits beyond the estimated original benefits when the asset was acquired and the costs of such additions can be reliably measured. These costs will be depreciated at the lower of the asset’s remaining useful life or the expected useful life of these renovations, the net carrying amount of the disposed part is eliminated. The straight-line method is used to calculate the depreciation by reducing the asset’s value to its salvage value over the estimated useful life except the land that is not considered a depreciable asset. The fixed assets’ salvage value and useful life are reviewed annually, and adjusted, if appropriate. The depreciation rates by type of asset are as follows:

Buildings ...... 2.5% Machinery, equipment and devices ...... 10% Furniture and fixtures ...... 15% Vehicles ...... 10% Computers ...... 25%

283 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

F) Intangible assets 1) Goodwill Goodwill results from the acquisition of subsidiaries and represents the excess of the cost of acquisition of shareholding in subsidiaries over the fair value of the Group’s share of the net assets of the acquired associate at the date of acquisition. Goodwill resulting from the acquisition of a subsidiary is included within intangible assets. The Group’s management conduct analysis annually or at shorter intervals, where there is an indication for impairment, to estimate whether the carrying value of goodwill is expected to be fully recovered, and reduce the carrying value of goodwill if it is higher than the expected recoverable amount. Any losses resulting from impairment of goodwill are charged to the income statement, and cannot be reversed subsequently. Profits and losses resulting from the disposal of investments in subsidiaries or associates comprise the carrying value of the goodwill related to the investment. Goodwill is allocated to cash generating units for the purpose of measurement of impairment. Allocation is made on cash generating units or a group of cash generating units that are expected to directly benefit from goodwill.

2) Trade name The trade name is included within intangible assets, represented in the name of Nile Badrawi Hospital Co. S.A.E., which result from the acquisition at fair value at the date of acquisition.

G) Inventories Inventories are measured at the lower of actual cost or net realisable value. Cost is determined using the weighted average method and includes purchase cost and other direct costs. The net realisable value comprises the estimated selling price in the ordinary course of business, less selling expenses. Allowance is made for slow moving inventories based on management’s assessment of inventory movements.

H) Financial assets 1) Classification The Company classifies its financial assets into the following categories at initial recognition depending on the purpose for which the financial assets were acquired: The management of the Company has classified its financial assets within the group of loans and receivables.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable values that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date. In this case, they are classified as non-current assets.

284 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) This category includes trade receivables, cash on hand and at banks, and due from related parties.

2) Initial and subsequent measurement: 1—Financial assets are measured on acquisition at fair value plus transaction costs. 2—Financial assets are derecognised when the right to receive cash flows from such assets has expired or has been transferred and the Company has transferred substantially all risks and rewards of ownership. 3—Loans and receivables are subsequently measured at amortised cost using the effective interest method.

3) Impairment of financial assets: Assets recognised at amortised cost The Company assesses, at end of reporting period, whether there is evidence that a financial asset or a group of financial assets is impaired. Impairment of a financial asset or group of financial assets is recognised if an impairment indicator exists as a result of one or more events that occurred after the initial recognition (a ‘‘loss event’’) and if the loss event (or events) has an impact on the future cash flows of the financial asset or group of financial assets that can be reliably measured. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing financial difficulty, default or delinquency in payments, the probability that they will enter bankruptcy or other financial reorganisation and where observable data indicate that there is a decrease in the estimated future cash flows, such as future changes or economic conditions that correlate with the impairment evidence. Fixed assets’ impairment loss is measured at amortised cost, which is the difference between the asset’s carrying amount and the present value of the estimated future cash flows (after eliminating future losses that have not occurred) discounted at the original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the statement of income. If, in a subsequent period, the amount of the impairment decreases and the decrease can be related to an event occurring after the initial recognition (such as an improvement in the debtor’s credit rating), the reversal of the impairment is recognised in the statement of income.

I) Impairment of non-financial assets: Intangible assets that have an indefinite useful life, and so are not depreciated, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in the statement of income for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows. Reversal of impairment losses recognised in prior years is recorded when there is an indication that impairment losses recognised for the asset no longer exist or have decreased. Loss of impairment, which should not exceed the fair value that will be determined (net of depreciation), is reversed. Such reversal is recognised in the statement of income, excluding goodwill.

285 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) J) Issued and paid up capital Ordinary shares are classified as equity.

K) Legal reserve As required by the Company’s Articles of Association, 5% of the net profit shall be transferred to constitute the legal reserve, once the financial statements are approved by the Company’s ordinary general assembly meeting. Such transfer may be discontinued when the reserve equals 50% of the issued and paid up capital. Whenever this reserve is lower than this percentage, the deduction should be continued. This reserve is not available for distribution.

L) Provisions Provisions are recognised when the Company has a (legal or constructive) obligation as a result of past events; it is expected that this settlement will result in an outflow of the Company’s resources, which ensures that economic benefits will arise; and it is probable that the resource usage will be required to settle the obligation and a reliable estimate of the amount of this obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

M) Suppliers and notes payables Suppliers and notes payables are obligations to pay for goods and services that have been acquired in the ordinary course of business. Suppliers and notes payables are initially recognised at fair value of products and services received from others, whether they have been billed or not. Long term liabilities are recognised at their present value, and suppliers and notes payables are subsequently shown at amortised cost using the effective interest method.

N) Borrowings Borrowings are recognised initially at the amount of the proceeds received, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost using the effective interest method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of income over the period of the borrowings using the effective yield method. Borrowing costs that are directly attributable to the acquisition, construction or production of qualifying assets are capitalised as part of the costs of those assets. The cost of borrowing, which is capitalised, is determined based on actual borrowing costs, which are incurred by the Group during the year due to borrowing process, less any income realised from the temporary investment of funds borrowed. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the date of the financial statements.

O) Employees’ benefits (1) Employees’ share of profit According to the Companies Law, the Group pays 10% of its cash dividends to its employees up to a maximum equal to the total salaries of the latest fiscal year before distribution. Employees’ share of profit is recognised as dividends in equity and as a liability when approved by the

286 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) Shareholders’ General Assembly. No liability is recognised for employees’ share of profit relating to undistributed profits.

(2) Pension and insurance scheme The Group pays contributions to the Public Authority for Social Insurance on a mandatory basis in accordance with the rules of Social Security Law. The Group has no further payment obligations other than those that have been paid. The regular contributions are recognised as periodic costs for the year in which they are due and as such are included in staff costs.

P) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable, including cash balances, trade and notes payable for rendering medical services and sale of medicine throughout the Group’s ordinary course of business, and bet of sales taxes, deductions or discounts. Revenues are recognised when the amount of revenue can be reliably measured; when it is probable that future economic benefits related to the sale process or service provision will flow to the Group; and when other specific criteria have been met for each of the Group’s activities as described below. The revenue amount is not considered reliably measurable unless all contingent liabilities are settled. The Group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

(1) Medical services revenues The Group renders several medical services, including surgeries, admission, medical supervision, analyses, investigations, x-rays and outpatient services. Revenue from medical service income is recognised when the service is rendered to the patient.

