THE EGYPT INVESTMENT COMPANY LIMITED
INTERIM REPORT 30 JUNE 2012 (UNAUDITED) The Egypt Investment Company Limited
Interim Report For the period ended 30 June 2012
Directors 1
Management and Administration 3
Report of the Investment Manager 4
Investment Portfolio 8
Financial Statements: Profit and Loss Account 10
Balance Sheet 11
Notes to the Financial Statements 12 THE EGYPT INVESTMENT COMPANY LIMITED DIRECTORS
Pierre C.A de Blonay (Chairman) Mr. de Blonay started his professional career in 1960 with Swiss Bank Corporation in London. In 1972, he joined Kidder, Peabody in Switzerland as an equity salesman. In 1980, he was elected Managing Director in charge of sales and asset management operations. He resigned in 1994 as Kidder, Peabody was taken over by PaineWebber and established himself as an independent financial consultant and money manager. Today, Mr. de Blonay is a member of the Board of a number of financial institutions including: - Banque Audi (Suisse) S.A. Geneva - Banque Baring Brothers Sturdza S.A. Geneva - Banque Paris, Bertrand, Sturdza S.A. Geneva - The Egyptian Growth Investment Company - The Concord Group International Funds - The Nile Growth Company - Castle Property Company - IREF Global Holdings (Bermuda) Ltd. - IREF Australia Holdings (Bermuda) Ltd. Mahmoud Abdel Aziz Mr. Abdel Aziz retired as Chairman & Managing Director of Commercial International Bank (Egypt) (CIB) in August 2002. Mr. Abdel Aziz headed the team responsible for setting strategic decisions that made CIB one of the leading private banks in the region. Since his graduation from Cairo University, Faculty of Commerce in 1961, he has worked in the field of banking. He was promoted to various positions at the Bank of Alexandria (previously known as Barclays) and the Central Bank of Egypt. He joined the National Bank of Egypt in 1977. He was also elected as the Chairman of the Bank’s Association of Egypt 1991-2000 in the same period he was the Chairman of the National Bank of Egypt. He was the first Egyptian to be elected as the Chairman of the Union of Arab Banks in 1992, being appointed for three consecutive terms. Mr. Abdel Aziz’s achievements in the Arab world have qualified him for many prizes. He was awarded the prize of the Banker of the year in 1994, according to a poll by World Today (Al Alam Al Youm) Newspaper; awarded the Banker’s lifetime Achievement Award for 1997 granted by the Arab Bankers’ Association of North America, Member of the International Who’s Who of Professional Organisations in 1998 and Foreign Manager of the Year 1999, awarded by Mannheim University (unternehmer Forum, Management Berater and VWD). He was made the Arab Banker of the year in 2000 by the Union of Arab Banks. During Mr. Abdel Aziz’s tenure as Chairman & Managing Director of CIB, the bank was awarded the prize of the Best Bank in Egypt for the Middle East Region & Africa for 6 consecutive years to the year 2000 by “Global Finance” and was awarded Best Bank in Egypt by EUROMONEY for 8 years. The Financial Times nominated the bank for the award of the year in September 2001. Peter Harwood (resigned with effect from 30 June 2012) A resident of Guernsey, he is an Advocate of the Royal Court of Guernsey and was a partner of Ozannes in Guernsey from 1983 to 2009, he remained as a consultant with Mourant Ozannes until December 2011. He was formerly Chairman of TSB Bank Channel Islands Limited and is a non-executive director of several listed investment funds. Mr Harwood was elected as a Deputy, and subsequently appointed as Chief Minister, of the States of Guernsey in May 2012. Nigel Melville Nigel Melville was Executive Chairman of Emtelle Holdings, a leading supplier of fibre optic cabling systems to the telecommunications sector, between 1996 and 2008.He is a director of a number of other public and private companies. Between 1972 and 1995, he was an investment banker with Barings, latterly as director responsible for international corporate finance. In 1995 he established Melville Partners to provide strategic consultancy to a range of international companies.
1 THE EGYPT INVESTMENT COMPANY LIMITED DIRECTORS
Mohamed Saleh Younes Mohamed S. Younes is the Chairman of Concord International Investments Group, LP. From July 1977 to December 1979 Mr. Younes was President of Industrial Holdings Limited in New York. Prior to that he was Head of International Corporate Finance and a member of the Board of Directors of Kidder, Peabody & Co. Incorporated. From December 1979 to February 1987 he was Chairman and Chief Executive of Kidder, Peabody International Limited. He has served on a number of advisory committees on securities-related issues, including the Advisory Committee on International Capital Markets to the Board of the New York Stock Exchange and the International Capital Committee of the Securities Industry Association, New York. He also served on the board of Euroclear Clearance Systems (Zurich), Baring Brothers (London) and UBAF Arab Bank (New York). Mr. Younes was a member of the board of Directors of the Central Bank of Egypt and of Al Borg Laboratory Limited. He is Vice Chairman of Pioneers Holding Company. He is also a member of the boards of Directors of IT Investments, Coral Growth Investments Limited, The Egyptian Growth Investment Company Limited, Egyptian Direct Investment Fund Limited, The IT-Concord-Misr Technology Venture Capital Fund Limited, Al Borg Laboratory Limited, Lecico Egypt, Bisco Misr and Coral Growth Investments (Parallel) Limited. Mr. Younes is also a member of the US-Egypt Business Council.
Frederick H.S. Allen Frederick Allen is an independent consultant focused on international affairs and on international cultural projects. He also advises financial institutions and corporations on the creation or restructuring of advisory boards. Mr.has Allenalso advisedwas first corporationsemployed by andMorgan financialGuaranty institutionsTrust onCompany the creationin 1960,or restructuringjoined that ofbank advisoryon a boards.full-time basis in 1963, and retired from J.P. Morgan Chase & Co. in 1999 ; he remained a consultant to that firm until 2009 as Executive Secretary of its International Council, a position previously held at JPMorgan since 1982. Other responsibilities at JPMorgan included Assistant to the Chairman (1976-81); cultural sponsorships; corporate communications, public affairs and press relations, and Middle East representative in Beirut. He was twice based in Paris, and was a director of J.P. Morgan (Suisse) in Geneva. Mr. Allen has served on the boards of various cultural and academic institutions and is currently on the Metropolitan Museum of Arts' Business Committee, the Morgan Library and Museum's Music Visiting Committee, and a board member of the American Foundation for the Paris School of Economics.
All the Directors are non-executive.
