(an egyptian joint stock company)resources.inktankir.com/swdy/consolidated-q3-2011.pdf ·...
TRANSCRIPT
EL Sewedy Electric Company
(An Egyptian Joint Stock Company)
Consolidated Financial Statements
For the Financial Period from 1 January 2011 to 30 September 20ll
And Limited Review Report
Report on Limited Review of Interim Consolidated Financial Statements
To The Members of Board of Directors ofEI Sewedy Electric Company
Introduction
We bave perfonned a limited review for the accompanying consolidated balance sheet ofEI Sewedy Electric Company as of September 30 2011 and the related consolidated statements of income changes in equity and cash flows for the nine-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 of Limited Review
Except as explained in the following paragraph we conducted our limited review in accordance with Egyptian Standard on Review Engagements 2410 Limited Review of Interim Financial Statements Perfonned 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 that 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 fmancial statements
Basis for Qualified Conclusion
We have not obtained the financial statements together with the review report for Libya for Joint Cables Company one of the companys subsidiary that have not started operations of which its total assets amounted to LE 862 million Had we been able to obtain the financial statements of this subsidiary and the review report there on matters might have come to our attention indicating that adjustments might be necessary to interim consolidated financial statements
Qualified Conclusion
Except for the adjustments to the interim consolidated financial statements that we might have become aware of had we obtained the limited review report for the above mentioned subsidiary nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial statements does not present fairly in all material respects the consolidated fmancial position of the company as at September 30 2011 and of its consolidated fmancial performance and its consolidated cash flows for the nine-months period then ended in accordance with Egyptian Accounting Standards
KPMG Hazem Hassan
Public Accountants And Consultants
Cairo 30 November 2011
EL Sewedy Electric Company
( An Egyptian Joint Stock Company)
Consolidated Balance Sheet
As opO September 2011
Translated from Ara~lc
311l21l0JJ
y
3544391436
269679123
14 2S4 000
10 2S2 SOO
1 16292
239371170
165762934
32201150
4277 li8 90S
3699614092
4114968519
283 311 917
569038356
1000073795
9 667 0116 679
4164172 964
601237551
2316105139
156312617
71805769
7309634040
2357372639
6634531 S44
1718600000
(171)4990)
83954091
578908660
1810338694
795529148
58 5J9 142)
4927116461
414195385
5341111846
1073035548
108960912
111223 238
1293 U9698
6634~
Chairllan
Assets
Long term assets
Fixed assets
Project under progress
Investments available for sale
Investments in associates
Paid on account of investments
Debit balances
Intangible assets
Deferred tax assets
Tomllong term assets
Current assets
Inventories
Trade notes and other receivables
Due from affiliates
Investment fund 1 treasury bills
Cash and cash equivalents
Toml current assets
Current liabilities
Banks facilities and overdraft
Loans
Trade notes and other payables
Due to affiliates
Provisions
Toml current liabilities
Working capiml
Total investments
These investments to be financed as follows
Shareholders Equity
Issued and paid capital
Own shares
Reserves
Increase in the net assets of the acquired subsidiaries over the consideration paid for the investment
Retaioed earnings
Net profit for the period 1year
Foreign exchange differences resulted from foreign entities translation
Toml parent sharebolders equity
Minority interest
Total equity
Long term liabilities
Loans
Deferred tax liabilities
Other liabilities
Totllliong term liabilities
Note
No
(3-3)(6)
(3-3)(7)
(3-5)(8)
(3-1)
(9)
(3-4)laquo10)
(3-7)(31)
(3-18)laquo21)
(3-8)(11)
(3-4)(12)
(29)
(3-6)(13)
(14)
(3-11)(15)
(3-11 )(16)
(3-4)laquo17)
(29)
(3-10)(18)
(19)
(20)
(3-11)(16)
(3-18)laquo21 )
(22)
30911011
LE
3436133 116
344088140
14284000
11 366314
3408460
252051 113
166239880
34247590
4261818613
4278558899
4553922677
274971529
383302238
959171 248
10 449 926 591
4736251953
I 157605886
1892 600 599
213 811 563
64660165
8064 930 166
2384996425
6646 81S 038
2234 180000
(2209920)
126216152
578908660
1797776496
528319062
(56738368)
5206452082
427214980
5633667062
809881809
117230876
86035291
1013147976
6646815038
bull The accompanying notes are an integra part of these consolidated financial statements
Managing Director Chief Financial Officer Eng Ahmed Ahmed Sadek Mr Sadek Ahmed ElsewedyMr Amr Mohamed Labib
Limited review report attached
-1shy
Translated from Arabic EL Sewedy Electric Company
( An Egyptian Joint Stock Company) Consolidated Income Statement
For tbe financial period from 1 January 2011 to 30 September 2011
From In12011 From 11112011 From In12010 From 1112010 to 30912011 to 30912011 to 30912010 to 30912010
LE bE LE l~middotE
Note No
Operational revenues (3-14) 3883261374 lJ 369 753 871 3225943880 9211550459
Operational costs (3-16) (3 320 186 023) (9 824 449 050) (2 737620250) (7 717 724 305)
Gross profits 563 075 351 1545304 821 488323630 1493826154
Other operating income (24) 17007264 68531480 17 102620 122530483
Selling and distribution expenses (3-16) (77754360) (242 760 804) (85872 590) (259405 420)
Adrninistrati Ie expenses (3-16) ( 130045 181) ( 397 197463) ( 127714724) (370347738)
Other operating expenses (25) 4465238 (30085237) ( 49 391904) (86 689 072)
Operating profits 376748 312 943792797 242447032 899914407
Financing income 9751958 37945732 21 635715 90683212
Financing costs ( 156937092) (337136282) ( 43580 215) ( 192793 875)
Net financing costs (26) ( 147 185134) ( 299 190 550) (21944500) (102 110663)
Net profit for tbe period before tax 229563178 644602247 220502532 797803 744
Income tax
Current income tax (3-18) (25020517) (80263887) (22780324) (60039335)
Deferred income tax (3-18) 2612484 (4888432) (7026193) ( 10970886)
Net profit for tbe year after tax 207155145 559449928 190696 015 726793523
Attributable to
Equity holders of the holding company 196 366 Il2 528319062 191 129767 698060357
Non- controlling interest 10 789 033 31 130866 433752 28733 166
207155145 559449928 190 696 015 726793523 Earnings per share (3-19)laquo34) 088 237 111 406
bull The accompanying notes are an integral part of these consolidated financial statements
-2shy
TllKUJlated from Arabie lit sectSU EIedric ~O1Il
(An EIYP Siodt C ) CotJlGUdatcddulbp 10 ~I 1aIMD1
or the nnMcloI period rrpm I bpwtry lOll 30 Septnnher 1011
laereue lit the wet _of Fondgn udraage lnd Pfit attnlllfahle dilleftMt Tend parattbMdand1d Emplo)ee tb4n TMaI n behleneeoeralrelUVC diariesovet RetUned ftnUnp 1ApI to the hold rmalled frvm haldenmiddot MUtoll9 lnterwt apltal
dteconWeratloa fot the period I year forelgn~ 1) paid f the 0 In_I
LE LE LE LE LE LE LE LE LE LE LE LE ~_~ 310t9 IllUeoOOO (l8J8000) 169153-13 43816130 H3lI 518l118660 166189 633 594601 ( 469f1001) 4111866160 37394 45830701 TtulSifetRd 10 re18inedearmng 613196148 (613196 748)
T mnsfm-ed to lesal ruetVe 1791859 (19m859)
Minority ~ in subsidlarics profd di$tribution (2414820) (24148201) Minority sbare in capi181 loorease ofsubsidiaries or acquired subsidiaries during the period 112879708 lIZ 879708 Cbange in micority sMn of subsidiariea (1425641) (lS64I) Foreign exchange differences from foreign cntilies tranmtion ( 115D863) ( 1152863) (II 5D863) Adjllltmcnts to the re18ined earning amp6339 (8D) (88633M) (886J3M) Effect of seUing wntrolling intcRst in a subsidiary ( bull 1871lB) ( 1107138) ( 17077lB) Owgc flaquo employees ebares bclsed payment ( 3424 1$9 LE) 400 ( 9820) (2) (m) Sfock dividenltb (profit for year 20(9) ( 55390) (4S6I0) Dividends to empIQ)ees (protit for y~ 2(09) (58 6801) (5081601) (58681601) Netprofil fory 2010 795529148 7955DI48 21107572 8bullbull 636120 Btdatlee iN at Deocasbcr 31 20 to 1118600 ( 110) 36713202 43816130 3424159 518l1186O 1810330 4 795529148 (50509 142) 27116461 414195385 534311846 Trarufemd to Maincd earning 1~319148 (7955DI48)
tl1lOllfCf1t)dtol~ 41538875 (41 538815)
Minority shDR in subsidiaries profit dislribuuon (160717) ( 16868717)
Minority shan in captl increase or subsidiariea or acquired subsidiaries ~ the period 118711 118711 Fomgn elaquoiliange differences from foreign entitle$ trmtlation 1710714 17707741778774 A4i_1o the_incd eamlngt (8883) (8803) ( 0479868) (222 265) CIwJae rIoY buodpeyme(441WLE) 123186 123186 123186di_ (pufit rolt yoar 200)_ 515580000 ( 5030) (SIS 015 01) chcli_ (pufit fory 2(10) ( 111 860 OOO) ( 111860 888) (1111160000) Dividenda to employees (71367598) (71361598) (113615~
Net pmfil for the periodfmm bull Jonuruy 20110 30 ScpIembor 2011 528312 55944918528319062 31130866 _ Sop_302011 2234180 000 PW201 18 252017 4316130 4141)45 518660 119171 bull 528 3 862 56138i$ 5286452082 42121 5633661862
JWace u ItDecember 3t 2009
T nnsferred to retaiocd ttntina Transferred 10 legal relCIlYC
Minority _re inrubsUijaries prorddistribution
Minority shan in capi181 inereasc of subsidiaries or ~ subsidiaries during the period Change in minority share of subsldiarics Foreign cxobange differences from fonign entities translation
A4i the_oanUngi Effect cfsellina tlOfIfrol1in8lmewt in a lwiblidiary
Chq loY booed peymon ( 126 828 LE) Aquirina controlling into- iD Nt uampoeiate SIDokcli_(profrtr_2009) 00_10 ~pIy 2(09)-01_ Net profu for the period from bull hIt_ 2010 to 30 Sop_2QO
~uat3epber20IO
13220000lI0
36000lI0
1118600000
(18380lI0)
(183000)
53-13
7978
36113202
51890860
51808 60
1189266229
613196 748
( 11452914) ( 1181137)
2 m 49 387
(3600000) ( 511238) ( 500000)
11612753
33 594 6 (613196148)
(1797859)
698 860352 698868 351
( 469800)
(4896393)
(810772)
4111866760
(34096393) (11452914) (1707137)
2111Mm 49534381
(5112838) (I SGOOIIO)
698868 351 4860980_
3717134
(241010 202) 60604126
(61lt25641)
28733166 369545 3
4503 187
(240202) 26
(6742564) (34 096393)
(1145291 ( 1101737)
218 534381
(51728 9lB) (15000lI0)
123523 5230W
bull ~ ~pyi$lInlPllllm lin intfllal pIIrt oftbesc consolidated faoancial statements
Translated from Arabic
EI Sewedy Electric Company ( An Egyptian Joint Stock Company) Consolidated Cash Flows Statement
For the financial period from 1 January 2011 to 30 September 2011
From 1112010 to 30192010
Y
797803 744
203113 880
(7670563)
102110663 4620407
(73145167)
2004 978
1028837942
(1 324469967) (391609709) (40999 573) (41175247)
(769416554)
( 443615 156) (1176419) (7252687)
6129062 44220287
( 276 383 769)
( 678 078 682)
(24140201) 60604126
1203048792
1239512717 ( 207 982 519)
715379926
507397407 (4620102)
502777305
Cash flows from operating activities Profit before tax
Adjustments for
Depreciation
Amortization
Provisions and receivable immpairment
Net financing costs
Capital gains Losses
Effect ofselling controlling interest in a subsidiary
Investment loss in associate
Charge for employees shares based payments
Operating profit before changes in working capital
Changes in trade notes and other receivables
Changes in inventories
Changes in related parties
Changes in trade notes and other payables
Net cash (used in) operating activities
Cash flows from investing activities Acquisition of fixed assets
Payments on account of investment in subsidiaries
Changes in investments in associates and available for sale
Proceeds from sale of fixed assets and project under progress
Proceeds from selling controlling interest in a subsidiary
Net proceeds (payments) for treasury bills and Investment Fund
Net cash flows (used in) investing activities
Cash flows from financing activities Dividends paid to minority
Proceeds from minorities share in subsidiaries capital increase
Proceeds from loans and overdrafts
Dividends to shareholders
Net cash flows provided by financing activities
Net change in cash and banks Cash and banks at the beginning of the period Cash and banks at the end of the period 1year Blocked cash
Cash and cash equivalents at the end of tbe period
From 1112011 to 30912011
LE
644602247
242598093 4103476
( 4111951)
299190550 (5013 416)
34378 723 186
1182126563
(470314345) ( 578 944 807)
65839324 (877474477)
( 678 767 742)
(231090111) (3408460) ( 466333)
9542402
185736118
(39686384)
( 16060717) 178711
865293585 ( 171 860000)
677 551579
(40902547) 1000073795
959171248 ( 10 868 673)
948302575
The accompanying notes are an integral part of these consolidated financial statements
4middot
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 Septem ber 2011
1 Company background
EI Sewedy Electric Company previously EI Sewedy Cables is an Egyptian Joint Stock Company established under the Investment Incentives and Guarantees Law No 8 of 1997 and was registered in the commercial registration under No 14584 on 1 June 2005
The Companys Extra-ordinary General Assembly held on 1942010 decided to change the company name from ELSewedy Cables to ELSewedy Electric This change was authenticated in the company commercial register on 41102010 The company has obtained the approval for the change of its name from Misr for Central Clearing Depository and Registry Company on 311102010 and changed the name in the Egyptian Stock Exchange on 31112010
The Companys 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 ofthe company is 25 years starts 1162005 from 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 30 November 2011
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 The methods used to measure fair values are discussed further in note No 35 below
Functional and presentation currency
These consolidated financial statements are presented in Egyptian Pound which is the companys functional currency
Use of estimates and judgments
The preparation of the financial statements in conformity with Egyptian Accounting Standards requires management to make judgments estimates and assumptions that affect the application of accounting polices and the reported amounts of assets liabilities income and expenses 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
In particular information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes
-5shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Note (6) Fixed assets Note (18) - Provisions Note (21) - Deferred taxes Note (23) - Contract revenue Note (31) Business combinations Note (32) - Shares based payment Note (35) Valuation offmancial instruments
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
3-1 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group
AcqUisitions from entities under common control Business combinations arising from transfers 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 recognized previously in the Groups controlling shareholders consolidated financial statements The components ofequity of the acquired entities are added to the same components within the Group equity and any gain loss arising is recognized directly in equity
Loss of control Upon loss of control the group derecognizes the assets and liabilities of the subsidiary any minority interests and other components of equity related to the subsidiary Any surplus or deficit is recognized in profit or loss If the group retains any interest in the previous subsidiary its accounted for subsequently as an equity investee or an available for sale financial asset depending on the level of influence retained
Investment in associates and jointly controlled entities Associates are those entities in which the Group has significant influence but not control over the financial and operating policies Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity Joint controlled are those entities over whose activities the Group has joint control Investment in associates is initially recorded by cost using equity method to account for this investment
