EL Sewedy Electric Company (An Egyptian Joint Stock...
Transcript of EL Sewedy Electric Company (An Egyptian Joint Stock...
EL Sewedy Electric Company (An Egyptian Joint Stock Company) Interim consolidated financial statements for the financial period ended 31 March 2018 and limited review report
EL Sewedy Electric Company (An Egyptian Joint Stock Company) Interim consolidated financial statements for the financial period ended 31 March 2018
Contents Pages
Auditor's report
Consolidated financial position
Consolidated income statement
1
2
Consolidated Comprehensive Income Statement
Consolidated statement of changes in shareholders' equity
3
4
Consolidated statement of cash flows 5
Notes to the consolidated financial statements
Hazem Hassan Public Accountants & Consultants
Telephone • (202) 35 36 22 00 - 35 36 22 11Pyramids Heights Off ice Park Telefax • (202) 35 36 23 01 - 35 36 23 05 Km 22 Cairo/Alex Road E-mai l • [email protected] PO. Box 48 AI Ahram Postal Code • ' 2556 AI Ahram Giza - Cairo - Egypt
Translated from Arabic Report on limited review of interim consolidated financial statements
To: The members of Board of Directors of EI Sewedy Electric Company
Introduction
We have reviewed the accompanying consolidated statement of financial position of El Sewedy Electric Company as of 31 March 2018 and the related consolidated statements of income, other comprehensive income, cash flows and changes in equity for the three months then ended, and a summary of significant accounting policies and other explanatory notes. Management is responsible for the preparation and fair presentation of these interim consolidated financial statements in accordance with Egyptian Accounting Standards. Our responsibility is to express a conclusion on these interim consolidated financial statements based on our limited review.
Scope ofLimited Review
We conducted our limited review in accordance with Egyptian Standard on Review Engagements (2410) "Limited Review of Interim Financial Statements Performed by the Independent Auditor of the Entity." A limited review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters in the Company, and applying analytical and other review procedures. A limited review is substantially less in scope than an audit conducted in accordance with Egyptian Standards on Auditing and consequently does not enable us to obtain assurance th;:tt we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on these interim consolidated financial statements.
Conclusion
Based on our limited review, nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial statements do not present fairly, in all material respects, the consolidated financial position of El Sewedy Electric Company as at 31' March 2018, and of its consolidated financial performance and its consolidated cash flows for the three months then ended in accordance with Egyptian Accounting Standards .
. ,.>. 1 I 11,1', ', :111
Pn l h' .t . , , ~ , ... ' ,111(1 <.. o l\\ ullants (2, ~.MG H zem Hassan
Public Accountants and Consultants
Cairo 5 June 2018 .
-----
Translated from Arabic
EL Sewedy Electric Company (An Egyptian joint stock company) Consolidated interim statement of financial position
As of 31 March 2018
Assets
Non current assets
Fixed assets
Project under progress
Investments available for sale
Equity-accounted investees
Investment certificates
Trade and other receivables
Intangible assets
Oeferred tax assets
Total non current assets
Current assets
InvenlOries
Trade, notes and other receivables
Due from rel~ted parties
Investment fund / treasury bills
Banks and cash in hand
Total current assets
Total assets
Shareholders' equity
Issued and paid capital
Reserves
Own shares
Retained earnings
Translation reserve
Equity attribl,ltable to owners of the company
Non controlling interests
Tota. equity
Liabilities
Non current liabilities
Loans
Banks facilities and overdraft
Deferred tax liabilities
Provisions
Other liabilities
Total non current liabilities
Current liabilities
Banks facilities and overdraft
Loans
Trade, notes and other pay abIes
Due to related parties
Provisions
Total current liabilities
Total liabilities
Total Equity and Liabilities
Note No.
(3-3)«6)
(3-3)«7)
(4-3)«8)
(4-3)«9)
(10)
(4-3) «11)
(5-3)«12)
(16-3)«13)
(6-3}<{14)
(4-3)«15)
(30)
(4-3)«16)
(17)
(3-9)«18)
(19)
(20)
(3-11)«21)
(3-11)«22)
(3-16)«13)
(3-12)«24)
(3-11) .(22)
(3-11) «21)
(3-4)«23)
(30)
(3-12)«24)
31/03/2018
L.E
4244076185
516242222
10 104 565
1 351 879610
20000000
3078935576
189334964
443073457
9853646579
7880297469
15 999 176695
643903628
4593016429
5147121245
34 263 515 4(i6
44 117 162 045
2184 180000
298934085
( 1 422 160)
10716794 923
1521275929
14719762777
557986 800
15 277 749 577
233040427
703233389
695560877
155627387
452792 084
2240254164
7944546852
1228389656
15962848112
432989636
1030384048
31/12/2017
L.E
4305017755
418538068
10 105 037
1213 111 060
20000000
3486 374 869
180548664
474341 539
10108036 '92
7818948365
14879193957
548573297
4232627134
4840105622
323194.48375
42 421485 367
2184180000
29&934085
( 1 422160)
9429130905
1601600 949
13 512423779
643304 985
14 155728764
330523631
848809687
660 120 089
143603879
109 455 011
2092 512 297
7199152473
1 191042810
16386947207
371383820
1030717996
26 599 158 304 26 179 244 306
28839412468 28,271 756 603
44 117 162045 42 427 485 367
• The a=mpanying notes in the pages from (6) to (36) are an integral part of these consolidated interim financial statements .
Chief Financial Officer Managing Director Chairman
Mr. Sherif Moha,c::::.=-",~~
"aepcrfi
Eng. Ahmed Ahmed Sadek Elsewedy Mr.Sadek Ahmed Elsewedy
Limited re~'
-1·
b:t
Translated fi:.om Arabic~ EL Sewedy Electric Company (An Egyptian joint stock company) Consolidated interim income statement For the period ended 31 March 2018~
F: The 3 months The 3 months
ended in ended in ~ 31/3/2018 31/3/2017
Note No. LE LE(: Operational revenues (5).(3-13) 9981 593507 9784711583
Operational costs (5).(3-14) (8 254 115 428) (7 260 211 ~59) ,~ Gross profits 1727478079 2 524 55!J fi24
Other operating income (25) 85434481 38176888
Selling and distribution expenses (3-14) ( 185 436 139) ( 177 471 436)
General & administrative expenses (3-14) ( 329 828 959) ( 331 291471)
Other operating expenses (26) ( 42 253 198) ( 185 005 136)
Operating profits 1255394264 1 868 968 4,69
Financing income 384846338 56218782
Financing expenses (93852206) ( 171 517397)
Net financing Income (expenses) (27) 290994132 ( 115 29. filS.)
Share of profit of equity accounted investees 152868669 112 23"r557
Income (Loss) from disposal of subsidiaries (5) (5326369). Net profits for the year before tax 1693930696 1 865904411
Current income tax (3-16) ( 229 797 622) ( 267 265 522)
Deferred income tax revenue (expense) (3-16) (32603405) ( 59 895 619)
Net profits for the year after tax 1431529669 1538743270
Attributable to : Equity holders of the holding f;Ompany 1402482485 1 508944536
Non controlling interest 29047 184 29798734
1 431 529669 1538743270
Basic earnings per share (LE/share) (33){3-17) 6.41 6.91
• The accompanying notes in the pages from (6) to (36) are an integral part of these consolidated interim financial statements.