2 THE EGYPT INVESTMENT COMPANY LIMITED MANAGEMENT AND ADMINISTRATION
Investment Manager Independent Auditors Concord National (Cayman) Limited Ernst & Young LLP C/o Wardour Management Services Limited Royal Chambers Alamander Way St Julians Avenue Grand Pavilion St Peter Port PO Box 10147 Guernsey Grand Cayman GY1 4AF Cayman Islands KY1-1002
Administrator, Secretary, Registrar and Channel Islands Stock Exchange Sponsor Legal Advisers Butterfield Fulcrum Group (Guernsey) Limited Mourant Ozannes 2nd Floor 1 Le Marchant Street Regency Court St Peter Port Glategny Esplanade Guernsey St Peter Port GY1 4HP Guernsey GY1 3NQ
Custodian HSBC Bank, Cairo PO Box 126D, Zamalek Cairo Egypt
Registered Office 2nd Floor Regency Court Glategny Esplanade St Peter Port Guernsey GY1 3NQ
3 THE EGYPT INVESTMENT COMPANY LIMITED REPORT OF THE INVESTMENT MANAGER
Economic Overview and Recent Developments Egypt’s long anticipated free presidential elections took place in May (first round) and June. The results were contested and following an extensive judicial review, were announced in favour of Mohamed Morsi on June 24th. President Morsi secured 51.7 per cent. of the 25.6 million votes cast. In late July, President Morsi appointed the previous cabinet’s Minister of Water Resources and Irrigation, Hesham Kandil, as Prime Minister. A new cabinet was formed following the appointment with little change in the key finance and foreign affairs ministries. The parliament that was elected in late 2011 was dissolved on the basis of being unconstitutional and it is anticipated that a new parliament will be elected in the coming months. Constitutional reform is also in progress and it is hoped that the new constitution will be finalized before the end of the year. At 1.8 per cent. for the first nine months of 2011/2012 (9 months 2010/2011: 2.3 per cent.), GDP continues to grow at a rate significantly lower than recent historical averages. The current account balance deficit reached USD 6.4 billion in the first nine months of fiscal year 2011/2012 as compared with USD 4.7 billion at the end of the previous fiscal year. The balance of payments ran an overall deficit of USD 11.2 billion in the first nine months of fiscal year 2011/2012, a deterioration from its USD 8.0 billion level in the first half of 2011/2012. An overall balance of payments deficit of USD 5.5 billion was witnessed in the first nine months of 2010/2011. The budget deficit reached 4.7 per cent. of GDP in the first half of 2011/2012 as compared to 9.5 per cent. for the full fiscal 2010/2011 year. Foreign debt decreased to 12.8 per cent. of GDP in the first nine months of fiscal year 2011/2012 as compared with 15.2 per cent. of GDP during the first nine months of 2010/2011. Domestic debt increased to 75.4 per cent. of GDP as at March 2012 from 72.7 per cent. as at March 2011. The average inflation rate declined to 9.55 per cent. in December 2011 from its 11.0 per cent. level in fiscal year 2010/2011. The inflation rate has continued to decline, registering 6.39 per cent. in July 2012 down from 7.26 per cent. one month earlier. During the 2011 calendar year tourism revenues fell by 30.5 per cent., reaching USD 8.7 billion compared to USD 12.5 billion during 2010. For the first nine months of 2011/2012 tourism revenues reached USD 7.1 billion. Egyptian exports increased to USD 20.1 billion in the first nine months of fiscal year 2011/2012, of which 51.2 per cent. were not oil-related. Despite the political crisis, exports have continued to increase from their USD 18.9 billion level in the first nine months of 2010/2011. Remittances increased sharply in the first nine months of 2011/2012 compared to the same period a year earlier, registering USD 12.8 billion versus USD 8.9 billion respectively. Suez Canal revenues have been relatively resilient to the political uncertainty in Egypt. Revenues increased slightly to USD 3.9 billion for the first three quarters of fiscal year 2011/2012 as compared to USD 3.7 billion for the corresponding period in 2010/2011. The Egyptian pound depreciated by only 1.16 per cent. year-to-date (31 August 2012) and 3.77 per cent. during 2011 against the USD. This came at the expense of foreign reserves which declined to USD 15.1 billion in August 2012, down from USD 36 billion in December 2011. Import cover has declined to only 3.2 months which is uncharacteristically low for Egypt, underlying the urgency with which the current government must act in order to rectify the depleting reserves. The drivers of foreign currency including tourism, exports, expatriate remittances, Suez Canal receipts and FDI must rebound in order for the currency to maintain its stable levels. Standard and Poor’s rate both foreign currency and local currency long-term sovereign debt with a B rating. S&P also rates short-term foreign and local currency debt with a B rating. Fitch Ratings’ outlook on Egypt is negative with a B+ rating on long-term foreign currency debt and a B+ rating on long-term domestic debt. Moody’s rates both foreign and local currency long-term debt B2.
Concord National (Cayman) Limited The Egypt Investment Company Limited USD Share Class Change in Net Asset Value + Distributions Since Inception
350.0%
300.0% 4
250.0%
200.0%
30-Jun-12 217.80% 150.0%
100.0%
50.0%
0.0%
-50.0% Jun-96 Jan-98 Aug-99 Mar-01 Oct-02 Jun-04 Jan-06 Aug-07 Mar-09 Oct-10 Jun-12
Concord National (Cayman) Limited The Egypt Investment Company Limited EGP Share Class Change in Net Asset Value + Distributions Since Inception 630.0%
580.0%
530.0%
480.0%
430.0%
380.0% 30-Jun-12 463.56% 330.0%
280.0%
230.0%
180.0%
130.0%
80.0%
30.0%
-20.0% Jun-96 Jan-98 Aug-99 Mar-01 Nov-02 Jun-04 Jan-06 Aug-07 Mar-09 Oct-10 Jun-12 THE EGYPT INVESTMENT COMPANY LIMITED REPORT OF THE INVESTMENT MANAGER
Fund Performance US Dollar Share Class
Concord National (Cayman) Limited The Egypt Investment Company Limited USD Share Class Change in Net Asset Value + Distributions Since Inception
350.0%
300.0%
250.0%
200.0%
30-Jun-12 217.80% 150.0%
100.0%
50.0%
0.0%
-50.0% Jun-96 Jan-98 Aug-99 Mar-01 Oct-02 Jun-04 Jan-06 Aug-07 Mar-09 Oct-10 Jun-12
The NAV per USD share, including distributions, was USD 31.78 as at 30th June 2012. This represents an increase of 217.80 per cent. since inception and an increase of 12.28 per cent. in the first six months of 2012.