(2) Sale of medicine revenues The Group sells medicine through the hospital pharmacy or when giving them to inpatients admitted in the hospital. The Group recognises the revenues of medicines when the patient receives the medicine or when the medicine is used for the treatment of inpatients.

(3) Rental income The Groups rents spaces to others. Such rental is recognised in the statement of income over the period of the lease.

(4) Interest income Interest income is recognised on a time-proportion basis using the effective interest method. When a receivable generated from the recognition of interest is impaired, the carrying amount will be reduced to its recoverable amount.

Q) Leases 1) Finance lease Leases are accounted for in accordance with Law 95 for the year 1995 if the leasee is not obliged to purchase the asset at the end of the lease term; the lease is registered in the register of the EFSA’s register; the lease grants the leasee the right to purchase the assets at a definite date and a definite amount; and the contract period represents at least 75% of the expected useful life of

287 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

2. Accounting policies (Continued) the asset, at least, or the present value of the total lease payments represents at least 90% of the value of the asset. The cost of lease, including the cost of maintenance of the leased assets are recognised as an expense in the consolidated statement of income for the period in which they occurred. If the Group decides to exercise the right to purchase the leased assets, the cost of the right to purchase is capitalised as a fixed asset, which is depreciated over the useful life of the expected remaining life of the asset in the same method followed with similar assets.

2) Operating lease Leases in which the lessor retains the risks and rewards of ownership are classified as operating leases. Payments made under operating leases net of any discounts received from the lessor are recognised as expense in the statement of income on a straight-line basis over the period of the lease.

R) Current and deferred income tax The income tax for the year is calculated based on the tax laws enacted at the balance sheet date. Management periodically evaluates tax situation through tax returns, taking into account the differences that may arise from some interpretations issued by administrative or regulatory authorities, and establishes provisions where appropriate based on amounts expected to be paid to the tax authority. Deferred income tax is fully recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. The deferred income taxes are not accounted for if it arises from initial recognition of an asset or liability other than those arising from business combination that at the time of the transaction affects neither accounting nor taxable income. Deferred income tax is determined using tax rates in accordance with the law prevailing at the consolidated balance sheet date that are expected to apply when the deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available, against which the temporary differences can be utilised.

S) Dividends Dividends are recognised in the Company’s consolidated financial statements in the period in which the dividends are approved by Company’s General Assembly of Shareholders approves the dividends.

T) Cash and cash equivalents For the purpose of preparation of consolidated statement of cash flows, cash and cash equivalents includes cash in hand, bank current accounts, and term deposits with maturities of three months of the date of placement.

288 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (1) Financial risk factors The Group’s activities expose it to a variety of financial risks; market risk (including the risk of fluctuations in foreign currency, and risk of change in interest rate), credit risk and liquidity risk. The Group is not exposed to price risk, as it does not have financial assets at fair value through profit and loss. The Group’s management aims to minimise potential adverse effects of such risks on the financial performance of the Group by the monitoring process performed by the Finance Department and General Manager of each company, and the Executive Committee at the level of the Parent Company. The Group does not use any derivative financial instruments to hedge specific risks.

(A) Market risk i) Risk of fluctuations in foreign currency rates Foreign currency risk represents the changes in foreign currency rates, which impact the payments and receipts denominated in foreign currencies, as well as the evaluation of foreign currency assets and liabilities. Given the nature of the Group’s activities, the Group does not undertake transactions denominated in foreign currencies as it carries out all purchases in Egyptian Pound. The Group’s very limited revenue in foreign currencies are generated from certain foreign embassies. Management is of the opinion that the foreign currency balances are considered immaterial. At the end of the year, the net foreign currency financial assets denominated in EGP was as follows:

2015 2014 US Dollars ...... 56,716 1,071,459 Euros ...... 18,896 118,678

ii) Fair value and cash flow interest rate risk The Parent Company obtained a long-term loan at interest rate linked to the corridor declared by the Central Bank of Egypt, and therefore, it is not exposed to cash flow risks. Management believe the effect is not material due to the amount and maturities of these balances.

(B) Credit risk Credit risk arises from cash at banks, as well as credit exposures to Group’s customers. The Executive Management of each Company, Central Finance Department and Executive Committee at the level of the Parent Company manage the credit risks for the Group as a whole. For banks, the Company deals with banks with high credit ratings and creditworthiness that are regulated by the Central Bank of Egypt. For customers, the Financial Director and the General Manager of each hospital perform analysis on the credit risk for each potential credit customer in accordance with the Group’s policies, including Cleopatra Hospital or subsidiaries. The Parent Company’s Executive Committee follows-up the compliance with credit terms, and reviews default cases and debt ageing report to take the necessary decisions whether to cancel the credit or to refer the defaulted customer to the Legal Department for their necessary actions.

289 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (Continued) The management establishes a provision for impairment of 100% for defaulted customers for more than 150 days from the invoice date, in addition to a provision based on the historical default rates. Balances exposed to credit risks are as follows:

2015 2014 Cash at banks ...... 109,353,010 53,398,420 Trade receivables ...... 112,340,748 38,179,376

(C) Liquidity risk The management makes cash flow projections on a monthly basis, which are discussed during the Executive Committee’s meeting, and takes the necessary actions to negotiate with suppliers, follow-up the collection process and manage the inventory balances in order to ensure sufficient cash is maintained to discharge the Group’s liabilities. The table below shows the Company’s liabilities at the balance sheet date by maturity:

Less than 3 months to More than 3 months 1 year 1 to 5 years 5 years Trade and notes payables ...... 44,293,491 1,586,307 — — Due to related parties ...... — — — 47,379,723 Borrowings ...... — 40,600,000 162,400,000 —

(2) Capital risk management The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital as is the case for other companies operating in the same field. The Parent Company’s management monitors capital on the basis of the net debt to total capital ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings and creditors and other credit balances less cash on hand and at banks. Total capital is represented in net debt plus total equity as shown in the balance sheet. Net debt to total capital ratio as at 31 December 2015 and 31 December 2014 is as follows:

2015 2014 Creditors and other credit balances ...... 139,930,019 29,852,391 Borrowings ...... 203,000,000 — Less: Cash in hand and at banks ...... (109,906,869) (53,632,054) Net debt ...... 233,023,150 (23,779,663) Total equity ...... 159,216,599 135,332,196 Total capital ...... 392,239,749 111,552,533 Net debt to total capital ratio ...... 59% (21,32)% Net debt to total capital ratio changed due to the loan obtained by the Company during the financial year ended 31 December 2015.

290 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

3. Financial risk management (Continued) (3) Fair values estimation The fair value of current financial assets and liabilities approximates their carrying amounts after taking into account the impairment. The Parent Company availed a long-term loan from an Egyptian bank, and the management believes that the fair value of the loan approximates its carrying amount as it was issued at a variable rate linked to the interest rate corridor declared by the Central Bank of Egypt.

