alexandria container & cargo handling financial statements

Alexandria Container & Cargo Handling FINANCIAL STATEMENTS

For The Financial Year Ended

June 30, 2019

Translation of financial statements originally issued in Arabic

Alexandria Container and Cargo Handling Company

Head Quarter – Private Free Zone

- 1 -

Report

Board of director for the company final accounts

For the period from 1/7/2018 till 30/6/2019 (second closing)

First department: Current activity

Below a summary for the Current activity elements that the company has been achieved for

the period from 1/7/2018 till 30/6/2019 for the resources and using compared with the

Targeted for that year as well as the actual achieved for the year 2017/2018.

Description Actual

2018/2019

Targeted

2018/2019

Actual 2017/2018 Percentage

targeted compared

No of current containers

foreign trade fees

transit fees

Containers

962 594

11 543

Container

840 000

10 000

Container

858 407

12 133

115%

115%

112%

95%

Total 974 137 850 000 870 540 115% 112%

Current activity revenue

foreign trade revenue fees

transit revenue fees

EGP

2 923 168 117

5 123 758

EGP

2 814 500 000

6 100 000

EGP

3 009 811 051

5 596 938

104%

84%

97%

92%

Total revenue of the trading

activity (1)

2 928 291 875 2 820 600 000 3 015 407 989 104% 97%

Added grants and contributions

(2)

Other revenues , interests and

gains(3)

Revenues for securities and credit

interests

Provisions no longer required

215 0 5 5 654

31 730 067

260 000 000

--

328 545 096

6 612 650

83%

--

65%

480%

total of revenues , interests and

other gains

246 785 721 260 000 000 335 157 746 95% 74%

Total revenues of the trading

activity , interests and other gains

(4) (1+2+3)

3 175 077 596 3 080 600 000 3 350 565 735 103% 95%

Costs and expenses (5)

Fuel, Spare parts and consumables

Salaries

Preference

Purchased services

Depreciation

Debit interest

rents

Real estate taxes

Indirect taxes

Investment Authority fees

Rights to use by licenses

79 778 958

542 560 737

69 665 643

45 638 333

141 910 998

--

180 215 766

--

89 010 684

29 225 611

21 327 376

104 000 000

530 000 000

72 000 000

40 000 000

143 900 000

--

166 000 000

--

30 000 000

61 000 000

18 600 000

83 919 201

470 294 460

54 048 896

51 217 658

118 147 793

--

148 289 357

16 234

35 167 150

67 911 708

18 039 327

77%

102%

97%

114%

99%

--

109%

--

297%

48%

117%

95%

115%

129%

89%

120%

--

122%

--

253%

43%

118%

Total costs and expenses (5) 1 199 334 101 1 165 100 000 1 047 051 784 103% 115%




- 2 -

Description Actual

2018/2019

Targeted

2018/2019

Actual

2017/2018

Percentage

targeted compared

Burdens and losses (6)

Provisions

Burdens and other losses

EGP

42 908 205

10 915 423

EGP

16 500 000

1 000 000

EGP

63 067 670

6 960 772

--

--

68%

157%

Total burdens and losses 53 823 628 17 500 000 70 028 442 -- 77%

Total costs , expenses and

burdens (7) = (5+6)

1 253 157 729 1 182 600 000 1 117 080 226 106% 112%

Net revenue (8) = (4-7) 1 921 919 867 1 898 000 000 2 233 485 509 101% 86%

Added other revenues (9)

Other Revenues and gains

Capital gains

10 411 437

5 836 024

2 000 000

--

47 130 222

185 046 762

22%

total of other revenues (9) 16 247 461 2 000 000 232 176 984

Total (10)= (9+8) 1 938 167 328 1 900 000 000 2 465 662 493 102% 79%

Less:

Other Costs and expenses (11)

Extraordinary expenses

Loss from currency exchange

Loss of sale of residues

Previous years expenses

30 692

100 419 667

136 302

--

--

--

--

--

1 352

12 799 909

61 086

--

Total costs and expenses (11) 100 586 661 -- 12 862 347

Net income before tax 1 837 580 667 1 900 000 000 2 452 800 146 97% 75%

Income tax (4 288 447) -- (5 918 564) 72%

Net income after tax 1 833 292 220 1 900 000 000 2 446 881 582 96% 75%

Deferred tax assets 71 238 -- --

Net profit of the year 1 833 363 458 1 900 000 000 2 446 881 582 96% 75%




- 3 -

Second department

Investment budget

First the operations that has been done during the financial year 2018 / 2019 that has been

previously approved within previous budgets

Approved operations from budget of 2017/2018 and previous budgets Value in EGP

thousands

1-extend the road of winches yard 3 558

2- adapter 3 mega , voltage 10.5 1 156

3- supply (2) winches giant pavements 233 541

4-Replacing and renovating the floors (A) yards and exports with space 9200

square meters

7 109

5-repair of berth 49 – 54 7 478

6- whole (8) cell TC medium pressure 11 f 1 361

7-injection process of berth 96 that necessary for depth of the pavement 3 207

8-supply of (11) tractors strenuous services 16 805

9-adapter 1,6 mega capacity 5.5 K 400 Volts 455

10-process of Deeping and dredging of berth 96 22 429

11- Replacing and renovating for devices and operating system 1 383

Total (1) 298 482

Second:-

Following up the investment budget for the year of 2018 / 2019 during the period from