F -2
EL Sewedy Electric Company (An Egyptian joint stock company) Consolidated interim other comprehensive income statement For the period ended 31 March 2018
Net profits for the period after tax
Qther coml!rehen~ive incstme items
Foreign operations translation difference
Total comprehensive income
attributable to :
Owners of the company
Non controlling interests
The 3 months
ended in
31/3/2018
LE
1431529669
( 120093769)
1311 435 900
1322157465
( 10721 565)
1311 435 900
Translated from Arabic
The 3 months
ended in
31/3/2017
LE
1538743270
128986602
1667729872
1637037224
30692 648
1667729872
• The accompanying notes in the pages from (6) to (36) are an integral part of these consolidated interim financial statements.
·3·
---U-U-Ul1tltl-UfJ--u--u--u--u'1I1I1t1I1I1I1IlIl-Ul1l1tLUl1tli~UlJ.UUu,
EL Sewed,. Electric Comp8ll,. (AD Egyptlanjolnt stockcomp8ll,.) Consolidated Interim statement of challges In Eqult,. For the period ended 31 March 2018
Iuued and paid capital
Legal reserve Geaeral reserve Own Shares RelaiDed earninp
Balance as otl Januar,. 2017
Other comprehensive iDcome
Net profits for the year
Other compr.hensi~ income items
Total other comprehensive income
Transactlans with owners of the compan,.
Transferred to legal reserve
Dividends to shareholders
Dividends to employees
Total transactiOIl5 with owners of the compan,.
Change In ownership interests and non controlling interests
Subsidiaries dividends to non controlling interest
Total dwlges In owner:shlp Interests and non controlling Interests
Balances as of 311 3/2017
!..E 2234180000
2234180000
y 15.35960U
44 713 638
44113 638
198309721
y; 43816730
43816730
.1& ( 314 723 006)
( 314 723 006)
!..E 65891188 570
1508 944 536
1508944 536
(44 713 638)
( 873 103 136)
( 21 639 349)
( 939 456 123)
71S9 376 983
Balance as of 1 Januar,. 2013 2184180000 298934085 ( 1 422 1(0) 9429130905
Retained Earninp aiUustmmts ( 76 607 101)
Other compn!heuslve iDcome
Net profits for the year 1402482485
Other comprehensive income items
Total other comprehensive income 1402482 41$
Transactions with owners of the company
Transferred to Legal reserve
Dividends to shareholders
Dividends to employees
Cancelation of own shares
Totaltransactlons with owners of tbe company
Cbange In owner:ship interests and non controlUng interests Elimination of subsidiary from consolidation ( 11601 923)
Dividends to employees from subsidiaries (20609443)
Subsidiaries dividends to non controlling interest
Total changes in owuersbip Interests and DOn controlling interest (38211 366)
Forelgu exdwlge differences
resulted from foreigu entitles
translation
J.&. 2278304825
128092 688
12809261111
Total parent's shareholders'
equity
LE 10 985 063 202
1508944 536
128 092 688
1637037224
( 873 103 136)
(21639349)
.~ TotalNon controlling shareholders'
Interest equit,.
LE !..E 514 496 934 11 569 560 136
29198134 1 538143270
893914 128986 602
30692648 1667729872
( 813 103 136)
(21639349)
( 894 742 485) ( 894 742 485)
(25901038)
(25901038)
2406 397 513 11 727 357941 589288 544 12 316 646 485
1601600949
(80 32S 020)
(80325 020)
13 512 423 779
(76607101)
1402482485
(80325020)
6433049115 14 155 728 764
57694 478 ( 18 912 (23)
29041184 1431 529 669
(39168 749) ( 120 093 7(9)
1 322157465 ( 107215(5) 1311 435 900
( 11 601 923) ( 9S 766 591) ( 113 368 514)
(20609443) ( 13698006) (34307449)
( 22 826 SOil - (22826501)
(3& 211 3(6) ( 132 291 098) ( 170 502 4(4)
Balances as of 31/3/2018 2184180000 2989340as ( I 422 1(0) 10716794923 1521 275929 14 719 762 777 551986800 15 277 749577
• The accompanying notes in the pages from (6) to (36) are an integral part of these consolidated interim financial statements .
·4·
Trallslated from Arabic
EI Sewedy Electric Company
(An Egyptian joint stock company)
Consolidated interim casll Rows statement
For tile period ended 31 Marcil 2018
Cash Rows from operating activities:
Net profits for tile period before tax
Adjustments :
Depreciation
Amortization
Provisions and receivable impairment (Net)
Net finance (income)
Share of profits of equity accounted investees
Capital gain
Income from disposal of subsidiaries
Operating profit before changes in working capital
Changes in:
-Trade, notes and other receivables
•Inventories
·Related parties
. Trade, notes and other payables
Net cash provided by operating activities
Cash Rows from investing activities:
Acquisition of fixed assets and project under progress
Paid for intangible assets
Proceeds from sale of fixed assets and projects under progress
(Paid for) treasury bills and investment fund
Net cash Rows (used in) investing activities
Cash Rows from financing activities
Dividends paid to NCI
(Paid) collected from loans, bank facilities and overd~ft
Dividends paid to shareholders
Net cash Rows (used in) financing activities
Net change in cash and banks
Cash and banks at tile beginning ofthe period
Restricted Cash
Cash and banks at the end of the period
Note No. The 3 months
ended in 31/3/2018
L.E
The 3 months ended in 31/3/2017
LE
1693930696 1 865904411
(6)
(26)
(25)
148234 177
5071 821
( 33 428227)
( 290994132)
( 152 868 669)
( 588713)
5326369
1 374683 322
125013 218
2403714
61 156135
115298615
( 112 234557)
( 4 191 551)
2053349985
( 802 067 662)
( 61 349 104)
( 33 724 515)
( 132 934 026)
344 608 015
(3 822 354 955)
(2 064 462 207)
34567947
3828747513
29848283
( 187607854)
( 13 858 121)
7407656
( 221 964 283)
( 12002974)
7529 191
( 360 389 295)
( 554 447614)
234693231
8255165
( 22 826 SOl)
539681 723
516855222
307015623
4840105622
5147121245
( 57 551 038)
36079913
( 873 103 136)
(894574261)
( 856 '470 813)
8270459888
( 300000)
7413 689 075
• The accompanying notes in the pages from (6) to (36) are an integral part of these consolidated interim financial statements.
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated interim financial statements for the period ended 31 March 2018
1. Company background
El Sewedy Electric Company "previously El Sewedy Cables" is an Egyptian Joint Stock Company, established under the Investment Incentives and Guarantees Law No.8 of 1997 and was registered i~ the commercial registration under No. 14584 on 1 June 2005.