4. Critical accounting estimates, assumptions and judgements Estimates and assumptions are evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will seldom equal the actual results.

(1) Provisions Provisions are recognised when there is a present legal or constructive obligation as a result of past events, and it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. The Group reviews the provision at each balance sheet date, and adjusts it to reflect the current best estimate by using the appropriate advisory experience of experts.

(2) Impairment of goodwill The Group’s management evaluates goodwill annually to determine any impairment in goodwill. The carrying amount of goodwill is reduced if it is higher than the expected recoverable amount. Any losses as a result of impairment of goodwill is charged to the statement of income, and cannot be reversed subsequently.

(3) Impairment of trade receivables Impairment of trade receivables is estimated by monitoring ageing of receivables. The Group’s management examines the credit position and ability of debtors and customers to make payments for their past due debts. Impairment is recognised for amounts due from debtors and customers whose credit position does not allow them to pay their dues as believed by the management. Further appropriate allowance is made for losses incurred but not yet identified by reference to historical loss rate.

5. Segment reporting Business segments are reported in line with the reports provided internally to the senior management, which makes decisions related to resources allocation and evaluation of segments’ performance in the Group, represented in Group’s executive management committee. The segment reports are provided to the Group based on each company, as each subsidiary is considered a separate business segment.

291 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

5. Segment reporting (Continued) Below is a summary of each segment, which is presented for one full year for each segment:

Cairo Cleopatra Specialised Nile Badrawi Hospital Hospital Hospital Company Company Company Balance sheet: Non-current assets ...... 427,851,466 25,678,386 18,884,960 Current assets ...... 99,658,411 82,793,359 51,291,592 Total assets ...... 527,509,877 108,471,745 70,176,552 Current liabilities ...... 109,580,657 40,341,609 35,267,169 Non-current liabilities ...... 217,906,819 1,727,506 — Total liabilities ...... 327,487,476 42,069,115 35,267,169 Statement of income: Operating revenue ...... 332,002,699 149,377,454 121,307,079 Operating costs ...... (214,407,386) (111,849,380) (81,601,341) Gross profit ...... 117,595,313 37,528,074 39,705,738 Other expense and revenues ...... (52,905,108) (20,279,719) (36,093,249) Profit for the year ...... 64,690,205 17,248,355 3,612,489 Other items Capital expenditure ...... 5,594,200 7,372,987 1,233,595 Fixed assets depreciation ...... 6,425,945 3,380,552 1,136,282

292 — (711,150) (933,856) (789,335) 7,152,719 3,468,778 9,410,849 (1,206,063) (1,182,875) 11,227,273 112,754,921 316,056,490 Projects 5,532,870 — — (5,532,870) Originally issued in Arabic (44,505) (839,915) — (2,754) (429) (46,253) — (253,417) (19,800) — (2,026) — — (435,907) 3,030,767 620,825 — 2,919,284 170,123 411,720 — 2,561,205 220,310 — — 620,640 66,623 — 3,484,947 1,269,198 — 4,412,275 174,166 70,263 — 7,720,110 1,079,284 — 386,953 — 490,496 1,550,430 (1,012,163) (64,782) — — (105,930) — — (1,025,363) (74,770) — — (105,930) — — Machinery 50,857,66712,444,679 3,056,303 1,414,531 14,967,000 27,170,313 — 1,189,997 10,854,674 1,086,725 68,239 748,878 5,532,870 62,787,629 — 66,604,247 63,302,34648,839,063 4,470,834 14,967,000 2,500,260 38,024,987 2,276,722 817,117 — 5,532,870 7,935,390 129,391,876 1,022,532 337,158 — 60,634,403 61,766,504 4,325,294 14,967,000 38,024,987 1,762,012 750,494 5,532,870 127,129,161 49,980,643 5,360,997 69,264,635 138,201,039 1,612,693 1,030,024 1,599,921 267,049,952 50,857,66776,558,602 3,056,303 10,404,764 — — 10,854,674 21,558,387 1,086,725 1,723,118 2,510,050 748,878 — — 66,604,247 63,302,346 4,470,834 14,967,000 38,024,987 2,276,722 817,117 5,532,870 129,391,876 Equipment Furniture & under Total and devices fixtures Land Buildings Vehicles Computers construction 2015 130,731,926 14,141,456 — 36,823,505 2,983,795 3,300,000 — 187,980,682 180,712,569 19,502,453 69,264,635 175,024,544 4,596,488 4,330,024 1,599,921 455,030,634 109,988,035 14,812,050 54,297,635 131,084,514 2,320,195 3,068,664 485,398 For the year ended 31For December 2015 Notes to the consolidated financial statements (Continued) ...... CLEOPATRA HOSPITAL COMPANY S.A.E. COMPANY AND ITS SUBSIDIARIES HOSPITAL CLEOPATRA ...... (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated) (All amounts in the notes are shown Egyptian Pounds ...... — — — ...... Net book value at 31 December 2014 Accumulated depreciation at 31 December 2014 Assets cost at 31 December 2014 Accumulated depreciation at 1 January 2014 depreciation of disposals Accumulated Charge for the year Disposals Additions Accumulated depreciation at 31 December 2015 Net book value at 31 December 2015 Balance at 1 January 2014 Transfers Fixed assets write-off Balance at 31 December 2015 Accumulated depreciation at 1 January 2015 assets on business combination Acquired depreciation of disposal and assets write-offAccumulated . .Charge for the year . . (169,290) (588,809) — (1,831) (214) (29,191) — Additions Disposals Acquired assets on business combination Acquired Balance at 1 January 2015 6. Fixed assets

293 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

7. Business combination and intangible assets

2015 Cost Goodwill Trade name Total Cost of intangible assets arising from business combination .... 75,853,020 21,342,000 97,195,020

Goodwill To calculate goodwill, Nile Badrawi Hospital Company S.A.E. was considered as a cash-generating unit, and goodwill resulting from acquisition was allocated to the company as a one unit. Recoverable amount of cash-generating unit is estimated by calculating the value in use, using pre-tax cash flows based on financial budgets approved by management, which cover a period of five years maximum. The management determines the specific assumptions of cash flow forecasts based on past experience and expectations of the market.