1/7/2018 till 30/6/2019

The approved amounts for the investment budget for 2018 / 2019 517 600

From 1/7/2018 till 30/6/2019 (2) 90 662,5

Total of what has been paid till 30 / 6 / 2019 (1+2) 389 144,5


- 4 -



Statement of financial position As of June 30, 2019

Note 30/6/2019 30/6/2018

No. EGP EGP

Non-Current Assets

Fixed assets: (1)

Buildings and Constructions 88 788 862 63 838 570

Machinery and Equipment 11 263 173 8 602 671

Transportation and Transmission 1 117 277 566 912 172 847

Tools 980 856 938 914

Office Furniture and Fixture 12 877 744 10 429 653

Total Property, plant and equipment 1 231 188 211 995 982 655

Project under construction:

Construction in progress (2) 101 805 514 67 379 677

Investment Expenditures (3) 37 109 623 83 545 178

Investment property (4) 2 412 898 2 412 898

Capitalized expenses (5) 1 531 530 2 681 136

Deferred tax asset 71 238 --

Expenditures related to non-owned assets 10 682 312 3 385 306

Investment in associates -- --

Investments in Companies (6) 12 196 200 11 544 000

Loans to others (7) 9 004 700 --

Total Non-Current Assets 1 406 002 226 1 166 930 850

Current Assets

Inventory: (8)

Raw materials, fuel and spare parts 95 175 235 88 522 152

Letter of credit for purchase of goods

and service -- 375 521

Trade receivables, Notes payable and debtors

Trade receivables (net) 187 594 214 142 566 503

Accrued revenues 19 928 699 37 220 914

Prepaid expenses 836 226 2 963 223

Suppliers 1 202 600 3 228 751

Other debit accounts (9) 85 315 523 342 815 241

Investments in current securities -- --

Treasury bills (10) 189 813 707 --

Cash at Banks (11) 3 121 341 955 4 307 103 854

Total Current Assets 3 701 208 200 4 924 796 159

Total Assets 5 107 210 426 6 091 727 009


- 5 -



Statement of financial position As of June 30, 2019

Note 30/6/2019 30/6/2018

No. EGP EGP

Equity

paid-up Capital (12) 744 876 700 744 876 700

Reserves: (13)

Legal reserve 783 434 924 783 434 924

Statutory reserve 617 605 868 617 605 868

Project Support Reserve 374 704 167 374 704 167

Other Reserves 26 128 862 26 128 862

Capital Reserve 207 300 619 228 903 950

Retained earnings (14) 47 331 454 31 343 872

Net Profit 1 833 363 458 --

Total Equity 4 540 083 144 2 806 998 343

Non-Current Liabilities (15)

Long term loans -- --

Long term provisions -- --

Total Non-Current Liabilities -- --

Current Liabilities

Provisions: (16)

Disputed taxes Provision 24 783 714 35 331 984

Claims and disputes provision 79 575 442 59 897 788

Other Provisions 16 642 950 33 617 660

Suppliers and Other Payables: (17)

Suppliers & Trade payable 51 526 614 96 837 738

Accounts payable for Bodies and

Authorities 41 368 885 19 085 889

Dividends payable 100 000 2 845 343 247

Accrued expenses 249 752 215 144 602 862

Advance from accounts receivables 11 669 937 4 009 770

Other credit balances (18) 91 707 525 46 001 728

Total Current Liabilities 567 127 282 3 284 728 666

Total Liabilities 567 127 282 3 284 728 666

Total Equity and Liabilities 5 107 210 426 6 091 727 009

Financial officer Chairman & managing

direction


- 6 -



Statement of Income

for the financial year ended June 30, 2019

Note

For the Year

Ended

30/6/2019

For the Year

Ended

30/6/2018

No. EGP EGP

Revenue / Sales 2 928 291 875 3 015 407 989

Cost of Sales / Revenue (19) (1 008 769 387) (842 192 500)