Transactions eliminated on consolidation Intra-group balances and any unrealized income and expenses ansmg from intra-group transactions are eliminated in preparing the consolidated financial statements Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group 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
-6shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Report on Limited Review of Interim Consolidated Financial Statements
To The Members of Board of Directors ofEI Sewedy Electric Company
Introduction
We bave perfonned a limited review for the accompanying consolidated balance sheet ofEI Sewedy Electric Company as of September 30 2011 and the related consolidated statements of income changes in equity and cash flows for the nine-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 of Limited Review
Except as explained in the following paragraph we conducted our limited review in accordance with Egyptian Standard on Review Engagements 2410 Limited Review of Interim Financial Statements Perfonned 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 that 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 fmancial statements
Basis for Qualified Conclusion
We have not obtained the financial statements together with the review report for Libya for Joint Cables Company one of the companys subsidiary that have not started operations of which its total assets amounted to LE 862 million Had we been able to obtain the financial statements of this subsidiary and the review report there on matters might have come to our attention indicating that adjustments might be necessary to interim consolidated financial statements
Qualified Conclusion
Except for the adjustments to the interim consolidated financial statements that we might have become aware of had we obtained the limited review report for the above mentioned subsidiary nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial statements does not present fairly in all material respects the consolidated fmancial position of the company as at September 30 2011 and of its consolidated fmancial performance and its consolidated cash flows for the nine-months period then ended in accordance with Egyptian Accounting Standards
KPMG Hazem Hassan
Public Accountants And Consultants
Cairo 30 November 2011
EL Sewedy Electric Company
( An Egyptian Joint Stock Company)
Consolidated Balance Sheet
As opO September 2011
Translated from Ara~lc
311l21l0JJ
y
3544391436
269679123
14 2S4 000
10 2S2 SOO
1 16292
239371170
165762934
32201150
4277 li8 90S
3699614092
4114968519
283 311 917
569038356
1000073795
9 667 0116 679
4164172 964
601237551
2316105139
156312617
71805769
7309634040
2357372639
6634531 S44
1718600000
(171)4990)
83954091
578908660
1810338694
795529148
58 5J9 142)
4927116461
414195385
5341111846
1073035548
108960912
111223 238
1293 U9698
6634~
Chairllan
Assets
Long term assets
Fixed assets
Project under progress
Investments available for sale
Investments in associates
Paid on account of investments
Debit balances
Intangible assets
Deferred tax assets
Tomllong term assets
Current assets
Inventories
Trade notes and other receivables
Due from affiliates
Investment fund 1 treasury bills
Cash and cash equivalents
Toml current assets
Current liabilities
Banks facilities and overdraft
Loans
Trade notes and other payables
Due to affiliates
Provisions
Toml current liabilities
Working capiml
Total investments
These investments to be financed as follows
Shareholders Equity
Issued and paid capital
Own shares
Reserves
Increase in the net assets of the acquired subsidiaries over the consideration paid for the investment
Retaioed earnings
Net profit for the period 1year
Foreign exchange differences resulted from foreign entities translation
Toml parent sharebolders equity
Minority interest
Total equity
Long term liabilities
Loans
Deferred tax liabilities
Other liabilities
Totllliong term liabilities
Note
No
(3-3)(6)
(3-3)(7)
(3-5)(8)
(3-1)
(9)
(3-4)laquo10)
(3-7)(31)
(3-18)laquo21)
(3-8)(11)
(3-4)(12)
(29)
(3-6)(13)
(14)
(3-11)(15)
(3-11 )(16)
(3-4)laquo17)
(29)
(3-10)(18)
(19)
(20)
(3-11)(16)
(3-18)laquo21 )
(22)
30911011
LE
3436133 116
344088140
14284000
11 366314
3408460
252051 113
166239880
34247590
4261818613
4278558899
4553922677
274971529
383302238
959171 248
10 449 926 591
4736251953
I 157605886
1892 600 599
213 811 563
64660165
8064 930 166
2384996425
6646 81S 038
2234 180000
(2209920)
126216152
578908660
1797776496
528319062
(56738368)
5206452082
427214980
5633667062
809881809
117230876
86035291
1013147976
6646815038
bull The accompanying notes are an integra part of these consolidated financial statements
Managing Director Chief Financial Officer Eng Ahmed Ahmed Sadek Mr Sadek Ahmed ElsewedyMr Amr Mohamed Labib
Limited review report attached
-1shy
Translated from Arabic EL Sewedy Electric Company
( An Egyptian Joint Stock Company) Consolidated Income Statement
For tbe financial period from 1 January 2011 to 30 September 2011
From In12011 From 11112011 From In12010 From 1112010 to 30912011 to 30912011 to 30912010 to 30912010
LE bE LE l~middotE
Note No
Operational revenues (3-14) 3883261374 lJ 369 753 871 3225943880 9211550459
Operational costs (3-16) (3 320 186 023) (9 824 449 050) (2 737620250) (7 717 724 305)
Gross profits 563 075 351 1545304 821 488323630 1493826154
Other operating income (24) 17007264 68531480 17 102620 122530483
Selling and distribution expenses (3-16) (77754360) (242 760 804) (85872 590) (259405 420)
Adrninistrati Ie expenses (3-16) ( 130045 181) ( 397 197463) ( 127714724) (370347738)
Other operating expenses (25) 4465238 (30085237) ( 49 391904) (86 689 072)
Operating profits 376748 312 943792797 242447032 899914407
Financing income 9751958 37945732 21 635715 90683212
Financing costs ( 156937092) (337136282) ( 43580 215) ( 192793 875)
Net financing costs (26) ( 147 185134) ( 299 190 550) (21944500) (102 110663)
Net profit for tbe period before tax 229563178 644602247 220502532 797803 744
Income tax
Current income tax (3-18) (25020517) (80263887) (22780324) (60039335)
Deferred income tax (3-18) 2612484 (4888432) (7026193) ( 10970886)
Net profit for tbe year after tax 207155145 559449928 190696 015 726793523
Attributable to
Equity holders of the holding company 196 366 Il2 528319062 191 129767 698060357
Non- controlling interest 10 789 033 31 130866 433752 28733 166
207155145 559449928 190 696 015 726793523 Earnings per share (3-19)laquo34) 088 237 111 406
bull The accompanying notes are an integral part of these consolidated financial statements
-2shy
TllKUJlated from Arabie lit sectSU EIedric ~O1Il
(An EIYP Siodt C ) CotJlGUdatcddulbp 10 ~I 1aIMD1
or the nnMcloI period rrpm I bpwtry lOll 30 Septnnher 1011
laereue lit the wet _of Fondgn udraage lnd Pfit attnlllfahle dilleftMt Tend parattbMdand1d Emplo)ee tb4n TMaI n behleneeoeralrelUVC diariesovet RetUned ftnUnp 1ApI to the hold rmalled frvm haldenmiddot MUtoll9 lnterwt apltal
dteconWeratloa fot the period I year forelgn~ 1) paid f the 0 In_I
LE LE LE LE LE LE LE LE LE LE LE LE ~_~ 310t9 IllUeoOOO (l8J8000) 169153-13 43816130 H3lI 518l118660 166189 633 594601 ( 469f1001) 4111866160 37394 45830701 TtulSifetRd 10 re18inedearmng 613196148 (613196 748)
T mnsfm-ed to lesal ruetVe 1791859 (19m859)
Minority ~ in subsidlarics profd di$tribution (2414820) (24148201) Minority sbare in capi181 loorease ofsubsidiaries or acquired subsidiaries during the period 112879708 lIZ 879708 Cbange in micority sMn of subsidiariea (1425641) (lS64I) Foreign exchange differences from foreign cntilies tranmtion ( 115D863) ( 1152863) (II 5D863) Adjllltmcnts to the re18ined earning amp6339 (8D) (88633M) (886J3M) Effect of seUing wntrolling intcRst in a subsidiary ( bull 1871lB) ( 1107138) ( 17077lB) Owgc flaquo employees ebares bclsed payment ( 3424 1$9 LE) 400 ( 9820) (2) (m) Sfock dividenltb (profit for year 20(9) ( 55390) (4S6I0) Dividends to empIQ)ees (protit for y~ 2(09) (58 6801) (5081601) (58681601) Netprofil fory 2010 795529148 7955DI48 21107572 8bullbull 636120 Btdatlee iN at Deocasbcr 31 20 to 1118600 ( 110) 36713202 43816130 3424159 518l1186O 1810330 4 795529148 (50509 142) 27116461 414195385 534311846 Trarufemd to Maincd earning 1~319148 (7955DI48)
tl1lOllfCf1t)dtol~ 41538875 (41 538815)
Minority shDR in subsidiaries profit dislribuuon (160717) ( 16868717)
Minority shan in captl increase or subsidiariea or acquired subsidiaries ~ the period 118711 118711 Fomgn elaquoiliange differences from foreign entitle$ trmtlation 1710714 17707741778774 A4i_1o the_incd eamlngt (8883) (8803) ( 0479868) (222 265) CIwJae rIoY buodpeyme(441WLE) 123186 123186 123186di_ (pufit rolt yoar 200)_ 515580000 ( 5030) (SIS 015 01) chcli_ (pufit fory 2(10) ( 111 860 OOO) ( 111860 888) (1111160000) Dividenda to employees (71367598) (71361598) (113615~
Net pmfil for the periodfmm bull Jonuruy 20110 30 ScpIembor 2011 528312 55944918528319062 31130866 _ Sop_302011 2234180 000 PW201 18 252017 4316130 4141)45 518660 119171 bull 528 3 862 56138i$ 5286452082 42121 5633661862
JWace u ItDecember 3t 2009
T nnsferred to retaiocd ttntina Transferred 10 legal relCIlYC
Minority _re inrubsUijaries prorddistribution
Minority shan in capi181 inereasc of subsidiaries or ~ subsidiaries during the period Change in minority share of subsldiarics Foreign cxobange differences from fonign entities translation
A4i the_oanUngi Effect cfsellina tlOfIfrol1in8lmewt in a lwiblidiary
Chq loY booed peymon ( 126 828 LE) Aquirina controlling into- iD Nt uampoeiate SIDokcli_(profrtr_2009) 00_10 ~pIy 2(09)-01_ Net profu for the period from bull hIt_ 2010 to 30 Sop_2QO
~uat3epber20IO
13220000lI0
36000lI0
1118600000
(18380lI0)
(183000)
53-13
7978
36113202
51890860
51808 60
1189266229
613196 748
( 11452914) ( 1181137)
2 m 49 387
(3600000) ( 511238) ( 500000)
11612753
33 594 6 (613196148)
(1797859)
698 860352 698868 351
( 469800)
(4896393)
(810772)
4111866760
(34096393) (11452914) (1707137)
2111Mm 49534381
(5112838) (I SGOOIIO)
698868 351 4860980_
3717134
(241010 202) 60604126
(61lt25641)
28733166 369545 3
4503 187
(240202) 26
(6742564) (34 096393)
(1145291 ( 1101737)
218 534381
(51728 9lB) (15000lI0)
123523 5230W
bull ~ ~pyi$lInlPllllm lin intfllal pIIrt oftbesc consolidated faoancial statements
Translated from Arabic
EI Sewedy Electric Company ( An Egyptian Joint Stock Company) Consolidated Cash Flows Statement
For the financial period from 1 January 2011 to 30 September 2011
From 1112010 to 30192010
Y
797803 744
203113 880
(7670563)
102110663 4620407
(73145167)
2004 978
1028837942
(1 324469967) (391609709) (40999 573) (41175247)
(769416554)
( 443615 156) (1176419) (7252687)
6129062 44220287
( 276 383 769)
( 678 078 682)
(24140201) 60604126
1203048792
1239512717 ( 207 982 519)
715379926
507397407 (4620102)
502777305
Cash flows from operating activities Profit before tax
Adjustments for
Depreciation
Amortization
Provisions and receivable immpairment
Net financing costs
Capital gains Losses
Effect ofselling controlling interest in a subsidiary
Investment loss in associate
Charge for employees shares based payments
Operating profit before changes in working capital
Changes in trade notes and other receivables
Changes in inventories
Changes in related parties
Changes in trade notes and other payables
Net cash (used in) operating activities
Cash flows from investing activities Acquisition of fixed assets
Payments on account of investment in subsidiaries
Changes in investments in associates and available for sale
Proceeds from sale of fixed assets and project under progress
Proceeds from selling controlling interest in a subsidiary
Net proceeds (payments) for treasury bills and Investment Fund
Net cash flows (used in) investing activities
Cash flows from financing activities Dividends paid to minority
Proceeds from minorities share in subsidiaries capital increase
Proceeds from loans and overdrafts
Dividends to shareholders
Net cash flows provided by financing activities
Net change in cash and banks Cash and banks at the beginning of the period Cash and banks at the end of the period 1year Blocked cash
Cash and cash equivalents at the end of tbe period
From 1112011 to 30912011
LE
644602247
242598093 4103476
( 4111951)
299190550 (5013 416)
34378 723 186
1182126563
(470314345) ( 578 944 807)
65839324 (877474477)
( 678 767 742)
(231090111) (3408460) ( 466333)
9542402
185736118
(39686384)
( 16060717) 178711
865293585 ( 171 860000)
677 551579
(40902547) 1000073795
959171248 ( 10 868 673)
948302575
The accompanying notes are an integral part of these consolidated financial statements
4middot
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 Septem ber 2011
1 Company background
EI Sewedy Electric Company previously EI Sewedy Cables is an Egyptian Joint Stock Company established under the Investment Incentives and Guarantees Law No 8 of 1997 and was registered in the commercial registration under No 14584 on 1 June 2005
The Companys Extra-ordinary General Assembly held on 1942010 decided to change the company name from ELSewedy Cables to ELSewedy Electric This change was authenticated in the company commercial register on 41102010 The company has obtained the approval for the change of its name from Misr for Central Clearing Depository and Registry Company on 311102010 and changed the name in the Egyptian Stock Exchange on 31112010
The Companys 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 ofthe company is 25 years starts 1162005 from 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 30 November 2011
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 The methods used to measure fair values are discussed further in note No 35 below
Functional and presentation currency
These consolidated financial statements are presented in Egyptian Pound which is the companys functional currency
Use of estimates and judgments
The preparation of the financial statements in conformity with Egyptian Accounting Standards requires management to make judgments estimates and assumptions that affect the application of accounting polices and the reported amounts of assets liabilities income and expenses 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
In particular information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes
-5shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Note (6) Fixed assets Note (18) - Provisions Note (21) - Deferred taxes Note (23) - Contract revenue Note (31) Business combinations Note (32) - Shares based payment Note (35) Valuation offmancial instruments
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
3-1 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group
AcqUisitions from entities under common control Business combinations arising from transfers 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 recognized previously in the Groups controlling shareholders consolidated financial statements The components ofequity of the acquired entities are added to the same components within the Group equity and any gain loss arising is recognized directly in equity
Loss of control Upon loss of control the group derecognizes the assets and liabilities of the subsidiary any minority interests and other components of equity related to the subsidiary Any surplus or deficit is recognized in profit or loss If the group retains any interest in the previous subsidiary its accounted for subsequently as an equity investee or an available for sale financial asset depending on the level of influence retained
Investment in associates and jointly controlled entities Associates are those entities in which the Group has significant influence but not control over the financial and operating policies Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity Joint controlled are those entities over whose activities the Group has joint control Investment in associates is initially recorded by cost using equity method to account for this investment
Transactions eliminated on consolidation Intra-group balances and any unrealized income and expenses ansmg from intra-group transactions are eliminated in preparing the consolidated financial statements Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group 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