Trade name The fair value of the trade name is estimated by using relief from royalty method. This method determines the value by referring to the nominal royalty payments, which are provided when acquiring the asset compared with the license of the asset and trade name by a third party. a) Acquisition of Nile Badrawi Hospital Company S.A.E. On 22 September 2015, Cleopatra Hospital Company S.A.E. acquired 99.92% of the total shares of Nile Badrawi Hospital Company S.A.E. This acquisition resulted in increase of the cost of acquisition over the fair value of the net assets of the acquired company, which were recognised as intangible assets, as indicated in the table above. The Groups expects that the acquisition will result in increase of its market share and to achieve future economic benefits, and upgrade the services offered to patients of the Group’s hospitals. The goodwill amounting to approximately EGP 75 million, resulting from the acquisition, is attributed to the list of customers, relations with insurance companies and the available medical experience of the hospital’s employees. The fair value of the net liabilities, which represents the net of assets and liabilities, excluding intangible non-current assets, is calculated after taking into consideration the contingent liabilities at the date of acquisition and the provisions for the impairment of doubtful receivables. The revenue recognised in the consolidated statement of income, which is contributed by Nile Badrawi Hospital since the date of acquisition, amounted to approximately EGP 36 million, and the net profits for this period amounted to approximately EGP 1.4 million. Nile Badrawi Hospital Company S.A.E. was included in the consolidated financial statements starting from 1 October 2015, which is the date on which the acquirer actually established control over the subsidiary and

294 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

7. Business combination and intangible assets (Continued) the power of control on the financial and operating policies was transferred to the Group. Net acquired assets and goodwill is as follows:

EGP Cost of acquisition: Paid-up cash ...... 257,004,947 Direct costs of acquisition ...... 2,000,000 Minority interests at the date of acquisition ...... 130,200 Total cost of acquisition ...... 259,135,147 Fair value of acquired assets ...... (161,940,127) Intangible assets ...... 97,195,020

Assets and liabilities resulting from the acquisition of Nile Badrawi Hospital Company S.A.E. were determined on the basis of fair value at 30 September 2015 as follows:

EGP Lands ...... 52,838,000 Buildings and constructions ...... 105,770,472 Machinery and equipment ...... 21,921,515 Vehicles ...... 597,077 Projects under construction ...... 485,398 Computers ...... 129,207 Kits and tools ...... 266,213 Total Fair value of intangible assets ...... 182,007,882 Net liabilities at fair value ...... (20,067,755) Net fair value of acquired assets ...... 161,940,127 b) Acquisition of Cairo Specialised Hospital On 16 September 2015, Cleopatra Hospital Company S.A.E. acquired 52.7% of the total shares of Cairo Specialised Hospital Company S.A.E. These are the shares owned by Creed Healthcare Co. Ltd., at that time. The acquisition is made for a consideration of approximately EGP 107 million, the same value Creed Health Care Ltd. paid to acquire Cairo Specialised Hospital during June 2014. As this transaction took place between parties under common control (because Care Health Care Ltd., the owner of Cleopatra Hospital Company is itself 100% owned to Creed Health Care Ltd.) to restructure ownership of the group companies, predecessor accounting method is applied for the business combination of Cairo Specialised Hospital within the consolidated financial statements of Cleopatra Hospital Company. The difference between the values of acquisition amount to approximately EGP 107 million and the book value of the net assets of Cairo Specialised Hospital at the date of acquisition amounting to approximately EGP 62 million after taking into account the minority interests amounting to approximately EGP 31 million pounds at the acquisition date, is recognised as acquisition reserve amounting to approximately EGP 76 million. The revenue recognised in the consolidated statement of income, which is contributed by Cairo Specialised Hospital S.A.E. since the date of control transfer, amounted to approximately EGP 41.5 million, and the net profits for this period amounted to approximately EGP 4.5 million.

295 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

8. Held-to-maturity investments Held-to-maturity investments comprise investments in public housing bonds (compulsory) issued by the Ministry of Finance in favour of the Central Bank, which shall be recoverable on 11 July 2015. Such bonds were collected on 13 January 2016.

9. Inventories

2015 2014 Medical supply inventory ...... 12,929,305 5,206,952 Pharmacy inventory ...... 1,328,796 646,314 Other ...... 1,259,856 484,556 15,517,957 6,337,822

10. Trade receivables

2015 2014 Due from customers ...... 106,022,109 38,179,376 Income / (prepayments) from inpatients ...... 2,322,612 (510,136) Trade notes receivable ...... 6,318,639 — Less: Impairment of trade receivables ...... (24,676,776) (3,422,536) 89,986,584 34,246,704

The income from inpatients comprises the revenues that have not been billed at the balance sheet date for their stay because the procedures of the medical services have not been completed, net of amounts collected in advance during the period of their stay. Trade notes receivables represent the checks collected from customers, and those, which are not deposited in banks for subsequent collection. The movement of the provision for impairment is as follows:

2015 2014 Balance at 1 January ...... 3,422,536 3,427,021 Provision formed during the year ...... 8,457,898 555,915 Write-offs of provision for receivables during the year ...... (279,679) — Provisions no longer required ...... (778,867) (560,400) Effect of acquisition ...... 13,854,888 — Balance at 31 December ...... 24,676,776 3,422,536

Trade receivable balances, which have not been due till the balance sheet date and have no impairment indicators, amounted to EGP 71,181,598 (2014: EGP 29,062,479). At the balance sheet date, the balances that were past due but not impaired amounted to EGP 13,438,722 (2014: EGP 2,390,455) regarding customers and transactions with no history of default. The analysis of these balances’ useful lives is as follows:

2015 2014 Less than 1 month ...... 9,167,504 3,303,806 One to five months ...... 4,271,218 2,390,455

296 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

11. Debtors and other debit balances

2015 2014 Due from employees ...... 7,242,569 6,785,832 Withholding taxes ...... 6,673,121 3,016,415 Prepaid expenses ...... 3,069,905 441,235 Advances to suppliers ...... 719,126 220,263 Refundable deposits ...... 470,030 69,629 Due from related parties ...... 4,640 24,622,611 Sundry debtors ...... 957,611 23,599 Impairment in other receivables ...... (854,860) — 18,282,142 35,179,584

The movement of the provision for impairment is as follows:

2015 2014 Balance at 1 January ...... — — Provision formed during the year ...... 173,161 — Effect of acquisition of subsidiary ...... 681,699 — 854,860 —

12. Cash on hand and at banks

2015 2014 Cash on hand ...... 553,859 233,634 Current accounts ...... 46,463,887 32,583,452 Deposits ...... 62,889,123 20,814,968 109,906,869 53,632,054

Term deposits are held with local banks in the EGP and have maturity of up to 6 months from the date of placements with fixed rate ranging from 7% to 9% (2014: 7% to 9%).

