Egyptian Direct Investment Fund Limited

EGYPTIAN DIRECT INVESTMENT FUND LIMITED

ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2016 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Contents

Management and Administration 2

Directors 3

Investment Manager's Report 4-13

Report of the Directors 14-16

Independent Auditor's Report 17-18

Investment Portfolio 19

Statement of Comprehensive Income 20

Statement of Financial Position 21

Statement of Changes in Equity 22

Statement of Cash Flows 23

Notes to the Financial Statements 24-37

1 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Management and Administration

Directors Investment Manager Ove Hoegh (Chairman) (Resigned 30 April 2017) Stanhope Overseas Limited, Richard C. Blum Alamander Way, Grand Pavilion, Mohamed S. Younes West Bay Road, PO Box 10173, Andrew Maiden Grand Cayman, KY1 - 1002, Cayman Islands. Registered Office PO Box 255, Mailing Address: Trafalgar Court, c/o Concord International Investments, Les Banques, 610 Fifth Avenue, 6th Floor, St. Peter Port, Guernsey, New York, NY 10020. Channel Islands GY1 3QL. Administrator, Secretary and Registrar Legal Advisers Northern Trust International Fund Mourant Ozannes, Administration Services (Guernsey) Limited, 1 Le Marchant Street, PO Box 255, St. Peter Port, Guernsey, Trafalgar Court, Channel Islands GY1 4HP. Les Banques, St. Peter Port, Guernsey, Custodian Channel Islands GY1 3QL. Northern Trust (Guernsey) Limited, Trafalgar Court, Sponsor for The International Stock Exchange Les Banques, (formerly the Channel Islands Securities Exchange) St. Peter Port, Guernsey, Northern Trust International Fund Channel Islands GY1 3DA. Administration Services (Guernsey) Limited, PO Box 255, Auditor Trafalgar Court, Deloitte LLP, Les Banques, PO Box 137, St. Peter Port, Guernsey, Regency Court, Channel Islands GY1 3QL. Glategny Esplanade, St. Peter Port, Guernsey, Channel Islands GY1 3HW.

2 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Directors Ove Hoegh (Chairman) (Resigned 30 April 2017)

Ove Hoegh was senior partner of Hoegh Invest AS, a family owned company up to 2006. Mr. Hoegh is a graduate of the Royal Norwegian Naval Academy and has a Master of Business Administration degree from the Harvard Business School. He was Managing Director, 1966 to 1974, and Chairman, 1974 to 1979, of Leif Hoegh & Co AS. Mr. Hoegh has been on the board of a number of Norwegian companies and associations. He is currently a board member of Coral Growth Investments Limited and Coral Growth Investments (Parallel) Limited and also for Ledlight Group AS. He is now a private investor with no affiliation to Hoegh Family affairs.

Richard C. Blum

Richard C. Blum is Chairman of Blum Capital Partners, L.P., a long-term strategic equity investment management firm which acts as general partner for various investment partnerships and provides investment advisory services. Mr. Blum currently serves as a member of the Board of Directors of CBRE Group, Inc., a global market leader in real estate services. He is also a director of Pacific Alliance Group Holdings, Ltd., Coral Growth Investments Ltd., Astar USA LLC and he was co-founder of Newbridge Capital (now TPG Asia). Mr. Blum is the former Chairman of the University of California Board of Regents, where he continues to serve as a Regent, as well as a member of the Advisory Board for the Haas School of Business at the University of California, Berkeley. He also serves as a member of the Federal Reserve Bank Economic Advisory Council and the President’s Global Development Council. Mr. Blum founded the American Himalayan Foundation and Blum Center for Developing Economies at the University of California, Berkeley. He is the Honorary Consul of Nepal. Additionally, Mr. Blum serves on the board of trustees of the following not-for-profits: The Asian Art Museum Foundation, California Academy of Sciences, The Carter Center, Central European University, Glide Foundation, Simon Wiesenthal Center Inc. and The Wilderness Society. He is also an Honorary Trustee for The Brookings Institute, a member of the Board of Directors for the National Democratic Institute and is on the Council of Advisors for National Geographic International. Mr. Blum earned both his B.A. and M.B.A. from the University of California at Berkeley. In 2006 he received an honorary doctoral degree from the University of San Francisco’s McLaren College of Business. Most recently, he was awarded the Haas School of Business’ Lifetime Achievement Award.

Andrew Maiden

Andrew has nearly 18 years’ experience in the offshore fund administration industry, including open and closed ended investment funds, property and real estate structures and private equity vehicles. He has an extensive knowledge of the day to day fund administration service requirements, in addition to experience with the structuring and set-up of a variety of funds in multiple locations. He holds a number of board appointments in other investment companies. He is resident in Guernsey. He is deemed to be independent since 26 June 2015.

Mohamed S. Younes

Mr. Younes is the Chairman of the Concord Group. 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., Inc. From December 1979 to February 1987 he was Chairman and Chief Executive of Kidder, Peabody International Limited. He was appointed Chairman of the Concord Group in 1988 and concurrently served as Chairman of Baring Brothers Co., Inc., the New York based corporate finance affiliate of Baring Brothers Co., Limited, until 1992. Mr. Younes is a graduate of Cairo University and has a Master of Business Administration Degree from the Harvard Business School. 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. Mr. Younes was a member of the Board of Directors of the Central Bank of Egypt. Mr. Younes also served as the Chairman of the International Advisory Board of the Cairo Stock Exchange and was a founder and member of the Board of Directors of the Egyptian Investment Management Association. He is also a director of the Egyptian Investment Company, The Egypt Investment Company Limited and Lecico Egypt.

3 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report for the year ended 31 December 2016

I. Recent Events

The Egyptian government has recently undertaken several measures to induce economic growth and there have been several positive developments on many fronts:

. The Central Bank of Egypt (CBE) has introduced 4 amendments to its SME initiative circular: integrating very small enterprises with small ones, doubling to 2 years financing granted to enterprises with revenues under EGP10m without audited financial statements, inclusion of renewable energy financing and increasing subsidy financing to EGP40m per client, granting banks some EGP10bn in tranches at 12% interest to use in the short term and working capital financing.

. On a related note, the Egyptian government approved the establishment of an SME development authority under the supervision of the Ministry of Trade and Industry to replace the Social Fund for Development (SFD). The new authority will be responsible for setting strategies and programs to encourage SMEs as well as help investors with procedures related to land acquisition and licensing.

. The government has managed to help 66 distressed plants resume operations, and is currently looking into solutions for some other 69 plants.

. Egypt has achieved over 60% of its USD10bn foreign direct investment target for FY16/17, according to the Minister of Investment and International Cooperation.

. British Petroleum has made a third gas discovery in its North Damietta offshore concession in Egypt and has started natural gas production from 2 fields in its West Nile Delta development which are currently producing at a rate of 0.7 bcf/day (and expected to raise Egypt’s gas production to 5.1 bcf/day from 4.45 bcf/day). It also successfully connected 0.6 bcf/day of gas from its West Nile Delta concession to the National Grid.

. Egypt has paid Eni its financial obligation of USD630m under the Zohr gas field development deal.

. Egypt has begun receiving oil products from Saudi Aramco and renewed an agreement with Kuwait to import 1.5m tons of refined petroleum products and 24m bbl per year over the next 3 years.

. The European Bank for Reconstruction and Development, the International Finance Corporation, and the African Development Bank have all preliminarily agreed to finance the second phase of Egypt’s feed-in tariff program.

. Egypt’s government has started applying the smart-card system for the supply of fuel to the industrial sector and power plants.

. Egypt’s New Urban Communities Authority (NUCA) and the General Authority for Investment and Free Zones (GAFI) have approved the offering of 66 land plots with a combined area of over 1,600 acres across 19 cities, including New Cairo, Sixth of October, and Sheikh Zayed.

. Proceeds from the 7 plots offered by the government in the first phase of the new administrative capital stood at EGP10bn as it sold a total of 950 feddans. The government signed a preliminary agreement with China Fortune Land Development (CFLD) for USD10bn of investments over a period of 10 years for development works at the new administrative capital.

4 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

I. Recent Events (continued)

. Egypt’s Suez Canal Authority (SCA) will start a new ship fuelling station and logistics services to vessels crossing the Suez Canal in the South of the Suez Canal at an investment cost of USD600m and has already received 5 partnership offers from Saudi Arabia, Kuwait, the UAE, the Netherlands, and Russia. In addition, it signed a financing agreement with Sonker Bunkering Company to finance the latter’s USD500m liquid bulk terminal project at the Sokhna port.

. Suez Canal revenue increased 1.4% m-o-m and 6.5% y-o-y in April to USD430m. Worthy to note that the Suez Canal Authority has scrapped plans to collect discounted toll fees 3 years in advance from shipping companies.

. Egypt’s government is targeting by June 2017 to increase the number of beneficiaries of the Takaful and Karama program (a national targeted social safety net program) to 1.7m families, representing approximately 8m citizens. In addition, the parliament approved a 10% raise for state employees not addressed under the civil service law.

It has also passed several laws to enhance the investment climate and others to enact IMF directives:

. On May 8, Egypt’s parliament passed the new investment law. The law includes multiple new incentives, including a 50% tax discount on investments made in underdeveloped areas, a return to investors of half of what they pay to acquire land for industrial projects if production begins within 2 years. The law also restores private- sector free zones.

. On March 8, the Ministry of Finance issued the executive regulations of the value-added tax (VAT) law.

. The Egyptian State Council introduced a stamp tax on stock market transactions of 0.125% to rise to 0.15% in the second year, and reach 0.175% by the third year to replace the capital gains tax from 17 May 2017.

Egypt has received foreign aid packages and signed several investment agreements with its partners as well:

. Egypt expects to receive the USD1.25bn second tranche of the IMF loan by mid-July, according to the Minister of Finance.