A distribution of USD 1.43 per share representing 5 per cent. of NAV was paid in June 2012.
5
Concord National (Cayman) Limited The Egypt Investment Company Limited EGP Share Class Change in Net Asset Value + Distributions Since Inception 630.0%
580.0%
530.0%
480.0%
430.0%
380.0% 30-Jun-12 463.56% 330.0%
280.0%
230.0%
180.0%
130.0%
80.0%
30.0%
-20.0% Jun-96 Jan-98 Aug-99 Mar-01 Nov-02 Jun-04 Jan-06 Aug-07 Mar-09 Oct-10 Jun-12 Concord National (Cayman) Limited The Egypt Investment Company Limited USD Share Class Change in Net Asset Value + Distributions Since Inception
350.0%
300.0%
250.0%
200.0%
30-Jun-12 217.80% 150.0%
100.0%
50.0%
0.0%
-50.0% Jun-96 Jan-98 Aug-99 Mar-01 Oct-02 Jun-04 Jan-06 Aug-07 Mar-09 Oct-10 Jun-12
THE EGYPT INVESTMENT COMPANY LIMITED REPORT OF THE INVESTMENT MANAGER
Fund Performance EGP Share Class
Concord National (Cayman) Limited The Egypt Investment Company Limited EGP Share Class Change in Net Asset Value + Distributions Since Inception 630.0%
580.0%
530.0%
480.0%
430.0%
380.0% 30-Jun-12 463.56% 330.0%
280.0%
230.0%
180.0%
130.0%
80.0%
30.0%
-20.0% Jun-96 Jan-98 Aug-99 Mar-01 Nov-02 Jun-04 Jan-06 Aug-07 Mar-09 Oct-10 Jun-12
The EGP NAV per share, including distributions, was EGP 191.33 as at 30th June 2012. This represents an increase of 463.56 per cent. since inception of the company and an increase of 12.76 per cent. in the first six months of 2012.
A distribution of EGP 8.63 per share representing 5 per cent. of NAV was paid in June 2012.
6 Concord National (Cayman) Limited The Egypt Investment Company Limited USD Share Class Change in Net Asset Value + Distributions Since Inception
350.0%
300.0%
250.0%
200.0%
30-Jun-12 217.80% 150.0%
100.0%
50.0%
0.0%
-50.0% Jun-96 Jan-98 Aug-99 Mar-01 Oct-02 Jun-04 Jan-06 Aug-07 Mar-09 Oct-10 Jun-12
Concord National (Cayman) Limited The Egypt Investment Company Limited EGP Share Class Change in Net Asset Value + Distributions Since Inception 630.0%
580.0%
530.0%
480.0%
430.0%
380.0% 30-Jun-12 463.56% 330.0%
280.0%
230.0%
180.0%
130.0%
80.0%
30.0%
-20.0% Jun-96 Jan-98 Aug-99 Mar-01 Nov-02 Jun-04 Jan-06 Aug-07 Mar-09 Oct-10 Jun-12
THE EGYPT INVESTMENT COMPANY LIMITED REPORT OF THE INVESTMENT MANAGER
Top Ten Holdings as at 30 June 2012
Percent of Investment Portfolio Commercial International Bank 5.78% National Societe Generale Bank 5.42% Egyptian International Pharmaceutical Industries 5.05% Orascom Construction Industries 4.77% Alexandria Mineral Oils Company 4.67% Telecom Egypt 4.15% Credit Agricole Egypt 4.02% Sidi Kerir Petrochemicals Company 3.76% Eastern Tobacco Company 3.54% Pioneers Holding 3.53%
Outlook and Conclusion Following a political vacuum for most of 2012, the presence of a president, prime minister and cabinet is highly reassuring. Delegates from the IMF have been able to return to Egypt to meet with these newly elected officials who, unlike their interim predecessors, are authorized to make decisions. It was recently announced that the terms of the proposed IMF loan have been accepted by the new Egyptian government. The amount has been revised upwards to USD 4.8 billion and is expected prior to year-end. These funds, in addition to monies already received from Qatar and other nations, are very positive for the Egyptian Pound. President Morsi has stated unequivocally that there will be no overnight devaluation of the Egyptian Pound and if the IMF funds are received on schedule, the need for a significant devaluation will be alleviated. Egyptian companies are for the most part fully operational and many remain profitable, albeit at a lower rate than in prior years. We continue to watch the economic and political developments very carefully and have maintained a conservative stance in the fund’s portfolio. We are now more confident following the recent developments and will be carefully increasing the fund’s equity allocation. The market has been primarily driven by local investors whose activity mostly tracks the country’s political developments. Foreign investor participation has increased in recent weeks as a result of greater confidence in the economy and less fears of a devaluation. As at August 31st 2012, the stock market rose by 45.60 per cent. since the beginning of the year; however, it still has a considerable way to go to recoup the losses made in 2011.