Gross Profit 1 919 522 488 2 173 215 489

Investment’s revenue (20) 215 055 654 328 545 096

Other gain and losses (92 781 316) 173 024 226

Other Revenues (21) 8 472 808 46 291 763

General Administrative Expenses (22) (190 071 566) (204 475 803)

Provisions (16) (42 908 205) (63 067 670)

No longer require Provisions (16) 31 730 067 6 612 651

Other expenses (23) (10 946 115) (6 962 124)

Financing expenses (493 149) (383 482)

Revenue from investment in associate -- --

Net Profit for the Year before tax 1 837 580 667 2 452 800 146

Income Tax (24) (4 288 447) (5 918 564)

Net Profit for the Year after tax 1 833 292 220 2 446 881 582

Deferred tax 71 238 --

Net profit for the year 1 833 363 458 2 446 881 582

Earnings per share (EGP/ Share) (25) 1.230 648 1.642 474

-The nominal value per share was split from five pounds to fifty piasters per share at 13/8/2018


direction


- 7 -



Statement of Other Comprehensive Income


For the Year

Ended

30/6/2019

For the Year

Ended

30/6/2018

EGP EGP

Net profit for the year 1 833 363 458 2 446 881 582

Other Comprehensive Income -- --

Total Comprehensive Income For The Year 1 833 363 458 2 446 881 582


direction


- 8 -


The head quarter and private free zone

Account of Production costs or purchase of sold units for the period from 1/7/2018 until 30/6/2019

Aggregate

EGP

Partial

EGP

Description Chart of

Account

Comparative

figures

30/6/2018

EGP

Aggregate

EGP

Partial

EGP


Account

Comparative

figures

30/6/2018

EGP -- 73 819 613 Raw materials ,Fuels ,

and spare parts ,

361 78 007 361

483 751 732 Salaries 362 376 378 139

557 571 344

(Other costs)

27 212 653 Purchased services 3631 22 028 216

132 363 341 Depreciation and

amortization

3632 109 876 956

169 878 640 Real estate rentals

(building , lands)

3634 143 309 929

-- Real estate taxes 3635 --

21 327 371 Right to use license

(Decree 521)

18 039 327

71 190 427 Taxes and fees 26 640 863 1 008 769 387 Cost of Production or

purchasing of sold

(carried forward to

trading account)

842 192 500

29 225 611 Investment authority

fees

67 911 709

451 198 043

1 008 769 387 842 192 500 1 008 769 387 842 192 500


- 9 -


The Head quarter and private free zone

Trading account for the period from 1/7/2018 until 30/6/2019

Aggregate

EGP

Partial

EGP


Account

Comparative figures

30/6/2018

Aggregate

EGP

Partial

EGP


Account

Comparative figures

30/6/2018

1 008 769 387 -- Cost of production

or Cost of goods

sold

Marketing costs

Raw material ,Fuel

and spare parts

salaries

371 842 192 500 2 928 291 875 Current activity

revenue

Sold services

Grants and

subsidies

41

414

42

3 015 407 989

-- Other costs

-- Purchased services 3731

1 919 522 488 Gross profit 2 173 215 489 2 928 291875 3 015 407 989 2 928291 875 3 015 407 989


- 10 -


The Head Quarter and private free zone

Profit and loss for the period from 1/7/2018 till 30/6/2019

Aggregate

EGP

Partial

EGP


Account

Comparative figures

30/6/2018

Aggregate

EGP

Partial

EGP


Account

Comparative figures

30/6/2018

Administrative, finance,

marketing expenses 1 919 522 488 Total carried

forward surplus

2 173 215 489

5 959 346 Raw martial, gas and

spare parts

381 5 911 840 Investments

interest

43

134 433 994 128 474 649 Salaries 382 147 965 217 -- Investment 432

Other expenses 196 751 546 Credit interest 435 323 683 124

18 425 680 Purchases services 3831 29 189 442 215 055 654 18 304 108 Treasury bills 43 4 861 972

9 547 657 Depreciation and

amortization

3832 8 270 837 other Income and

gains

44

-- Debit interest 3833 31 730 067 No longer require

provisions

441 6 612 651

10 337 125 Real estate rentals

(building , lands)