-6shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
EL Sewedy Electric Company
( An Egyptian Joint Stock Company)
Consolidated Balance Sheet
As opO September 2011
Translated from Ara~lc
311l21l0JJ
y
3544391436
269679123
14 2S4 000
10 2S2 SOO
1 16292
239371170
165762934
32201150
4277 li8 90S
3699614092
4114968519
283 311 917
569038356
1000073795
9 667 0116 679
4164172 964
601237551
2316105139
156312617
71805769
7309634040
2357372639
6634531 S44
1718600000
(171)4990)
83954091
578908660
1810338694
795529148
58 5J9 142)
4927116461
414195385
5341111846
1073035548
108960912
111223 238
1293 U9698
6634~
Chairllan
Assets
Long term assets
Fixed assets
Project under progress
Investments available for sale
Investments in associates
Paid on account of investments
Debit balances
Intangible assets
Deferred tax assets
Tomllong term assets
Current assets
Inventories
Trade notes and other receivables
Due from affiliates
Investment fund 1 treasury bills
Cash and cash equivalents
Toml current assets
Current liabilities
Banks facilities and overdraft
Loans
Trade notes and other payables
Due to affiliates
Provisions
Toml current liabilities
Working capiml
Total investments
These investments to be financed as follows
Shareholders Equity
Issued and paid capital
Own shares
Reserves
Increase in the net assets of the acquired subsidiaries over the consideration paid for the investment
Retaioed earnings
Net profit for the period 1year
Foreign exchange differences resulted from foreign entities translation
Toml parent sharebolders equity
Minority interest
Total equity
Long term liabilities
Loans
Deferred tax liabilities
Other liabilities
Totllliong term liabilities
Note
No
(3-3)(6)
(3-3)(7)
(3-5)(8)
(3-1)
(9)
(3-4)laquo10)
(3-7)(31)
(3-18)laquo21)
(3-8)(11)
(3-4)(12)
(29)
(3-6)(13)
(14)
(3-11)(15)
(3-11 )(16)
(3-4)laquo17)
(29)
(3-10)(18)
(19)
(20)
(3-11)(16)
(3-18)laquo21 )
(22)
30911011
LE
3436133 116
344088140
14284000
11 366314
3408460
252051 113
166239880
34247590
4261818613
4278558899
4553922677
274971529
383302238
959171 248
10 449 926 591
4736251953
I 157605886
1892 600 599
213 811 563
64660165
8064 930 166
2384996425
6646 81S 038
2234 180000
(2209920)
126216152
578908660
1797776496
528319062
(56738368)
5206452082
427214980
5633667062
809881809
117230876
86035291
1013147976
6646815038
bull The accompanying notes are an integra part of these consolidated financial statements
Managing Director Chief Financial Officer Eng Ahmed Ahmed Sadek Mr Sadek Ahmed ElsewedyMr Amr Mohamed Labib
Limited review report attached
-1shy
Translated from Arabic EL Sewedy Electric Company
( An Egyptian Joint Stock Company) Consolidated Income Statement
For tbe financial period from 1 January 2011 to 30 September 2011
From In12011 From 11112011 From In12010 From 1112010 to 30912011 to 30912011 to 30912010 to 30912010
LE bE LE l~middotE
Note No
Operational revenues (3-14) 3883261374 lJ 369 753 871 3225943880 9211550459
Operational costs (3-16) (3 320 186 023) (9 824 449 050) (2 737620250) (7 717 724 305)
Gross profits 563 075 351 1545304 821 488323630 1493826154
Other operating income (24) 17007264 68531480 17 102620 122530483
Selling and distribution expenses (3-16) (77754360) (242 760 804) (85872 590) (259405 420)
Adrninistrati Ie expenses (3-16) ( 130045 181) ( 397 197463) ( 127714724) (370347738)
Other operating expenses (25) 4465238 (30085237) ( 49 391904) (86 689 072)
Operating profits 376748 312 943792797 242447032 899914407
Financing income 9751958 37945732 21 635715 90683212
Financing costs ( 156937092) (337136282) ( 43580 215) ( 192793 875)
Net financing costs (26) ( 147 185134) ( 299 190 550) (21944500) (102 110663)
Net profit for tbe period before tax 229563178 644602247 220502532 797803 744
Income tax
Current income tax (3-18) (25020517) (80263887) (22780324) (60039335)
Deferred income tax (3-18) 2612484 (4888432) (7026193) ( 10970886)
Net profit for tbe year after tax 207155145 559449928 190696 015 726793523
Attributable to
Equity holders of the holding company 196 366 Il2 528319062 191 129767 698060357
Non- controlling interest 10 789 033 31 130866 433752 28733 166
207155145 559449928 190 696 015 726793523 Earnings per share (3-19)laquo34) 088 237 111 406
bull The accompanying notes are an integral part of these consolidated financial statements
-2shy
TllKUJlated from Arabie lit sectSU EIedric ~O1Il
(An EIYP Siodt C ) CotJlGUdatcddulbp 10 ~I 1aIMD1
or the nnMcloI period rrpm I bpwtry lOll 30 Septnnher 1011
laereue lit the wet _of Fondgn udraage lnd Pfit attnlllfahle dilleftMt Tend parattbMdand1d Emplo)ee tb4n TMaI n behleneeoeralrelUVC diariesovet RetUned ftnUnp 1ApI to the hold rmalled frvm haldenmiddot MUtoll9 lnterwt apltal
dteconWeratloa fot the period I year forelgn~ 1) paid f the 0 In_I
LE LE LE LE LE LE LE LE LE LE LE LE ~_~ 310t9 IllUeoOOO (l8J8000) 169153-13 43816130 H3lI 518l118660 166189 633 594601 ( 469f1001) 4111866160 37394 45830701 TtulSifetRd 10 re18inedearmng 613196148 (613196 748)
T mnsfm-ed to lesal ruetVe 1791859 (19m859)
Minority ~ in subsidlarics profd di$tribution (2414820) (24148201) Minority sbare in capi181 loorease ofsubsidiaries or acquired subsidiaries during the period 112879708 lIZ 879708 Cbange in micority sMn of subsidiariea (1425641) (lS64I) Foreign exchange differences from foreign cntilies tranmtion ( 115D863) ( 1152863) (II 5D863) Adjllltmcnts to the re18ined earning amp6339 (8D) (88633M) (886J3M) Effect of seUing wntrolling intcRst in a subsidiary ( bull 1871lB) ( 1107138) ( 17077lB) Owgc flaquo employees ebares bclsed payment ( 3424 1$9 LE) 400 ( 9820) (2) (m) Sfock dividenltb (profit for year 20(9) ( 55390) (4S6I0) Dividends to empIQ)ees (protit for y~ 2(09) (58 6801) (5081601) (58681601) Netprofil fory 2010 795529148 7955DI48 21107572 8bullbull 636120 Btdatlee iN at Deocasbcr 31 20 to 1118600 ( 110) 36713202 43816130 3424159 518l1186O 1810330 4 795529148 (50509 142) 27116461 414195385 534311846 Trarufemd to Maincd earning 1~319148 (7955DI48)
tl1lOllfCf1t)dtol~ 41538875 (41 538815)
Minority shDR in subsidiaries profit dislribuuon (160717) ( 16868717)
Minority shan in captl increase or subsidiariea or acquired subsidiaries ~ the period 118711 118711 Fomgn elaquoiliange differences from foreign entitle$ trmtlation 1710714 17707741778774 A4i_1o the_incd eamlngt (8883) (8803) ( 0479868) (222 265) CIwJae rIoY buodpeyme(441WLE) 123186 123186 123186di_ (pufit rolt yoar 200)_ 515580000 ( 5030) (SIS 015 01) chcli_ (pufit fory 2(10) ( 111 860 OOO) ( 111860 888) (1111160000) Dividenda to employees (71367598) (71361598) (113615~
Net pmfil for the periodfmm bull Jonuruy 20110 30 ScpIembor 2011 528312 55944918528319062 31130866 _ Sop_302011 2234180 000 PW201 18 252017 4316130 4141)45 518660 119171 bull 528 3 862 56138i$ 5286452082 42121 5633661862
JWace u ItDecember 3t 2009
T nnsferred to retaiocd ttntina Transferred 10 legal relCIlYC
Minority _re inrubsUijaries prorddistribution
Minority shan in capi181 inereasc of subsidiaries or ~ subsidiaries during the period Change in minority share of subsldiarics Foreign cxobange differences from fonign entities translation
A4i the_oanUngi Effect cfsellina tlOfIfrol1in8lmewt in a lwiblidiary
Chq loY booed peymon ( 126 828 LE) Aquirina controlling into- iD Nt uampoeiate SIDokcli_(profrtr_2009) 00_10 ~pIy 2(09)-01_ Net profu for the period from bull hIt_ 2010 to 30 Sop_2QO
~uat3epber20IO
13220000lI0
36000lI0
1118600000
(18380lI0)
(183000)
53-13
7978
36113202
51890860
51808 60
1189266229
613196 748
( 11452914) ( 1181137)
2 m 49 387
(3600000) ( 511238) ( 500000)
11612753
33 594 6 (613196148)
(1797859)
698 860352 698868 351
( 469800)
(4896393)
(810772)
4111866760
(34096393) (11452914) (1707137)
2111Mm 49534381
(5112838) (I SGOOIIO)
698868 351 4860980_
3717134
(241010 202) 60604126
(61lt25641)
28733166 369545 3
4503 187
(240202) 26
(6742564) (34 096393)
(1145291 ( 1101737)
218 534381
(51728 9lB) (15000lI0)
123523 5230W
bull ~ ~pyi$lInlPllllm lin intfllal pIIrt oftbesc consolidated faoancial statements
Translated from Arabic
EI Sewedy Electric Company ( An Egyptian Joint Stock Company) Consolidated Cash Flows Statement
For the financial period from 1 January 2011 to 30 September 2011
From 1112010 to 30192010
Y
797803 744
203113 880
(7670563)
102110663 4620407
(73145167)
2004 978
1028837942
(1 324469967) (391609709) (40999 573) (41175247)
(769416554)
( 443615 156) (1176419) (7252687)
6129062 44220287
( 276 383 769)
( 678 078 682)
(24140201) 60604126
1203048792
1239512717 ( 207 982 519)
715379926
507397407 (4620102)
502777305
Cash flows from operating activities Profit before tax
Adjustments for
Depreciation
Amortization
Provisions and receivable immpairment
Net financing costs
Capital gains Losses
Effect ofselling controlling interest in a subsidiary
Investment loss in associate
Charge for employees shares based payments
Operating profit before changes in working capital
Changes in trade notes and other receivables
Changes in inventories
Changes in related parties
Changes in trade notes and other payables
Net cash (used in) operating activities
Cash flows from investing activities Acquisition of fixed assets
Payments on account of investment in subsidiaries
Changes in investments in associates and available for sale
Proceeds from sale of fixed assets and project under progress
Proceeds from selling controlling interest in a subsidiary
Net proceeds (payments) for treasury bills and Investment Fund
Net cash flows (used in) investing activities
Cash flows from financing activities Dividends paid to minority
Proceeds from minorities share in subsidiaries capital increase
Proceeds from loans and overdrafts
Dividends to shareholders
Net cash flows provided by financing activities
Net change in cash and banks Cash and banks at the beginning of the period Cash and banks at the end of the period 1year Blocked cash
Cash and cash equivalents at the end of tbe period
From 1112011 to 30912011
LE
644602247
242598093 4103476
( 4111951)
299190550 (5013 416)
34378 723 186
1182126563
(470314345) ( 578 944 807)
65839324 (877474477)
( 678 767 742)
(231090111) (3408460) ( 466333)
9542402
185736118
(39686384)
( 16060717) 178711
865293585 ( 171 860000)
677 551579
(40902547) 1000073795
959171248 ( 10 868 673)
948302575
The accompanying notes are an integral part of these consolidated financial statements
4middot
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 Septem ber 2011
1 Company background
EI Sewedy Electric Company previously EI Sewedy Cables is an Egyptian Joint Stock Company established under the Investment Incentives and Guarantees Law No 8 of 1997 and was registered in the commercial registration under No 14584 on 1 June 2005
The Companys Extra-ordinary General Assembly held on 1942010 decided to change the company name from ELSewedy Cables to ELSewedy Electric This change was authenticated in the company commercial register on 41102010 The company has obtained the approval for the change of its name from Misr for Central Clearing Depository and Registry Company on 311102010 and changed the name in the Egyptian Stock Exchange on 31112010
The Companys 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 ofthe company is 25 years starts 1162005 from 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 30 November 2011
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 The methods used to measure fair values are discussed further in note No 35 below
Functional and presentation currency
These consolidated financial statements are presented in Egyptian Pound which is the companys functional currency
Use of estimates and judgments
The preparation of the financial statements in conformity with Egyptian Accounting Standards requires management to make judgments estimates and assumptions that affect the application of accounting polices and the reported amounts of assets liabilities income and expenses 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
In particular information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes
-5shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Note (6) Fixed assets Note (18) - Provisions Note (21) - Deferred taxes Note (23) - Contract revenue Note (31) Business combinations Note (32) - Shares based payment Note (35) Valuation offmancial instruments
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
3-1 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group
AcqUisitions from entities under common control Business combinations arising from transfers 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 recognized previously in the Groups controlling shareholders consolidated financial statements The components ofequity of the acquired entities are added to the same components within the Group equity and any gain loss arising is recognized directly in equity
Loss of control Upon loss of control the group derecognizes the assets and liabilities of the subsidiary any minority interests and other components of equity related to the subsidiary Any surplus or deficit is recognized in profit or loss If the group retains any interest in the previous subsidiary its accounted for subsequently as an equity investee or an available for sale financial asset depending on the level of influence retained
Investment in associates and jointly controlled entities Associates are those entities in which the Group has significant influence but not control over the financial and operating policies Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity Joint controlled are those entities over whose activities the Group has joint control Investment in associates is initially recorded by cost using equity method to account for this investment
Transactions eliminated on consolidation Intra-group balances and any unrealized income and expenses ansmg from intra-group transactions are eliminated in preparing the consolidated financial statements Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group 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
-6shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated from Arabic EL Sewedy Electric Company
( An Egyptian Joint Stock Company) Consolidated Income Statement
For tbe financial period from 1 January 2011 to 30 September 2011
From In12011 From 11112011 From In12010 From 1112010 to 30912011 to 30912011 to 30912010 to 30912010
LE bE LE l~middotE
Note No
Operational revenues (3-14) 3883261374 lJ 369 753 871 3225943880 9211550459
Operational costs (3-16) (3 320 186 023) (9 824 449 050) (2 737620250) (7 717 724 305)
Gross profits 563 075 351 1545304 821 488323630 1493826154
Other operating income (24) 17007264 68531480 17 102620 122530483
Selling and distribution expenses (3-16) (77754360) (242 760 804) (85872 590) (259405 420)
Adrninistrati Ie expenses (3-16) ( 130045 181) ( 397 197463) ( 127714724) (370347738)
Other operating expenses (25) 4465238 (30085237) ( 49 391904) (86 689 072)
Operating profits 376748 312 943792797 242447032 899914407
Financing income 9751958 37945732 21 635715 90683212
Financing costs ( 156937092) (337136282) ( 43580 215) ( 192793 875)
Net financing costs (26) ( 147 185134) ( 299 190 550) (21944500) (102 110663)
Net profit for tbe period before tax 229563178 644602247 220502532 797803 744
Income tax
Current income tax (3-18) (25020517) (80263887) (22780324) (60039335)
Deferred income tax (3-18) 2612484 (4888432) (7026193) ( 10970886)
Net profit for tbe year after tax 207155145 559449928 190696 015 726793523
Attributable to
Equity holders of the holding company 196 366 Il2 528319062 191 129767 698060357
Non- controlling interest 10 789 033 31 130866 433752 28733 166
207155145 559449928 190 696 015 726793523 Earnings per share (3-19)laquo34) 088 237 111 406
bull The accompanying notes are an integral part of these consolidated financial statements
-2shy
TllKUJlated from Arabie lit sectSU EIedric ~O1Il
(An EIYP Siodt C ) CotJlGUdatcddulbp 10 ~I 1aIMD1