Laura Osman September 2012
7 THE EGYPT INVESTMENT COMPANY LIMITED INVESTMENT PORTFOLIO as at 30 June 2012
Number of Percentage Value Shares/Securities Sector/Security of Net Assets EGP Banking and Finance (December 2011: 9.45%)
982,230 Commercial International Bank (CIB) 5.78 25,498,691 1,956,836 Credit Agricole Egypt 4.02 17,748,503 824,889 National Société Generale Bank 5.42 23,921,781 3,790,000 Pioneers Holding 3.53 15,576,900 18.75 82,745,875
Construction and Materials (December 2011: 10.59%)
18,850 Al Ezz Al Dekhela Iron and Steel 2.15 9,457,988 175,999 Lecico Egypt (GDRs) 0.22 975,045 1,173,196 Lecico Egypt 1.47 6,487,779 36,359 Orascom Construction Industries (GDRs) 2.02 8,921,381 48,750 Orascom Construction Industries 2.75 12,117,788 155,415 Torah Portland Cement Company 1.06 4,662,450 429,263 Suez Cement Company 2.04 9,014,523 11.71 51,636,954
Chemicals and Fertilisers (December 2011: 5.54%)
475,275 Paints and Chemical Industries Company 3.41 15,066,218 1,348,130 Sidi Kerir Petrochemicals Company 3.76 16,595,480
7.17 31,661,698
Tobacco (December 2011: 2.82%)
195,203 Eastern Tobacco Company 3.54 15,614,288 3.54 15,614,288
Food/Food Related (December 2011: 2.42%)
343,124 Bisco Misr 2.71 11,964,734 2.71 11,964,734
Textiles (December 2011: 3.68%)
505,489 Oriental Weavers 2.05 9,033,088 2.05 9,033,088
Health Care (December 2011: 5.78%)
Egyptian International Pharmaceutical Industries 701,264 Company (EIPICO) 5.05 5.05 22,314,223 5.05 22,314,223
8 THE EGYPT INVESTMENT COMPANY LIMITED INVESTMENT PORTFOLIO - Continuation Shares (continued) as at 30 June 2012
Number of Percentage Value Shares/Securities Sector/Security of Net Assets EGP
Hotels (December 2011: 5.07%)
14,440 Club Ras Soma Hotel Company * 0.71 3,143,732 131,532 Egyptian Investment Company * 2.98 13,153,200 47,170 Misr Hotels Co (Hilton) 0.33 1,450,949 32,510 Soma Bay Hotel Company * 1.02 4,482,154 5.04 22,230,035
Housing & Real Estate (December 2011: 4.06%)
557,500 El Kahera Housing 0.56 2,475,300 867,819 Nasr City Housing 3.24 14,258,266 965,591 Heliopolis Housing 3.40 15,014,940 7.20 31,748,506
Technology (December 2011: 0.52%)
54,500 IT Investments Company SAE * 0.49 2,152,205 15,000 IT-Concord-Misr Technology Venture Capital Fund Limited * 0.00 - E-Knowledge Company 0.00 - 0.49 2,152,205
Telecommunications (December 2011: 6.82%)
174,000 Telecom Egypt 0.52 2,314,200 243,590 Telecom Egypt (GDRs) 3.63 16,012,322 4.15 18,326,522
Oil Processing (December 2011: 5.60%)
1,519,500 Maridive & Oil Services 2.32 10,218,539 237,293 Alexandria Mineral Oils Company 4.67 20,592,286 6.99 30,810,825
Bonds (December 2011: 4.98%)
24,000,000 Arab Republic of Egypt 8.75% 07.18.12 5.29 23,361,600 5.29 23,361,600
Treasury Bills (December 2011: 29.06%)
81,000,000 Egyptian Treasury Bill - 13% 07.03.12 18.34 80,913,544 18.34 80,913,544
Total Investments 98.48 434,514,097 Other Assets in Excess of Liabilities 1.52 6,697,268 Net Assets 100.00 441,211,365
* Unlisted investments
9 THE EGYPT INVESTMENT COMPANY LIMITED PROFIT AND LOSS ACCOUNT (Unaudited)
For the period from 1 January 2012 to 30 June 2012
2012 2011 Notes EGP EGP
Net gain / (loss) on investments 3 46,020,928 (61,570,397) Foreign Exchange (loss) / gain (53,493) 182,036
Investment income 4 13,307,062 17,070,580 Expenses 5 (5,335,015) (5,438,068) Net income before taxation 7,972,047 11,632,512
Withholding tax 16 (1,282,971) (644,336) Net income after taxation 6,689,076 10,988,176
Profit / (loss) for the period 52,656,511 (50,400,185)
Basic and Diluted earnings per participating redeemable preference shares - EGP Class 11 19.40 (18.57) Basic and Diluted earnings per participating redeemable preference shares - USD Class 11 19.40 (18.57)
All items in the above Statement are derived from continuing operations.
The notes on pages 12 to 24 form an integral part of these financial statements
10 THE EGYPT INVESTMENT COMPANY LIMITED BALANCE SHEET (Unaudited) as at 30 June 2012
Audited 30 June 2012 31 December 2011 Notes EGP EGP Assets Investments at fair value through profit and loss 3 434,514,097 397,164,407
Current assets Cash and cash equivalents 31,094,745 14,985,189 Receivables and prepayments 6 1,416,893 1,897,072 32,511,638 16,882,261
Total Assets 467,025,735 414,046,668
Liabilities Payables 7 25,814,370 2,010,425 25,814,370 2,010,425
Equity shareholders' funds Called up share capital 8 149,533 149,533 Share premium 8 149,515,750 149,515,750 Retained earnings 66,963,648 83,755,961 Capital reserve 9 213,106,829 167,139,394 Translation Reserve 11,475,605 11,475,605 441,211,365 412,036,243
Total liabilities and Equity 467,025,735 414,046,668
Net asset value per redeemable participating preference share - EGP class 12 EGP162.56 EGP151.82 Net asset value per redeemable participating preference share - USD class 12 USD26.83 USD25.17
Net asset value per management share 1.00 1.00 Net asset value per nominal share - -
11 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies The financial statements have been prepared under the historical cost convention as modified by the revaluation of investments, in accordance with United Kingdom accounting standards and The Companies (Guernsey) Law, 2008.
The preparation of financial statements requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities at the balance sheet date and the reported amounts of income and expenses during the reporting period. Actual results could differ from these estimates. Going Concern A fundamental principle of the preparation of financial statements in accordance with United Kingdom Accounting Standards is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realisation of assets and settlement of liabilities in the ordinary course of business. The Directors have reviewed the Company’s forecast activities, budgets and cash flows. As a result the Directors consider the Company has adequate financial resources and believe that the Company is well placed to manage its business risks successfully to continue in operational existence for the foreseeable future and hence that it is appropriate to prepare the financial statements on the going concern basis.
Investments at fair value The Company classifies all its investments at fair value through profit or loss category. These financial assets are designated as investments at fair value through profit or loss at inception on the basis that they are part of a financial assets group which are managed and their performance evaluated on a fair value basis in accordance with the risk management and investment strategies of the Company as set out in the Company’s constitutive documents. The financial information about these financial assets is provided internally on a fair value basis to the Investment Manager and to the Board of Directors.
All regular way purchases and sales of financial instruments are recognised on the trade date, which is the date that the Company commits to purchase or sell an asset. Regular way purchases or sales are purchases or sales of financial instruments that require delivery of assets within the period generally established by regulation or convention in the market place. The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the rights to receive cash flows from the financial asset and the transfer qualifies for derecognition in accordance with Financial Reporting Standard 26 (FRS 26) Financial Instruments: Recognition and measurement.
Most of the Company’s investments are listed and regularly traded on the Egyptian Exchange. This market is order driven where only one official closing price is available. As such, the Company uses the official closing prices to value these investments. All other securities, which are actively traded, for which market quotations are available are valued at the last bid price quoted on the valuation point or, if there is no trade on that date, at the latest available quoted market price.
Where there is a lack of readily ascertainable market values for the unlisted investment or listed investments with no active trading and an inherent uncertainty involved in valuing them then valuation is according to the International Private Equity and Venture Capital (“IPEVC”) valuation guidelines, using price earning multiples, as deemed appropriate by the Directors. An average P/E of similar companies listed on the stock exchange was calculated and a discount is applied to that P/E.