The Company's Extra-ordinary General Assembly held on 19/412010 decided to change the company name from "EL Sewedy Cables" to "EL Sewedy Electric". This change was authenticated in the company commercial register on 4/10/2010. The company has ob~ained the approval for the change of its name from Misr for Central Clearing, Depository and Registry Company on 31/10/2010, and changed the name in the Egyptian Stock Exchange on 3/11/2010. '
The Company's purpose is to establish and operates a production facility for power cables, transformers, terminators, joint accessories, copper and aluminum terminators either coated or not coated production. In addition to designing, building, managing, operating and maintaining power generation units and power nets. The duration of the company is 25 years from 1/6/2005 (the date of its registration in the commercial register).
The consolidated financial statement includes the holding company and its subsidiaries "The group".
2. Basis of preparation Statement of compliance
The consolidated financial statements have been prepared in accordance with Egyptian Accounting Standards and the Egyptian laws and regulations.
The consolidated financial statements were approved by the Board of Directors on 5/6/2018.
Basis of measurement
The financial statements have been prepared on the historical cost basis except for financial derivatives measured at fair value and available for sale investments.
Functional and presentation currency
These consolidated financial statements are presented in Egyptian Pound, which is the company's functional currency.
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by Group entities.
-6
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
3~1 Business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. .
Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.
Any contingent consideration is measured at fair value at the date of acquisition, if an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
Non-controlling interests
NCI are measured at their proportionate share of the acquirer's identifiable net assets at the date of acquisition. Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
Loss of control
When the Group loses control over a subsidiary, it der.ecogn~es the assets and liabilities of the subsidiary, and any related NCI and other components of equity. Any resulting gain or loss is recognized in profit or loss. Any interest retained in the former subsidiary is measured at fair value when control is lost.
Interests in equity~accounted investees
The Group's interests in equity-accounted investees comprise interests in associates and in joint ventures. Associates are those entities in which the Group has signi~icant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Group has joint control, whereby the Group has rights to the net assets of the arrangement.
Interests in associates and the joint ventures are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs. Subsequent to initial r~cognition, the consolidated financial statements Include the Group's share of the profit or loss and OCI of equityaccounted investees.
-7
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from intragroup transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
Acquisitions from entities under common control Business combinations arising from acquisition of interests in entities that are under the control of the shareholders that controls the group are accounted for as of the acquisition date. The assets and liabilities acquired are recognized at the carrying amounts and the difference recorded in equity between the assets of these entities and the paid acquisition value. The components of equity of the acquired entities are added to the same components within the net assets of acquired entities than the paid value in investment.
3-2 Foreign currency Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognized in profit or loss. However, foreign currency differences arising from the translation of the following items are recognized in OCI: -Available-for-sale equity investments (except on impairment, in which case foreign currency differences that have been recognized in OCI are reclassified to profit or loss. - A financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective, and - Qualifying cash flow hedges to the extent that the hedges are effective.
Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated into Egyptian pound at the exchange rates at the reporting date. Foreign currency differences are recognized in OCI and accumulated in the translation reserve, except to the extent that the translation difference is allocated to NCI. When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group disposes of only part of an associate or joint venture while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
- 8
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
3-3 Fixed assets Recognition & measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses at the reporting date of the consolidated financial statements. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self constructed assets includes the cost of materials and direct labor, any others costs directly attributable to bringing the asset to a working conditions for its intended use. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.
Subsequent costs Subsequent costs are capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.
Project under progress Project under progress are recognized by cost. The cost includes all expenditure that are directly related to and necessary for the asset to be ready for using and the purpose for which acquired. The project under progress are transferred to fixed assets when finished and available for usage.
Depreciation Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss. Land is not depreciated. The estimated usefullives of property, plant and equipment for current and comparative periods are as follows:
Asset Years Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
Lease hold improvements are depreciated over 3 years or the lease period whichever is less. Depreciation methods, useful lives and residual values for fixed assets are reviewed at the end of each financial period, and have been adjusted if needed.
Capital lease Rental expenses of capital lease in-addition to the operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - lin.e basis over the period of lease. In case of purchasing the leased assets at the end of the contract using the contract bargain purchase option, these assets should be recorded as fixed assets with the bargain option amount agreed in the lease contract, and are depreciated over the remaining estimated useful life according to the applied depreciation policy.
-9
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
r
3-4 Financial instruments Non-derivative financial instruments The Group classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets. The Group classifies non-derivative financial liabilities into the following categories: financial liabilities at fair value through profit or loss and other financial liabilities category.
Non-derivative financial assets and financial liabilities-Recognition and derecognition The Group initially recognises loans and receivables and debt securities issued on the date when they are originated. All other financial assets and financial liabilities are initially recognised on the trade date when the entity becomes a party to the contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability. The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire. Financial assets and financial liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legally enforceable right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Non-derivative financial assets - Measurement: Financial assets at fair value through profit or loss: A financial asset is classified as at fair value through profit or loss if it is classified as held-fortrading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, including any interest or dividend income, are recognised in profit or loss.
Held-to-maturity financial assets: These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method.
Loans and receivables: These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest method.
Available-for-sale financial assets: . These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on debt instruments are recognised in OCI and accumulated in the fair value reserve. When these assets are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.
-10
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
Investment in funds Investments in funds are recorded according to its latest announced recoverable value.
Investment in treasury bills Treasury bills are stated at the balance sheet at its nominal value after deducting the balance of interest not due. There is no losses from the impairment of the value of these bills because it is governmental bills and can be sold at the Central Bank of Egypt adjustment rate.
Non-derivative financial liabilities-Measurement: A financial liability is classified as at fair value through profit or loss if it is classified as held-fortrading or is designated as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial liabilities at fair value through profit or loss are measured at fair value and changes therein, including any interest expense, are recognised in profit or loss. Other non-derivate financial liabilities are initially measured at fair value less any directly attributable transactions costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
3-5 Intangible assets and goodwill Recognition and measurement Gilodwill Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.
Other intangible assets Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and to use or sell the assets.
Subsequent expenditure Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it related to research and development projects under progress and recognized as intangible asset. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.
Amortization Amortization is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit or loss.
Goodwill is not amortized Amortization methods, useful lives and residual values are reviewed at each reporting date and adj usted if appropriate.
- 11
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
3·6 Inventories Inventories are valued at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the normal course of business, minus the estimated cost for com~letion and any selling costs. Net realizable value of the quantity of inventory held to satisfy firm sales is based on the contract price. If the sales are for less than the inventory quantities held, the Iie~ realizable value of the excess is based on general selling·price. Provisions arise from firm saJes contracts in excess of inventory quantities held or from firm purchase contracts. Cost of raw materials is determined using the weighted average method. In case of fin~shed goods and work in process, cost includes direct material and direct labor cost and an appropriate share of production cost.
3-7 Assets held for sale Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-forsale if it is highly probable that they will be recovered primarily through sale or distribution rather than through continuing use. Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred tax assets, employee benefit assets, which continue to be measured in accordance with the Group's other accounting policies. Impairment losses on initial classifications as held for sale and subsequent gains and losses on remeasurement are recognized in profit or loss. Once classified as held for sale, intangibles assets and property plant and equipment are no longer amortized or depreciated, and any equity accounted investee is no longer equity accounted.