or the nnMcloI period rrpm I bpwtry lOll 30 Septnnher 1011
laereue lit the wet _of Fondgn udraage lnd Pfit attnlllfahle dilleftMt Tend parattbMdand1d Emplo)ee tb4n TMaI n behleneeoeralrelUVC diariesovet RetUned ftnUnp 1ApI to the hold rmalled frvm haldenmiddot MUtoll9 lnterwt apltal
dteconWeratloa fot the period I year forelgn~ 1) paid f the 0 In_I
LE LE LE LE LE LE LE LE LE LE LE LE ~_~ 310t9 IllUeoOOO (l8J8000) 169153-13 43816130 H3lI 518l118660 166189 633 594601 ( 469f1001) 4111866160 37394 45830701 TtulSifetRd 10 re18inedearmng 613196148 (613196 748)
T mnsfm-ed to lesal ruetVe 1791859 (19m859)
Minority ~ in subsidlarics profd di$tribution (2414820) (24148201) Minority sbare in capi181 loorease ofsubsidiaries or acquired subsidiaries during the period 112879708 lIZ 879708 Cbange in micority sMn of subsidiariea (1425641) (lS64I) Foreign exchange differences from foreign cntilies tranmtion ( 115D863) ( 1152863) (II 5D863) Adjllltmcnts to the re18ined earning amp6339 (8D) (88633M) (886J3M) Effect of seUing wntrolling intcRst in a subsidiary ( bull 1871lB) ( 1107138) ( 17077lB) Owgc flaquo employees ebares bclsed payment ( 3424 1$9 LE) 400 ( 9820) (2) (m) Sfock dividenltb (profit for year 20(9) ( 55390) (4S6I0) Dividends to empIQ)ees (protit for y~ 2(09) (58 6801) (5081601) (58681601) Netprofil fory 2010 795529148 7955DI48 21107572 8bullbull 636120 Btdatlee iN at Deocasbcr 31 20 to 1118600 ( 110) 36713202 43816130 3424159 518l1186O 1810330 4 795529148 (50509 142) 27116461 414195385 534311846 Trarufemd to Maincd earning 1~319148 (7955DI48)
tl1lOllfCf1t)dtol~ 41538875 (41 538815)
Minority shDR in subsidiaries profit dislribuuon (160717) ( 16868717)
Minority shan in captl increase or subsidiariea or acquired subsidiaries ~ the period 118711 118711 Fomgn elaquoiliange differences from foreign entitle$ trmtlation 1710714 17707741778774 A4i_1o the_incd eamlngt (8883) (8803) ( 0479868) (222 265) CIwJae rIoY buodpeyme(441WLE) 123186 123186 123186di_ (pufit rolt yoar 200)_ 515580000 ( 5030) (SIS 015 01) chcli_ (pufit fory 2(10) ( 111 860 OOO) ( 111860 888) (1111160000) Dividenda to employees (71367598) (71361598) (113615~
Net pmfil for the periodfmm bull Jonuruy 20110 30 ScpIembor 2011 528312 55944918528319062 31130866 _ Sop_302011 2234180 000 PW201 18 252017 4316130 4141)45 518660 119171 bull 528 3 862 56138i$ 5286452082 42121 5633661862
JWace u ItDecember 3t 2009
T nnsferred to retaiocd ttntina Transferred 10 legal relCIlYC
Minority _re inrubsUijaries prorddistribution
Minority shan in capi181 inereasc of subsidiaries or ~ subsidiaries during the period Change in minority share of subsldiarics Foreign cxobange differences from fonign entities translation
A4i the_oanUngi Effect cfsellina tlOfIfrol1in8lmewt in a lwiblidiary
Chq loY booed peymon ( 126 828 LE) Aquirina controlling into- iD Nt uampoeiate SIDokcli_(profrtr_2009) 00_10 ~pIy 2(09)-01_ Net profu for the period from bull hIt_ 2010 to 30 Sop_2QO
~uat3epber20IO
13220000lI0
36000lI0
1118600000
(18380lI0)
(183000)
53-13
7978
36113202
51890860
51808 60
1189266229
613196 748
( 11452914) ( 1181137)
2 m 49 387
(3600000) ( 511238) ( 500000)
11612753
33 594 6 (613196148)
(1797859)
698 860352 698868 351
( 469800)
(4896393)
(810772)
4111866760
(34096393) (11452914) (1707137)
2111Mm 49534381
(5112838) (I SGOOIIO)
698868 351 4860980_
3717134
(241010 202) 60604126
(61lt25641)
28733166 369545 3
4503 187
(240202) 26
(6742564) (34 096393)
(1145291 ( 1101737)
218 534381
(51728 9lB) (15000lI0)
123523 5230W
bull ~ ~pyi$lInlPllllm lin intfllal pIIrt oftbesc consolidated faoancial statements
Translated from Arabic
EI Sewedy Electric Company ( An Egyptian Joint Stock Company) Consolidated Cash Flows Statement
For the financial period from 1 January 2011 to 30 September 2011
From 1112010 to 30192010
Y
797803 744
203113 880
(7670563)
102110663 4620407
(73145167)
2004 978
1028837942
(1 324469967) (391609709) (40999 573) (41175247)
(769416554)
( 443615 156) (1176419) (7252687)
6129062 44220287
( 276 383 769)
( 678 078 682)
(24140201) 60604126
1203048792
1239512717 ( 207 982 519)
715379926
507397407 (4620102)
502777305
Cash flows from operating activities Profit before tax
Adjustments for
Depreciation
Amortization
Provisions and receivable immpairment
Net financing costs
Capital gains Losses
Effect ofselling controlling interest in a subsidiary
Investment loss in associate
Charge for employees shares based payments
Operating profit before changes in working capital
Changes in trade notes and other receivables
Changes in inventories
Changes in related parties
Changes in trade notes and other payables
Net cash (used in) operating activities
Cash flows from investing activities Acquisition of fixed assets
Payments on account of investment in subsidiaries
Changes in investments in associates and available for sale
Proceeds from sale of fixed assets and project under progress
Proceeds from selling controlling interest in a subsidiary
Net proceeds (payments) for treasury bills and Investment Fund
Net cash flows (used in) investing activities
Cash flows from financing activities Dividends paid to minority
Proceeds from minorities share in subsidiaries capital increase
Proceeds from loans and overdrafts
Dividends to shareholders
Net cash flows provided by financing activities
Net change in cash and banks Cash and banks at the beginning of the period Cash and banks at the end of the period 1year Blocked cash
Cash and cash equivalents at the end of tbe period
From 1112011 to 30912011
LE
644602247
242598093 4103476
( 4111951)
299190550 (5013 416)
34378 723 186
1182126563
(470314345) ( 578 944 807)
65839324 (877474477)
( 678 767 742)
(231090111) (3408460) ( 466333)
9542402
185736118
(39686384)
( 16060717) 178711
865293585 ( 171 860000)
677 551579
(40902547) 1000073795
959171248 ( 10 868 673)
948302575
The accompanying notes are an integral part of these consolidated financial statements
4middot
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 Septem ber 2011
1 Company background
EI Sewedy Electric Company previously EI Sewedy Cables is an Egyptian Joint Stock Company established under the Investment Incentives and Guarantees Law No 8 of 1997 and was registered in the commercial registration under No 14584 on 1 June 2005
The Companys Extra-ordinary General Assembly held on 1942010 decided to change the company name from ELSewedy Cables to ELSewedy Electric This change was authenticated in the company commercial register on 41102010 The company has obtained the approval for the change of its name from Misr for Central Clearing Depository and Registry Company on 311102010 and changed the name in the Egyptian Stock Exchange on 31112010
The Companys 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 ofthe company is 25 years starts 1162005 from 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 30 November 2011
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 The methods used to measure fair values are discussed further in note No 35 below
Functional and presentation currency
These consolidated financial statements are presented in Egyptian Pound which is the companys functional currency
Use of estimates and judgments
The preparation of the financial statements in conformity with Egyptian Accounting Standards requires management to make judgments estimates and assumptions that affect the application of accounting polices and the reported amounts of assets liabilities income and expenses 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
In particular information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes
-5shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Note (6) Fixed assets Note (18) - Provisions Note (21) - Deferred taxes Note (23) - Contract revenue Note (31) Business combinations Note (32) - Shares based payment Note (35) Valuation offmancial instruments
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
3-1 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group
AcqUisitions from entities under common control Business combinations arising from transfers 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 recognized previously in the Groups controlling shareholders consolidated financial statements The components ofequity of the acquired entities are added to the same components within the Group equity and any gain loss arising is recognized directly in equity
Loss of control Upon loss of control the group derecognizes the assets and liabilities of the subsidiary any minority interests and other components of equity related to the subsidiary Any surplus or deficit is recognized in profit or loss If the group retains any interest in the previous subsidiary its accounted for subsequently as an equity investee or an available for sale financial asset depending on the level of influence retained
Investment in associates and jointly controlled entities Associates are those entities in which the Group has significant influence but not control over the financial and operating policies Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity Joint controlled are those entities over whose activities the Group has joint control Investment in associates is initially recorded by cost using equity method to account for this investment
Transactions eliminated on consolidation Intra-group balances and any unrealized income and expenses ansmg from intra-group transactions are eliminated in preparing the consolidated financial statements Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group 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
-6shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
TllKUJlated from Arabie lit sectSU EIedric ~O1Il
(An EIYP Siodt C ) CotJlGUdatcddulbp 10 ~I 1aIMD1
or the nnMcloI period rrpm I bpwtry lOll 30 Septnnher 1011
laereue lit the wet _of Fondgn udraage lnd Pfit attnlllfahle dilleftMt Tend parattbMdand1d Emplo)ee tb4n TMaI n behleneeoeralrelUVC diariesovet RetUned ftnUnp 1ApI to the hold rmalled frvm haldenmiddot MUtoll9 lnterwt apltal
dteconWeratloa fot the period I year forelgn~ 1) paid f the 0 In_I
LE LE LE LE LE LE LE LE LE LE LE LE ~_~ 310t9 IllUeoOOO (l8J8000) 169153-13 43816130 H3lI 518l118660 166189 633 594601 ( 469f1001) 4111866160 37394 45830701 TtulSifetRd 10 re18inedearmng 613196148 (613196 748)
T mnsfm-ed to lesal ruetVe 1791859 (19m859)
Minority ~ in subsidlarics profd di$tribution (2414820) (24148201) Minority sbare in capi181 loorease ofsubsidiaries or acquired subsidiaries during the period 112879708 lIZ 879708 Cbange in micority sMn of subsidiariea (1425641) (lS64I) Foreign exchange differences from foreign cntilies tranmtion ( 115D863) ( 1152863) (II 5D863) Adjllltmcnts to the re18ined earning amp6339 (8D) (88633M) (886J3M) Effect of seUing wntrolling intcRst in a subsidiary ( bull 1871lB) ( 1107138) ( 17077lB) Owgc flaquo employees ebares bclsed payment ( 3424 1$9 LE) 400 ( 9820) (2) (m) Sfock dividenltb (profit for year 20(9) ( 55390) (4S6I0) Dividends to empIQ)ees (protit for y~ 2(09) (58 6801) (5081601) (58681601) Netprofil fory 2010 795529148 7955DI48 21107572 8bullbull 636120 Btdatlee iN at Deocasbcr 31 20 to 1118600 ( 110) 36713202 43816130 3424159 518l1186O 1810330 4 795529148 (50509 142) 27116461 414195385 534311846 Trarufemd to Maincd earning 1~319148 (7955DI48)
tl1lOllfCf1t)dtol~ 41538875 (41 538815)
Minority shDR in subsidiaries profit dislribuuon (160717) ( 16868717)
Minority shan in captl increase or subsidiariea or acquired subsidiaries ~ the period 118711 118711 Fomgn elaquoiliange differences from foreign entitle$ trmtlation 1710714 17707741778774 A4i_1o the_incd eamlngt (8883) (8803) ( 0479868) (222 265) CIwJae rIoY buodpeyme(441WLE) 123186 123186 123186di_ (pufit rolt yoar 200)_ 515580000 ( 5030) (SIS 015 01) chcli_ (pufit fory 2(10) ( 111 860 OOO) ( 111860 888) (1111160000) Dividenda to employees (71367598) (71361598) (113615~
Net pmfil for the periodfmm bull Jonuruy 20110 30 ScpIembor 2011 528312 55944918528319062 31130866 _ Sop_302011 2234180 000 PW201 18 252017 4316130 4141)45 518660 119171 bull 528 3 862 56138i$ 5286452082 42121 5633661862
JWace u ItDecember 3t 2009
T nnsferred to retaiocd ttntina Transferred 10 legal relCIlYC
Minority _re inrubsUijaries prorddistribution
Minority shan in capi181 inereasc of subsidiaries or ~ subsidiaries during the period Change in minority share of subsldiarics Foreign cxobange differences from fonign entities translation
A4i the_oanUngi Effect cfsellina tlOfIfrol1in8lmewt in a lwiblidiary
Chq loY booed peymon ( 126 828 LE) Aquirina controlling into- iD Nt uampoeiate SIDokcli_(profrtr_2009) 00_10 ~pIy 2(09)-01_ Net profu for the period from bull hIt_ 2010 to 30 Sop_2QO
~uat3epber20IO
13220000lI0
36000lI0
1118600000
(18380lI0)
(183000)
53-13
7978
36113202
51890860
51808 60
1189266229
613196 748
( 11452914) ( 1181137)
2 m 49 387
(3600000) ( 511238) ( 500000)
11612753
33 594 6 (613196148)
(1797859)
698 860352 698868 351
( 469800)
(4896393)
(810772)
4111866760
(34096393) (11452914) (1707137)
2111Mm 49534381
(5112838) (I SGOOIIO)
698868 351 4860980_
3717134
(241010 202) 60604126
(61lt25641)
28733166 369545 3
4503 187
(240202) 26
(6742564) (34 096393)
(1145291 ( 1101737)
218 534381
(51728 9lB) (15000lI0)
123523 5230W
bull ~ ~pyi$lInlPllllm lin intfllal pIIrt oftbesc consolidated faoancial statements
Translated from Arabic
EI Sewedy Electric Company ( An Egyptian Joint Stock Company) Consolidated Cash Flows Statement
For the financial period from 1 January 2011 to 30 September 2011
From 1112010 to 30192010
Y
797803 744
203113 880
(7670563)
102110663 4620407
(73145167)
2004 978
1028837942
(1 324469967) (391609709) (40999 573) (41175247)
(769416554)
( 443615 156) (1176419) (7252687)
6129062 44220287
( 276 383 769)
( 678 078 682)
(24140201) 60604126
1203048792
1239512717 ( 207 982 519)
715379926
507397407 (4620102)
502777305
Cash flows from operating activities Profit before tax
Adjustments for
Depreciation
Amortization
Provisions and receivable immpairment
Net financing costs
Capital gains Losses
Effect ofselling controlling interest in a subsidiary
Investment loss in associate
Charge for employees shares based payments
Operating profit before changes in working capital
Changes in trade notes and other receivables
Changes in inventories
Changes in related parties
Changes in trade notes and other payables
Net cash (used in) operating activities
Cash flows from investing activities Acquisition of fixed assets
Payments on account of investment in subsidiaries
Changes in investments in associates and available for sale
Proceeds from sale of fixed assets and project under progress
Proceeds from selling controlling interest in a subsidiary
Net proceeds (payments) for treasury bills and Investment Fund
Net cash flows (used in) investing activities
Cash flows from financing activities Dividends paid to minority
Proceeds from minorities share in subsidiaries capital increase
Proceeds from loans and overdrafts
Dividends to shareholders
Net cash flows provided by financing activities
Net change in cash and banks Cash and banks at the beginning of the period Cash and banks at the end of the period 1year Blocked cash
Cash and cash equivalents at the end of tbe period
From 1112011 to 30912011
LE
644602247
242598093 4103476
( 4111951)
299190550 (5013 416)
34378 723 186
1182126563
(470314345) ( 578 944 807)
65839324 (877474477)
( 678 767 742)
(231090111) (3408460) ( 466333)
9542402
185736118
(39686384)
( 16060717) 178711
865293585 ( 171 860000)
677 551579
(40902547) 1000073795
959171248 ( 10 868 673)
948302575
The accompanying notes are an integral part of these consolidated financial statements
4middot
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 Septem ber 2011
1 Company background
EI Sewedy Electric Company previously EI Sewedy Cables is an Egyptian Joint Stock Company established under the Investment Incentives and Guarantees Law No 8 of 1997 and was registered in the commercial registration under No 14584 on 1 June 2005