12 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies (continued) Investments at fair value (continued)
Changes in the fair value of investments classified as at fair value through profit or loss are recorded in net gain / (loss) on financial assets at fair value through profit or loss in the profit and loss account (note 3).
Realised gains and losses on the disposal of investments classified as at fair value through profit or loss are recorded in net gain / (loss) on financial assets at fair value through profit or loss in the profit and loss account (note 3). Cash and cash equivalents Cash and cash equivalents comprise cash at banks and on hand and short term deposits with an original maturity of three months or less. Income Income represents bank interest on bank and cash deposits, and investment income. Investment income represents dividend income which is generated from the equity portfolio and is accounted for when the right to receive it is established. Interest income generated on all interest bearing financial instruments is recognised using the effective interest method. Bank interest is accounted for on an accruals basis.
Expenses Operating expenses are accounted for on an accruals basis. The Company is responsible for all normal operating expenses including investment managers fees, directors fees and charges incurred on the acquisition and realisation of investments. Foreign currencies The Company changed its presentation and functional currency from United States Dollars (“USD”) to Egyptian Pound (“EGP”) with effect from 1 January 2010.
The Directors had considered the primary economic environment of the Company and the currency in which the original finance was raised, the currency in which receipts from operating activities are usually retained and ultimately would be returned to investors on a break up basis (US Dollar). The Directors had also considered the currency to which the underlying investments (denominated in EGP) are exposed. On balance, the Directors had previously believed that the US Dollar best represented the functional currency of the Company. Following the creation of a new EGP share class, the Directors decided that the functional currency that most faithfully represents the economic effects of the underlying transactions, events and conditions was no longer the US Dollar and decided to change the functional currency from to Egyptian Pounds effective 1 January 2010. The presentation currency was also changed as a consequence of the above change. This change has been accounted for in accordance with FRS 23, The Effects of Changes in Foreign Exchange Rates (FRS 23). In accordance with FRS 23, the effect of a change in functional currency is accounted for prospectively with the result that the functional currency for the comparative year remains unchanged. The net gains arising on translation of the comparative information into the presentation currency has been recorded in the Translation Reserve on the balance sheet.
2. Material Agreements a) Investment Management Agreement Investment management services are provided by Concord National (Cayman) Limited, a member of the Concord Investments Group, LP. A fee of 1.5 per cent. per annum of the Net Asset Value of each share class is payable to the Investment Manager quarterly in arrears. For the period ended 30 June 2012, fees paid to the Investment Manager by the Company amounted to EGP3,415,179 (30 June 2011: EGP3,843,405) of which EGP1,808,441 (31 December 2011: EGP1,678,609) remained outstanding at the period end.
b) Administration Agreement Administration, company secretarial and registrar services are provided by Butterfield Fulcrum Group (Guernsey) Limited. A fee of 0.15 per cent. of the Net Asset Value of each share class is payable monthly in arrears. The annual fee payable is subject to a minimum of £40,000 per annum for the Company. For the period ended 30 June 2012, fees paid to the Administrator by the Company amounted to EGP374,795 (30 June 2011: EGP384,778) of which EGP66,679 (31 December 2011: EGP55,169) remained outstanding at the period end.
13 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (continued)
2. Material Agreements (continued)
c) Custodian Agreement Custodian services have been provided by HSBC Limited, Cairo. A sliding scale of fees is payable, based on a percentage of the asset values of different types of assets held within the portfolio, quarterly in arrears. For the period ended 30 June 2012, fees paid to the Custodian by the Company amounted to EGP321,359 (30 June 2011: EGP365,748) of which EGP43,931 (31 December 2011: EGP31,721) remained outstanding at the period end.
d) Directors' fees The Chairman receives US$20,000 per annum and each of the other Directors receives US$15,000 per annum, payable yearly half in arrears and half in advance, with the exception of Mr Mohamed Younes, who has waived his entitlement to receive emoluments.
3. Financial Assets at fair value through profit and loss
30 Jun 2012 31 Dec 2011 EGP EGP
Opening Cost 498,923,332 490,129,584 Purchases 301,102,468 754,201,890 Sales (309,699,873) (774,011,677) Realised gains on sale on investments 11,238,265 28,603,535 Closing Cost 501,564,192 498,923,332
Unrealised loss on investments (67,050,095) (101,758,925)
Closing valuation 434,514,097 397,164,407
30 Jun 2012 30 Jun 2011 EGP EGP
Net gain/(loss) on financial assets at fair value through profit or loss Realised gains 11,238,265 27,510,440 Movement in unrealised losses 34,782,663 (89,080,837)
Total gains / (losses) 46,020,928 (61,570,397)
14 THE EGYPT INVESTMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued) 3. Investments at fair value through profit and loss (continued)
Fair Value of financial instruments The following table shows financial instruments recognised at fair value, analysed between those whose fair value is based on: - Quoted prices in active markets for identical assets or liabilities (Level 1); - Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and - Those with inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
At 30 June 2012, the financial assets at fair value through profit or loss were as follows:
Total Level 1 Level 2 Level 3
EGP EGP EGP EGP
Equities 330,238,953 306,332,617 975,045 22,931,291 Debt securities 104,275,144 104,275,144 - -
Total 434,514,097 410,607,761 975,045 22,931,291
The fair value of investments valued under Levels 1 to 3 as at 31 December 2011 were as follows: Total Level 1 Level 2 Level 3
EGP EGP EGP EGP
Equities 256,899,340 234,522,037 1,020,794 21,356,509 Debt securities 140,265,067 140,265,067 - -
Total 397,164,407 374,787,104 1,020,794 21,356,509
Level 3 reconciliation 30 Jun 2012 31 Dec 2011 Unlisted equities Unlisted equities
EGP EGP At 1 January 21,356,509 24,750,717 Total gains and losses through profit or loss 1,574,782 (3,394,208) At 30 June 22,931,291 21,356,509
The valuation of the unlisted hotel investments is based on an average price earnings multiple of similar companies listed on the stock exchange. However Egyptian Investment Company (EIC) was not valued based on a P/E multiple. EIC owns a portfolio of investments, with the majority of investments related to Soma Bay project. Some of its portfolio companies have not started operations yet, while other companies are still in their initial operational years and have not gained momentum yet. Given the nature of the EIC, being a portfolio composed of different companies at different stages of their lives, there are no listed comparable companies, to use for multiple valuations. The value is based on the par value per share of EGP100 which is also the acquisition cost. The eventual proceeds of realisation of these investments may inevitably differ from the estimated proceeds and the differences could be significant.