3-8 Impairment Non-derivative financial assets: Financial assets not classified as at fair value through profit or loss, including an interest in an equity-accounted investee, are assessed at each reporting date to determine whether there is objective evidence of impairment. Objective evidence that financial assets are impaired includes: - Default of delinquency by it debtor, - Restructuring of an amount due to the group on terms that the Group would not consider
otherwise, - Indications that a debtor or issuer will enter bankruptcy, - Adverse changes in the payment status of borrowers or issuers, - The disappearance of an. active market for a security because of financial difficulties, or - Observable data indicating that there is a measurable decrease
For an investment in an equity security, objective evidence of impairment includes a significant or prolonged decline in its fair value below its cost. The Group considers a decline of 20% to be significant and a period of nine months to be prolonged.
-12
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
Financial assets measured at amortised cost: The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping together assets with similar risk characteristics.
In assessing collective impairment, the Group uses historical information on the timing of recoveries and the amount of loss incurred, and makes an adjustment if current economic and credit conditions are sl}ch that the actual losses are likely to be greater or lesser than suggested by historical trends. Any impairment loss is calculated as the difference between an asset's carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Group considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreases and the decrease can be related objectively to an
event occurring after the impairment was recognised, then the previously recognised impairment loss is reversed through profit or loss.
A vailable-for-sale financial assets Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of any principal repayment and amortisation) and the current fair value, less any impairment loss previously recognised in profit or loss. If the fair value of an impaired available-for-sale debt security subsequently increases and the increase can be related objectively to an event occurring after the impairment loss was recognised, then the impairment loss is reversed through profit or loss. Impairment losses recognised in profit or loss for an investment in an equity instrument classified as available-for-sale are not lieversed through profit or loss.
Equity-accounted investees An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount of the investment with its carrying amount. An impairment loss is recognised in profit or loss, and is reversed if there has been a favourable change in the estimates used to determine the recoverable amount.
Non-financial assets: At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. Goodwill is tested annually for impairment. For impairment testing, assets are grouped together into the smallest group assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs that are expected to benefit from synergies of the combination. .
- 13
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
The recoverable amount of an asset or CGU is the greater if its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows discounted to their present money and the risks specific to the asset or CGU. An impairment loss is recognized if the carrying amount of an assets or CGU exceeds its recoverable amount. Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amounts of the other assets in the CGU on a pro rata basis. An impaiqnent loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, of no impairment loss had been recognized.
3-9 Share capital
Incremental Costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. Income tax relating to transaction costs of an equity transaction are accounted for in accordance with EAS 24 Repurchase and reissue of ordinary shares (treasury shares): When shares recognised as equity are repurchased, the amount of the consideration paid, which includes directly attributable costs is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the treasury shares reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity and the resulting surplus or deficit on the transaction is presented within share premium.
3-10 Dividends
Dividends are recognised as a liability in the financial period in which the dividends are approved by the shareholders general meeting.
3-11 Interest bearing borrowings
Interest bearing borrowings ffre recognized initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest bearing borrowings are stated at amortized cost with any difference between cost and redemption value been recognized over the period of borrowing on an effective interest basis. Interest and commissions on credit facilities and loans that are directly attributable to the acquisition, construction or production of qualifying assets are capitalized as part of the cost of those assets till the date of availability for use. All borrowing costs that do not meet the capitalization criteria are recognized as expense in the consolidated income statement as incurred
3-12 Provisions
Provisions are recognized when the Group has a legal or constructive ?bligation as a result of past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and the liability can be reliably estimated. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market adjustments of the time value of money and the risks specific to the liability. The provisions are reviewed at each balance sheet date and amended, (when necessary), to represent the best current estimate.
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Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
3-13 Recognition of revenue Sales revenue Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Risk and rewards of ownership are transferred when goods are received at the customer's warehouse; however, for some international shipments transfer occurs upon loading the goods onto the relevant carrier.
Revenue of construction contracts Revenues from construction contracts are recognized using the percentage-of-completion method. The percentage-of-completion is measured by correlating costs incurred to date to estimated total costs for each contract.
Contract costs include all ditect material, equipment, labor, subcontract and those indirect costs related to contract performance, such as indirect labor and maintenance costs. General and administrative costs allocable to particular contracts are charged to contract costs. All other general and administrative costs are charged to expense as incurred. Changes in job performance, job conditions, estimated profitability and final contract settlements may result in revisions to costs and income and are recognized in the period in which the facts requiring such revisions become known.
Provision for estimated losses including allocable general and administrative expenses on uncompleted contracts is made in the period in which such losses are determined. Claims for additional contract revenue are recognized when realization is assured and the amount can be reasonably determined.
Finance income and finance costs The Group's finance income and finance costs include: Interest income
Interest expense
Dividend income Dividends on preference shares issued classified as financial liabilities The net gain or loss on the disposal of available-for-sale financial assets The net gain or loss on financial assets at fair value through profit or loss The foreign currency gain or loss on financial assets and financial liabilities The gain on the measurement to fair value of any pre-existing interest in an acquire in a business combination The fair value loss on contingent consideration classified as a financial liability Impairment losses recognized on financial assets (other than trade recei~ables)
The net gain or loss hedging instruments that are recognized in profit or loss; and The reclassification of net gains previously recognized in OCI.
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
Interest income or expense is recognized using the effective interest method. Dividend income is recognized in profit or loss on the date on which the group's right to receive payment is established.
Revenues from Available For Sale Revenues are recognized when the group has the right to the revenues
3-14 Expenses Operating expenses, selling and distribution, general administrative expenses and other expenses are recognized using the accrual basis of accounting and as such are recognized in the income statement as incurred.
3-15 Employees benefits
Social Insurance Scheme The Group contributes in the governmental social insurance system for the benefits of its employees according to the social insurance Law No. 79 of 1975 and its amendments. The Group's contributions are recognized in income statement using the accrual basis of accounting. The Group's obligation in respect of employees' pensions is confined to the amount of the aforementioned contributions.
Share-based payment arrangements The grant-date fair value of equity-settled share-based payment arrangements granted to employees is generally recognized as an expense with a corresponding increase in equity, over the vesting period of the awards. The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.
3-16 Income tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that it relates to a business combination, or items recognized directly in equity or in OCL
Current tax: Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends. Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax: Deferred tax is recognized in respect to temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized: Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit nor loss;
- 16
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on business plans for individual subsidiaries in the group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefits will be realized; such reductions are reversed when the probability of the future taxable profits improve. Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the
. extent that it has become probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement if deferred tax reflects the tax consequences that would follow from the manner in which the group expects, at the reporting date, to recover or settle the carrying amount of its assets or liabilities. For this purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through sale, and the group has not rebutted this presumption. Deferred tax assets and liabilities are offset only if certain criteria are met.
3-17 Earnings per share
Basic EPS is calculated by dividing the profit or loss attributable to the ordinary shareholders of the company by the weighted average number of ordinary shares outstanding during the year.