. During late January, Egypt raised USD4bn in its triple-tranche international bond offering in North America, Europe, Asia, and the Middle East. The offer was covered 3 times with tenors of 5, 10 and 30 years and interest rates ranging from 6.125% to 8.5%. In late May, Egypt tapped USD3bn from the international debt market by reopening subscriptions in 5-year, 10-year and 30-year dollar-denominated Eurobonds with yields ranging from 5.45% to 7.95%, with a total coverage ratio of 4x.

. The World Bank has disbursed the second USD1bn tranche of its USD3bn loan to Egypt.

. Egypt has received the second USD0.5bn tranche of its USD1.5bn loan from the African Development Bank.

. The Organisation for Economic Cooperation and Development (OECD) has extended a EUR400m loan to Egypt to finance the logistics of the economic zone of the new Suez Canal bypass project.

. The European Investment Bank (EIB) lent USD500m to finance the first phase of the rehabilitation of Cairo Metro Line 1.

5 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

I. Recent Events (continued)

. The African Export-Import Bank has granted a USD300m financing facility to state-owned National Bank of Egypt (NBE) to support Egypt’s industrialisation efforts.

On 14 February, the parliament approved a cabinet reshuffle that includes new ministers of supply, agriculture, parliamentary affairs, local development, higher education, education, transportation, and planning. The reshuffle also merged the Ministry of Investment with the Ministry of International Cooperation, with the new joint ministry headed by Sahar Nasr, previously the minister of international cooperation.

There were further subsequent events to the Egyptian Pound floatation in November 2016:

. As of mid-February, total inflows into the Egyptian banking system have reached USD12.3bn since the EGP floatation, also backed by Egyptian remittances which rose 10.9% y-o-y in 1Q17 to USD4.6bn.

. The CBE has amended the policy governing banks’ use of excess USD liquidity to allow 50% to cover the import of non-essential goods, 25% for corporate repatriation, and 25% to be sold in the interbank market.

. At the beginning of May, state-owned Banque Misr has removed international spending limits on its issued credit cards.

. The CBE has launched an initiative to help Egyptian companies pay off debts under USD5m resulting from foreign currency differences following the EGP floatation. As of 5 March, the CBE sold USD420m to banks to cover for 580 clients with dues less than USD5m to Egyptian banks. The banks were conditioned to redeposit the amounts back with the CBE for a 2-year term at 3.65% interest. The CBE also instructed banks to extend the time period after which they can categorise the loans as non-performing.

. The IMF delegation tasked with the first economic review has advised the CBE to raise interest rates in an attempt to curb inflation. On 21 May, the CBE’s Monetary Policy Committee (MPC) raised the benchmark overnight deposit and lending rates by 200 bps each to 16.75% and 17.75%, respectively and raised the discount rate by 200 bps to 17.25%.

On a related note, the Egyptian Stock Exchange has seen several favorable effects as well:

. Foreign holdings in Egyptian treasuries have reached USD5.8bn at the end of April.

. In preparation for the IPO of Banque du Caire, the EGX has approved the listing of the bank’s shares. On a related note, NI Capital, has invited investment banks to submit offers to arrange for the initial public offering (IPO) of a stake in state-owned Enppi.

. Egypt’s new leasing contracts increased c15% y-o-y in 1Q17 to EGP6.6bn, while new mortgage finance loans more than doubled to EGP662m from EGP303m in 1Q16.

The government continued its efforts to support the country’s fragile tourism industry:

. The CBE has launched a EGP5bn initiative to extend loans to the sector to cover 75% of the refurbishment costs of hotels, Nile cruisers, and transportation fleets. The loans will carry a 10% interest rate and will have a maximum tenor of 10 years.

6 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

I. Recent Events (continued)

. It is worthy to note that Denmark, Finland, Norway, and Sweden removed their flight bans to South Sinai that have been in place for over a year, and earmarked Sharm El Sheikh, Dahab, and Saint Catherine as safe areas. Germany has also lifted its flight restrictions to the region.

. Egypt’s tourist arrivals rose c49% y-o-y in March to 654,900 tourists, while the number of tourist nights increased c119% y-o-y to 5.42m.

Egypt’s 3Q16/17 GDP growth accelerated to 3.9% y-o-y from 3.6% in 3Q15/16 and 3.8% in 2Q16/17, according to the minister of planning.

The International Monetary Fund (IMF) has cut its GDP growth forecasts for Egypt to 3.5% in FY16/17 from 4.0% previously, according to its April 2017 World Economic Outlook report. The IMF expects inflation to average 22.0% this fiscal year, up from 18.2% previously. As for the current account deficit, the IMF estimates now point to 5.3% of GDP in FY16/17, slightly up from 5.2% previously.

The World Bank expects Egypt’s GDP growth to slow down to 3.9% in FY16/17, before accelerating to 4.6% in FY17/18 and 5.3% in FY18/19.

Moody’s has confirmed a stable outlook for several Levant and North African countries, including Egypt, adding that it expects Egypt’s GDP to grow 4.0% in 2017 and 4.5% in 2018.

Fitch Ratings has assigned Egypt’s new senior unsecured bonds issued in January under the country’s global medium- term note (GMTN) program a ‘B’ rating.

S&P Global Ratings (S&PGR) affirmed Egypt’s stable outlook. The rating agency affirmed the ‘B-’ long-term outlook and ‘B’ short-term foreign and local currency sovereign rating.

Egypt’s net international reserves inched up to USD28.64bn in April from USD28.53bn in March.

The EGX 30 recorded 13,094 points on 25 May 2017. Year-to-date, it increased by 6.07% from 12,344 points on 29 December 2016.

II. CLUB RAS SOMA HOTEL COMPANY

Financial and Operational Update

(LE 000s) 2015 2016 % Change Net Revenues 37,842 21,835 -42% EBITDA 35,932 18,185 -50% Net Profit Before Taxes 37,461 39,6191 6% Tax 5,116 2,841 -45% Net Profit After Taxes 32,345 36,779 14% Earnings per share* 53.9 61.3 14%

The figures are based on audited accounts. *Earnings per share are annualised.

1Includes LE 27.1m FX gain

7 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

II. CLUB RAS SOMA HOTEL COMPANY (continued)

. The hotel’s revenue is a factor of the occupancy rates and total revenue per room sold. The hotel’s revenues in 2016 recorded LE 100.1 million versus LE 141.2 million in 2015 (drop of 29%) due to the hotel’s closure from January 2016 until 1 July 2016 for its scheduled renovation. The decline in revenues is in line with the drop in number of sold rooms by 55% as revenues reported pertain to 196 days only in 2016 compared to 366 days in 2015. The decline in sold rooms of 55% more than offset the increase in revenue /room sold which increased by 58% as it recorded LE 2,138 versus LE 1,357 in 2015 (partially affected by the depreciation of LE against the EUR which occurred in November 2016 to record LE 11.18/EUR2 versus LE 8.51/EUR in 2015). Total revenue /room sold increased in EUR terms by 20% from EUR 159 in 2015 to EUR 191 in 2016. . Gross profit of the hotel decreased by 55% from LE 50.8 million to LE 23 million in 2016, due to the hotel’s closure. It is worthy to note that in both the Rooms and Food & Beverage sectors, revenues have decreased by an average of 20-36% and while the margin in the Rooms sector was maintained at 90%, it declined in the F&B sector to 47% from 50%. This drop in profitability was further affected by an increase of 1% in Unallocated Overhead expenses which recorded LE 43.7 million in 2016 versus LE43.3 million in 2015, driven mainly by an increase in salaries expense of 10%. . Due to lower hotel revenues achieved in 2016, Management Company basic fees decreased by 29% to record LE 3 million versus LE 4.2 million in 2015. It is worth noting that included in the net revenues of LE 21.8 million, the hotel experienced an FX gain of LE 14.1 million on the revaluation of cash balances in 2016 versus LE 0.7.million in 2015, which helped the NOP to decrease at a slower rate of 42% to record LE 21.8 million versus LE 37.8 million in 2015. . As a result of the above, the hotel’s net operating profit (Revenues of the Owner Company) decreased from LE 37.8 million in 2015 to LE 21.8 million in 2016 (decrease of 42%). . The Company’s EBITDA decreased at a higher rate than the decrease in revenues, as it decreased by 49% from LE 35.9 million to LE 18.2 million in 2016. This was mainly due to an increase in SGA (Selling, General & Administrative expenses) by 8.3% as follows: o An increase in the management fees due to Abou Soma Development Company (ASDC) from LE 1.2 million in 2015 to LE 2.1 million in 2016 (73% increase) o Employment cost which increased from LE 0.3 million to LE 1.7 million in 2016 relating to the cost of 4 engineers, delegated from Abo Soma Development Company (ASDC), who oversaw the execution of part of the renovation project.

. Due to the revaluation of the owner Company's cash balances, the Company recorded LE 27.1 million in foreign exchange gain in 2016 versus LE 0.4 thousand loss in 2015 due to the November devaluation of the Egyptian Pound, included in net profit before tax. . Taxes decreased by 44% in 2016 to record LE 2.8 million versus LE 5.1 million in 2015. . The net profit after tax hence increased by 14% to record LE 36.8 million in 2016 versus LE 32.3 million in 2015. . EDIF has raised a legal case to annul the general assembly decision of Club Ras Soma Hotel Company that approved a service level agreement with Abo Soma Development Company "ASDC" for 2016. The case is currently channeled through courts. . The Company’s AGM which was held on 29 March 2017 approved the distribution of LE 60 million of profits to shareholders (gross of taxes and net of employee distribution) in two equal USD and Euro amounts. EDIF will receive a total of USD 154.5 thousand and EUR 143.4 thousand. . The Company’s AGM in March also approved by majority vote the renewal of the Service Level Agreement (SLA) with Abo Soma Development Company in 2017 with a 70% increase despite EDIF’s objection that proposed it to be 5% as stipulated in the contract. . The Company’s board meeting on March 30, 2017 approved extending a short-term loan for LE 11 million to Soma Bay Hotel Company in order to settle its long-standing environmental violation dating back to Dr. Farid Saad’s tenure. 2Year-average rate. 3World Tourism Organisation (UNWTO) 17 January 2017.