15 THE EGYPT INVESTMENT COMPANY LIMITED
NOTES TO THE FINANCIAL STATEMENTS (continued)
4. Investment Income 30 Jun 2012 30 Jun 2011 EGP EGP Dividend Income 12,099,490 15,808,553 Bond Income 1,050,000 1,050,000 Bank Interest 157,572 212,027
13,307,062 17,070,580
5. Expenses 30 Jun 2012 30 Jun 2011 EGP EGP Investment Manager's fees 3,415,179 3,843,405 (Note 2) General expenses 1,229,339 915,856 Directors remuneration (Note 2) 248,396 184,203 Custodian's fees and charges (Note 2) 321,359 365,748 Auditors' remuneration 120,742 128,856 5,335,015 5,438,068
6. Receivables and prepayments
30 Jun 2012 31 Dec 2011 EGP EGP Interest receivable 950,833 952,919 Dividends receivable - 909,102 Other receivables 466,060 35,051 1,416,893 1,897,072
7. Payables
30 Jun 2012 31 Dec 2011 EGP EGP Management fee 1,808,441 1,678,609 Administration fee 66,679 55,169 Audit fee 177,066 225,721 Dividend payable 23,481,388 - Other payables 280,796 50,926 25,814,370 2,010,425
16 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (continued)
8. Share Capital and Share Premium Number of Number of Share Capital Share Premium Shares Shares EGP EGP USD Class EGP Class a) Management Shares At 1 January 2012 and 30 June 2012 - 100 549 - b) Participating Redeemable Preference Shares At 1 January 2012 and 30 June 2012 1,754,063 959,999 148,984 149,515,750
The Company may redeem any shares held by a person not qualified to hold them and who has failed to comply with a request by the Company to transfer the same. The capital and assets of the Company shall on any winding up be applied first to repay capital paid up on participating redeemable preference shares, then to repay capital paid up on Management Shares and Nominal Shares.
Subject to the Directors exercising their discretion to operate the annual redemption facility, market conditions and certain limitations, holders of Participating Redeemable Preference Shares may on an annual basis, which commenced from 2002, request the redemption of all or part of their shareholdings for cash at a price to be decided by the Directors in their discretion but based on the prevailing Net Asset Value per Participating Redeemable Preference Share. Redemptions under any annual redemption facility will be restricted to 25 per cent. of the Company's share capital then in issue, with any excess redemption requests being scaled back pro rata. The operation of the annual redemption facility is at the sole discretion of the Directors.
Nominal Shares Nominal Shares may subsequently be converted and re-issued as Participating Redeemable Preference Shares. On a winding-up, the Nominal Shares rank, for the purpose of the return of capital paid up, after the repayment of capital paid up on the Shares and are not entitled to participate in any surplus assets. Nominal Shares do not carry any right to receive dividends.
Management Shares On a winding-up, the Management Shares rank, for the purpose of the return of capital paid up, after the return of capital paid up on the Participating Redeemable Preference Shares and the Nominal Shares but are not entitled to participate in any surplus assets. Management Shares do not carry any right to receive dividends.
17 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (continued)
9. Capital Reserve Realised Unrealised Realised Unrealised Gain on Loss on Loss Gain on Sale of Revaluation Foreign Foreign Investments of Investments Currency Currency Total EGP EGP EGP EGP EGP
At 1 January 2012 282,387,434 (101,642,333) (18,211,404) 4,605,697 167,139,394 Movement for the period 11,238,265 34,782,663 31,316 (84,809) 45,967,435
At 30 June 2012 293,625,699 (66,859,670) (18,180,088) 4,520,888 213,106,829
10 Capital Management The Company's objectives for managing capital are: 1. To invest the capital in investments meeting the description, risk exposure and expected return indicated in its offering memorandum and further restrict the purchase of more than 20% of net assets in securities of a single company. 2. The Company maintains sufficient liquidity to meet the operational expenses of the Company, and to meet redemption requests as they arise. Although the Company is closed ended, on an annual basis, redemption requests may be received. These redemption requests are settled at the discretion of the Directors and are also subject to further restrictions as noted in note 8. 3. The Board may exercise all the powers of the Company to borrow money, to give guarantees or to charge all or part of its undertakings and uncalled capital for any liability or obligation of the Company for a sum not exceeding 10% of the net asset value of the Company. The Company did not require such borrowings at the end of the year. The Company monitors capital on the basis of Net Asset Value over time. Refer to 12 for the NAV disclosure.
11. Earnings Per Participating Redeemable Preference Share The profit per Share has been calculated by dividing the profit for the period after tax of EGP52,656,511 (30 June 2011: loss of EGP50,400,185) by the weighted average number of Participating Redeemable Preference Shares in issue during the period of 2,714,062 (30 June 2011: 2,714,062).
12. Reconciliation of Net Asset Value per the Financial Statements to Published Net Asset Value The 25 June 2012 valuation was the latest published valuation before the Balance Sheet date. A reconciliation of the NAV's per share between the 25 June 2012 valuation and the NAV's per share as showing on the Balance Sheet is detailed as follows:
30 Jun 2012 30 Jun 2012 USD Class EGP Class Published Net Asset Value at 25 June 2012 27.98 169.44 Adjustments for updated investment valuations 0.31 1.90 Dividend payable adjustment (1.43) (8.63) Accrual adjustments 0 (0.03) (0.15) Net asset value per Participating Redeemable Preference Share at 30 June 2012 USD26.83 EGP162.56
18 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (continued)
13. Related Party Transactions Mohamed Younes is a Director of the Company and of Concord (BVI) International Limited, a member of the Concord International Investments Group, LP., the Investment Manager of the Company. A fee of 1.5 per cent. per annum of the Net Asset Value of each Share Class is payable to the Investment Manager quarterly in arrears. Mohamed Younes is also a director of several investee entities as described on page 2.