The Companys Extra-ordinary General Assembly held on 1942010 decided to change the company name from ELSewedy Cables to ELSewedy Electric This change was authenticated in the company commercial register on 41102010 The company has obtained the approval for the change of its name from Misr for Central Clearing Depository and Registry Company on 311102010 and changed the name in the Egyptian Stock Exchange on 31112010
The Companys 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 ofthe company is 25 years starts 1162005 from 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 30 November 2011
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 The methods used to measure fair values are discussed further in note No 35 below
Functional and presentation currency
These consolidated financial statements are presented in Egyptian Pound which is the companys functional currency
Use of estimates and judgments
The preparation of the financial statements in conformity with Egyptian Accounting Standards requires management to make judgments estimates and assumptions that affect the application of accounting polices and the reported amounts of assets liabilities income and expenses 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
In particular information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes
-5shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Note (6) Fixed assets Note (18) - Provisions Note (21) - Deferred taxes Note (23) - Contract revenue Note (31) Business combinations Note (32) - Shares based payment Note (35) Valuation offmancial instruments
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
3-1 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group
AcqUisitions from entities under common control Business combinations arising from transfers 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 recognized previously in the Groups controlling shareholders consolidated financial statements The components ofequity of the acquired entities are added to the same components within the Group equity and any gain loss arising is recognized directly in equity
Loss of control Upon loss of control the group derecognizes the assets and liabilities of the subsidiary any minority interests and other components of equity related to the subsidiary Any surplus or deficit is recognized in profit or loss If the group retains any interest in the previous subsidiary its accounted for subsequently as an equity investee or an available for sale financial asset depending on the level of influence retained
Investment in associates and jointly controlled entities Associates are those entities in which the Group has significant influence but not control over the financial and operating policies Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity Joint controlled are those entities over whose activities the Group has joint control Investment in associates is initially recorded by cost using equity method to account for this investment
Transactions eliminated on consolidation Intra-group balances and any unrealized income and expenses ansmg from intra-group transactions are eliminated in preparing the consolidated financial statements Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group 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
-6shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated from Arabic
EI Sewedy Electric Company ( An Egyptian Joint Stock Company) Consolidated Cash Flows Statement
For the financial period from 1 January 2011 to 30 September 2011
From 1112010 to 30192010
Y
797803 744
203113 880
(7670563)
102110663 4620407
(73145167)
2004 978
1028837942
(1 324469967) (391609709) (40999 573) (41175247)
(769416554)
( 443615 156) (1176419) (7252687)
6129062 44220287
( 276 383 769)
( 678 078 682)
(24140201) 60604126
1203048792
1239512717 ( 207 982 519)
715379926
507397407 (4620102)
502777305
Cash flows from operating activities Profit before tax
Adjustments for
Depreciation
Amortization
Provisions and receivable immpairment
Net financing costs
Capital gains Losses
Effect ofselling controlling interest in a subsidiary
Investment loss in associate
Charge for employees shares based payments
Operating profit before changes in working capital
Changes in trade notes and other receivables
Changes in inventories
Changes in related parties
Changes in trade notes and other payables
Net cash (used in) operating activities
Cash flows from investing activities Acquisition of fixed assets
Payments on account of investment in subsidiaries
Changes in investments in associates and available for sale
Proceeds from sale of fixed assets and project under progress
Proceeds from selling controlling interest in a subsidiary
Net proceeds (payments) for treasury bills and Investment Fund
Net cash flows (used in) investing activities
Cash flows from financing activities Dividends paid to minority
Proceeds from minorities share in subsidiaries capital increase
Proceeds from loans and overdrafts
Dividends to shareholders
Net cash flows provided by financing activities
Net change in cash and banks Cash and banks at the beginning of the period Cash and banks at the end of the period 1year Blocked cash
Cash and cash equivalents at the end of tbe period
From 1112011 to 30912011
LE
644602247
242598093 4103476
( 4111951)
299190550 (5013 416)
34378 723 186
1182126563
(470314345) ( 578 944 807)
65839324 (877474477)
( 678 767 742)
(231090111) (3408460) ( 466333)
9542402
185736118
(39686384)
( 16060717) 178711
865293585 ( 171 860000)
677 551579
(40902547) 1000073795
959171248 ( 10 868 673)
948302575
The accompanying notes are an integral part of these consolidated financial statements
4middot
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 Septem ber 2011
1 Company background
EI Sewedy Electric Company previously EI Sewedy Cables is an Egyptian Joint Stock Company established under the Investment Incentives and Guarantees Law No 8 of 1997 and was registered in the commercial registration under No 14584 on 1 June 2005
The Companys Extra-ordinary General Assembly held on 1942010 decided to change the company name from ELSewedy Cables to ELSewedy Electric This change was authenticated in the company commercial register on 41102010 The company has obtained the approval for the change of its name from Misr for Central Clearing Depository and Registry Company on 311102010 and changed the name in the Egyptian Stock Exchange on 31112010
The Companys 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 ofthe company is 25 years starts 1162005 from 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 30 November 2011
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 The methods used to measure fair values are discussed further in note No 35 below
Functional and presentation currency
These consolidated financial statements are presented in Egyptian Pound which is the companys functional currency
Use of estimates and judgments
The preparation of the financial statements in conformity with Egyptian Accounting Standards requires management to make judgments estimates and assumptions that affect the application of accounting polices and the reported amounts of assets liabilities income and expenses 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
In particular information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes
-5shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Note (6) Fixed assets Note (18) - Provisions Note (21) - Deferred taxes Note (23) - Contract revenue Note (31) Business combinations Note (32) - Shares based payment Note (35) Valuation offmancial instruments
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
3-1 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group
AcqUisitions from entities under common control Business combinations arising from transfers 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 recognized previously in the Groups controlling shareholders consolidated financial statements The components ofequity of the acquired entities are added to the same components within the Group equity and any gain loss arising is recognized directly in equity
Loss of control Upon loss of control the group derecognizes the assets and liabilities of the subsidiary any minority interests and other components of equity related to the subsidiary Any surplus or deficit is recognized in profit or loss If the group retains any interest in the previous subsidiary its accounted for subsequently as an equity investee or an available for sale financial asset depending on the level of influence retained
Investment in associates and jointly controlled entities Associates are those entities in which the Group has significant influence but not control over the financial and operating policies Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity Joint controlled are those entities over whose activities the Group has joint control Investment in associates is initially recorded by cost using equity method to account for this investment
Transactions eliminated on consolidation Intra-group balances and any unrealized income and expenses ansmg from intra-group transactions are eliminated in preparing the consolidated financial statements Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group 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
-6shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 Septem ber 2011
1 Company background
EI Sewedy Electric Company previously EI Sewedy Cables is an Egyptian Joint Stock Company established under the Investment Incentives and Guarantees Law No 8 of 1997 and was registered in the commercial registration under No 14584 on 1 June 2005
The Companys Extra-ordinary General Assembly held on 1942010 decided to change the company name from ELSewedy Cables to ELSewedy Electric This change was authenticated in the company commercial register on 41102010 The company has obtained the approval for the change of its name from Misr for Central Clearing Depository and Registry Company on 311102010 and changed the name in the Egyptian Stock Exchange on 31112010
The Companys 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 ofthe company is 25 years starts 1162005 from 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 30 November 2011
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 The methods used to measure fair values are discussed further in note No 35 below
Functional and presentation currency
These consolidated financial statements are presented in Egyptian Pound which is the companys functional currency
Use of estimates and judgments
The preparation of the financial statements in conformity with Egyptian Accounting Standards requires management to make judgments estimates and assumptions that affect the application of accounting polices and the reported amounts of assets liabilities income and expenses 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
In particular information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the financial statements is included in the following notes
-5shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Note (6) Fixed assets Note (18) - Provisions Note (21) - Deferred taxes Note (23) - Contract revenue Note (31) Business combinations Note (32) - Shares based payment Note (35) Valuation offmancial instruments
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
3-1 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group
AcqUisitions from entities under common control Business combinations arising from transfers 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 recognized previously in the Groups controlling shareholders consolidated financial statements The components ofequity of the acquired entities are added to the same components within the Group equity and any gain loss arising is recognized directly in equity
Loss of control Upon loss of control the group derecognizes the assets and liabilities of the subsidiary any minority interests and other components of equity related to the subsidiary Any surplus or deficit is recognized in profit or loss If the group retains any interest in the previous subsidiary its accounted for subsequently as an equity investee or an available for sale financial asset depending on the level of influence retained
Investment in associates and jointly controlled entities Associates are those entities in which the Group has significant influence but not control over the financial and operating policies Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity Joint controlled are those entities over whose activities the Group has joint control Investment in associates is initially recorded by cost using equity method to account for this investment
Transactions eliminated on consolidation Intra-group balances and any unrealized income and expenses ansmg from intra-group transactions are eliminated in preparing the consolidated financial statements Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group 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
-6shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Note (6) Fixed assets Note (18) - Provisions Note (21) - Deferred taxes Note (23) - Contract revenue Note (31) Business combinations Note (32) - Shares based payment Note (35) Valuation offmancial instruments
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
3-1 Basis of consolidation
Subsidiaries Subsidiaries are entities controlled by the Group The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases The accounting policies of subsidiaries have been changed when necessary to align them with
the policies adopted by the Group
AcqUisitions from entities under common control Business combinations arising from transfers 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 recognized previously in the Groups controlling shareholders consolidated financial statements The components ofequity of the acquired entities are added to the same components within the Group equity and any gain loss arising is recognized directly in equity
Loss of control Upon loss of control the group derecognizes the assets and liabilities of the subsidiary any minority interests and other components of equity related to the subsidiary Any surplus or deficit is recognized in profit or loss If the group retains any interest in the previous subsidiary its accounted for subsequently as an equity investee or an available for sale financial asset depending on the level of influence retained
Investment in associates and jointly controlled entities Associates are those entities in which the Group has significant influence but not control over the financial and operating policies Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity Joint controlled are those entities over whose activities the Group has joint control Investment in associates is initially recorded by cost using equity method to account for this investment
Transactions eliminated on consolidation Intra-group balances and any unrealized income and expenses ansmg from intra-group transactions are eliminated in preparing the consolidated financial statements Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the group 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
-6shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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 at the reporting date are retranslated to the functional currency at the exchange rate at that date Foreign currency differences arising on retranslation are recognised in the consolidated profit or loss
Foreign Operations
The assets and liabilities of foreign operations are translated to Egyptian Pound at exchange rates at the reporting date The income and expenses of foreign operations are translated to Egyptian Pound at exchange rates at the dates of the transactions Foreign currency differences arising on retranslation are recognised in a separate item under the equity in the consolidated balance sheet