8 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

II. CLUB RAS SOMA HOTEL COMPANY (continued)

. According to the UNWTO World Tourism Barometer, international tourist arrivals increased by 3.9% during 20163. Asia and the Pacific recorded a growth of 8%, Africa enjoyed a strong rebound after two weaker years recording a growth of 8%. In the Americas, international arrivals increased by 4%, while Europe increased by 2%. Available data for the Middle East points to an estimated decrease of 4%. . As for Egypt, tourist arrivals for the first 9 months of 2016 experienced a decrease of 48% while tourist nights experienced a decline of 67% over the same period last year4. . Tourism receipts decreased by 64% from approximately USD 5.1 billion in Q3 2015 to USD 1.8 billion in Q3 2016. This was driven by a decrease in tourist nights of 67% coupled with an increase in the average spending per tourist night by 10% from $73.1 to $80.1. Investment Valuation The investment was made in July 2004 at a price per share of LE 1,800 (before the 1:10 stock split) which was a P/E multiple of 4.9 times 2004 expected earnings. A stock split of 1 to 10 was made during June 2005 as a prerequisite for listing the stock on the Egyptian Stock Exchange. The Company was listed at par on the stock exchange during December 2005, but there was no arm’s length transaction on the stock. However in March 2010, the Company was delisted, due to its inability to comply with the stock exchange regulations including; minimum number of shareholders, minimum percentage of shares offered for public/private subscription and minimum percentage of free floating shares, because the Company is closely held.

EDIF received a total of LE 200.955 per share in dividends over the holding period.

The Company has been valued historically using a P/E multiples valuation until September 2015. During January-June 2016, the hotel was closed for renovations and it was expected to make losses in that year. After reopening, the hotel’s occupancy started picking up to its normal rates before closure. Although the hotel produced some profit in 2016, a significant portion was the result of foreign exchange gain due to the November devaluation of the Egyptian Pound which nearly doubled foreign currency holdings in both the hotel and owner company, hence, P/E multiples would not provide a reliable estimate for valuation in 2016.

It is believed to keep the same valuation as of December 2015 which is based on the last reliable fair value estimate of 31 December 2014, based on FRS 102 guidelines for unlisted equities. The investment value will be held in the same manner until a reliable fair value estimate based on market values can be made -in 2017 P/E multiples will be used and applied once the company achieves a full year of profitable earnings deriving mainly from operations.

The Egyptian government’s decision to liberalise the currency on November 3, 2016 has negatively affected the value of the fund’s holdings denominated in Egyptian Pounds. The EGP was set to float freely against the USD and as of December 31, the USD/EGP rate stood at 18.13. This resulted in a Gross US dollar IRR of 6.6% and a Multiple of Cash (including dividends) of 1.6 times the invested funds.

The last dividend payment of LE 50.625 (half of which was paid in EUR) was received in EDIF’s account on the 31

III. SOMA BAY HOTEL COMPANY (LE 000s) 2015 2016 % Change Net Revenues6 (4,691) (10,199) 117% EBITDA (6,330) (13,097) 107% Net Loss Before Taxes (12,418) (22,149) 78% Tax (1,147) 1,115 -197% Net Loss After Taxes (11,271) (23,264) 106% Loss per share (9.02) (18.61) 106%

The figures are based on audited accounts. *Earnings per share are annualised. 4Central Bank of Egypt Monthly Statistical Bulletin February 2017. 5The last dividend payment of LE 50.625 (half of which was paid in EUR) was received in EDIF’s account on the 31 July-2 August 2016. 6The Sheraton hotel made a loss for 2016 of LE 10.2 million

9 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

III. SOMA BAY HOTEL COMPANY (continued)

. The hotel’s revenue is a factor of the occupancy rates and total revenue per room sold. The hotel’s revenues decreased from LE 57.9 million to LE 49 million in 2016 (decrease of 15%) and from EUR 6.2 million to EUR 3.6 million in 2016 (decrease of 42%). Occupancy rates decreased from 39% to 32.6% (decrease of 16%). This was mainly due to a decrease in the number of rooms sold by 16% in 2016. This decline more than offset the marginal increase in revenue/room sold which increased by only 1% from LE1,249 to LE 1,257 in 2016. The increase in revenue/room sold in LE terms by 1% is mainly driven by the November depreciation of the EGP since the revenue /room sold in EUR terms actually decreased by 31% to record EUR 92 from EUR 133 in 2015. It is worthy to note that lower revenues in 2016 is mainly due to the hotel’s deteriorated state and the overdue PIP (Property Improvement Plan), which the hotel lacks the immediate funding for. . The hotel recorded a gross loss of LE 6.3 million in 2016 versus a gross loss of LE 0.6 million in the previous period. This was mainly due to a reduction in the Gross Profit Margin in the ‘Food & Beverage’ sector which decreased from 20% to 16% in 2016, mainly due to salaries decreasing at a slower rate than revenues. The Gross Loss deteriorated further with a 4% increase in other Unallocated Overhead expenses. Unallocated salaries experienced an unproportional decrease to sales of 3% whereas marketing and utilities increased by 2% and 14% respectively. . Due to lower hotel revenues achieved in 2016, Management Company basic fees decreased by 15% to record LE 123 thousand versus LE 145 thousand in 2015. . As a result of the above, the hotel’s net revenues (Revenues of the Owner Company) recorded a loss of LE 10.2 million in 2016 versus a loss of LE 4.7 million in 2015. . EBITDA recorded negative 13.1 million in 2016 versus a negative LE 6.3 million in 2015 due to Selling, General & Administrative (SGA) expenses increase of 22.7% in 2016. Audit/consultancy fees and employment costs increased by 16% and 28% respectively. In addition, the management fees due to Abou Soma Development Company (ASDC) increased by 73% from LE 1.2 thousand in 2015 to LE 2 million in 2016. . The company recorded LE 3.8 million in provision expense in 2016 versus LE 3 thousand the previous year due to taxes for the period 2008-2014 in dispute with the tax authorities. . It is worthy to note that the company recorded a one-off provision expense in 2015 for LE 10.2 million relating to the court penalty of an environmental violation that occurred during Farid Saad’s tenure. The company approved in its board meeting on 30 March an interest-bearing loan for LE 11 million for 6 months from Club Ras Soma Hotel company that was used to pay off the above-mentioned environmental fine. . Hence net results before taxes recorded a negative LE 22.1 million versus a negative LE 12.4 million in 2015. . The company recorded LE 23.3 million net loss in 2016 versus LE 11.3 million net loss in 2015. . The company’s AGM on March 29 approved by majority vote the renewal of the Service Level Agreement (SLA) for 2017 with Abo Soma Development Company with a 70% increase despite EDIF’s objection. EDIF has filed a claim last year to annul the results of the AGM which approved the renewal of the company’s SLA with a 75% increase. The case is currently channeled through courts. EDIF has also filed a claim last year to annul the general assembly decision of approving the settlement of the dues from ASDC to the company totaling LE 106.5 million in cash and in kind. The court hearing will take place on 13 May 2017. . The company obtained a 4 months financing facility until September 2016 for services rendered from ASDC in addition to 15% discount on services charged in foreign currency, as an assistance to the company’s low occupancy. . In September 2016, ASDC informed ‘Starwood’ that it will postpone the ‘PIP’ until the hotel’s strategy with ‘Marriot’ is finalized. It is worthy to note that Marriott International and Starwood Hotels have merged to become the world’s largest hotel chain with the deal finalized in 2016. . During 2016, IT infrastructure, internet and Wifi coverage has been installed in the public areas and whole hotel premises.

10 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

III. SOMA BAY HOTEL COMPANY (continued)

. During Q1 2017, ASDC has started transferring the ownership of a 162.3 thousand m2 plot of land to Soma Bay Hotel Company in full settlement for the loan7 owed by it to the company according to the AGM decision of 25 February 2016. . The company’s board meeting dated 23 February 2017 approved the increase in the company’s paid-in capital by LE 25 million to reach a total paid-in capital of LE 150 million. The subscription date ended on 19 April in the first round of capital increase. Both EIC and ASDC participated with a combined amount of around LE 13 million. It is worthy to note that EDIF did not agree to the proposed capital increase and hence did not subscribe in it.

Investment Valuation The investment was made in August and September 2004 at a price per share of LE 1,300 (before the 1:10 stock split) which was a P/E multiple of 8.4 times 2004 expected earnings. A stock split of 1 to 10 was made during 2006 as a prerequisite for listing the stock on the Egyptian Stock Exchange. The Company was listed at par on the stock exchange during October 2006, but there was no arm’s length transaction on the stock. However in March 2010, the Company was delisted, due to its inability to comply with the stock exchange regulations including; minimum number of shareholders, minimum percentage of shares offered for public/private subscription and minimum percentage of free floating shares, because the Company is closely held.

EDIF received a total dividend of LE 102.6 per share during the holding period.

The company has been valued historically using P/E multiples valuation until September 2015. The Sheraton Soma Bay hotel suffers from deteriorated infrastructure and facilities and has an urgent and mandatory Property Improvement Plan (PIP) for which it lacks the funding. Occupancy levels are very low and the company has recorded losses in both 2015 and 2016. Notwithstanding the above, the company is still generating revenues and as such is not considered to be impaired from the 2014 valuation.

The last reliable fair value estimate of 31 December 2014 is believed to be the best way to value the company, which is based on FRS 102 guidelines for unlisted equities. The investment value will be held in the same manner to the time in future where a reliable fair value estimate based on market values can be made.

The Egyptian government’s decision to liberalise the currency on November 3, 2016 has negatively affected the value of the fund’s holdings denominated in Egyptian Pounds. The EGP was set to float freely against the USD and as of 31 December 2016, the USD/EGP rate stood at 18.13. This resulted in a Gross US dollar IRR of (0.8%) and a Multiple of Cash (including dividends) of 1 times the invested funds.