2015 2014 Cash on hand and at banks ...... 109,906,869 53,632,054 Deposits with a maturity of more than 3 months from the date of placement (62,889,123) — Cash and cash equivalents ...... 47,017,746 53,632,054

13. Provisions

2015 2014 Provision for claims ...... 17,889,001 2,758,668 Provision against employees’ benefits ...... 910,057 552,484 Employees leave provision ...... 1,035,539 — Provision for stamp duty ...... 56,200 56,200 19,890,797 3,367,352

297 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

13. Provisions (Continued) The movement of provisions during the year is as follows:

2015 Effect of Provision Utilised Balance at acquisition of made during during the Balance at 1 January 2015 subsidiaries the year year 31 December 2015 Provision for claims ...... 2,758,668 19,436,433 2,307,000 (6,613,100) 17,889,001 Provision against employees’ benefits ...... 552,484 — 519,413 (161,840) 910,057 Employees’ leave provision .... — 439,367 596,172 — 1,035,539 Provision for stamp duty ...... 56,200 — — — 56,200 Total ...... 3,367,352 19,875,800 3,422,585 (6,774,940) 19,890,797

2014 Provision Utilised Balance at made during during the Balance at 1 January 2014 the year year 31 December 2014 Provision for claims ...... — 2,758,668 — 2,758,668 Provision against employees’ benefits ...... 712,888 120,234 (280,638) 552,484 Provision for stamp duty ...... 48,200 8,000 — 56,200 Total ...... 761,088 2,886,902 (280,638) 3,367,352

14. Creditors and other credit balances

2015 2014 Due to related parties (Note 27) ...... 47,379,723 — Suppliers and notes payable ...... 45,879,798 10,033,842 Accrued expenses ...... 22,360,166 4,736,837 Doctor fees ...... 8,732,694 7,541,479 Tax Authority ...... 8,076,340 5,519,768 Sundry creditors ...... 4,877,940 1,586,016 Social insurance ...... 1,111,470 — Deferred Income ...... 181,300 — Cash dividends ...... 149,217 — Deposits from others ...... 1,181,371 434,449 139,930,019 29,852,391 Less: Due to related parties—non-current portion ...... (47,379,723) — 92,550,296 29,852,391

Due to related parties is repayable to the Parent Company and a subsidiary. In accordance with an undertaking given by the Parent Company, these dues are not repaid before five years after the balance sheet date, provided that sufficient cash is maintained. These dues do not carry interest.

15. Borrowings The Company obtained a loan facility of EGP 203,000.000 from the Commercial International Bank to finance 100% to finance the acquisition of Cairo Specialized Hospital Company. The loan is repayable in

298 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

15. Borrowings (Continued) ten equal semi-annual instalments commencing 30 June 2016 until 31 December 2020 and carry an annual interest rate of 2.4% in addition to the interest rate of corridor declared by the Central Bank of Egypt. The borrowing balance is as follows:

2015 2014 Total loan amount ...... 203,000,000 — Less: Current portion of borrowings ...... (40,600,000) — Non-current portion of borrowings ...... 162,400,000 —

Main guarantees: • The Group has pledged its shares in the Cairo Specialized Hospital Company S.A.E. of 52.7% of the total shares in favour of the Commercial International Bank. • The Company has also pledged 51% of its shares held by the ultimate Parent Company (Care Healthcare Ltd.) in favour of the Commercial International Bank. • Subsequently, On 19 January 2016, Cleopatra Hospital Company obtained another loan of EGP 230 million from the Commercial International Bank. Care Healthcare Ltd. pledged its remaining shares as a guarantee for the bank’s loan, accordingly total mortgage reached 99.99%. • Cleopatra Hospital Company pledged the entire shares it owned in Al Shorouk Hospital as a guarantee for the same loan.

16. Share capital The issued and paid up capital comprises 8 million shares of EGP 10 each, totalling EGP 80 million. The underwriting was as follows:

Number of Nominal shares value Care Healthcare Ltd...... 7,999,998 79,999,980 Amr Abdul Kareem Tawheed Hilal ...... 1 10 Walid Fayez Said Bakr ...... 1 10 Total ...... 8,000,000 80,000,000

17. Reserves a. Legal reserve In accordance with the Law No. 159 of 1981 and the Company’s Articles of Association, 5% of the net profit for the year shall be transferred to the legal reserve. As proposed by the Board of Directors, this transfer may discontinued if the legal reserve reaches 50% of the issued capital. This reserve is not available for distribution to shareholders. b. Acquisition reserve This reserve represents the difference between the value of the acquisition by Cleopatra Hospital Company S.A.E. and the book value of the net assets and liabilities of Cairo Specialized Hospital Company S.A.E. at the acquisition date, as the two companies are under common control. The reason for

299 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

17. Reserves (Continued) the acquisition is restructuring of the Group companies. Therefore, the assets and liabilities of the subsidiary were transferred at historical cost. c. Below is the movement on reserves during the year:

2014 Balance at Provision made Balance at 1 January 2014 during the year 31 December 2014 Legal reserve ...... 9,594,619 2,042,935 11,637,554

2015 Balance at Provision made Balance at 1 January 2015 during the year 31 December 2015 Legal reserve ...... 11,637,554 2,190,106 13,827,660 Acquisition reserve ...... — (76,131,168) (76,131,168)

18. Minority interest

Share of Minority interests on Share Legal Retained settlement of capital reserve earnings acquisition Total Share of minority interests in the acquisition of subsidiaries ...... 12,787,080 8,098,271 10,130,813 103,260 31,119,424 Profit for the year ...... — — 2,130,631 — 2,130,631 Balance at 31 December 2015 ...... 12,787,080 8,098,271 12,261,444 103,260 33,250,055

19. Operating revenues

2015 2014 Surgeries revenues ...... 65,223,585 56,476,361 Outpatient clinics revenues ...... 70,723,297 49,733,100 Admission and medical supervision revenues ...... 101,998,867 52,961,487 Laboratories revenues ...... 36,738,522 26,915,816 Cardiac catheterization revenues ...... 35,724,685 24,939,813 Emergency revenues ...... 27,269,411 23,356,619 Radiology revenues ...... 22,246,087 18,707,928 Service charge revenues ...... 19,106,628 13,043,092 Pharmacy revenues ...... 6,045,715 5,478,787 Dentistry revenues ...... 8,334,904 8,603,861 physiotherapy revenues ...... 5,639,463 3,985,220 Heart tests revenues ...... 4,683,712 3,937,833 Endoscopy revenues ...... 3,069,576 2,154,897 Revenues of oncology Centre ...... 2,458,596 — Other departments revenues ...... 326,741 — 409,589,789 290,294,814

300 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

20. Operating costs

2015 2014 Doctor fees ...... 93,212,405 67,449,039 Salaries, wages and benefits ...... 72,434,676 68,307,192 Medical and pharmaceutical supplies ...... 72,156,375 48,054,531 Maintenance, spare parts and energy costs ...... 12,322,784 5,320,526 Fixed assets depreciation and write-off ...... 9,232,637 6,530,433 Food, beverage and consumables costs ...... 8,773,367 6,859,972 Rents ...... 722,225 — Other expenses ...... 974,124 2,086,461 269,828,593 204,608,154

21. General and administrative expenses

2015 2014 Salaries, wages and benefits ...... 21,451,843 16,200,474 Impairment of trade receivables ...... 7,852,192 (4,485) Maintenance, spare parts and energy costs ...... 1,441,132 432,889 Professional and consulting fees ...... 2,763,297 189,522 Food, beverage and consumables costs ...... 1,215,690 246,913 Rent...... 1,057,351 351,384 Donations ...... 695,930 586,190 Government fees ...... 548,333 288,476 Fixed assets depreciation ...... 699,253 622,286 Other expenses ...... 2,948,221 1,756,876 40,673,242 20,670,525