3-3 Fixed assets
Recognition amp measurement Items of fixed assets are measured at cost less accumulated depreciation and accumulated impairment losses
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 When parts of an item of fixed assets have different useful lives they are accounted for as separate items of fixed assets
Subsequent costs The cost of replacing part of an item of property plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably The carrying amount of the replaced part is derecognised The costs of the day-to-day servicing of property plant and equipment are recognised in the consolidated profit or loss as incurred
Project under progress Project under progress are added to fixed assets and depreciated when it become ready for its intended use
Depreciation Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property plant and equipment The estimated useful lives for the current and comparative years are as follows
Buildings 8 -50 years Machinery and equipment 5-10 years Furniture 4 -17 years Vehicles 5-8 years
- 7shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Depreciation metbods useful lives and residual values are reviewed at each reporting date
Capital lease Rental expenses of capital lease in-addition to tbe operating costs such as maintenance and repair of the leased assets are charged to the income statement on a straight - line basis over tbe period of lease In case of purchasing tbe 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 tbe remaining estimated useful life according to the applied depreciation policy
3-4 Financial instruments Non-derivative financial instruments Non-derivative fmancial instruments comprise investments in equity and debt securities trade and other receivables cash and cash equivalents loans and borrowings and trade and other payables
The financial assets and liabilities are recognised in tbe balance sheet when the company and its subsidiaries become side in the financial instruments agreement The initial recognition with the financial instruments by its fair value and for trade and other receivables and trade and other pay abIes by its nominal value Cash and cash equivalents comprise cash balances and call deposits for a period more than three months which form an integral part of the Groups cash management are included as a component ofcash and cash equivalents for the purpose of tbe statement ofcash flows
Derivative financial instruments The Group doesnt hold derivative financial instruments for speculative purposes The hedged instrument is recognised initially at fair value attributable transaction costs are recognised in profit or loss when incurred Subsequent to initial recognition derivatives are measured at fair value
3-5 Available-for-sale financial assets The Groups investments in equity securities are classified as available-for-sale fmandal assets Subsequent to initial recognition tbey are measured at fair value (if quoted) and changes therein other tban impairment losses and foreign exchange gains and losses on available-for-sale monetary items are recognized directly in equity When an investment is derecognized tbe cumulative gain or loss in equity is transferred to income statement Investments which are not listed at stock exchanges are measured at historical value after reducing any impairment losses
3-6 Investment in treasury bills Central Bank Certificates and Investment Fund Where the Group has the positive intent and ability to hold treasury bills Central Bank certificates and investment fund to maturity then they are classified as held-to-maturity Held-toshymaturity investments are measured at amortized cost using the effective interest metbod The book value for tbese investments (amended cost) becomes equal to the nominal value at the maturity when redeemed less any impairment while treasury bills and central bank certificates are classified according to present value
- 8shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-7 Other assets
Goodwill Goodwill represents the excess of the cost of the acquisition over the Groups interest in the net fair value of identifiable assets liabilities and contingent liabilities of the acquirer When the excess is negative it is recognized inunediately in profit or loss
Intangible assets Intangible assets that are acquired by the Group which have finite useful lives are measured at cost less accumulated amortization and accumulated impainnent losses Amortization is recognized in the profit and loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill from the date they are available for use The estimated useful life is as follows Patents 20 years Amortization methods useful lives and residual values are reviewed at each reporting date and adjusted ifappropriate
3-8 Inventories
Inventories are valued at the lower of cost and net realizable value Net realizable value is the estimated selling price in the nonnal course of business minus the estimated cost for completion and any selling costs Net realizable value of the quantity of inventory held to satisfy finn sales is based on the contract price If the sales are for less than the inventory quantities held the net realizable value of the excess is based on general selling price Provision arises from finn sales contracts in excess of inventory quantities held or from fmn purchase contracts Cost of raw materials is detennined using the weighted average method In case offmished goods and work in process cost includes direct material and direct labor cost and an appropriate share ofproduction cost
3-9 Impairment
Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset that can be estimated reliably Impainnent loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying amount and the present value of the estimated future cash fl9wS discounted at the assets original effective interest rate Impainnent losses on available for sale financial assets are recognized by reclassifying the losses accumulated in the fair value reserve in equity to profit and loss Individually significant financial assets are tested for impainnent on an individual basis All impainnent losses are recognised in profit or loss Financial assets that are not individually significant are collectively assessed for impainnent by grouping them together according to their similar risk characteristics An impainnent loss is reversed if the reversal can be related objectively to an event occurring after the impainnent loss was recognized
- 9shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Non-financial assets
The carrying amounts ofthe Groups non-financial assets other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment Ifany such indication exists then the assets recoverable amount is estimated
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its estimated recoverable amount Impairment losses are recognised in profit or loss An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined net of depreciation or amortisation ifno impairment loss had been recognised
3-10 Provisions
Provisions are recognized when the Group has a legal or constructive obligation 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 risksspecific to the liability The provisions are reviewed at each balance sheet date and amended when necessary to represent the best current estimate
3-11 Interest bearing borrowings
Interest bearing borrowings are 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 in the over the period of borrowing on an effective interest basis
3-12 Dividends
Dividends are recognized as a liability in the financial period in which the dividends are approved by the shareholders general meeting
3-13 Treasury shares
When share capital recognized as equity is repurchased the amount of the consideration paid including directly attributable costs is recognized as a deduction from equity Gain or losses arising from sale of treasury shares are included in equity in the consolidated financial statements
- 10shy
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabi c
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-14 Recognition of revenue Sales revenne 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 ofthe consideration is probable the associated costs and possible return ofgoods 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 customers 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 direct 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
Investment income Income from available-for-sale investments are recognized when the Groups right to the income is established
Credit interest Credit interest is recognized in the income statements according to the effective interest rate method
3-15 Segment reporting A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment) or in providing products or services within a particular economic environment (geographical segment) which is subject to risks and rewards that are different from those of other segments The Groups primary format for segment reporting is based on business segments
3-16 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
- 11 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3-17 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 Groups contributions are recognized in income statement using the accrual basis of accounting The Groups obligation in respect of employees pensions is confined to the amount of the aforementioned contributions
Share based payments The fair value of options granted to employees is recognized as expense with a corresponding increase in equity over the period that the employees becomes unconditionally entitled to the options
3-18 Income tax Income tax in the parent and its subsidiaries includes income tax for the current period and the deferred tax Income tax is recognized in the consolidated income statement except for the
income tax related to the equity items which are stated directly in the equity in the consolidated financial statements
Income tax is recognized on net taxable income using tax rates enacted at the consolidated financial statements date and in addition to any tax differences related to the previous years
Deferred income tax is provided using the balance sheet liability method providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the consolidated balance sheet date A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized
3-19 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 ofordinary shares outstanding during the period
4 Fair Value
A number of the group accounting policies and disclosures require the determination of fair value for both financial and non financial assets and liabilities Fair values have been determined for measurement andl or disclosure purposes based on the following methods
- 12shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial ~tatements - 30 September 2011
Fixed assets The fair value of the fixed assets recognised as a result of a business combination is based on market values The market value of fixed assets is the estimated amount for which an asset could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably prudently and without compulsion
Inventories The fair value of inventories acquired in a business combination is determined based on the estimated selling price in the ordinary course of business less estimated costs of completion and sale and a reasonable profit margin based on the effort required to complete and sell the inventories
Intangible assets The fair value of patents acquired in a business combination is based on the discounted estimated royalty payments that have been avoided as a result of the patent or trade mark being owed
Investments in equity instrument Fair values is based on quoted market prices without any deduction for transaction costs except for the unquoted equity security which is stated at cost less impairment loss
Receivables The fair value receivables is estimated as the present value of future cash flows discounted at the market rate of interest at the reporting period
S Financial risk management
The Group has exposure to the following risks from its use offmancial instruments - Credit risk - Liquidity risk - Market risk
This note presents information about the Groups exposure to each of the above risks the Groups objectives policies and processes for measuring and managing risk and the Groups management of capital Further quantitative disclosures are included throughout these consolidated financiaJ statements The Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework The Board is responsible for developing and monitoring the Groups risk management policies The Groups risk management policies are established to identify and analyse the risks faced by the Group 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 Groups activities The Group 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 Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures the results of which are reported to the board of directors
- 13 shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers and investment securities
Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due The Groups approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due under both normal and stressed conditions without incurring unacceptable losses or risking damage to the Groups reputation
Market risk Market risk is the risk that changes in market prices such as foreign exchange rates interest rates and equity prices will affect the Groups income or the value of its holdings of financial instruments The objective of market risk management is to manage and control market risk exposures within acceptable parameters while optimising the return
Currency risk The Group is exposed to currency risk on sales purchases and borrowings that are denominated in a currency other than the respective functional currencies of Group entities primarily the euro and US Dollars
Interest rate risk All the Group investments and borrowing are based on Libor rates or Egypt Central Bank rates plus a fixed percentage to reduce risk
- 14 shy
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
EI Sewedy Electric Company Notes to the consolidated fmancial statements - 30 September 2011
Translated from Arabic
6 Fixed Assets
Cost
Balance as of 11112011
Land
LE
386247023
Buildings
LE
1240725456
Machienary
ampEquipment LE
2251837979
Furniture amp
Office Supplies
LE
89960525
Vehicles
LE
117422547
Total
LE
4086193530
Additions 9243431 6570978 60711 916 11638205 9150467 97314997
Additions from project under progress 7055864 27374043 317432 569508 35316847
Disposals ( 127762) (9497306) ( 623 100) ( 1681239) ( 11 929407)
Exchange differences and other adjustments (5741 883) 3240027 (2153829) 594635 ( 498733) (4559783)
Cost as of 301912011 389620809 1257592325 2328272 803 101887697 124962550 4202336184
Depreciation
Accumulated Depreciation as of 1112011
Depreciation
81245380
34298917
381648920
176316684
29086029
14322685
49821765
17 659 807
541802094
242598093
Disposals
Exchange differences and other adjustments ( 283745)
(8329636)
(7282096)
( 434084)
( 290503)
( 1 041 067)
( 535988)
(9804 787)
(8392332)
Accumulated Depreciation as of 3092011 115260552 542353872 42684127 65904 517 766203068
Net book value as of 3092011 389620809 1142331773 1785918931 59203570 59058033 3436133116
Net book value as of 31122010 386247023 1159480076 1870189059 60874496 67600 782 3544391436
-15shy
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
7 Projects under progress
Projects under progress as of 30 September 2011 represent the companys new projects and expansions in existing plants in Spain Saudi Arabia Algeria Syria Sudan Libya Zambia and Yemen ofLE 1038 million Transformer plant in Egypt ofLE 7 million Engineering workshop building of LE 35 million fiber optics and special cables of LE 32 million factories for Elsewedy Electric Company of LE 3562 million machinery and equipment under progress for subsidiaries expansions in Egypt of LE 636 million the companys new head office in the Fifth compound New Cairo of LE 6531 million and the remaining balance represents the expansions cost to increase the production capacity in Egypt and other countries in which the company operates