IV. EGYPTIAN INVESTMENT COMPANY “EIC”

(LE 000s) 2015 2016 % Change Revenues 21,527 23,213 8% EBITDA 19,373 18,523 -4% Net Profit/(Loss) Before Taxes 19,376 (9,905) -151% Tax *** (4,543) - - Net Profit/Loss After Taxes 14,833 (9,905) -167% Earnings per share 3.00 (2.00) -167% The figures are based on audited accounts. **EPS is based on 5,000,000 shares representing 2.3 million fully paid shares and 2.7 million shares that are 50% paid. Earnings per share are annualised. *** As at the date of signing these financial statements, it is unclear whether capital gains tax is payable and as such has not been provided for.

11 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

IV. EGYPTIAN INVESTMENT COMPANY “EIC” (continued)

. Revenues increased from LE 21.5 million in 2015 to LE 23.2 million in 2016 (an increase of 8%). The increase is mainly attributable to an increase in interest income on the company’s time deposit with Egyptian Finance Company (amounting to LE 299.2 million in 2016 versus LE 276.3 in 2015) from LE 21.2 million in 2015 to LE 23.1 million in 2016, an increase of 8.8%. The balance of revenues consist of other negligible amounts of bank and treasury bills income.

. EBITDA decreased by 4% from LE 19.4 million in 2015 to LE 18.5 million in 2016 as a result of an increase in Selling, General & Administrative expenses (SG&A) from LE 1.6 million to 3.8 million in 2016 (increase of 132% ). This was mainly due to an increase in audit & consultancy fees by 51% (from LE 1.2 million to LE 1.8 million) since some consultancy fees are denominated in USD and an increase in Other Expenses by 383% (from LE 0.39 million to LE 1.89 million in 20167). In addition, management fees due to ASDC increased by 75% from LE 0.5 million to LE 0.9 million in 2016.

. Net Profit Before Taxes (NPBT) recorded a negative LE 9.9 million from LE 19.4 million in 2015 due to the following: 1) The Company recorded a negative LE 9.45 million in revaluation loss as a result of its subscription in the capital increase of Cascades back in August 2015. 2) The Company recorded LE 27.9 million in loss on the liability8 due to the European Investment Bank (EIB), most of which related to FX. 3) The Company achieved a net loss on investments in associate companies of LE 17.9 million in 2016 compared to a loss of LE 14.2 million in 2015, mainly attributed to the loss from Soma Bay Hotel Company, which recorded LE 6.9 million versus a loss of LE 3.4 million in 2015. This aforementioned loss was partially offset by the following: 4) Recording dividends from the two Katemeya Heights companies in 2016 amounting to LE 10.5 million versus LE 14.9 million in 2015. 5) A revaluation gain on the Company’s investment in Orient Trust units amounting to LE 12.8 million, based on the audited statements of Orient Trust Company as of 31 March 2016, which was, however, issued with a qualified opinion. In January 2017, the liquidation process of Orient Trust was completed and shares’ ownership in the underlying OTC units were transferred to EIC. 6) The Company experienced LE 4.3 million in foreign exchange gain on its cash holdings in 2016. . The company recorded no taxes in 2016. Hence, the Company recorded a net loss of LE 9.9 million in 2016 versus a net profit of LE 14.8 million in 2015. . Regarding EDIF’s filed claim against the Company concerning its deposit with EFC, an expertise committee is currently being formed to assess the case in order to take a decision. . On March 5, EFC had sent its proposal for settlement of its debt with EIC. On 22 March, EDIF sent its comments and amendments to the aforementioned proposed offer. During the company’s board meeting on 30 March 2017, it discussed EFC’s proposal for settlement and EDIF’s comments were communicated to EIC during the board meeting to be included in the official response letter to EFC regarding its settlement plan. . The Company appointed a new legal advisor, Dr. Ali Yassin Abdel Wahed, replacing Baker & Mackenzie effective February 2017. . The Company approved in its board meeting in February participating in Soma Bay Hotel Company’s capital increase from 125 million to LE 150 million. EIC stake is LE 31.5% hence its subscription amounts to LE 7.75 million. 7As a result of dividend taxes on dividends received from its Katameya Heights Investments in 2015 and 2016 in addition to taxes on dividends from Club Ras Soma Hotel Company distributed in 2016. 8Loan used to buy shares in Abou Soma Development Company, Abou Soma Peninsula Hotel Company (Kempinski) and Cascades Hotel Company

12 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Investment Manager's Report (continued) for the year ended 31 December 2016

IV. EGYPTIAN INVESTMENT COMPANY “EIC” (continued)

Investment Valuation The investment was made in October 2004 at a price per share of LE 100, which is the par value per share. The Company was listed on the Egyptian Stock Exchange, but there was no arm’s length transaction on the stock. However in December 2009, the Company was delisted, due to its inability to comply with the stock exchange regulations including; minimum number of shareholders, minimum percentage of shares offered for public/private subscription and minimum percentage of free floating shares, because the Company is closely held. The Company has distributed a stock dividend of 0.06 of a share per share. It further distributed a stock dividend of 0.0849 of a share per share. The Company owns a portfolio of investments, with the majority of investments related to Soma Bay project, some of the portfolio companies have not started operations yet, while other companies are still in their initial operational years and have not gained momentum yet. The value is based on the net asset value per share of the Company adjusted for the fair value of Soma Bay Hotel Company and Club Ras Soma Hotel Company and the Company’s deposit with the Egyptian Finance Company. The value of Soma Bay Hotel Company and Club Ras Soma Hotel Company have been adjusted as detailed above. The Egyptian Finance Company (EFC) is a related Company owned by the three founding shareholders of Soma Bay Group (Gargour group, Olayan group and Dr. Farid Saad). The articles of The Egyptian Finance Company, allows the Company to accept deposits. The auditor issued a qualified opinion for the 31 December 2016 financial statements of the Egyptian Investment Company and among the reasons for the qualified opinion is that the Company did not present to the auditor the contract for the deposit with the Egyptian Finance Company and a confirmation from the Egyptian Finance Company on the balance of the deposit amounting to LE 299.2 million as of December 31, 2016. Hence, the auditor could not verify the accuracy of the balance of the deposit or the accuracy of the calculation of the interest expense amounting to LE 23.1 million as of 31 December 2016. Based on this, the amount of the deposit with the Egyptian Finance Company was reduced by the amount of accumulated interest since the inception of the deposit amounting to LE 150.3 million as of 31 December 2016. The balance of the deposit was reduced from LE 299.2 million to LE 148.8 million. Based on the adjusted Net Asset Value, the value per share is LE 74.06. The value of the investment was also affected by the liberalization of the currency and on 31 December 2016, the USD/EGP rate stood at 18.13. This resulted in a negative Gross US dollar IRR of (9.8%) and a Multiple of Cash (including dividends) of 0.3 times the invested funds.

Stanhope Overseas Limited 30 June 2017

13 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Report of the Directors .The Directors present their Annual Report and the Audited Financial Statements of the Company for the year ended 31 December 2016.

Principal Activity The Company is a closed-ended investment company which issues and redeems Participating Redeemable Preference Shares ("Participating Shares") at the Company's discretion. It was established to provide long term capital appreciation by taking advantage, primarily, of the opening up of the Egyptian economy and also, where appropriate, of other opportunities in the Middle East Region.

Registration The Company was registered under The Companies (Guernsey) Law, 1994 (now superseded by The Companies (Guernsey) Law, 2008) on 20 October 2000.

The Company is regulated as an authorised closed-ended investment scheme, under The Protection of Investors (Bailiwick of Guernsey) Law, 1987.

Listing The issued Participating Shares of the Company were admitted to the Official List of The International Stock Exchange (formerly the Channel Islands Securities Exchange) on 22 December 2000.

Results The results for the year are set out in the Statement of Comprehensive Income on page 20.

Directors The Directors of the Company during the year and to the date of this report are as set out on pages 2 and 3.

Directors' Responsibilities Statement The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

The Companies (Guernsey) Law, 2008 requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Accounting Standards including Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and with the requirements of Guernsey law. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that year. In preparing these financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently; • make judgments and accounting estimates that are reasonable and prudent; • state whether applicable UK Accounting Standards have been followed; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The board of Directors confirms that, throughout the period covered the financial statements, the Company complied with the Code of Corporate Governance issued by the Guernsey Financial Services Commission, to the extent it was applicable based upon its legal and operating structure and its nature, scale and complexity.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors are responsible for keeping proper accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with The Companies (Guernsey) Law, 2008. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

14 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Report of the Directors (continued)

Directors' Responsibilities Statement (continued) Life of the Company The Company’s life was originally due to expire on 31 December 2013, however, since that date, the shareholders have annually voted in favour of proposals to amend the Memorandum and Articles of Incorporation (“M&As”) and to extend the life of the Company. At the last Annual General Meeting held on 30 December 2016, the Company's life was extended to 31 December 2017. Further extensions may be requested by the Directors as required to enable the orderly realisation of the remaining investments.

Investment Valuation Uncertainty The unlisted investments of Soma Bay Hotel Company ("Soma Bay") and Club Ras Soma Hotel Company ("Club Ras") have been valued historically using P/E multiples (applicable to comparable companies less a 20% discount for liquidity) until September 2015. For year-end 2015, and due to the absence of reliable market data, the valuation was based on the 31 December 2014 LE valuation translated at the year-end rate and reviewed for possible impairment, since Soma Bay hotel incurred losses due to low occupancy levels while Club Ras Soma was closed from January-June 2016 for renovation, hence was expected to produce losses in 2016.