22. Other income

2015 2014 Buffet income and cafeteria concessions ...... 1,010,748 361,687 Rents ...... 994,574 33,580 Gift corner revenue ...... 206,646 216,862 Sale of rags (scrap) revenue ...... 22,500 27,350 (Loss)/ gain on sale of fixed assets ...... (15,970) 39,112 Miscellaneous income ...... 302,857 — 2,521,355 678,591

301 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

23. Expenses by nature

2015 2014 Salaries, wages and benefits ...... 93,886,519 84,507,666 Doctor fees ...... 93,212,405 67,449,039 Medical and pharmaceutical supplies ...... 72,156,375 48,054,531 Food, beverage and consumables costs ...... 9,989,057 7,106,885 Fixed assets depreciation and write-off ...... 9,931,890 7,152,719 Maintenance, spare parts and energy costs ...... 13,763,916 5,753,414 Impairment of customers’ balances ...... 7,852,192 (4,485) Other expenses ...... 9,709,482 5,258,918 310,501,836 225,278,687

24. Financing income and finance cost

2015 2014 Finance income Interest Income ...... 6,160,009 2,068,573 Gain on currency translation ...... 93,527 18,078 6,253,536 2,086,651 Finance cost Interest expenses ...... (8,487,998) (3,235) Net finance income / (cost) ...... (2,234,462) 2,083,416

25. Income taxes Income tax expense as shown in the statement of income is as follows:

2015 2014 Current income tax for the year ...... (24,889,872) (21,372,222) Deferred tax (Note 26) ...... (2,166,243) 283,107 (27,056,115) (21,089,115)

The tax on profit before tax theoretically differs from the amount expected to be paid by applying the average tax rate applicable to the Group’s profits as follows:

2015 2014 Net profit before tax ...... 95,952,262 64,891,240 Income tax calculated based on the applicable local tax rate ...... 21,589,259 19,417,372 Add/ (less): Expenses not deductible for tax purposes ...... 5,696,627 1,671,743 Effect of applicable tax rate adjustment ...... (229,771) — Income tax ...... 27,056,115 21,089,115

302 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

25. Income taxes (Continued)

2015 2014 Current income tax liabilities Balance at 1 January ...... 21,372,222 13,996,640 Effect of acquisition of subsidiaries ...... 7,246,737 — Payments during the year ...... (21,372,222) (13,996,640) Current tax incurred during the year ...... 24,889,872 21,372,222 32,136,609 21,372,222

26. Deferred tax Change in tax assets and liabilities during the year is as follows:

Effect of (Expense)/ acquisition of income charged Balance at subsidiaries to the statement Balance at 1 January 2015 Asset/ of income 31 December (liability) (liability) during the year 2015 (liability) Liabilities Fixed assets ...... (2,297,712) 4,144,261 (3,976,042) (2,129,493) Fixed assets—effect of fair value ...... — (38,680,936) 101,195 (38,579,741) Intangible assets—effect of fair value ...... — (4,801,950) — (4,801,950) Total liabilities ...... (2,297,712) (39,338,625) (3,874,847) (45,511,184) Assets Provisions, excluding claims ...... — — 1,708,604 1,708,604 Net deferred tax—liability ...... (2,297,712) (39,338,625) (2,166,243) (43,802,580)

(Expense)/ income charged to the Balance at statement of Balance at 1 January 2014 income during 31 December (liability) the year 2014 (liability) Fixed assets—effect of accelerated depreciation ...... (2,580,819) 283,107 (2,297,712)

27. Related party transactions During the year, the Group made transactions with certain related parties. The Balances with related parties at the financial statements date as well as the transactions during the years are as follows: Balances of balance sheet:

Nature of transaction 2015 2014 (Related parties) Care Healthcare Ltd. (Parent Company) Accounts and other payables (Note 14) ...... financing 47,379,723 —

303 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

28. Tax position Cleopatra Hospital Company S.A.E. (1) Corporate taxes • The Company was inspected till 31 December 2013 • Tax returns are regularly submitted on time. • A tax clearance certificate was obtained from the tax authority up to 2013. • Years from 2014 to 2015 were not inspected.

(2) Sales taxes • The Company was inspected till 31 December 2004 • Years from 2005 to 2015 were not inspected.

(4) Stamp duty • The Company was inspected till 31 July 2006 and settlement was made. • The Company was inspected during the period from 1 August 2006 to 31 December 2013. The Company was notified, through a form No. 19 dated 23 April 2015, of tax assessment of EGP 72,966 for this period. The Company filed an objection to the assessment on 3 May 2015. The internal committee is in the process of fixing a date to resolve this issue. • Years from 2014 to 2015 were not inspected.

Cairo Specialized Hospital Co. S.A.E. (1) Corporate tax • The Company was inspected since the inception of activity to 2008, and all entitlements were paid. • The Company was not inspected from the years 2009 to 2015. Tax returns were filed annually in the legal due dates.

(2) Salaries tax • The Company was inspected since the inception of activity to 2009, and all entitlements were paid. • The Company was not inspected from the year 2010 till the end of the year 2015.

(3) Stamp duty • The Company was inspected since the inception of activity to 31 July 2006, and all entitlements were paid.

304 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

28. Tax position (Continued) • The Company was assessed on presumptive basis from August 2006 to 2015, and appeal was filed in the legal due date.

(4) Withholding tax • The Company was not inspected since the beginning of activity until 2014.

Nile Badrawi Hospital Co. S.A.E. (1) Corporate tax • Years to 2009 were settled, and all dues were paid until the end of 2009. • Form No.19 for 2010, 2011 and 2012 was issued under No.13833 on 18 August 2015. Appeal was filed against the legal due date. The internal committee is currently taking the necessary action. • No samples were issued for the Years 2013/ 2015 to date.

(2) Salaries tax • Years up to 2011 were inspected and settled. No tax is due for the years up to 2011. • Tax settlement is in progress for the years from 2012 to 2015.

(3) Stamp duty • Years up to 2005 were inspected and settled. • Years from 2006 to 2015 are currently inspected.

29. Commitments a.) Capital commitments Capital commitments related to fixed assets at financial year end, which are not yet due, amounted to nil (2014: EGP 517.310). b.) Rental liabilities Rental liabilities at financial year-end, which are not yet due, are as follows:

2015 2014 Less than 1 Year ...... 3,115,658 3,934,630 1 to 5 years ...... 2,083,019 4,553,413 Over 3 years ...... — 766,112

30. Subsequent events On 24 January 2016, the Group acquired 99% of Al Shorouk Hospital Company S.A.E. Actual control on financial and operating policies was transferred to the Group on 31 January 2016. The cost of acquisition of investment amounted to EGP 280 million, thus Al Shorouk Hospital Company turned into a subsidiary of Cleopatra Hospital Company S.A.E. Until the date of the preparation of the consolidated financial statements, procedures of conveyance have not been made to Cleopatra Hospital Company S.A.E. It is noteworthy that Al Shorouk Hospital Company will be fully consolidated within the first consolidated financial statements to be prepared after 31 January 2016.