4· Use of estimates and judgments
The preparation of the financial statements in conformity with Egyptian Accounting Standards requires management to make estimates and assumptions that affect the application of the accounting policies and the reported amounts of assets, liabilities, income, and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Measurement of fair values
The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that such valuations, including the level in the fair value hierarchy in which such valuations should be classified. When using deductible cash flow method as a revaluation method, the future cash flows are estimated on the base of the best estimates for the management. The used discount rate is determined according to the price at reporting date for the same financial instruments of its nature and activities.
- 17
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
5. Operating segments
The Group has the following strategic divisions which are reportable segments. These divisions offer different product and services and are managed separately because they require different technology and marketing structure The following summary describe the operation of each reportable segment:
Segment Report Process
Cables The cables segment manufactures, markets and trade the cables
Constructions This segment execute construction related to power of generation units and electricity distribution networks
Electricity products This segment manufactures electric meters, transformers, electric Joints and also market and trade the products
- 18
~ ·w QQ QQ~ au~ QU~ ~ ~ ~u u u u a~ uU~ a a ~ a u uuU~ , EL SEWEDY ELECI'RIC COMPANY Notes to the consolidated interim financial statements· 31 March 2018 Translated from Arabic
Operating segments
Power and Special Cables TurnKey Electric Products and Accessories ConsolidatedElimination Egypt International projects Egypt International 31·Mar-18 I.E I.E I.E I.E I.E I.E I.E
6451 775 22~Local Sales 2698136840 982933034 2 149602233 450016631 171 086490
Export Sales and construction revenues 2265302669 168526757 256372 898 230206488 609409467 3529818279
Total revenue without inter segment sales 4963439509 1 151 459791 2405975 131 680223 119 780495957 9981 593507
Inter segment revenues 3274229869 452393856 182078731 13 175913 3921878369
Total revenue 8237669378 1 151 459791 2858368987 862301850 793671870 3921 878369 9981 593507
Total Cost ( 7 427- 838 336) ( 1 080 314 978) ( 2 427 696 563) ( 668 340 479) ( 571 803 441) 3921 878369 ( 8 254 115 428)
Gross Profit 809831042 71 144813 430672424 193 961 371 221868429 1 727478079
Total selling & marketing expenses ( 98 878 975) . 19167928) ( 6354369) ( 20881 705) ( 40 153 162) ( 185436 139)
Segment profit 710952067 51 976885 424318055 173079666 181 715267 1 542041940
Other operating income
Loss from disposal of subsidiaries
Share of profit equity accounted investee
General and administrative expenses
Other operating expenses
Net financing revenue
Current income tax
Deferred tax (expense)
Net profit for the period
85434481 ( 5326369) 152868669
( 329 828 959) ( 42253198)
290994132 ( 229 797 622) ( 32603405)
1 431 529669
Depreciation 30827067 38234544 38756650 10 663 932 26974625 Unallocated
2777359 148234177
Assets
Liabilities
14 047 889 229 3827408407
3466552636 907543058
3118838460 2684603 106
11 120 443 310 8611432507
2109 698 460 1990456309
10 253739950 10 817 969 081
44 117 162045 28839412468
Additions to fixed assets and project under progress 71452558 32858382 55240277 17829256 14 213 757 1 691 221 193285451
. -19
'~~~~111lil~lj~~''''1~'~\j\j~'~~''~''''~' IX U; IX IX \t EL Sewedy Electric company Notes to tbe consolidated Interim finandal statements - 31 March lO18 ItaTlSlated from Arabic
Power and Spedal Cables TurnKey Electric Products and Accessories ConsolidatedEliminationEgypt International projects Egypt International 31·Mar-17
Operating segments LE L.E LE LE LE LE LE
Local Sales 1 766 297 848 1 343423 185 1758284820 354 114091 121 311 370 5343431314
Export Sales and construction revenues 2064852211 9535771 1790286093 63066 771 513 599 423 4441340269
Total revenue witbout Inter segment sales 3831150059 1352958956 3548 570913 417180862 6349i0793 9784771583
Inter segment revenues 3009 126620 460496526 232806018 6537756 3708966920
Total revenue 6840276679 1352958956 4009067439 649986880 641448549 3708966920 9784771583
Total Cost (5371311 524) ( 1 176013 914) ( 3 447540 165) ( 510 259 194) ( 464 054 082) 3708966920 ( 7 260 211 959)
Gross Profit 1468965155 176945042 561527274 139727686 177394467 2524559624
Total selling and marketing expenses ( 91 593381) ( 24 188747) ( 9620 191) 15494210) ( 36574907) ( 177471 436)
Segment profit 1377371774 152756295 551907083 124233476 140819560 2347088188
Other operating income
Income from disposal of subsidiaries
General and administrative expenses
Other operating expenses
Net financing income
Current income tax
Deferred tax
Net profit for the year
Depreciation 28917612 45805503 12971 303 11608217 24166005 Unanocated
1544578
38 176888
112234557
( 33'1 291 471)
( 185005 136)
( 115 298 615)
( '167 '165
( 59895
125013 218
Assets
Liabilities
14488092959
( 3 641 243975)
2832712742
( 1 529 246 554)
15 047 136 343
( 12 733 244 800)
3262147942
( 1944588 513)
679820986
( 1 025 370170)
7508675663
( 10 451 '146 138)
43818586635
( 31 3'14940 150)
Additions to fixed assets and project under pr()gress 9475103 4226302 48634317 16985561 7016947 1 319919 87658 149
·20·
Trallslated from Arabic EI Sewedy Electric company Notes to the consolidated interim ftnanclal statements - 31 March 2018
6 Fixed assets
Land Buildings Machineries
& equipments Furniture &
office suppUes Vehicles
leasehold improvements
Total
L.E L.E L.E L.E L.E L.E L.E Cost
Balance as of 1/1/2018 486549810 2272 634938 5312957826 363196592 245821088 39984685 8721144939
Additions during the year 309617 1 238857 43065230 6039833 4075673 1071427 55800637
Disposals during the year ( 1 162378) ( 244733) ( 7 397914) ( 49329) ( 1 309474) (10163 828)
Transfer from constrution in progress 751 315 29756093 1 312618 1999800 283237 34103063
Adjustment,translation differences and syria assets disposal ( 340575) 6180090 19952995 ( 922268) ( I 290224) ( 73604) 23 506414
Cost as of 31/3/2018 485356474 2280560467 5398334230 369577446 249296863 41265745 8824391225
Depreciation
Accumulated depreciation as of 1/1/2018 688617130 3268736574 281604681 152782384 24386415 4416127184
Depreciation 19405843 110287065 9746603 1847263 6947403 148234177
Accumulated depreciation of disposal ( 149899) ( 3 005 377) ( 27204) ( 162405) (3344885)
Adjustments,translation difference and syria assets disposals 1 973771 18832239 ( 792909) ( 710 987) ( 3550) 19298564
Accumulated depreciation as of 31/3/2018 709846845 3394850501 290531171 153756255 31330268 4580315040
Net carrying amount as of 31/3/2018 485356474 1570713622 2003483729 79046275 95540608 9935477 4244076185
Net carrying amount as of 31/12/2017 486549810 1584017808 2044221252 81591911 93038704 15 598 270 4305017755
The company agreed to sell its new adminstrative building (under construction). According to the terms of the sale agreement the company Extra ordinary General Assembly (EXGA) is to approve the sale and the company should register the building in the name of the buyer. The EXGA was invited on 23 April 2014 and decided to postpone its approval on the sale. On 18 June 2015 the company sent a warning letter to the buyer to hand over the building because of his failure to meet the special conditions under the contract related to the finishing which should have been completed by 31 December 2013 or after by a maximum of 3 months from that date. The company sent warning required the buyer to return back all documentation that was delivered to the buyer in relation to this sale by minutes dated 31 January 2013. The EXGA decided in its meeting dated 12 January 2016 that the company should take legal action against the buyer for violation of the contract terms.