For year-end 2016, it was decided to continue using the 31 December 2014 LE valuation for both hotels (translated at the rate of exchange on 31 December 2016) and reviewed for possible impairment. This is due to the fact that Soma Bay Hotel has recorded losses in 2016 as well resulting from low occupancy rates, deteriorated infrastructure and has an urgent and mandatory Property Improvement Plan (PIP) for which it lacks the funding, as such the inputs into a P/E model would be unreliable. As the hotel is generating revenue the investment manager does not 2015 audit opinions believe the valuation has been impaired. Therefore the investment value will be held in the same manner until a Club Ras Soma - unqualified reliable fair value estimate based on market values can be made. Egyptian Investment Company - qualified (due to lack of support on prices used for valuing Orient Trust Equity Fund, related party deposit, unavailable audited fs of investee company and afs instruments) Soma Bay Hotel - qualified for finance income of LE9,292,694 that is unsupported Club Ras Soma Hotel, on the other hand, has completed is renovation program and recently opened on 1 July 2016. After reopening, the hotel’s occupancy started picking up to its normal rates before closure. Although the hotel unexpectedly produced some profit in 2016, a significant portion was the result of foreign exchange gains due to the November devaluation of the Egyptian Pound which nearly doubled foreign currency holdings in both the hotel and owner company. As earnings were not for a full year they are not considered reliable and the adjusted 2014 P/E mulitple was used to value the investment. Hence for Club Ras Soma, P/E multiples will be used in 2017 as the company achieves a full year of profitable earnings deriving mainly from operations.

The unlisted investment in The Egyptian Investment Company is valued based on the net asset value per share of the Company adjusted for the Investment Manager's valuation of Soma Bay Hotel Company and Club Ras Soma Hotel Company and the Company’s deposit with the Egyptian Finance Company as detailed in the Investment Manager's Report on pages 4 to 13.

The Directors note that the audit reports accompanying the financial statements as of 31 December 2016, for The Egyptian Investment Company was issued with a qualified opinion.

Among the reasons for the qualified opinion of EIC, for the year ended 31 December 2016, was that the Company did not present to the auditor the contract for the deposit with the Egyptian Finance Company and a confirmation from the Egyptian Finance Company on the balance of the deposit amounting to LE 299.2 million as of 31 December 2016.

The Directors are mindful that although the results of these investee companies are not consolidated in the Company’s financial statements, they do have responsibility to ensure the valuation basis is a fair value and that the investment held are operating as expected.

Following advice from the Investment Manager, a review of the underlying financial data of each of these investments and discussions with the Investment Manager and auditors, the Directors believe that the valuation basis for Soma Bay Hotel Company, Club Ras Soma Hotel Company and Egyptian Investment Company is a fair value reflection of the investment valuation.

In addition, the Directors note that the valuations for Soma Bay Hotel Company, Club Ras Soma Hotel Company and The Egyptian Investment Company are estimates and that the ultimate realisable values of these investments may vary significantly from the valuation included in these financial statements.

15 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Report of the Directors (continued)

Going Concern On 30 December 2016 the Company's life was extended for a further year to 31 December 2017. It is also expected that a further extension will be requested by the Directors as required to enable the orderly realisation of the remaining investments. The Directors are also of the opinion that the shareholders will react positively to extend the life of the Company as they did in December 2016 and that it is appropriate for these financial statements to be prepared on a going concern basis.

These conditions indicate the existence of material uncertainty that may cast doubt on the Company’s ability to continue as a going concern and therefore, that it may be unable to realise its assets in an orderly manner and discharge its liabilities in the normal course of business.

Notwithstanding this material uncertainty, in the opinion of the Directors, the Company is able to meet its obligations as they fall due. The Directors, with assistance from the investment manager have reviewed the Company’s cash flow projections, on the assumption that dividends are expected to be received in Q1 2018, and due to the Company’s current asset investment being readily realisable, there is no gearing and there are minimal creditors and accordingly, the Directors believe the Company has adequate financial resources to continue in operational existence for the next 12 months. Should a dividend not be received in 2018 the Directors and investment manager will formulate a plan to ensure the Company has sufficient liquidity, which may involve delaying the payment of certain fees.

Independent Auditor Deloitte LLP has expressed their willingness to continue in office as auditor and a resolution to re-appoint them will be proposed at the next Annual General Meeting.

Significant Shareholders The following shareholders of the Company held 10% or more of the Company's issued share capital:

Shareholder: Number of Shares: Percentage of Shares: Commercial International Bank - Egypt SAE 738 29.06% Continuum Fund Ltd 369 14.53% DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH 369 14.53% European Investment Bank 369 14.53%

Disclosure of information to auditors Each of the persons who is a Director at the date of approval of the financial statements confirms that: 1) so far as the Director is aware, there is no relevant audit information of which the Company’s Auditor is unaware; and 2) the Director has taken all steps he ought to have taken as a Director to make himself aware of any relevant audit information and to establish that the Company’s Auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of Section 249 of The Companies (Guernsey) Law, 2008.

By order of the Board

Andrew Maiden Director 30 June 2017

16 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Independent Auditor's Report to the members of Egyptian Direct Investment Fund Limited We have audited the financial statements of Egyptian Direct Investment Fund Limited for the year ended 31 December 2016 which comprise the Investment Portfolio, Statement of Comprehensive Income, the Statement of Financial Position, the Statement of Cash Flows, the Statement of Changes in Equity and the related notes 1 to 16. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards including Financial Reporting Standard 102, "The Financial Reporting Standard applicable in the UK and Republic of Ireland".

This report is made solely to the Company's members, as a body, in accordance with Section 262 of The Companies (Guernsey) Law, 2008. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and Auditor As explained more fully in the Directors' Responsibilities Statement, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors: and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on financial statements In our opinion the financial statements: • give a true and fair view of the state of the Company's affairs as at 31 December 2016 and of its return for the year then ended; • have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • have been prepared in accordance with the requirements of The Companies (Guernsey) Law, 2008.

Emphasis of matter regarding uncertainty around the value of investments In forming our opinion on the Financial Statements, which is not modified, we have considered the adequacy of disclosures made in note 2 to the Financial Statements in respect of underlying unlisted equity investments held by the Company valued at US$1,709,770 as at 31 December 2016 (31 December 2015: US$4,064,180). The ultimate realisable values of the investments are inherently uncertain and accordingly may vary significantly from the valuations included in the Financial Statements. In addition we have considered the adequacy of disclosures in Note 5 in respect of the items leading to the financial statements of one of the investments being qualified by those companies' auditors and the impact these qualifications have had on the valuations of these investments. We have also considered adequacy of disclosure made in note 11 to the political unrest in Egypt since 2011. The events in Egypt have had a severe impact on the performance of many of the Company's investments since the unrest began and this may continue to impact the fair value of the Company's investments in the future.

17 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Independent Auditor's Report (continued) to the members of Egyptian Direct Investment Fund Limited

Emphasis of matter regarding going concern In forming our opinion on the Financial Statements, which is not modified, we have considered the adequacy of the disclosures made in note 1 to the financial statements concerning the Company's ability to continue as a going concern. The Company is due to terminate its life on 31 December 2017 unless shareholders holding at least 75% of the voting power vote in favour of the extension of the life of the Company. These conditions may indicate the existence of a material uncertainty which may cast doubt on the ability of the Company to continue as a going concern. We note that the investment values are also based on a going concern assumption assuming a willing buyer and seller and not a forced sale basis. The Financial Statements do not include any adjustments that would result if the Company was unable to continue as a going concern as the directors expect that the shareholders will agree to this extension. It is also expected that further extensions will be requested by the Directors as required to enable the orderly realisation of the remaining investments.

Matters on which we are required to report by exception We have nothing to report in respect of the following matters where The Companies (Guernsey) Law, 2008 requires us to report to you if, in our opinion: • proper accounting records have not been kept; or • the financial statements are not in agreement with the accounting records or; • we have not received all the information and explanations we require for our audit

Deloitte LLP, St. Peter Port, Guernsey Channel Islands 30 June 2017

18 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Investment Portfolio as at 31 December 2016

% of % of Nominal Cost Value Net Net US$ US$ Assets Assets 31.12.2016 31.12.2015 Unlisted Equity Investments

Soma Bay Hotel Company 15.28% Ordinary Shares Held 191,000 3,988,002 316,369 15.29 14.88

The Egyptian Investment Company 3.22% Ordinary Shares Held 161,000 2,322,230 657,697 31.77 33.06

Club Ras Soma Hotel Company 9.30% Ordinary Shares Held 55,800 1,624,633 735,704 35.54 34.59

Total Investments US$ 7,934,865 1,709,770 82.60 82.53

Net Current Assets 360,226 17.40 17.47

Total Net Assets US$ 2,069,996 100.00 100.00

19 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Statement of Comprehensive Income for the year ended 31 December 2016

01.01.2016 to 01.01.2015 to 31.12.2016 31.12.2015 Revenue Capital Total Total Notes US$ US$ US$ US$

Income Bank interest 35,843 - 35,843 46,938 Investment income 349,784 - 349,784 -

385,627 - 385,627 46,938

Expenses Investment Manager's fees 4 (150,764) - (150,764) (193,618) Brokers' commission - - - (64,095) Performance fee 4 - - - (65,626) Administration fees 4 (73,768) - (73,768) (176,958) Directors' fees 4 (90,000) - (90,000) (90,000) Sundry expenses (88,853) - (88,853) (88,360) Insurance fees (6,878) - (6,878) (8,094) Consultancy fee 10 (40,000) - (40,000) (40,000) Custodian's fees 4 (20,000) - (20,000) (20,000) Audit fee (25,429) - (25,429) (38,082) Withholding tax (42,101) - (42,101) (9,386)

(537,793) - (537,793) (794,219)

Net deficit for the year (152,166) - (152,166) (747,281)

Foreign exchange differences 9 - (1,732,628) (1,732,628) (1,456,781) * Unrealised loss on investments 5 & 9 - (970,474) (970,474) (16,738,334) * Realised gain on sale of investments 9 - - - 17,143,550-

Total loss for the year US$ (152,166)US$ (2,703,102)US$ (2,855,268)US$ (1,798,846)

Basic and diluted loss per share 13 US$ (59.91)US$ (1,064.21)US$ (1,124.12)US$ (618.71)

* - The prior year unrealised loss on investments has been restated for presentational purposes. A reclassification of unrealised foreign currency movements has been reclassified from unrealised loss on investments to foreign exchange differences.