8 Investments available for sale
30912011 311122010 LE LE
Long term investments (42840 shares represent 357 of Oriental Petrochemical Companys share capital- An Egyptian Joint Stock Company)
4284000 4284000
(1 000 000 shares represent 10 ofKahromica Companys share capital- An Egyptian Joint Stock Company) 10000000 10 000 000
14284000 14284000
9 Paid on account of investments
The balance as at 30 September 2011 represents the amounts paid by the company for establishing new subsidiaries and for acquiring companies in Asian and Arab countries amounted by LE 3 408 460 (LE 1 176 292 at 31 December 2010)
10 Other Long Term receivables
30912011 3111212010 LE LE
Due from clients (construction) 232503213 186000197
Other debit balances 19547900 53370973
252051113 239371170
16
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
11 Inventories
3092011 LE
311122010 LE
Raw materials and consumables 1 464413 105 1 520210353 Spare parts Work in progress Finished goods Goods in transit
138955344 925193293
1385674825 364322332
114324911 645767843
1097753013 321557972
4278558899 3699614092
Some of inventories items are recorded according to its net realizable value The difference between the book value of these items and its net realizable value is LB 26 770 928 at 30 September 2011 (LB 34793552 at 31 December 2010)
12 Trade and notes receivable debtors and other receivables
3092011 3111212010 LE LE
Trade receivables 3 198893866 3 143 185441 Notes receivables 208422735 271908342 Due from clients (constructions) 383257983 134677218 Debtors and other receivables 763348093 565 197518
4553922677 4114968519
Trade and notes receivable debtors and other receivables are recorded after deducting impairment losses amounted to LB 212089084 at 30 September 2011 (LB 241 680677 at 31 December 2010)
13 Investment fund 1 treasury bills
3092011 31122010 LE LE
Investment funds I treasury bills 383302238 569038356 383302238 569038356
This item includes investment in investment funds amounted to LB 1 185 105 at 30 September 2011 The returns on these investment recorded in the income statement for the period amounted to LB 182 160 at 30 September 2011 (LB 444 405 as oDO September 2010)
The accrued interest on investment in treasury bills amounted to LB 30 Million at the consolidated balance sheet date (LB 349 Million as at 30 September 201OThe interest rate range is between 7 and 1394
17
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
14 Cash and cash equivalent
3092011 LE
3111212010 LE
Banks - Time deposits () Banks - Current accounts () Cashon hand
39324440 898959176 20887632
959171248
67662292 914403009
008494 1000073795
() Time deposits include LE 6 617 310 at 30 September 2011 blocked as a security for credit facilities letters ofguarantee and letters ofcredit (2010- LE 4797 904)
() Banks - Current accounts include LE 4 251 363 at 30 September 2011 blocked as a security for letters of credit
15 Banks - Credit facilities and overdraft
The banks-credit facilities and overdraft items of LE 4 736 251 953 (LE 4 164 172 964 at 31 December 2010) represented in the credit facilities and overdraft secured by promissory notes Banks current accounts and joint guarantees The average interest rate is annually 105 or 05 over the Central Bank of Egypt borrowing and lending rate for the Egyptian Pound 075 over Libor and 15 monthly commission on the highest debit balance for US Dollar and 15 over Eurobor for the EUROs facilities
16 Loans
This item represents the loans granted to the company and its subsidiaries as followsshy
3092011 3111212010 LE LE
Current liabilities Loans due within one year 1 157605886 601237551
Long-term liabilities 316711 872 1001 700930 Secured bank loans 493 169937 71334618 Unsecured bank loans 809881809 1073 035548
The unsecured short term loans amounted to LE 44 419 462 at 30 September 2011 (LE 55 111 410 at 31 December 2010)
The average interest rate for loans and credit facilities is 105 for the Egyptian pounds and 15 over LIBOR for the US Dollars
Loans and credit facilities granted to the company and its subsidiaries are secured by promissory notes from subsidiaries of approximately LE 1344 million Euro 51 million USD 356 million SP 65 million DZD 5179 million and joint guarantees amounted to LE 787 million and mortgaged machineries equipments and vehicles amounted to USD 10 million in-addition the company shares in Iskra Emeco Slovenia (subsidiary)
18
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
17 Trade notes and other payables
3092011 LE
Trade and notes payables 863820149 Non-trade payables and accrued expenses 1028780450
1892600599
18 Provisions
30912011 LE
Balance as at 111 71805769 Balance related to acquired subsidiaries Fonned during the period I year 2339767 Used during the period I year (9324550) Provisions no longer required (11 226993) Exchange rates adjustments 11066172
64660165
19 Share Capital
Authorized share capital
The Companys authorized share capital is LE 5 billion on September 30 2011
Issued and paid in share capital
311122010 LE
1 165754856 1 150350283
2316105139
311122010 LE
94696821 688637
12 181 540 (37036185)
(8924539) 10199495 71805769
The issued and fully paid-in share capital of the Company is amounted to LE 1 718 600 000 on December 312010 divided over 171 860000 share with par value LE 10 each
The Company Extra Ordinary General Assembly held on 26142011 decided to increase the Companys issued capital by issuing 51 558000 shares with amount ofLE 515 580000 as a share dividends Accordingly the companys issued capital after this shares dividends had reached LE 2 234 180 000 divided over 223 418 000 share with par value LE 10 each This change was authenticated in the company commercial register on 28172011 (This transaction represents non-cash transaction without effect on the cash flows statement)
20 Reserves
Legal reserve General reserve Employees shares reserve
30912011 311122010 LE LE
78252077 36713202 43816730 43816730 4147345 3424159
126216152 83954091
-Comparative figures is reclassified to agree with current reclassification
19
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolida ted financial statements - 30 Septem ber 2011
Legal reserve According to the Companies Law and the statutes of the Company 5 ofthe 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 dermed level then the Company is required to resume setting aside 5 ofthe annual profit until it reaches 20 of the issued share capital
General reserve The general reserve amounted to LE 43 816 730 represents realized gain from sale of treasury bills of 25 million of own shares at 362007
21 Deferred Tax
301912011 LE
311122010 LE
Deferred tax assets Deferred tax liability
34247590 (117230876)
32201 150 (l08 960912)
Unrecognized deferred tax assets
3092011 3111212010 LE LE
Clients and debtors 52522271 48336135 Provisions 1 041 14266924
68187312 62603059
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
22 Other liabilities - Long term
3092011 311122010 LE LE
Sales tax on imported machines 459299 1371 845 Other creditors 85575992 109851393
86035291 111223238
23 Segment reporting
Segment information is presented in respect of the Groups business and geographical segments The primary format business segments is based on the Groups management and internal reporting structure Segment results include items directly attributable to each segment as well as those that can be allocated on a reasonable basis
20
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
6204737403
EL SEWEDY ELECTRIC COMPANY Notes to the consolidated financial statements- 30 September 2011 Translated from Arabic
Primary Reponing Format- Business Segmenu - 30 Sept~iiiher 2011 The revenue analysis in the table below is based on the type ofbusiness activities at 30 September 2011
Power and Special Cables TurnKey Electric ProduclS and Accessories ConsolidatedElimination
Egypt International projeclS Egypt International 3009l011 LE LE LE LE LE LE LE
Local Sales 2012414736 2298164 278 1 159653418 236955248 497 549 723
Export Sales and construction 3783275010 360 243 708 714492 872 147419597 159585281 5 165016468
Total revenue without inter segment sales 5795689746 2658407986 1874146290 384374845 657135004 II 369753 871
Inter segment revenues 4545857852 460 681316 250182965 134930768 28006 280 ( 5 419 659 181)
Total revenue 10 341 547 598 3 119089302 2124329255 519305613 685141284 5 419659 181 II 369753871
Total Cost ( 9 786 502 799) ( 2 888 748 313) ( 1 640512915) ( 383832 192) ( 544512012) 5419659181 ( 9 824 449050)
Gross Profit 555044799 230340989 483816340 135473421 140629272 I 545304821
Total selling amp marketing expenses
Segment profit
( 128 070 552)
426974247
( 32512951)
197828038
( 10 331 371)
473484969
( 21 299 789)
114 173632
( 50 546 141)
90083131
( 242 760 804)
13t2544017
Other operating income
General and Administrative expenses
Other operating expenses
Net financing costs
Current income tax
Deferred income tax expense
Net profit for the year
68531480
( 397 197 463)
( 30 085 237)
( 299 190 550)
( 80263887)
( 4888432)
559449928
Depreciation 71 223728 106 814 688 15424 164 12520063 29621 236
UnallOcated
6994214 242598093
Assets
Liabilities
6033593861
( 562 634 992)
3521699194
( 660 574 769)
1717367234
( 790 832 969)
541 171 208
( 56139094)
1696872 778
( 162909 240)
1 201040 929
( 6 844 987 078)
14711745204
(9 078078 142)
Additions to fixed assets and project under progress 67474561 66 325 728 12117195 10781 248 71 438381 2952997 231090110
-21shy
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
- - -
~-ey f~rtcmn-aY
NoeallIt poundlf9IHW 1lnIrd dltSllfs 30 8mtttMr lOll _ -- s-III1R~F_-G~Z-Q1ty~middotJDSoept_rlQll
Rn-IUampQOrdingW ~~SCJl~ b roJlos
N_ 0 K~ S A Wra u v_ ~ u -shy
lMtMOU
LE I IE 18 LR E E pound LE E LE I E L L
12733590 1iO 81311259) 299 753 067 612870029 13889562 83 548 325 3 506 819 413623 436 9111846S7 546066693 64 2G3 270 34220077 36 364 037 ~26615 13 490 427 112862667 ( 5 419 6S9 181) 11 369153 81Jshy 9162846093 123 345 579 498 760 180 675166 J911 42715055 44 800 112 6164 064 748312826 941670 511 692495205 145408393 100602 0 1I9256920 L32108 471 550 814 545 126 671361 1471) 145 204
LiaIh1run ( 8 177 160 209) ( 54 652 31 ( 103515938) ( 204 171 493) ( I 645 106) ( 1l65 03L) ( 450 597) ( 112 196 916) ( 139919002) ( S3 916 372) ( 1597 ) ( 6004 039) ( 732(852) ( 7526842) ( 1124 156) ( 616 915) ( bull 1118 on I)
AdditioMotfi~ude~ 90 347 439 19560249 3526 946 4232664 lot 933 53 185 9302 6536502 21943126 12250077 1665197 10204710 3 029 767 304 067 45 80amp 862 5513484 231090110 und~--
-22shy
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
EL Sewedy Electric Com pany Notes to the consolidated financial statement- 30 September 2011 Translated from Arabic
Prn~ry Re~crting Fet - Bm~s Segm~f~ 30 September 2010 The revenue analysis in the table below is based on the type of business activities at 30 September 2010
Power and Special Cables
Egypt International
LE LE
TurnKey
projeclll LE
Eledric Products and Accessories Egypt International
LE
Elimination
LR
Consolidated 3010912010
LE
Local Sales Export Sales and construction
2085466 504 3375510393
1824621735 85594429
469563958 493862267
130027454 67944 643
472 011 167 206947909
4981690 818 4229859641
Total revenue without inter segment sales 5460976897 1910216164 963426225 197972 097 678959076 9211550459
Inter segment revenues Total revenue Total Cost Gross Profit Total selling amp Marketing expenses Segment profit
3709859433 9 170836330
(8370642507) 800193823
( 161796960) 638396863
285544651 2 195 760815
(1999501716) 196259099
(32649812) 163609287
156665303 1 120091 528
( 856255139) 263836389 (8221767) 255614622
136608049 334580 146
( 256573299) 78006847
( 16022400) 61984447
16985208 695944284
( 540414288) 155529996
(40714481) 114815515
(4305662644) ( 4 305 662644)
4305662644 9211 550459
(7717724305) 1493826154
(259405420) 1234420734
Other operating income General and Administrative expenses Other operating expenses Net financing costs Current income tax Deferred income tax expense Net profit for the period
122530483 ( 370347738) ( 86689072)
( 102110663) ( 60039335) ( 10970886)
726 793523
Depreciation 63 147321 80066026 9990224 12052318 25626711 Unallocated
12231280 203 113 880
Assets Liabilities
5102354313 ( 1134942165)
2892698276 ( 614812362)
1 657281 772 ( 1 067 780 989)
492088916 ( 105 123 148)
1 857785722 ( 240 769 840)
1319316460 ( 4 927 571 059)
13 321525459 (8090999563)
Additions to fixed assets and project under progress 83321464 205494459 31975578 17127947 28491966 77 203 742 443615156
-23shy
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
ELSrwelri1edritCompaollJ N to~tel flnqdalwPMftb- 3R SqiUllfbfr 1011
~~F-~~IMPMIibull IotdM3R~r2Ilte
~~ugt~kaI~i1ufoilowt
wt u
w
Qlhir
IE
c
t
LE
_11
L
Chiu
LL
_
LE
LE
LE
LE
_An
LE
-shyIE
-Ipound
_
LE
1tatWmd (rom Antllc
-L
TN
IE
Jtvenua 10403319552 762961339 316195666 295676 166 71 095 009 42 769 569 4271982 141i 1S9 406021l0~2 moo 66743431 5743186S5 325322519 53437191 132453818 ( 4 lOS 66l 644) 921l5504S9
Uabilitiel
82874J9266
(1187402793)
1904 893 076
(163750560)
SOl 061981
(191301L15)
39137~ 342
(87m~n)
78151 308
(6638289)
38096258
(l83l803
tl29H71
(1369amp068)
421970
(16Mgt
729953828
(1494234amp7)
994741
( 3) ( Sot 436)
71237922
( 29018 (07)
7tti631354
(9amp111 738)
57635J 074
( 79568427)
12791~ 046
( 39198(6)
995959810
1224132B
t3J21254~
(999563)
MdihoMorrned-usncI~n 2051S9346 10185519 1538907 83938387 156775 313174 1246 9436538 1704906 756Om 24269059 9m630 2J 025 117 44361S 1S6
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
24 Other operating income
From From From From 11712011 to 1112011 to 11712010 to 1112010 to 301912011 301912011 3092010 3092010
LE LE LE LE Provisions no longer required 6857993 11226993 156989 5898 L21 Investment income 1568434 Proceeds from selling controlling interest in a subsidiary
73 145 L67
Capital gain amp other income 10 149271 55736053 16945631 43487 195 17007264 68 480 17102620 122530 middot83
25 Other operating expenses
From From From From 1172011 to 11112011 to 11712010 to 11112010 to 3092011 3092011 3092010 3092010
LE LE LE LE Provisions formed (4710769) 2339767 2633423 7859853 Impairment loss of receivables 1619170 14099825 36046693 55310991 Others I 3736392 13645645 10711 788 23518228
(4465238) 30085237 49391904 86689072
26 Net financing cost
From From From From 1172011 to 11112011 to 172010 to 11112010 to 3092011 3092011 3092010 3092010
Finance income LE LE LE LE Interest income (1 823 817) 6497266 2129424 4137679 Foreign exchange gain 4984744 51232673 Treasury bills and investment fund income 11 575775 31448466 14521547 35312860
9751958 37945732 21635715 90683212
Finance cost Interest expense and finance charges (109502436) (259387 172) (43580215) (146307283) Foreign exchange loss (474346562 77 749110) ~i86592)
(156 937 092 337 136 2821 (43580215 ~793875)
Net financing cost ~147 185 134l 299 190 550l 21 944500l ~110663)
27 Capital commitments
The Groups capital commitment as at 30 September 2011 is LE 75 million (2010- LE 114 million) The commitments are expected to be settled in the next financial year
25
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
28 Contingencies
Uncovered portion of letters of guarantees and letter ofcredits
3092011 LE
1870991043
29 Related parties
311122010 LE
1437410397
Related parties are represented in the Companys 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 financial period is LE 494 million The following are the balances of related parties as at 30 September 2011shy
Stated under current assets Due from affiliates