14. Reconciliation of Movements in Net assets attributable to participating redeemable shareholders
30 Jun 2012 31 Dec 2011 EGP EGP
Profit / (loss) for the period / year 52,656,511 (127,145,637) Dividends paid to shareholders (note 17) (23,481,389) (28,910,089)
At 1 January 2012 412,036,243 568,091,969
At 30 June 2012 441,211,365 412,036,243
Total assets 467,025,735 414,046,668 Accrued expenses (25,814,370) (2,010,425) Net assets 441,211,365 412,036,243
Attributable to Participating Redeemable Preference Shareholders 441,210,816 412,035,694 Attributable to Management Shareholders 549 549 Attributable to Nominal Shareholders - -
15. Financial Instruments and Risk Profile In accordance with its investment objectives and policies, the Company holds financial instruments which at any one time may comprise the following:
a. securities held in accordance with its investment objectives and policies; b. cash and short-term debtors and creditors arising directly from its operations; c. short-term borrowings to enhance the liquidity of the Company; d. derivative transactions including investments in warrants and forward currency contracts; and e. options or futures for hedging purposes. The financial instruments held by the Company at 30 June 2012 principally comprise equities listed on the Egyptian Stock Exchange and are thus subject to risk factors greater than those typically encountered in investing in securities of companies listed in major securities markets. The specific risks arising from the Company's exposure to these instruments and the board policies for managing these risks, which have been applied throughout the year, are summarised below:
19 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (continued)
15. Financial Instruments and Risk Profile (continued) Market Price Risk Market price risk is the risk that the fair value of future cash flows of financial instruments will fluctuate due to changes in levels of indices and the value of shares. Market price risk arises mainly from uncertainty about future prices of equity investments held. It represents the potential loss the Company might suffer through holding market positions in the face of price movements. Details of all investments held as at 30 June 2012 are listed in the investment portfolio including the comparative holdings within each industry sector. The Investment Manager manages the Company’s market price risk on a daily basis in accordance with the Company’s investment objective and policies. The Company’s overall market positions are monitored on a regular basis by the Board of Directors. Most of the Company’s investment portfolio consists primarily of equity investments listed on the Egyptian Stock Exchange. Regulations concerning reporting requirements and auditing standards for Egyptian companies may not afford the same degree of investor protection as that available in US or European markets. Accordingly, the Investment Manager may have access to less financial information and to potentially less reliable financial information on investment candidates and on the Company’s investments than would normally be the case in more sophisticated markets. This may increase the risk to the Company of suffering a loss as a result of business failures. Enforcement of legal rights may present additional considerations than in more developed jurisdictions. The Company’s prospectus details the limits placed on investing the net assets of the Company in individual positions. Risks associated with investment in Egypt, as in most emerging markets which could impact the market price, may include: a) controls on foreign investment, including those related to the level of foreign ownership, which may include the risk of expropriation, nationalisation and confiscation of assets, together with possible limitations on repatriation of invested capital; b) greater price volatility, substantially less liquidity and significantly smaller market capitalisation of its securities markets; c) more substantial government intervention in the economy, including restrictions on investing in companies or in industries deemed sensitive to its national interest; d) a lower level of government supervision and enforcement activity in its securities markets and the participants in those markets; and e) political uncertainty or diplomatic developments and social instability. The Investment Manager will provide benefit from its strong network developed within the investment and business communities in Egypt and its access to extensive, readily available research on Egyptian companies and the strong analytical resources at its disposal. Since the identification of attractive investment opportunities is difficult and involves a high degree of uncertainty, the expertise available will reduce this risk associated with investment decisions. All securities investments present a risk of loss of capital. The board through the Investment Manager moderates this risk through a careful selection of securities and other financial instruments within specified limits. At 30 June 2012, should the market price of investments subject to market price risk have increased or decreased by 5 per cent. with all other variables remaining constant, the increase or decrease in net assets attributable to holders of participating redeemable preference shares for the period would amount to approximately EGP21,725,705 (31 December 2011: EGP19,858,220).
Foreign Currency Risk Foreign currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Egyptian Pounds is the functional and presentational currency of the company. The majority of the Company's investment portfolio is invested in securities denominated in Egyptian Pounds, the reporting currency of the Company. The board through the Investment Manager has the power to manage exposure to currency movements by using forward currency contracts, by writing call-options and by purchasing put-options or currencies, subject to the investment restrictions set out in the Company's Scheme Particulars. No such instruments were held during the period end at the date of these financial statements.
20 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (continued)
15. Financial Instruments and Risk Profile (continued) Foreign Currency Risk (continued) The treatment of transactions in currencies other than Egyptian Pounds is set out in Note 1 to the Financial Statements under "Foreign Currencies". As at 30 June 2012, had the exchange rate between the Egyptian pound increased or decreased compared to the US dollar by 5% with all other variables held constant, the increase or decrease respectively in the profit or loss and in net assets attributable to holders of participating redeemable preference shares would amount to approximately EGP2,063,304 (31 December 2011: EGP1,883,803) arising due to the increase/decrease of Investments at fair value through profit or loss. The currency exposures of the Company as at 30 June 2012 were:
Other net assets / Investments (liabilities) Total EGP EGP EGP
Egyptian Pound 398,386,812 1,558,467 399,945,280 Sterling - (98,317) (98,317) US Dollar 36,127,285 5,237,118 41,364,403 434,514,097 6,697,268 441,211,365
The currency exposures of the Company as at 31 December 2011 were:
Other net assets / Investments (liabilities) Total EGP EGP EGP
Egyptian Pound 365,244,416 9,115,769 374,360,185 Sterling - (208,126) (208,126) US Dollar 31,919,991 5,964,193 37,884,184 397,164,407 14,871,836 412,036,243
Interest Rate Risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair values of financial instruments. It has not been the Company's policy to use derivative instruments to mitigate interest rate risk, as the Directors believe that the effectiveness of such instruments does not justify the costs. The Company may invest in fixed and floating rate securities. The income of the Company may be affected by changes to interest rates relevant to particular securities or as a result of the board being unable to secure similar returns on the expiry of contracts or sale of securities. The value of fixed interest securities may be affected by interest rate movements in the future. All of the interest bearing financial assets are in fixed income Egyptian government backed securities. This interest income is not subject to significant amounts of risk due to fluctuations in prevailing levels of market interest rates, however the fair value of the security may be affected by the interest rate movement in future. The following details the Company’s sensitivity to a 300 basis points increase and decrease in the bank deposit interest rates, representing management’s assessment of a reasonably possible change in interest rates. A 300 basis point increase / (decrease) in bank deposit interest rates would result in an increase / (decrease) of EGP4,061,097 / (EGP1,207,572) (31 December 2011: increase / (decrease) of EGP4,657,508 / (EGP2,465,857) in the profit or loss and the net assets attributable to the redeemable participating preference shareholders.