The Directors consider the activities of the Company to be of a continuing nature.

The Company has no recognised gains and losses other than those included above.

The notes on pages 24 to 37 form an integral part of these Financial Statements.

20 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Statement of Financial Position as at 31 December 2016

Employment of Net Assets 31.12.2016 31.12.2015 Notes US$ US$

Non-current Assets Investments at fair value through profit or loss 2 & 5 1,709,770 4,064,180

Current Assets Debtors 6 1,622 8,561 Cash and cash equivalents 449,503 980,221

451,125 988,782

Creditors: Amounts Falling Due Within One Year Creditors 7 90,899 127,698 Net Current Assets 360,226 861,084

Net Assets US$ 2,069,996 US$ 4,925,264

Financed by: Shareholders' capital 8 130 130 Reserves 9 2,069,866 4,925,134

Total Shareholders' Funds US$ 2,069,996 US$ 4,925,264

Total Funds Attributable to Equity Shareholders US$ 2,069,892 US$ 4,925,160

Total Funds Attributable to Non-Equity Shareholders US$ 104 US$ 104

Net Asset Value per Fully Paid Equity Share 14 US$ 814.92 US$ 1,939.04

The Financial Statements on pages 20 to 37 were approved at a meeting of the Board of Directors held on 30 June 2017 and signed on its behalf by:

Andrew Maiden Director

The notes on pages 24 to 37 form an integral part of these Financial Statements.

21 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Statement of Changes in Equity for the year ended 31 December 2016

Share Capital Reserves Total Notes US$ US$ US$ For the year ended 31 December 2016 Shareholders' Funds at beginning of the year 8 & 9 130 4,925,134 4,925,264

Net loss for the year 9 - (152,166) (152,166) Other recognised losses 9 - (2,703,102) (2,703,102)

Net decrease in Shareholders' Funds 8 & 9 - (2,855,268) (2,855,268)

Shareholders' Funds at end of the year US$ 130 2,069,866 2,069,996

Share Capital Reserves Total US$ US$ US$ For the year ended 31 December 2015 Shareholders' Funds at beginning of the year 8 & 9 130 29,199,140 29,199,270

Net loss for the year 9 - (747,281) (747,281) Other recognised losses 9 - (1,051,565) (1,051,565) Redemptions 8 - (22,475,160) (22,475,160)

Net decrease in Shareholders' Funds 8 & 9 - (24,274,006) (24,274,006)

Shareholders' Funds at end of the year 130 4,925,134 4,925,264

The notes on pages 24 to 37 form an integral part of these Financial Statements.

22 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Statement of Cash Flows for the year ended 31 December 2016

01.01.2016 to 01.01.2015 to 31.12.2016 31.12.2015 Notes US$ US$ Operating activities Total loss for the year (2,855,268) (1,798,846) Adjustments for: Unrealised loss on investments 5 970,474 16,738,334 * Unrealised loss on foreign currency 1,383,936 231,687 * Realised gain on sale of investments 9 - (17,143,550) Decrease in debtors for the year 6,939 26,044 Decrease in creditors for the year (36,799) (3,485,818)

Net cash outflow from operating activities (530,718) (5,432,149)

Investing activities Proceeds from sale of investments 5 - 26,100,164 Net proceeds from maturity of treasury bills - 65,299

Net cash inflow from investing activities - 26,165,463

Financing Activities Redemptions paid 8 - (22,475,160)

Net cash outflow from financing activities - (22,475,160)

Decrease in cash US$ (530,718)US$ (1,741,846) Net cash at beginning of the year 980,221 2,722,067

Net cash at end of the year US$ 449,503US$ 980,221

The notes on pages 24 to 37 form an integral part of these Financial Statements.

23 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements

1. The Company The Company was registered under The Companies (Guernsey) Law, 1994 on 20 October 2000 (superseded by The Companies (Guernsey) Law, 2008). The Company is an authorised closed-ended investment company which issues and redeems Participating Redeemable Preference Shares ("Participating Shares") at the Company's discretion. It was established to provide long term capital appreciation by taking advantage, primarily, of the opening up of the Egyptian economy and also, where appropriate, of other opportunities in the Middle East Region.

The issued Participating Shares of the Company were admitted to The International Stock Exchange (formerly the Channel Islands Securities Exchange) on 22 December 2000.

The Company's registered office is at PO Box 255, Trafalgar Court, Les Banques, St. Peter Port, Guernsey, Channel Islands GY1 3QL.

2. Principal Accounting Policies The following accounting policies have been applied consistently in dealing with items which are considered to be material in relationClub Ras to Soma the Company's Hotel Company Financial Statements. The Company has adopted Financial Reporting Standard 102, The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland ("FRS 102") in these Financial Statements.

BasisSoma ofBay Accounting Hotel Company The Financial Statements have been prepared under the historical cost convention as modified by the fair value of investments in accordance with the United Kingdom Accounting Standards, including FRS 102 issued by the Financial Reporting Council.

Financial Instruments The Company has chosen to adopt Section 11 and Section 12 of FRS 102, in full in respect of financial instruments.

All of the Company's assets and liabilities are classified as basis financial assets and financial liabilities and are initially recognised at transaction price in accordance with section 11.

Investments Investments in Ordinary Shares are accounted for at fair value through profit or loss ("FVTPL"), unless their fair value can be measured reliably, they are measured at cost less impairment.

Unrealised and realised gains or losses on investments are shown within the Statement of Comprehensive Income as capital movements.

Refer to note 5 for further disclosure of the valuation of the investments.

Cash and cash equivalents Cash and cash equivalents in the statement of financial position comprise cash at banks and short term deposits with an original maturity date of three months or less.

18.13

24 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

2. Principal Accounting Policies (continued) Income Bank interest is accounted for on an accruals basis. Income arising from investments is accounted for on an ex- dividend basis and is shown gross of withholding taxes. Other investment income is accounted for on an accruals basis.

Expenses Expenses are accounted for on an accruals basis.

Foreign Currencies Monetary foreign currency assets and liabilities, including investments at market value, are translated into US Dollars at the rate of exchange ruling at the Statement of Financial Position date. Investment transactions and income and expenditure items are translated at the rate of exchange ruling at the date of the relevant transaction. Exchange differences are included in the Statement of Comprehensive Income as capital movements.

Presentational and Functional Currency The United States Dollar (US$) is the presentational and functional currency of the Company. As at 31 December 2016 the exchange rate between US$ and Egyptian Pound ("LE") was 18.13000 (31 December 2015: 7.83005).

Life of the Company The Company’s life was originally due to expire on 31 December 2013, however, since that date, the shareholders have annually voted in favour of proposals to amend the Memorandum and Articles of Incorporation (“M&As”) and to extend the life of the Company. At the last Annual General Meeting held on 30 December 2016, the Company's life was extended to 31 December 2017. Further extensions may be requested by the Directors as required to enable the orderly realisation of the remaining investments.

Notwithstanding this material uncertainty, in the opinion of the Directors, the Company is able to meet its Club Ras Soma Hotel Company obligations as they fall due. The Directors, with assistance from the investment manager have reviewed the Company’sSoma Bay Hotel cash Companyflow projections, on the assumption that dividends are expected to be received in Q1 2018, and due to the Company’s current asset investment being readily realisable, there is no gearing and there are minimal creditors and accordingly, the Directors believe the Company has adequate financial resources to continue in operational existence for the next 12 months. Should a dividend not be received in 2018 the Directors and investment manager will formulate a plan to ensure the Company has sufficient liquidity, which may involve delaying the payment of certain fees.

Accounting standards in issue but not yet effective In March 2016 amendments were made to FRS 102 - Fair value hierarchy disclosures, revising the disclosure requirements for financial institutions and retirement benefit plans. An entity shall apply these amendments for accounting periods beginning on or after 1 January 2017 with early application permitted. The Company early adopted the Amendments to FRS 102.

Critical accounting judgements and estimation uncertainty The preparation of the Financial Statements in conformity with FRS 102 requires management to make judgements, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expense and the accompanying disclosures. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

25 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

2. Principal Accounting Policies (continued) Critical accounting judgements and estimation uncertainty (continued) The items in the Financial Statements where these judgments and estimates have been made include:

I. Investments at fair value through profit and loss Investments are classified as investments at fair value through profit and loss. The key source of estimation uncertainty is on the valuation of the investments which are not traded in active markets. In reaching its valuation of the investments, the key judgements that the Board has to make relate to the valuation models and techniques. Further details are provided in note 5 and note 12.

II. Determination of functional currency The revenue and costs of the Company are mainly influenced by US Dollar. This is also the currency used to manage the liquidity in order to handle the issue and redemption of the Company’s participating shares and accordingly the Board have determined that the Company’s functional and presentation currency is US Dollar.

Prior year restatement The prior year unrealised loss on investments has been restated for presentational purposes. A reclassification of unrealised foreign currency movements has been reclassified from unrealised loss on investments to foreign exchange differences.

3. Taxation The Company is exempt from Guernsey income tax under the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and accordingly is charged an annual exemption fee of £1,200 (2015: £1,200).

4. Material Agreements Investment Manager Agreement (a) Management Fee Under the terms of an appointment made by the Board on 31 October 2000, Stanhope Overseas Limited was appointed with effect from 1 December 2000 as Investment Manager (the "Investment Manager") and with effect from 1 January 2014 is paid a management fee of 1.9 per cent. per annum on the total cost of the remaining investments in the portfolio at the time of investment.

(b) Performance Fee In addition to the Management Fee referred to above, the Investment Manager is entitled to a performance related fee which is determined and paid upon the making of distributions in accordance with the Private Placement Memorandum in the manner set out below.

Disposal Proceeds will be distributed as soon as practicable after receipt by the Company (except as otherwise provided in the Private Placement Memorandum). Current Income will be distributed as soon as practicable after receipt by the Company. The Company will be entitled to withhold from any distributions amounts necessary to create, in its discretion, appropriate reserves for its expenses and liabilities.