-21
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
7. Projects under progress
31/3/2018 LE
Buildings
Tools & Equipments
Computers
Others
121285067
249826374
1290130
143840651
31/12/2017 LE
91389543
197301 761
15661631
114185133
516242222 418538068
8. Available for sale investment
31/3/2018 LE
Misr for Mechanical and Electrical Projects (Kahromica)An Egyptian Joint Stock Company (the share proportion 10000000 is 10%)
Others 104565
31/12/2017 L.E
10000000
105037
10104565 10105037
9. Equity-accounted investees The assets, liabilities and income from Equity accounted investments are as follow:
31/3/2018 Million
LE
Assets 4638
Liabilities 3286
Profits 153
* The disclosure No. (30) Includes the equity accounted companies.
23
31/12/2017 Million
L.E
3663
2450
701
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
10. Investment certificates
31/3/2018 LE
31/12/2017 L.E
Investment in Suez canal bank for Suez canal investment certificates 20000000
20000000
20000000
20000000
11. Trade and other receivables
Clients receivables (construction)
12. Intangib1e assets
Goodwill Other Intangible assets
31/3/2018 LE
3078935576
3078935576
31/3/2018 L:E 12204789
177130175 189334964
31/12/2017 LE
3486374869
3486374869
31/12/2017 LE
12204789 168343875 180548664
Goodwill resulted from acquisitions which resulted in L.E 12.5 million at the acquisition date and the intangible assets amortization amounted to L.E 5 071 821 16188246 at 31 December 2017).
13. Deferred tax
Deferred tax assets
Deferred tax liability
Unrecognized deferred tax asset
Clients and debtors
Provisions
for the period ended 31 March 2018 (L.E
31/3/2018 LE
443073457
(695 560 877)
31/3/2018 L.E
363684375
266852573
630536948
31/12/2017 L.E
474341539
(660 120089)
31/12/2017 LE
425369961
264222421
689592382
Deferred tax assets relating to these items have not been recognized because the necessary conditions for the reversal of the temporary differences have not been met.
24
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
14. Inventory 31/3/2018 31/12/2017
LE L.E
Raw Materials 2872238114 2967065813
Work in progress 1373193920 1057564 268
Finished goods 2448574045 2693713736
Goods in transit 1186291390 1100604548
78189483657880297469
Some of inventories items are recorded according to their net realizable value. The difference between the book value of these items and their net realizable value is L.E 514 million at 31 March 2018 (L.E 479 million at 31 December 2017).
15. Trade, notes and other receivables
31/3/2018 31/12/2017r L.E LE
F=il Trade receivables 5985481384 6933140 957
r= Due from receivables turnkey 4085749265 4273914819
Notes receivables 844080747 799533596
Other receivables* 5083865299 2872604585 ~ 15 999 176695 14 879 193 957 ~
Trade, notes and other receivables are recorded after deducting impairment losses of L.E 1 616 million at 31 March 2018. (L.E 1890 million at 31 December 2017) ~ ·Other receivables include advance payments to suppliers of L.E 948 million, accrued revenue of L.E 1 038 million, retention insurance of L.E 911 million and prepaid expenses of L.E 341 million at 31 March 2018. ~
16. Investment in investment funds/treasury bills 31/3/2018 31/12/2017
LE LE ~ :!!I Present value of investment in treasury bills 4721062908 4424 635 267
::!I (Less):
::!I Interest not due (128 046 479) (192 008 133)
4593016429::!1
::!I
:!I 25
4232627134
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
17. Banks and cash in hand 3113/2018 31/12/2017
L.E LE
Banks - time deposits 741359647 1155225 099
Banks - current accounts 4226971673 3666682289
Cash in hand 178789925 18198234
5147121245 4840105622
18. Share capital
Authorized share capital
The Company's authorized share capital is L.E. 5 billion.
Issued and paid in share capital The issued and fully paid-in share capital of the Company at 1 January 2017 is amounted to L.E 2234 180000 divided over 223 418 000 share with par value L.E 10 each. The Extraordinary General Assembly of the Company decided on 4 May 2017 to cancel 5 million treasury shares and accordingly the company's issued and paid capital become LE 2 184 180000 distributed over 218 418000 share with a nominal value of LE 10 per share.
19. Reserves 31/3/2018 31/12/2017
LE L.E
Legal reserve (*) 298934085 298934 085 General reserve
298934085 298934085
(.) Legal reserve According to the Companies Law and the statutes of the Company, 5% of the annual net profit is set aside to form a legal reserve. The transfer to legal reserve cease once the reserve reach 20% of the issued share capital. The reserve is not distributable, however, it can be used to increase the share capital or offset losses. If the reserve falls below the defined level, then the Company is required to resume setting aside 5% of the annual profit until it reaches 20% of the issued share capital again.
20. Own shares The Board of Directors of the Company held a Board meeting on 9 October 2016 decided to buy 3.6 million own shares at a price of LE 62.5 per share. The fair value of the shares was a price of LE 73.8 per share determined by an independent financial advisor (HC Securities and Investment Company). The board decided to buy the shares in the period from 11 October 2016 to 17 October 2016. The Board also held a meeting on 18 October 2016 and decided to buy 1.4 million own shares at a price of L.E 62.5 per share based on the same study of fair value of the shares during the period from 20 October 2016 until 26 October 2016.
Accordingly the company own shares represented 5 million shares or 2.24% of the total shares capital. The decision was made in order to invest cash liquidity in local currency. The Extraordinary General Assembly decided on 4 May 2017 to cancel the own shares amounting to L.E 50 million at par. The General Assembly also decided to amend articles (6),(7) of the company statute. The shares cancelation was recorded in the Commercial Register on 19 July 2017.
26
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
*The value of own shares purchased in accordance with the resolutions of the Board of Directors above is LE 313 300 846. The cancelation of these shares resulted in the reduction of issued and paid up capital of LE 50 million, the general reserve reduced by LE 43,8 million and retained earnings by LE 219,5 million.
21. Loans
Short and long term loans granted to the company and its subsidiaries are classified as follows:
31/3/2018 31/12/2017 L.E L.E
Current liabilities
Loans and installments due within one year 1228389656 1191042810
1228389656 1191042810
Non current liabilities
Secured bank loans 179400956 315224 624
Unsecured bank loans 53639471 15299007
233040427 330523631
The average interest rate for loans and credit facilities is 17.75% for the Egyptian pounds and 2.25 % over Ubor for the US Dollars and 4% for Euro
Loans granted to the company and its subsidiaries are secured by promissory notes from subsidiaries approximately L.E 1 300 million, USD 41 million, DZD 6.6 million ,joint guarantees of L.E 4 104 million and machinery and equipment.