El Sewedy for Tools amp Cables Consolidated Suppliers Siag International Iskra Sarajevo Iskra Malaysia Iskra Mavira El Sewedy Emirates (UAE) Investment holding group - Qatar Aamal Holding Group Co 3W Networks Egypt Elsewedy trading Syria Gelenkor International AG Zesco - Zambia Elsewedy for Cement ELRowad for Modem Engineering-Algeria National Electricity Authority - Sudan Aloula for Real estate Development United Arab for Electricity and Energy Ltd MToress Group ELRowad for Modem Engineering-Libya
- Yemen
The engineering and construction industries - SiPack Shareholders current account Others
3092011 311122010 LE LE
83098728 42062607 498466
4855796 6508672 8326853 2784434 4812561 3443003 4 178775
31576922 115810099 49612541 38388890
8065198 8336936 3289169
14786760 14389800 6702028 3047409
2 198871 33621687 16846987 2030732 2000000 4002974 3290649
596547 2540384 6542325 7177210 3649216
10103 180 9107037
274971529 283311 917
26
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
3092011 3111212010 LE LE
Stated under current liabilities Due to associates Shareholders current account 1241 764 4801 723 United Transformers- Saudi Arabia 27259855 29506896
Misr for Mechanical and Electrical projects 9085861 2209392
National Electricity Authority - Sudan 4442365 4671684 Arab Steel Fabrication co 5 183 958 23113243 Thomas and Peets 2277 669 2546819 Military Industrialization Authority 29691440 7892247 Siag International 17864974 10765351 Kazimi 8886392 Trelco Qatar 3414 184 Qatar for In vestment group 37800712 9532320 MTDI 11067409 Iskra -Malysia 1 574375 1670575 Iskra Sarajevo 268 160 Aamal Holding Group Co 61016267 28168 133 The engineering and construction industries - SiPack 1 136291 4988739 Emas ofModern Systems 9098580 2630428 Others 2455 108 3861266
213811 563 156312 617
Subsidiaries and jointly controlled The following are subsidiaries andjointly controlled owned by the company as at 30 September 2011shy
Date of Nature of acquisition Country contribution of
share Subsidiaries Co for El Sewedy Electric Egyptian Company For Advanced Industries 21-06-2005 Egypt Direct 9800 United Metals Co 23-06-2005 Egypt Direct 9980 Sedplast Co 25-08-2005 Egypt Direct 9990 Egytech Cables Co 25-12-2005 Egypt Direct 9998 United Industries Co 25-12-2005 Egypt Direct 9998 Elastymould (subsidiary ofEgyptian 22-02-2006 Egypt Indirect 4960 Company for Advanced Industries) El Sewedy for External cables Co(E1 Sewedy 19-04-2006 Egypt Direct 9996 Electric previously) United Wires Co 02-11-2006 Egypt Direct 9994 Egyplast Co 24-12-2006 Egypt Direct 9990 El Sewedy Cables - Egypt 21-02-2007 Egypt Direct 9987 Red Sea Co for Copper 21-06-2007 Egypt DirectlIndirect 7400 Elsewedy Electric Co For Transmission 21-10-2007 Egypt Direct 9700 Pyramids Industrial Urban Development 27-09-2007 Egypt DirectlIndirect 5000 El Sewedy Power (Electric High Voltage 27-09-2007 Egypt Direct 9600 previously) EI Sewedy Sedco for Petroleum services 10-01-2008 Egypt Direct 9600 Iskra Emco Energy Measurement - Misr 18-02-2008 Egypt Direct 9900 Iskra Emco Slovenia 01-01-2008 Slovenia Direct 9970
27
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Egyptian Company for Insulators Industry Elsewedy Electric Co For Trading and Distribution Siag EI Sewedy for Towers EI Sewedy for Wind Energy Generation Power System Projects Company Desert Wind Company Wind Blades Company El Sewedy Electric Contracting and Engineering Zambia EI-Ola for development Industrial zone EI Sewedy Energy Distribution International company for development Research technology and measurement devices (R amp D Tech) EI Rowad Engineering Co Pyramids Zonafranca-Egypt Etalsamia
Subsidiaries for EI Sewedy for External Cables Co( EI Sewedy Electric previously) EI Sewedy Cables - Syria Sudanese Egyptian Electric Giyad EI Sewedy for Transport Limited Giyad Cables Co EI Sewedy Electric Ghana Limited El Sewedy Cables - Qatar EI Sewedy Cables - Algeria EI Sewedy Electric - Syria Senyar Holding EI Sewedy Cables Arable Iraq Sedplast Co - Syria EI Sewedy Cables Limited EI Sewedy Cables - Yemen EI Sewedy Cables - Kuwait El Sewedy Cables - South Africa Power Empire - China EI Doha Cables- Qatar El Sewedy Electric Limited Zambia El Sewedy Electric Limited Nigeria El Sewedy Cables - Ethiopia Libya for Common Cables El Sewedy Electric Transmission and Power Distribution Iskra Malta Red Sea for copper Egypt MAS for Trading and Contracting MTorres - Spain United Co For Electrical Industries
Date of acquisition
30-06-2008 21-12-2008
17-08-2008 10-07-2008 31-12-2008 31-12-2008 31-03-2009 31-03-2009
30-9-2009 31-12-2009
30-6-2010
30-6-2010 30-6-2010 30-6-2010
28-02-2006 13-02-2006 13-02-2006 13-02-2006 10-02-2006 20-04-2006 03-10-2006 30-10-2006 09-05-2008 07-10-2007 22-07-2007 24-12-2006 13-05-2007 18-02-2008 13-05-2007 01-01-2008 09-05-2008 31-03-2009 31-03-2009 31-03-2009
30-9-2009 31-12-2009
31-12-2009 31-12-2009
3-3-2010 10-1-2010 31-3-2010
28
Country
Egypt Egypt
Egypt Egypt Egypt Egypt Egypt
Zambia
Egypt Sudan Egypt
Egypt Egypt Egypt
Syria Sudan Sudan Sudan Ghana Qatar
Algeria Syria Qatar Iraq
Syria Saudi
Yemen Kuwait Malawi China Qatar
Zambia Nigeria Ethiopia
Labia Algeria
Malta Egypt Egypt Spain Saudi
Nature of contribution
DirectlIndirect Direct
Direct Direct Direct Direct Direct Direct
Direct Indirect Indirect Direct
Indirect Indirect Indirect
Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect Indirect
Direct Indirect Direct Indirect
Indirect Indirect Indirect
of sh~lre
6983 998
4900 998
7500 4990 9960 4990
5000 9690 9000
6500 475
9998
96 7000
99 4500 7183 2450
99 9597 5000 5000 9800 6000 7000 4900 995 100
4556 6000 9474 9500 5500 9700
9998 100 60 90 60
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Date of Nature of acquisition Country contribution of
shure Sweg - Malta 31-12-2009 Malta Direct Indirect 99 97 3 W Network - Emirates 30-6-2010 Emirates Indirect 75 Elsewedy for trade - Limited 31-3-2011 Syria Indirect 96 Egyplus Energy PVT LTD 31-3-2011 India Indirect 996
From 11112010 the Arab Cable Company was merged into Egytech Company
30 Tax status
EI Sewedy Electric Company
The company enjoys a ten years corporate tax holiday effective of the financial year following the year in which operations commence as determined by the General Authority for Investment and Free Zone The company received a letter from General Authority for Investment and Free Zone considering that the date of starting operations for its transformer plant is 18 May 2008 accordingly the company enjoys a tax exemption on its activities up to 31 December 2018
Subsidiaries in Egypt subject to corporate income tax
Sed Plast Company Pyramids Industrial Urban Development Elsewedy Electric Co For Trading and Distribution Power Systems Projects Co - Madkour Egyptian company for Insulators Industry Co Iskra Emeco Energy Measurement - Misr Egytech Cables Co EL - Ola for Development Industrial zones United Metals Co United Industries Co Sedco Advanced Elastimold Siag E1Sewedy for Towers E1Sewedy for Wind Energy Generation Desert Wind Company Wind Blades Company International company for development Research technology and measurement devices (RampD Tech) MAS for Trading and Contracting Rowad Engineering Pyramids Zonafranca -Egypt
Subsidiaries outside Egypt subject to corporate income tax
El Sewedy Cables - Qatar El Sewedy Cables - Saudi Arabia El Sewedy Cables - South Africa ( Malawi) EL Sewedy Cables Syria Iskra Emeco - Slovenia El Sewedy Cables - Arbil Iraq
29
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
EI Sewedy Cables - Kuwait Power Empire China Senyar Holding - Qatar El Doha Cables Qatar El Sewedy Electric Contracting and Engineering - Zambia Libya for Common Cables ELSewedy Electric Transmission and Power Distribution - ( EL Sewedy for Energy Distribution Co Ltd Sudan Sudatraf Giad ELsewedy for Transport Limited MToress-Spain United Electrical Industries Limited - Saudi Arabia Iskra Malta Sweg- Malta Elsewedy Trade Limited - Syria Egyplus Energy PVT LTD India EI Sewedy Cables - Ethiopia
Algeria)
Free Zone subsidiaries in Egypt
El Sewedy for External Cables (EI Sewedy Electric previouRed Sea for Copper EI Sewedy Power (previously High Voltage) EI Sewedy Electric Transmission and Power Distribution EI Sewedy Sedco for Petroleum services Red Sea for Copper - Egypt
sly)
Free Zone subsidiaries out Egypt
EI Sewedy Electric Ghana 3 W Network - Emirates
Subsidiaries in Egypt enjoying tax exemption from corpo
Egy Plast Co United wires Company Elsewedy Cables Egypt Etalsamia
rate income tax End of tax exemption 3111212017 311122017 17052018 311122019
Subsidiaries outside Egypt enjoying tax exemption from corporate income tax
End of tax exemption
EL Sewedy Cables Yemen (7 years since inception of the companys production) EL Sewedy Cables Algeria (3 years since inception ofthe companys production) EL Sewedy Electric Syria 20102011 Sed Plast Syria (5 years since inception of the companys production) Giyad Cables EI Sewedy 141212012 EI Sewedy Electric Limited - Zambia (25 years since inception ofthe companys production) EI Sewedy Electric Limited - Nigeria (2 years since inception ofthe companys production)
30
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
31 Acquisition of subsidiaries
MTorres Olvega Industrial SL (Spain) The Company obtained controlling inteyest in MTorres (previously owns 30) and during the 1st
quarter of20l0 the company acquired an additional 60 ofMTorres to reach 90 of the shares and voting interests of MTorres The fair value of the identifiable assets and liabilities assumed by an independent expert at the acquisition date are as follows
Fixed assets 44693377 Intangible assets-Patents 105059498 Trade and other receivables 14547250 Inventories 420734824 Cash and cash equivalents 1 924216 Loans and borrowings (5220461) Deferred tax liabilities (27 188656) Trade and other payables (251 536 495) Total Identifiable net assets 303013553
Goodwill recognized at acquisition as follows Total consideration 326983585 Minority Interest 24680949 Fair value of identifiable net assets (303013 553) Goodwill 48650981
Patent after amortization amounted to LE 73 474 135 as of 30 September 2011 (LE 76 493 620 at 31 December 2010)
Acquisition of other companies
During the period the group acquired controlling share in Rowad for Modem Engineering at 65 3 W Networks - United Arab of Emirates at 75 Pyramids Zona-Franka - Egypt of 475 and Italsimia for Equipment against Explosion Industries of 999 The acquisition of these companies resulted in initial goodwill approximately 12 million LE The fair value of identifiable assets and liabilities will be determined by an independent expert within one year from these subsidiaries acquisition date The initial goodwill at acquisition date for these companies was LE 12 Million
32 Shares based payment
The general assembly dated 13 April 2008 decided to issue 200 000 shares with par value of LE 10 each as employees share based payments according to the ministerial decree No 282 for 2005 According to this scheme the shares are issued on account of retained earnings The Extraordinary General assembly dated 19 April 2010 decided a shares dividend (3 shares for each 10 shares) each financial period is charged by part of the fair value of these shares and in 26 April 2011 EGA a dividends shares of 3 shares for each 10 shares was decided The employee has the right at each year end during the three years scheme to exercise part of the shares based payments in the following ratesshy
First year 20 Second year 30 Third year 50
31
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
fair value of the services rendered in return of the shares granted as at 30 September 2011 as follows
Number of shares granted as at 31 December 2008 126000 Shares exercised up to 30 September 2011 (57400) Share canceled up to 30 September 2011 (5500) Shares balance at 30 September 2011 63100 Fair Market value at 30 September 2011 4 147345
33 Capital lease
The company sold some of its fixed assets to the International Company for Capital Lease (Incolease) by virtue of an initial contract of USD $ 32 283 318 equivalent to the net book value of LE 181 990 960 The company leased back these assets by virtue of capital lease contract of USD $ 36 010 100 to be paid over 20 quarterly installments during the period of USD $ 1 800 505 each The lease contract contains a bargain option to purchase the leased assets at a purchase bargain option ofLE 4 during the last 2 months at the end of each contract or at the end of each year from the date of the lease A capital gain ofLE 5363286 resulted from sale of these fIXed assets which is amortized over the lease contract period
34 Earnings per share
The calculation ofbasic earnings per share at 30 September 2011 based on the profits attributable to the shareholders The weighted average number of ordinary shares outstanding during the period as followsshy
From From From From 11712011 to 11112011 to 1172010 to 11112010 to 3092011 30912011 30912010 309~~010
LE LE LE LE Profits attributable to the ordinary 196366112 528319062 191 129767 698060357 shareholders Weighted average number of shares Issued capital at 111 171860000 171860000 132200000 132200000 Share dividends (19 April 2010) 39660000 39660000 Share dividends (26 April 2011) 51 558000 51 558000 Own stock (220 992 (220 992 1838002 183800) Weighted average number ofshares 223197008 223 197008 171676200 171676200
35 Financial instruments and the related risks
The main risks related to the company activities are
- Credit risk
- Liquidity risk
- Market risk
32
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
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
(LE million)
3092011 311212010
Receivable and debtors 4553 4114 Cash and investments 1342 1569
5895 5683
Receivable aging (LE million)
30912011 3111212010
Not due 98 66 Due from 30 days 709 705 Due From 31 to 120 days 1452 955 Due From 121 to 180 days 249 588 Due from More than 180 days 743 510 Others 1302 1290
4553 4114
Liquidity risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fal l[
due The company approach to managing liquidity is to ensure as far as possible that it will always have sufficient liquidity to meet its liabilities when due without incurring losses or risk the reputation of the company
The company ensures that it has cash on demand to meet expected liabilities in due dates this excludes potential impact of extreme circumstances that can not reasonably be predicted such as natura disasters The companys obligations due to the suppliers and other creditors are paid in a period less than three months
(LE Thousand) Less than 6 - 12 month More than Other 6 month one year
LE LE LE LE
Suppliers creditors and other credit balance 723399 456661 25958 772618 Due to banks 1 091 167 1397740 271 939 3942894
33
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34
Translated From Arabic
EL Sewedy Electric Company Notes to the consolidated financial statements - 30 September 2011
Foreign currency risk The following are the balances of monetary assets and liabilities in foreign currencies as of 30 September 2011
(LE Thousand)
3092011 3111212010 usns Euro GBP usns Euro GBP
Financial assets 462981 277 689 2977 1 154309 1274142 40468 Financial liabilities 867182 205619 2748 3 117603 463320 10004
The following are the significant foreign currency exchange rates during the period Spot rates Average rates
For the For the Nine- Nine-
Months Months ended ended
3092011 31122010 30912011 3092010 usn $ 596 58 596 559 Euro 798 777 788 747
Interest rate risk
The following are the Group interest bearing financial instruments
(LE million) Net book value
3092011 3111212010 Fixed interest rates
Financial assets 138 Financial liabilities (151) (107)
(151) 31 Variable interest rates
Financial assets 23 8 Financial liabilities (1622) I 383
(1599) 1375)
The average interest rates are on the fmancial assets and liabilities are as follows
LE EURO USD$
Financial assets 10 2 175
Financial liabilities 1075 25 275
34