26 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

4. Material Agreements (continued) Investment Manager Agreement (continued) (b) Performance Fee (continued) Disposal Proceeds and Current Income (other than Income from Temporary Investments) in respect of each Fund Investment will be applied in making distributions to Shareholders and in payment of a performance fee to the Investment Manager (which payment the Company hereby undertakes to make) in the following amounts and order of priority: a) First, 100 per cent. by way of distribution to Shareholders until cumulative distributions of Current Income and Disposal Proceeds are equal to the aggregate of the Committed Capital attributable to: i. Realised Fund Investments; ii. any Fund Investments to the extent that such investments have been written off or written down permanently (to the extent not previously distributed); and iii. the management fee and all other expenses paid or accrued (as such expenses are described above) allocable to Realised Fund Investments; b) Second, 100 per cent. by way of distribution to Shareholders until cumulative distributions of Current Income and Disposal Proceeds from Realised Fund Investments represent an 8 per cent. annual internal rate of return on the Committed Capital attributable to Realised Fund Investments and to any Fund Investments to the extent that such investments have been written off or written down permanently (to the extent not previously distributed) from the date or dates on which any part of such capital was drawn down until the date Shareholders are given notice of the relevant distribution; c) Third, 100 per cent. by way of a performance fee to the Investment Manager of an amount equal to 20 per cent. of the aggregate of: i. the total amounts distributed to Shareholders pursuant to clause (b) above; and ii. the amount of performance fee pursuant to this clause (c); and d) Therefter, 80 per cent. by way of distribution to Shareholders and 20 per cent. by way of performance fee to the Investment Manager.

Performance fee charged during the year amounted to US$Nil (31 December 2015: US$65,626), and US$Nil has been accrued at 31 December 2016 (31 December 2015: US$Nil). Total performance fees paid during the year amounted to US$Nil (31 December 2015: US$3,061,822).

(c) Custodian Agreement Under the terms of a Custodian Agreement dated 1 December 2000, the Company appointed Northern Trust (Guernsey) Limited ("NGL") as Custodian. NGL is paid 0.10 per cent. per annum on the proportion of the Net Asset Value comprised of listed securities and 0.05 per cent. per annum on the proportion of the Net Asset Value comprised of unlisted securities, subject to a minimum of US$20,000 per year.

(d) Administration Agreement Under the terms of an Administration Agreement dated 1 December 2000, the Company appointed Northern Trust International Fund Administration Services (Guernsey) Limited ("NTI") as Administrator, Secretary, Registrar and Designated Manager. Until 31 December 2015, NTI was paid by reference to the number of hours spent on work for the Company and its standard hourly charging rates in force from time to time, subject to a minimum fee of US$9,000 per quarter. Effective 1 January 2016, NTI is paid a fixed fee of US$100,000 per annum.

(e) Directors' Fees The Directors are entitled to an annual fee of US$20,000 each. The Chairman is entitled to an annual fee of US$30,000.

All the expenses mentioned in this note are reflected in the Statement of Comprehensive Income.

27 EGYPTIAN DIRECT INVESTMENT FUND LIMITED Notes to the Financial Statements (continued)

5. Investments 31.12.2016 31.12.2015 US$ US$

Cost of investments at beginning of year 7,934,865 16,956,778 Cost of investments sold during the year - (9,021,913) Cost of investments at end of year 7,934,865 7,934,865 Accumulated unrealised loss on investments (note 9) (6,225,095) (3,870,685) Adjusted closing cost 1,709,770 US$ 4,064,180

On 19 January 2015, the Company sold its investment in Bisco Misr for LE89.86 per share, for a total consideration of LE 186,617,474 (equivalent to US$26,100,164). Realised gains on this sale, net of capital gains tax and brokers' commission of US$498,252, amounted to US$16,515,904.

The movement in unrealised loss on investments and foreign exchange during the year amounted to US$970,474 and US$1,732,628 respectively (31 December 2015: US$16,738,334 and US$1,456,781).

The unlisted investments of Soma Bay Hotel Company ("Soma Bay") and Club Ras Soma Hotel Company ("Club Ras") have been valued historically using P/E multiples (applicable to comparable companies less a 20% discount for liquidity) until September 2015. For year-end 2015, and due to the absence of reliable market data, the valuation was based on the 31 December 2014 LE valuation translated at the year-end rate and reviewed for possible impairment, since Soma Bay hotel incurred losses due to low occupancy levels while Club Ras Soma was closed from January- June 2016 for renovation, hence was expected to produce losses in 2016.

Club Ras Soma Hotel, on the other hand, has completed is renovation program and recently opened on 1 July 2016. After reopening, the hotel’s occupancy started picking up to its normal rates before closure. Although the hotel unexpectedly produced some profit in 2016, a significant portion was the result of foreign exchange gains due to the November devaluation of the Egyptian Pound which nearly doubled foreign currency holdings in both the hotel and owner company. Hence for Club Ras Soma, P/E multiples will be used in 2017 as the company achieves a full year of profitable earnings deriving mainly from operations. Therefore, in accordance with FRS 102, where there is no longer a reliable measure of fair value, its fair value at the date the investment was last reliably measured is treated as the cost of the investment and this is assessed for any impairment. The investment manager has determined the investments are not impaired.

The Directors note that the audit reports accompanying the financial statements as of 31 December 2016, for The Egyptian Investment Company was issued with a qualified opinion.

Among the reasons for the qualified opinion of The Egyptian Investment Company (EIC), for the year ended 31 December 2016, was that the Company did not present to the auditor the contract for the deposit with the Egyptian Finance Company and a confirmation from the Egyptian Finance Company on the balance of the deposit amounting to LE 299.2 million as of 31 December 2016.

28 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

5. Investments (continued) The Directors are mindful that although the results of these investee companies are not consolidated in the Company’s financial statements, they do have responsibility to ensure the valuation basis is a fair value and that the investment held are operating as expected.

6. Debtors 31.12.2016 31.12.2015 US$ US$

Current asset investments interest receivable - 5,421 Other prepayments 1,518 3,036 Monies due from Investment Manager in respect of nominal shares 103 103 Monies due from Investment Manager in respect of management shares 1 1 1,622 8,561

7. Creditors 31.12.2016 31.12.2015 US$ US$

Administration fee accrual (note 4d) 25,000 44,923 Audit fee accrual 30,363 38,531 Other expenses 25,563 28,072 Directors' fee accrual (note 4e) 5,000 5,000 Custodian fee accrual (note 4c) 4,973 10,082 Withholding tax - 1,090 90,899 127,698

8. Share Capital and Share Premium Nominal Value Authorised 31.12.2016 31.12.2015 US$ US$

100 Management Shares of US$0.01 each 1 1 Unlimited Unclassified Shares of US$0.01 each - - 1 1

29 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

8. Share Capital and Share Premium (continued) Issued Share Capital 2016 Number of Share Shares Capital Non-Equity Share Capital US$

(i) Management Shares US$0.01 each: Balance at 1 January 2016 and at 31 December 2016 100 US$ 1 (ii) Nominal Shares US$0.01 each: Balance at 1 January 2016 10,320 US$ 103 Shares issued during the year - - Balance at 1 January 2016 and at 31 December 2016 10,320 103

Number of Number of Share Capital Units Shares US$ Paid

Balance at 1 January 2016 127 2,540 US$ 26 Redemptions during the year - - - Balance at 1 January 2016 and at 31 December 2016 127 2,540 US$ 26

Unpaid

Balance at 1 January 2016 and at 31 December 2016 - US$ - Total equity and non-equity share capital as at 31 December 2016 12,960 US$ 130

Issued Share Capital 2015 Number of Share Shares Capital Non-Equity Share Capital US$

(i) Management Shares US$0.01 each: Balance at 1 January 2015 and 31 December 2015 100 US$ 1 (ii) Nominal Shares US$0.01 each: Balance at 1 January 2015 8,532 US$ 85 Shares issued during the year 1,788 18 Balance at 31 December 2015 10,320 103

30 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

8. Share Capital and Share Premium (continued) Equity Share Capital Number of Number of Share Units Shares Capital (iii) Participating Shares of US$0.01: US$

Paid Balance at 1 January 2015 216 4,328 44 Redemptions during the year (89) (1,788) (18) Balance at 31 December 2015 127 2,540 US$ 26

Unpaid Balance at 1 January 2015 and at 31 December 2015 - US$ -

Total equity and non-equity share capital as at 31 December 2015 12,960 US$ 130

On 16 March 2015, 1,788 participating shares were redeemed for a price of US$12,570 per share, a total of US$22,475,160.

Non-equity Share Capital has been issued and comprises of: The Management Shares have been created in order to comply with Guernsey Law under which the Participating Shares in issue must be issued with preference over an alternate class of capital. The Management Shares have been issued to the Investment Manager and its representatives. The Management Shares carry a right to vote at general meetings of the Company but do not carry the right to receive dividends. In a winding-up, Management Shares rank only for the return of the nominal paid-up capital after the return of the nominal capital paid-up on Participating Shares and Nominal Shares.

The Unclassified Shares are termed as such pending issue. They are issued as Participating Shares or Nominal Shares.

Equity Share Capital has been issued and comprises of: Participating Shares may be issued and redeemed at prices based on the value of the Company's net assets as determined in accordance with the Articles of Association at the Company's discretion. On the redemption or forfeit (for unpaid Participating Shares) of a Participating Share by the Company, a Nominal Share is issued to the Investment Manager for cash at par on the basis of one Nominal Share for each Participating Share redeemed. Nominal Shares may be converted and re-issued as Participating Shares upon subsequent applications for Participating Shares. Participating Shares carry the right to vote on limited matters at general meetings of the Company and to receive dividends and, in a winding-up rank first for the return of the nominal paid-up capital. Nominal Shares carry neither the right to vote at general meetings of the Company nor to receive dividends and, in a winding-up rank only for the return of the nominal paid-up capital after the return of the nominal capital paid-up on Participating Shares.