22. Banks credit facilities and overdraft
Credit facilities and overdraft amounted to L.E 7944546852 at 31 March 2018 (L.E 7 199 152473 at 31 December 2017) secured by promissory notes and joint guarantees. The interest of the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound plus 1.5% for Egyptian pound facilities, 1.5 % over Ubor and 0.1 % monthly commission on the highest debit balance for US Dollar and 1.5 % over Eurobor for the Euro facilities. The portion included in the non-current liabilities of L.E 703 233 389 !epresents the value of the Group's credit facilities from several banks which are repaid in installments that mature after more than one year. (L.E 848809687 at 31 December 2017)
27
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
23. Trade, notes and other payables
31/3/2018 hE
31/12/2017 hE
Trade and notes payables
Prepayments and due to clients
Other credit balances and accrued expenses *
3700516567
7475025414
4787306131 15 962 848 112
3139495170
8346282142
4901169895 16 386 947 207
*Other credit balances include income tax and other accrued taxes of L.E 1 956 million, retention payable of L.E 324 million and accrued expenses of L.E 644 million.
24. Provisions
31/3/2018 31/12/2017 hE hE
Balance as at 1/1 1174321875 1179508175 Formed during the period/year 11 702013 521091485 Used during the period/year (3134373) (126184850) Provisions no longer required (1259952) (119 687 752) Translation differences and adjustments 4381872 (280 405 183)
1186011435 1174321875
Provisions include an amount of L.E 1 030 384 048 as of 31 March 2018 within the current liabilities in the consolidated statement of financial position (L.E 1 030717996 at 31 December 2017) and the noncurrent portion in the non-current liabilities of L.E 155 627 387 (L.E 143 603 879 at 31 December 2017).
25. Other operating income
The 3 months The 3 months ended in ended in 31/3/2018 31/3/2017
LE LE Capital gain
588713 4191551 Reversal of receivable impairment
68348176 Provision no longer required
1259952 27911657 Others
15237640 6073680 85434481 38176888
28
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
26. Other operating expenses The 3 months
ended in 31/3/2018
LE
The 3 months ended in
31/3/2017 LE
Provisions
Impairment receivables
Amortization
Others
11 702013
23230389
5071821
2248975
82833844
67410332
2403714
32357246
42253198 185005136
27. Net financing income ( Cost)
The 3 months ended in 31/3/2018
LE
The 3 months ended in 31/3/2017
LE
Finance income
Interest earned
Change in present value
Foreign exchange gain
225257082
98096054
61493202
50982967
5235815
Finance cost 384846338 5621878'1..
Interest expense (93852206) {I71517397)
Total finance cost (93852206) (171517397)
290994132 (115 298 615)
28. Capital commitments The Group's capital commitment as at 31 March 2018 is L.E 225 million (L.E 763 million at 31 December 2017). The commitments are expected to be settled in the next financial year.
29
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
29. Contingencies
Uncovered portion of letters of guarantees and letter of credits
30. Related parties
31/3/2018 31/12/2017 LE L.E
11 015 370 388 11 232 579 162
Related parties are represented in the Company's shareholders and the companies in which the shareholders own directly or indirectly shares that give them the ability to control or significantly influence these companies. The main transactions with the related parties are sale of finished products. The total value of sales to the affiliates during the period is L.E 723 million as of 31 March 2018. The significant related parties' balances at 31 March 2018 are as follows:
Stated under current assets
"Due from related parties"
ELSewedy Cables-:-Qatar
ELSewedy for Tools and Cables EI sewedy for construction EI rowad co- Dubai Construction technology company Iskra Malysia Zesco Company
Ola for real estate development Doha cables-Qatar
EI Sewedy for constructions Co.Algeria:
Glencore Company
Elsewedy for Electrical Industries(Egylux)
Pyramids for Industrial parks development Pyramids Zonafranca
Electricity Authority- Sudan
3W Net works - Qatar 3W Net works - Egypt Zambia for Constructions EI sewedy cables- Syria EI sewedy electric- Syria Elastymold Egypt Giad cables Others
31/3/2018 31/12/2017 LE L.E
180220396187652318 150686219 92 036153 30357802 30384144
6610 596 6610596 7389162 7353767
484865 1893656
29799 1526831 15367827 44664001
43759279 43956950
42166 9489673 12444170 8749436 16022119
4802323
9407213 9407212 5914102 5914102
44254163 43564568 161297 162025
1347233 1353434 4013907
48731387 38364864 73511256 3835913
643903628 548573297
30
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
31/3/2018 31112/2017
L.E L.E Stated under current liabilities
"Due to related parties" Pyramids for real estate development 30578013 46314536 Pyramids zonafranca 14750839 18854830
1223936Egyptian company for advanced Industries and systems
AI Ola for Industrial Parks Development 107804 162547 AIarabia for Steel Industries 60059477 764517 Elastymould-Egypt 16989732 17888946 Maali Holding 11645543 32872752 EI Sewedy cables-Qatar 47314655 60 465136 Doha cables 26817 345 6216239 Senyar- Holding 33367322 2334119 EI Sewedy cables- Syria 84692380 78188288 EI Sewedy electric- Syria 8176528 8281499 EI Rajhee Construction 40735691 40908229 Zambia for Construction 8945883 8986293 Giad cables 166562 294338 Hassan Giad 17765910 17 846163 International company for development 6437809 6464522 Shareholders divideneds 21180966 16597141 Others 3197177 6719789
371383 820432989636
Subsidiaries and jointly controlled The following are the most important subsidiaries entities owned by the company as at 31 March 2018 :
Date of Nature of %of acquisition Country contribution share
Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 98.00 United Metals Co. 23-06-2005 Egypt Direct 99.80 Egytech Cables Co. 25-12-2005 Egypt Direct 99.98 United Industries Co. 25-12-2005 Egypt Direct 99.98 EI Sewedy for Electric International Co.(previously 19-04-2006 Egypt Direct 99.96 External cables) United Wires Co. 02-11-2006 Egypt Direct 99.94 Egyplast Co. 24-12-2006 Egypt Direct 99.97 EI Sewedy Cables - Egypt 21-02-2007 Egypt Direct 99.87 Elsewedy Transformer 30-04-2011 Egypt Direct 99.87 Elsewedy Electric Co. For Transmission 21-10-2007 Egypt Direct 99.97 EI Sewedy Power 27-09-2007 Egypt Direct 99.84 EI Sewedy Sedco for Petroleum Services 10-01-2008 Egypt Direct 96.00 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Indirect 99.12 Iskra Emco Slovenia 1-1-2008 Solvenia Indirect 99.70 Egyptian Company for Insulators 30-6-2008 Egypt Direct/Indirect 74.83 Elsewedy Electric Co. For Trading and Distribution. 21-12-2008 Egypt DirectlIndirect 99.8 Siag EI Sewedy for Towers 17-08-2008 Egypt Direct 99.00
31
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
EI Sewedy for Wind Energy Generation 10-07-2008 Egypt Direct 99.8 Power System Projects Company 31-12-2008 Egypt Direct 100.00 Rowad Engineering Co. 30-6-2010 Egypt Indirect 65.00 Etalsamia for manufacturing electrical tools against 30-6-2010 Egypt Indirect 99.98 explosion SMD for developments and managements Co. 14-1-2018 Egypt Direct 99.8 Souq misr for malls Co. 11-3-2018 Egypt Direct 99.99
Subsidiaries for EI Sewedy for Electric International Co (External cables previously).