305 CLEOPATRA HOSPITAL COMPANY S.A.E. AND ITS SUBSIDIARIES Originally issued in Arabic Notes to the consolidated financial statements (Continued) For the year ended 31 December 2015 (All amounts in the notes are shown in Egyptian Pounds unless otherwise stated)

30. Subsequent events (Continued) The fair value of tangible assets of Al Shorouk Hospital Company S.A.E amounted as follows:

EGP Lands ...... 26,903,626 Buildings ...... 53,807,254 Machinery and equipment ...... 23,168,000 Net other assets at fair value ...... 6,530,553 Net fair value of acquired assets ...... 110,409,433

306 PART 15 Definitions The following definitions apply throughout this Offering Memorandum unless the context requires otherwise:

‘‘2010 PD Amending Directive’’ ..... Directive (2010/73/EU) ‘‘Abraaj NAH’’ ...... Abraaj NAH Limited, an exempted company incorporated under the laws of the Cayman Islands with limited liability (registered number MC-286462) ‘‘Al Shorouk’’ ...... the hospital run by Al Shorouk Hospital Company ‘‘Al Shorouk Hospital Company’’ .... Al Shorouk Hospital Company S.A.E. ‘‘Board’’ ...... the board of directors of the Company ‘‘BMI’’ ...... Business Monitor International ‘‘CAGR’’ ...... compound annual growth rate ‘‘Cairo Specialized Hospital’’ ...... the hospital run by Cairo Specialized Hospital Company ‘‘Cairo Specialized Hospital Company’’ ...... Cairo Specialized Hospital Company S.A.E. ‘‘Capital Market Law’’ ...... the Egyptian Law No. 95 of 1992 ‘‘CAPMAS’’ ...... the Central Agency for Public Mobilization and Statistics of Egypt ‘‘Care Healthcare’’ ...... Care Healthcare Limited ‘‘CCO’’ ...... The Curative Care Organization ‘‘Cleopatra’’ ...... the hospital run by Cleopatra Hospital Company ‘‘Cleopatra Hospital Company’’ or ‘‘Company’’ ...... Cleopatra Hospital Company S.A.E. ‘‘Closed Subscription’’ ...... the offer to the Selling Shareholder by the Company, following completion of the Combined Offer, of the right to subscribe for up to 40,000,000 new Shares at the Offer Price ‘‘Closed Subscription Shares’’ ...... the new Shares to be offered to the Selling Shareholder by the Company pursuant to the Closed Subscription ‘‘CMA’’ ...... the Egyptian Capital Market Authority ‘‘Combined Offer’’ ...... the Egyptian Retail Offer and the International Offer ‘‘Commencement of Trading’’ ...... commencement of trading in Shares on the EGX, expected to take place on 2 June 2016 ‘‘Companies Law’’ ...... Egyptian Law No. 159 of 1981 and its Executive Regulations, as amended ‘‘DEG’’ ...... DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH, a private limited company incorporated under the laws of Germany ‘‘Directors’’ ...... the Executive Directors and the Non-Executive Directors ‘‘EAS’’ ...... Egyptian Accounting Standards ‘‘EBRD’’ ...... European Bank for Reconstruction and Development, an international organisation formed by treaty ‘‘EEA’’ ...... the European Economic Area ‘‘EEAA’’ ...... the Egyptian Environmental Affairs Agency

307 ‘‘EFG Hermes’’ ...... EFG Hermes Promoting and Underwriting ‘‘EFSA’’ ...... Egyptian Financial Supervisory Authority ‘‘EGP’’ ...... Egyptian pounds, the lawful currency of Egypt ‘‘Egyptian Income Tax Law’’ ...... Income Tax Law No. 91 of 2005 as amended by Law no. 53 of 2014 and Law no. 96 of 2015 ‘‘Egyptian Retail Offer’’ ...... the offering of Egyptian Retail Offer Shares by the Company in a domestic retail offering in Egypt ‘‘Egyptian Retail Offer Shares’’ ..... the Shares to be offered in the Egyptian Retail Offer ‘‘EGX’’ ...... the Egyptian Exchange ‘‘Environmental Law’’ ...... the Law No. 4 for the year 1994 and its executive regulations ‘‘ERP’’ ...... enterprise resource planning system ‘‘Egypt’’ ...... the Arab Republic of Egypt ‘‘ESMA’’ ...... The European Securities and Markets Authority ‘‘ESMA/2013/319’’ ...... European Union Regulation 809/2004 and the content of the recommendation issued by ESMA for the consistent implementation of the regulation ‘‘EU’’ ...... the European Union ‘‘Executive Directors’’ ...... the executive directors of the Company ‘‘FPO’’ ...... the Egyptian law Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005, as amended ‘‘GAMCA’’...... Gulf Approved Medical Centres Association ‘‘GAFI’’ ...... General Authority for Investment and Free Zones, an affiliate of the Egyptian Ministry of Investment ‘‘GDP’’ ...... gross domestic product ‘‘Group’’ ...... Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company ‘‘Historical Financial Information’’ . . . the audited consolidated financial statements of the Company and its subsidiaries as at and for the year ended 31 December 2015 and the audited financial statements of Cleopatra Hospital Company, Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as at and for the three years ended 31 December 2015, 2014 and 2013 ‘‘ICU’’ ...... intensive care unit ‘‘IFA’’ ...... an independent financial adviser ‘‘IFRS’’ ...... International Financial Reporting Standards as issued by the International Accounting Standards Board ‘‘IMF’’ ...... International Monetary Fund ‘‘International Offer’’ ...... the offering of International Offer Shares by the Company to certain institutional investors in a number of countries, including Egypt but excluding the United States ‘‘International Offer Shares’’ ...... the Shares to be offered in the International Offer ‘‘Investment Law’’ ...... the Egyptian Investment Guarantees and Incentives Law No. 8 of 1997, as amended