31 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

9. Reserves Capital reserve - Realised Foreign Unrealised Accumulated gain on Exchange loss on Deficit Investments Differences Investments Total US$ US$ US$ US$ US$

At 1 January 2016 (14,698,448) 25,731,115 (2,468,535) (3,638,998) 4,925,134 Movement during the year (152,166) - (1,732,628) (970,474) (2,855,268) Redemptions - - - - - Balance at 31 December 2016 (14,850,614) 25,731,115 (4,201,163) (4,609,472) US$ 2,069,866

Capital reserve - Realised Foreign Unrealised Accumulated gain on Exchange Investmentsloss on Deficit Investments Differences * Total US$ US$ US$ US$ US$

At 1 January 2015 (13,951,167) 31,062,725 (1,011,754) 13,099,336 29,199,140 Movement during the year (747,281) 17,143,550 (1,456,781) * (16,738,334) * (1,798,846) Redemptions - (22,475,160) - - (22,475,160) Balance at 31 December 2015 (14,698,448) 25,731,115 (2,468,535) (3,638,998) 4,925,134

Under Guernsey law, companies can pay dividends in excess of accounting profit provided they satisfy the solvency test prescribed under The Companies (Guernsey) Law, 2008. The solvency test considers whether a company is able to pay its debts when they fall due; and whether the value of a company’s assets is greater than its liabilities.

10. Controlling Party and Related Party Transactions The issued shares of the Company are owned by several parties and therefore, in the opinion of the Directors, there is no Ultimate Controlling Party of the Company as defined in FRS 102.

Mohamed S. Younes is also a Director of Stanhope Overseas Limited, which is the Investment Manager to the Company, to whom the Investment Manager fee and the performance fee are payable. The management and performance fees are disclosed in Note 3 and Note 6. Consultancy fees of US$40,000 (31 December 2015: US$40,000) were paid to a family member of the Director, Mohamed S. Younes, during the year, for work performed on behalf of the Company of which US$Nil (31 December 2015: US$Nil) was payable at year end.

Andrew Maiden was employed until 26 June 2015 as a Vice President of NTI, which is the Administrator, Secretary and Registrar of the Company. NTI and the Custodian, NTG, are both wholly owned subsidiaries of The Northern Trust Corporation and receive fees as Administrator and Custodian respectively, as detailed in Note 3 and Note 6. He is now deemed to be independent from 26 June 2015.

32 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

11. Risks Arising from Investments in Financial Assets and Liabilities Foreign exchange risk Foreign exchange risk is the market risk that the fair value of future cash flows of financial instruments will fluctuate because of a change in foreign exchange rates. During the year, the Company was exposed to foreign currency risk arising from currency exposures, principally in securities denominated in Egyptian Pounds.

The Company's exposure to foreign currencies at year end is set out below.

31.12.2016 31.12.2015

Local US$ Local US$ Currency Equivalent Currency Equivalent

EGP 30,998,647 1,709,816 35,576,562 4,532,939

The table below shows the effect on NAV and results for the year if the US Dollar rate of exchange against Egyptian Pounds increased/decreased by 5% with all other variables held constant. 31.12.2016 31.12.2015 US$ US$

EGP +/- 85,490 +/- 226,647 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.

The Company’s exposure to credit risk is as follows: 31.12.2016 31.12.2015 US$ US$ US$ 449,503 US$ 980,221

Cash and cash equivalents Cash and cash equivalents include cash in bank. As at 31 December 2016, the balance also included Treasury Notes issued by the Egyptian government, with maturity of less than 3 months. Standard & Poor’s currently has a B- credit rating for both short term and long term Egyptian Pound denominated bonds.

Liquidity and market risk Egypt is an emerging market. Emerging markets, including Egypt, are subject to particular investment risks and considerations. Furthermore, the likelihood of adverse political and economic developments may be magnified in emerging markets. The Company has investments in private/unlisted securities, which when seeking to sell, little or no market may exist for the securities. As at 31 December 2016, the Company held 3 unlisted investments representing 82.60% (31 December 2015: 3 unlisted investments representing 82.53%) of the Net Assets of the Company. The remaining assets were held in the form of cash and prepayments.

EGP Interest rate risk Floating rate financial assets comprise the cash balances which bear interest at rates based on bank base rates. Fixed rate #REF! financial assets comprise of current asset investments in Egyptian Treasury Bills. The value of the fixed interest Egyptian Treasury Bills is affected by general changes in interest rates that will in turn result in increases or decreases in the market value of those instruments. The value of the Egyptian Treasury Bills may also be impacted by prevailing economic and political conditions and market expectations about likely movements in interest rates in Egypt. No further interest rate risk disclosures have been made as all the material amounts other than cash balances and current asset investments are non-interest bearing.

33 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

12. Fair Value Hierarchy of Financial Instruments

The table below 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).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes ‘observable’ requires significant judgement by the Investment Manager. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and end of the year.

31.12.2016 Level 1 Level 2 Level 3 Total US$ US$ US$ US$ Assets Investments at fair value through profit or loss - - 1,709,770 1,709,770

31.12.2015 Level 1 Level 2 Level 3 Total US$ US$ US$ US$ Assets Investments at fair value through profit or loss - - 4,064,180 4,064,180

34 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

12. Fair Value Hierarchy of Financial Instruments (continued)

The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and end of the year. 31.12.2016 31.12.2015 US$ US$

Opening balance 4,064,180 4,507,812 Purchases - - Sales - - Net unrealised loss for the year (2,354,410) (443,632)

Closing balance 1,709,770 4,064,180

There have been no transfers between levels during the year.

Quantitative information of significant unobservable inputs in Level 3 The table below summarises quantitative information about the unobservable inputs used in the fair value measurement and the valuation processes used by the Company within Level 3 securities:

Range 31.12.2016 Valuation Unobservable (weighted Description USD Technique Input average)

Unlisted hotel equity investment 1,052,073 Average Discount to 20% discount Price-earnings average multiple multiple applicable to comparable companies*

Unlisted investment company equity 657,697 Adjusted NAV Investments 20% discount investment revalueddiscounts using to average price- earnings multiple

*As disclosed in note 5, as there is no reliable measure of fair value at 31 December 2016, the investments in Soma Bay and Club Ras are valued at cost in accordance with FRS 102, being the 31 December 2014 valuation (using Price/Earnings multiples applicable to comparable companies less a 20% discount for liquidity), translated at the rate of exchange on 31 December 2016. The investment manager has determined that both assets are not impaired.

35 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

12. Fair Value Hierarchy of Financial Instruments (continued) Sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy Effect on Description Unobservable Sensitivity fair value Input used** USD

Unlisted hotel equity investment Discount to 20% +/- 210,297 average multiple Unlisted investment company equity Investments 20% +/- 19,304 investment revalued using discounts to average price- earnings multiple

**The sensitivity analysis refers to a percentage amount added to the unobservable input and the effect this has on the fair value.

13. Basic and Diluted Loss per Share The loss per share has been calculated on a weighted average basis and is arrived at by dividing the total return for the period by the weighted average number of equity shares in issue. The weighted average number of shares is 2,540 (31 December 2015: 2,907).

14. Net Asset Value Per Fully Paid Equity Share The Net Asset Value per paid share calculation has been calculated by dividing the total funds attributable to Equity Shareholders' by the total number of fully paid equity shares in issue at the Statement of Financial Position date.

31.12.2016 31.12.2015 US$ US$ Total Funds Attributable to Equity Shareholders 2,069,892 4,925,160 Total number of Paid Equity Shares (note 8) 2,540 2,540

Net Asset Value per Paid Equity Share 814.92 1,939.00

15. Reconciliation of Net Asset Value per the Financial Statements to Published Net Asset Value NAV per NAV Equity Share US$ US$

Net Asset Value reported on TISE to Shareholders 2,068,478 814.36 Prepayments 1,518 0.60 Nominal shares (104) (0.04)

Total Funds Attributable to Equity Shareholders as at 31 December 2016 2,069,892 814.92

16. Contingent Assets and Liabilities The Company sold its investment in Bisco Misr in full on 19 January 2015. The sale was subject to a 10% capital gains tax, 6% of which was withheld by the brokers for remittance to the Egypt tax authority. In May 2015, the Egyptian government put on hold, for 2 years, the collection of capital gains tax. As of date of signing of these financial statements, it is still unclear that whether the 6% CGT paid is recoverable or if the Company is liable to pay remaining 4% CGT.

36 EGYPTIAN DIRECT INVESTMENT FUND LIMITED

Notes to the Financial Statements (continued)

16. Contingent Assets and Liabilities The Directors have taken legal advice as to the recoverability of the tax previously paid in relation to the sale of the Bisco Misr shares and also whether the 4% tax is still payable. Whilst legal opinion suggests that the tax paid is recoverable and the further 4% is not payable, there is still some uncertainty surrounding the application of the suspension of the CGT legislation.

Given the lack of correspondence from the tax authorities on this matter and in view of tax advice received, the Directors have not accrued for the potential recoverable amount of USD498,252 (as FRS 102 only allows for provision for contingent assets if they are virtually certain) and they have not accrued the currently unpaid CGT of USD303,291 at 31 December 2016.

On 8 March 2016, the Investment Manager advised the shareholders of the Company that legal procedures will be launched in relation to the investments in Soma Bay project (namely, Soma Bay Hotel Company, Club Ras Soma Hotel Company and Egyptian Investment Company) covering the lapses in corporate governance by the previous management of the Soma Bay project which the new major shareholder failed to rectify when it took over the management in 2010. The Investment Manager believes that it is too early to estimate the amount of proceeds that the Company can anticipate to receive in an eventual settlement.

17. Post Balance Sheet Events These financial statements were approved for issuance by the Board on 30 June 2017. Subsequent events have been evaluated until this date.

Ove Hoegh resigned from the Board of Directors and as Chairman on 30 April 2017.

For the year ended 30 April 2017, the occupancy rates for Soma Bay Hotel Company was 36% and for Club Ras Soma Hotel Company was 75%.

No other significant subsequent events have occurred.