21 THE EGYPT INVESTMENT COMPANY LIMITED NOTES TO THE FINANCIAL STATEMENTS (continued)
15. Financial Instruments and Risk Profile (continued) Interest Rate Risk (continued) The Company receives an annual fixed coupon rate of 8.75% from the Arab Republic of Egypt 8.75% July 2012 bond (31 December 2011: 8.75%). The Company also holds an Egyptian Treasury Bill, traded at a price below par (EGP100). The Yield depends on what price it was purchased at as well as the price that it will be sold at. Assuming it is held until maturity, then there is no interest rate risk as the yield is received at purchase. The Company is exposed to changes in the fair value of its fixed income portfolio based on revaluing the fixed rate financial assets at the end of the reporting period, however the Company considers the impact of this fair value movement to be insignificant and as such it does not form part of the risk management strategy of the Company. These assets represent 23.66% of net assets attributable to participating preference shareholders (31 December 2011: 34.01%). Interest receivable on bank deposits will be affected by fluctuations in interest rates.
The Company's exposure to interest rate risk is as follows: Fixed Floating Non interest Interest rate Interest rate Bearing Total EGP EGP EGP EGP
Cash - 31,094,745 - 31,094,745 Investments 104,275,144 - 330,238,953 434,514,097 Other net liabilities - - (24,397,477) (24,397,477) Total net assets 104,275,144 31,094,745 305,841,476 441,211,365
The interest rate exposures of the Company as at 31 December 2011 were:
Fixed Floating Non interest Interest rate Interest rate Bearing Total EGP EGP EGP EGP
Cash - 14,985,189 - 14,985,189 Investments 140,265,067 - 256,899,340 397,164,407 Other net liabilities - - (113,353) (113,353) Total net assets 140,265,067 14,985,189 256,785,987 412,036,243
Credit Risk
Credit risk represents the risk that the counterparties to a financial instrument fail to discharge their obligation, contractual or otherwise, which causes the Company to suffer a financial loss.
Maximum exposure to Credit risk 30 Jun 2012 31 Dec 2011 EGP EGP
Cash at bank 31,094,745 14,985,189 Fixed Income Securities 104,275,144 140,265,067 Accrued Interest 950,833 952,919 136,320,722 156,203,175
22 NOTES TO THE FINANCIAL STATEMENTS (continued)
15. Financial Instruments and Risk Profile (continued) Credit Risk (continued)
All transactions in listed securities are settled/paid for upon delivery using approved brokers. The risk of default is considered minimal, as delivery of securities is only made once the broker has received payment. Payment is made in turn on a purchase only once the securities have been received by the broker. The trade will fail if either party fails to meet its obligation. The fixed income securities that the Company has invested in are comprised of short-term Treasury Notes (EGP80,913,544) and a bond with a maturity date of 18 July 2012 (EGP23,361,600) issued by the Egyptian government. Standard & Poor's currently has a B credit rating for both short-term and long-term Egyptian Pound denominated bonds.
Liquidity Risk Many of the Company's Investments are listed on the Egyptian Stock Exchange. Liquidity and trading values can be an issue in the Egyptian securities markets and opportunities for the accumulation and disposal of holdings may, on occasion, be limited. The Company held 5.2% (31 December 2011: 5.29%) of net assets in unlisted securities at the balance sheet date. Liquidity risk is defined as the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities. Liquidity risk arises because of the possibility that the Company could be required to pay its liabilities earlier than expected. The nature of these investments is generally of a long term nature. The closed- ended nature of the Company enables the Investments Advisor to manage the risk of illiquid investments as this minimizes the risk of cash redemptions of the redeemable shares. Refer to note 8 for further details. The Company may not purchase any security which is not listed or traded on a stock exchange or regulated market (or for which an application for admission to listing or for permission to trade has not been made) if, as a result, more than 15 per cent of its Net Asset Value (NAV) would be invested in such securities, according to the terms of its Articles and laws of the Egyptian Stock Exchange. Infrequently traded investments are valued as described in note 1. Such valuations may not necessarily accurately reflect the intrinsic value of these investments and therefore realisation proceeds of such investments may be significantly different. In addition, the Company holds no debt and its policy is to maintain sufficient cash and cash equivalents to meet normal operating requirements, such as expense requirements. The table below analyses the Company's financial assets and liabilities into relevant maturity groups based on the remaining period at the Balance Sheet date to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting is not significant.
Less than 1-12 no stated 1 month months > 1 Year maturity Total EGP EGP EGP EGP EGP
Financial assets at fair value through profit or loss 104,275,144 - - 330,238,953 434,514,097 Other receivables and prepayments 950,833 466,060 - - 1,416,893 Cash at bank 31,094,745 - - - 31,094,745 Total financial assets 136,320,722 466,060 - 330,238,953 467,025,735
Other creditors 25,814,370 - - - 25,814,370
Total financial liabilities 25,814,370 - - - 25,814,370
23 NOTES TO THE FINANCIAL STATEMENTS (continued) 15. Financial Instruments and Risk Profile (continued) Liquidity Risk (continued)
The maturity groups as at 31 December 2011 were:
Less than 1-12 no stated Total 1 month months > 1 Year maturity EGP EGP EGP EGP EGP Financial assets at fair value through profit or 30,670,606 109,594,461 - 256,899,340 397,164,407 Otherloss receivables and prepayments 8,232 1,888,840 - - 1,897,072 Cash at bank 14,985,189 - - - 14,985,189 Total financial assets 45,664,027 111,483,301 - 256,899,340 414,046,668
Other creditors 2,010,245 - - - 2,010,245 Total financial liabilities 2,010,245 - - - 2,010,245
16. Taxation
The Company is exempt from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and accordingly was subject to the payment of a fee of £600 for the year. Interest from Egyptian Treasury bills is taxable at a rate of 20%. Witholding tax in Egypt of EGP1,282,971 was charged on the treasury bills received during the period ended 30 June 2012 (30 June 2011: EGP644,336).
17. DividendsDistribution
During the period the Board declared a dividend of 5% of the Company's published Net Asset Value at 25 May 2012. The ex-dividend date was 29 June 2012 and the pay date was 6 July 2012.
30 Jun 2012 30 Jun 2011 EGP EGP
USD Participating Shares - USD1.43 per share (2011 : USD1.80) 15,196,598 18,858,899 EGP Participating Shares - EGP8.63 per share (2011 : EGP10.47) 8,284,791 10,051,190
Total distributions 23,481,389 28,910,089
18. DividendsPost Balance Sheet event A resolution was passed at an EGM held on 27 June 2012 to reclassify the Company for Guernsey regulatory purposes as a registered open ended collective investment scheme under the Protection of Investors (Bailiwick of Guernsey), Law, 1987. The implementation of this resolution is expected to be completed in December 2012.
24