EI Sewedy Cables - Algeria 03-10-2006 Algeria Indirect 99.89 El Sewedy Cables Limited 24-12-2006 Saudi Indirect 60.00 EI Sewedy Electric Limited Zambia 31-03-2009 Zambia Indirect 60.00 El Sewedy Cables Ethiopia 31-03-2009 Ethiopia Indirect 95.00 Red Sea for copper - Egypt 31-12-2009 Egypt Direct /Indirect 100
United Co. For Electrical Industries 31-3-2010 Saudi Indirect 60
3W Network - Emirates 30-6-2010 Emirates Indirect 75 National Extrution and manifacturing of metal 23-5-2013 Egypt Direct 99.98 EI Sewedy Cables-Dubai 30-9-2016 Emirates Indirect 49.00 EI Sewedy Electric for engineering projects-Kuwait 27-10-2010 Kuwait Indirect 49.00
Equity accounted investee's Elasty Mould 22/2/2006 Egypt Indirect 49.60 Elsewedy Contracting 31/3/2009 Zambia Direct 49.90 Aloula 30/9/2009 Egypt Direct and indirect 50.00 Elsewedy Cables 20/4/2006 Qatar Indirect 38.30 Senyar 9/5/2008 Qatar Indirect 50.00 Doha Cables 9/5/2008 Qatar Indirect 48.72 Pyramids 27/9/2007 Egypt Direct and indirect 50.00 Zona Franca 30/6/2010 Egypt Direct and indirect 47.50
On 9 June 2015 EL Sewedy Power Company - a subsidiary of EI Sewedy Electric and EI Sewdy Electric Company agreed to sell MTOI, a Spanish company (previously M. Torres) fully owned by both mentioned companies, for 1 Euro in addition to Euro 250K to be paid in November 2015. According to the agreement, MTOI will pay the credit balance due to EL Sewedy Power almost of Euro 4.6 million on an annual installments starting at November 2015 to November 2018 with interest of 2% over Eurobor. Both MTOI and the buyer are jointly liable for paying the credit balance according to the contract. There is no cash inflows on the transaction consolidated cash flow. The Company sold its shares in Elsewedy Cables-syria, Elsewedy Electric-syria and SedPlast Syria.
32
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
31. Tax status El-sewedy Electric Company is subject to Investment Guarantees and Incentives law No.8 for 1997 and its executive regulations and the rest of group companies are subject to taxes in Egypt or abroad. The companies enjoying tax exemption are as follow: Subsidiaries in E2Vpt enjoying tax exemption from corporate income tax
End of tax exemption Elsewedy Cables - Egypt 31/12/2018 Sedco for electrical industries (Etalsamia previously) 31/12/2019 EI sewedy transformer 31/12/2018
32. Shares based payment The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of L.E 10 each as employees share based payments according to the ministerial decree No 282 for 2005. The Extraordinary General assembly's dated 19 April 2010 and 26 April 2011 decided a shares dividend (3 shares for each 10 shares). The employee right at each year end during the three years scheme to exercise part of the shares based payments were in the following rates:
First year 20% Second year 30% Third year 50% The fair value of the services rendered in return of the shares granted as at 31 December 2011 is as follows: Number of share options granted in 31December 2008 126000 Share dividends (3 for each 10) 52383 Exercised up to 31 December 2011 (161227) Canceled shares to employees up to 31 December 2011 (17156)
Fair Market value at 31 December 2011 4227700 The granted options were fully exercised and there is a remaining balance of shares of 142 216 available for share based payments that belongs to the system. The Group is in the process of renewing the share based payments system.
33. Earnings per share The 3 months The 3 months
ended in ended in 31{3{2018 31{3/2017
LE LE
Profits attributable to the shareholders of the company 1402482485 1508944536
Weighted average number of share
Issued and paid capital 218418000 223 418 000
Treasury shares
5 million shares purchased in October 2016 (5000 000)
Treasury shares (reward system) (142216) (142216)
Weighted average number of share 218275784 218275784
33
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
34. Financial instruments and the related risks
The main risks related to the company activities are:
- Credit risk
- Liquidity risk
- Market risk
The Company risk management policies are established to identify and analyze the risk faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company activities. The Company through its training and management standards and procedures aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations. The Company does not use derivative financial instruments.
Credit risk Credit risk is the risk that one party to a financial instrument fails to discharge an obligation and cause the other party to incur financial loss. This risk arises from the receivable and debtors.
(L.E million) 31/3/2018 31/12/2017
Receivable and debtors 19091 18366 Due from related parties 618 549 Cash and investments 5147 4840 Total 24 856 23755
Receivable aging (L.E million)
31/3/2018 31/12/2017
Not due 3046 2107 Due for 30 days. 1816 3723 Due for 31 to 120 days 5915 8389 Due for 121 to 180 days 2563 3404 Due for more than 180 days 339 502 Others 5412 241
19091 18366
34
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
Liquidity risk Payments to suppliers and creditors are due within a period of 90 days from receipt of goods or services.
Creditors and due to related parties Due to banks
Foreign currency risk
Less than one year LE
16382640 9172 936
(LE Thousand)
More than one year L.E
452792 936273
The following are the balances of monetary assets and liabilities in foreign currencies: (Thousand)
Financial assets Financial liabilities
USD
623602 440061
31 March 2018 Euro 255403 90741
GBP
31025 1853
31 December 2017 USD Euro
671 044 100147 312559 125508
GBP
24527 5693
The fOllowing are the significant foreign currency exchange rates during the year:
Closing rates Average rates
31/3/2018 31/12/2017 31/3/2018 2017 USD$ 17.71 17.79 17.85 17.85 Buro 21.82 21.35 21.59 20.23
Sensitivity Analysis
A reasonably possible strengthening (Weakening) of BOP against the US dollar and Buro at 31 March 2018 would have affected the measurement of financial instruments denominated in a foreign currency and affected equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.
Effect Change 10% (Thousand)
31{3/2018 31/12/2017
USD 325051 637754 Buro 359291 {54144} Total 684342 583610
35
Translated From Arabic
EL Sewedy Electric company Notes to the consolidated interim financial statements for the period ended 31 March 2018
Interest rate risk The following are the group interest bearing financial instruments:
Fixed interest rates Financial assets Financial liabilities
Variable interest rates Financial assets Financial liabilities
The average interest rates are as follows:
LE
Financial assets 16.75
Financial liabilities 17.75
31/3/2018
4312 (793) 3519
1298 (5323) (4025)
EURO
2
4
(LE. million)
Net book value 31/12/2017
3490 (1522)
1968
5388 (8048) (2660)
USD
1.75
2.75
36