308 ‘‘ISO’’ ...... International Organization for Standardization ‘‘JCI’’ ...... Joint Commission International ‘‘KPI’’ ...... key performance indicator ‘‘Labour Law’’ ...... the Law No. 12 for the year 2003 ‘‘Lashin’’ ...... Lashin for Plastic Industries S.A.E. ‘‘Listing’’ ...... the Shares being listed on the EGX, which occurred on 13 April 2016 ‘‘Local Custodian’’ ...... a local custodian within Egypt authorised by EFSA ‘‘LOGIC Report’’ ...... the report prepared by LOGIC Market Research, a market research company, for the Group ‘‘LTIP‘‘...... an employee long term incentive plan ‘‘Mandatory Lock-Up’’ ...... the restriction required by the EGX Listing Rules pursuant to which the Company is required to lock-up 51 per cent. of the Shares held by the Selling Shareholder until the later of (i) the publication of the second annual financial statements following Commencement of Trading or (ii) 24 months following Commencement of Trading ‘‘MCDR’’...... Misr for Central Clearing, Depositary and Registry ‘‘Medical Establishments Law’’ ..... the Egyptian Law No. 51 for the year 1981 and its executive regulations, as amended from time to time ‘‘MoHP’’...... the Egyptian Ministry of Health and Population ‘‘Nile Badrawi’’ ...... the hospital run by Nile Badrawi Hospital Company ‘‘Nile Badrawi Hospital Company’’ . . . Nile Badrawi Hospital Company S.A.E. ‘‘Non-GAAP Financial Measures’’. . . net debt, total capital, capital expenditure, gearing ratio, working capital, adjusted operating costs, adjusted gross profit, adjusted general and administrative expenses, EBITDA margin, adjusted EBITDA margin, EBITDA, pro forma EBITDA, pro forma net debt, adjusted EBITDA and adjusted profit for the year, each as defined in ‘‘Non-GAAP financial measures’’ in Part 2 (Presentation of Financial and Other Information) ‘‘Offer Price’’ ...... the price at which each Share is to be issued pursuant to the Combined Offer ‘‘Offer Price Range’’ ...... between EGP 8.75 and EGP 11.88 per Share ‘‘Offer Shares’’ ...... the Egyptian Retail Offer Shares, together with the International Offer Shares ‘‘Offering Memorandum’’ ...... this international offering memorandum ‘‘Operational License’’ the license issued by the relevant governor once a hospital obtains approval from the Medical Permanent Committee, is registered with the Egyptian Medical Syndicate and has satisfied all conditions and requirements of the Medical Establishments Law ‘‘Promotion Order ...... Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended ‘‘Pricing Statement’’ ...... the pricing statement to be published on or about 26 May 2016 by the Company detailing the Offer Price and related disclosures

309 ‘‘Proparco’’ ...... Societ´ e´ de Promotion et de Participation pour la Cooperation´ Economique S.A., a soci´et´e anonyme incorporated under the laws of France ‘‘Public Offering Notice’’ ...... the document to be issued in connection with the Egyptian Retail Offer ‘‘Qualified Investors’’ ...... persons who are ‘‘qualified investors’’ within the meaning of Article 2(1)(e) of the Prospectus Directive ‘‘Relevant Member State’’ ...... each member state of the EEA which has implemented the Prospectus Directive ‘‘Regulation S’’ ...... Regulation S under the U.S. Securities Act ‘‘Repatriation Fund’’ ...... the mechanism re-instituted by the Central Bank of Egypt in 2013 that allows foreign investors who access the Egyptian market through the Central Bank of Egypt to convert, without delay, the proceeds and dividends from their Egyptian investments to foreign currency through registered banks ‘‘Revolution’’ ...... the 25 January 2011 revolution in Egypt ‘‘Right of Reallocation’’ ...... the right of the Company and the Sole Global Coordinator to reallocate Offer Shares from the International Offer to the Egyptian Retail Offer ‘‘SEC’’ ...... the U.S. Securities and Exchange Commission ‘‘Selling Shareholder’’ ...... Care Healthcare ‘‘Shareholders’’ ...... the holders of Shares in the capital of the Company ‘‘Shares’’ ...... the ordinary shares of the Company, having the rights set out in the Statutes ‘‘Sole Global Coordinator’’ ...... EFG Hermes Promoting and Underwriting ‘‘Stabilisation’’ ...... the option for EFG Hermes, or any of its agents, to effect transactions in the Shares with a view to supporting or maintaining the market price of the Shares at a level higher than that which might have otherwise prevailed in the open market ‘‘Stabilisation Fund’’ ...... the stabilisation account into which EFG Hermes will deposit up to 15 per cent. of the gross proceeds of the Combined Offer pursuant to Stabilisation ‘‘Stabilisation Period’’ ...... the period starting on the date of Commencement of Trading and ending 30 days thereafter ‘‘Statutes’’ ...... the Statutes of the Company ‘‘Surtax’’ ...... effective from the 2014 tax year, an additional five per cent. income tax in Egypt being levied temporarily for three years, which has now been abolished from 2015 ‘‘THIO’’ ...... The Teaching Hospitals and Institutes Organization ‘‘U.K.’’ ...... the United Kingdom of Great Britain and Northern Ireland

310 ‘‘Unaudited Pro Forma Consolidated Financial Information’’ ...... the unaudited pro forma consolidated financial information prepared for illustrative purposes only to show the effect of the Company’s ownership of Al Shorouk Hospital Company as if the acquisition of that company had occurred on 31 December 2015 from a balance sheet perspective and to show the effect of the Company’s ownership of Cairo Specialized Hospital Company, Nile Badrawi Hospital Company and Al Shorouk Hospital Company as if the acquisition of each of those companies had occurred on 1 January 2015 from a statement of income perspective ‘‘Underwriting Agreement’’ ...... the underwriting agreement to be entered into on or about the date of the Pricing Statement among the Company, the Selling Shareholder and the Sole Global Coordinator described under the heading ‘‘Underwriting Arrangements’’ in Part 12 (Details of the Combined Offer) ‘‘Unified Code’’ ...... a unique, personalised stock exchange code for the EGX ‘‘United States’’ or ‘‘U.S.’’ ...... the United States of America, its territories and possessions, any State of the United States of America, and the District of Columbia ‘‘U.S. Securities Act’’ ...... the United States Securities Act of 1933, as amended ‘‘WHO’’ ...... World Health Organization

311 CLEOPATRA HOSPITAL COMPANY S.A.E.

39–41 Cleopatra Street Heliopolis Cairo Egypt

SELLING SHAREHOLDER

Care Healthcare Limited 85 St. John Street Valletta VLT 1165 Malta

SOLE GLOBAL COORDINATOR AND BOOKRUNNER

EFG Hermes Promoting and Underwriting B129, Phase 3 Smart Village, Km 28 Cairo Alexandria Desert Road Egypt

LEGAL ADVISERS TO THE COMPANY AND TO THE SELLING SHAREHOLDER

As to US and English law As to Egyptian law Freshfields Bruckhaus Deringer LLP Zulficar & Partners 65 Fleet Street Nile City Building, South Tower London EC4Y 1HS Eighth Floor, 2005 A Cornich El Nil United Kingdom Ramlet Beaulac, Cairo, Egypt 11221

LEGAL ADVISERS TO THE GLOBAL COORDINATOR AND BOOKRUNNER

As to US and English law As to Egyptian law Shearman & Sterling (London) LLP Matouk Bassiouny 9 Appold Street 12 Mohamed Ali Genah London EC2A 2AP Garden City United Kingdom Cairo, Egypt

MANAGER

Pharos Holding 7 Abu El Feda Street Zamalek 11211 Cairo, Egypt

AUDITORS OF THE COMPANY

Mansour & Co. PricewaterhouseCoopers (PricewaterhouseCoopers) Plot No 211, Second Sector, City Center New Cairo 11835 PO Box 170 New Cairo Egypt Merrill Corporation Ltd, London 16ZBC43301