3834 4 979 428

-- Real estate taxes 3835 16 234

17 820 258 Indirect tax on activity 3836 8 526 287

56 130 720

Burdens and losses 31 730 067

42 908 204 Provisions 351 63 067 670

53 923 627 10 915 423 Miscellaneous losses 354 6 960 772

1 921 919 867 Profit 2 233 485 509

2 166 308 208 2 508 373 236 2 166 308 208 2 508 373 236

-- Previous years expenses 356 -- 1 921 919 867 Net profit 2 233 485 509

30 693 Extraordinary losses 358 1 352 -- Foreign currency

exchange gain

445 131 836

-- Capital losses 359 -- -- Previous years

income

446 --

-- Deferred tax -- 5 836 024 Capital gain 447 185 046 762

4 288 447 Income tax 5 918 564 8 472 808 Other income 448 46 291 763

100 419 666 Foreign currency

exchange losses

12 931 745 1 938 629 Gain on sale of

remnants

838 459

136 302 Loss of sale of remnants 61 086

104 875 108 Net profit 16 247 461

1 833 292 220 Surplus 2 446 881 582

1 938 167 328 2 465 794 329 1 938 167 328 2 465 794 329


- 11 -



STATEMENT OF CHANGES IN EQUITY

FOR THE FINANCIAL Year ENDED June 30, 2019

Capital Legal

reserve

Other

reserves

Project Construction

Reserves

Capital

reserve

Statutory

reserve

Retained

earnings /

(Losses)

Net Profit

for The Year

Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP

Balance as of July 1, 2017 739 297 920 507 833 322 26 128 862 293 508 929 43 857 188 715 238 904 791 014 045 -- 3 116 879 169

Change during the year 5 578 780 275 601 602 -- 81 195 238 185 046 762 (97 733 036) (759 670 173) -- (309 880 826)

Balance as of June 30,2018 744 876 700 783 434 924 26 128 862 374 704 167 228 903 950 617 605 868 31 343 872 -- 2 806 998 343

Change during the year -- -- -- -- (21 603 331) -- (78 675 326) -- (100 278 657)

Net Profit for the Year -- -- -- -- -- -- -- 1 833 363 458 1 833 363 458

Balance as of June 30, 2019 744 876 700 783 434 924 26 128 862 374 704 167 207 300 619 617 605 868 (47 331 454) 1 833 363 458 4 540 083 144


direction


12



STATEMENT OF CASH FLOWS


Note

The financial

Year ended

30/6/2019

The financial

Year ended

30/6/2018

No. EGP EGP

Cash Flows From Operating Activities

Proceeds from Trade receivables (28) 3 240 784 503 3 169 135 431

Suppliers (29) (499 742 147) (1 194 813 877)

Paid salaries (30) (610 995 094) (539 721 517)

Marketable securities revenue (31) 18 304 108 8 740 339

Proceeds from Credit interest (32) 217 669 948 331 176 659

Tax and fees (33) (352 450 508) (436 996 834)

Other Proceeds (34) 307 767 439 572 908 344

Other payments (35) (13 081 256) (4 047 661)

Foreign exchange from valuation of currency -- 22 987 614

Cash Generated From Operating Activities 2 308 256 993 1 929 368 498

Cash Flows From Investing Activities

Payments for purchasing fixed assets (36) (362 881 708) (417 279 924)

Proceeds from selling fixed assets (37) 5 909 046 (457 700)

Proceeds from retrieval of contributions in marketable securities (38) 303 050 880 (256 509 663)

Payments for acquisition of marketable securities

(Treasury Bills) (39) (492 864 589) (91 650 553)

Cash (Used in) Investing Activities (546 786 371) (252 878 515)

Cash Flows From Financing Activities

Proceeds form shares -- 168 088 641

Paid dividends (40) (2 845 042 543) (1 578 369 747)

Cash Used In Financing Activities (2 845 042 543) (1 410 281 106

Net change in cash and cash equivalent during the Year (1 083 571 921) 266 208 877

Foreign currency valuation 102 189 940 --

Total Cash and cash equivalent at the beginning of the year 4 307 103 856 4 040 894 979

Total cash at the end of year 3 121 341 995 4 307 103 856

Letters of credit at cash equivalence 336 459 130 --

Letters of guarantee at cash equivalent 47 760 225 --

Cash and cash equivalent at the end of the Year 2 737 122 640 --

- The accompanying notes are an integral part of these financial statements.


direction


13



Notes to the financial statements as at 30/6/2019

First: Company Profile: Company Name: Alexandria Container and Cargo Handling

One of the companies of the Maritime and Land Holding Company Legal form: A subsidiary joint stock Egyptian company subject to the Public Enterprises Company law No. 203 of

year 91 and its executive regulation. On 16/1/2005, the Vice Chairman of the General Authority for Investment and

Free Zones issued a resolution No. 460 for 2005, to transfer the company’s branches, at the Alexandria and Dekheila

container terminals and the management of multi-purpose terminals, to operate under the free zone system.

The company's activity in the statute: The purpose of the company is to handle containers and goods in Alexandria and Dekheila ports at the site assigned

by the General Authority of Alexandria Port, transport of containers and goods to specific areas, transport to and

from the port for such type, management and operation of multi-purpose terminals within different ports and outside

of it, carrying out customs clearance activities, practicing real-estate investment activity in all its forms either by

itself or through an agent, individually or in association with others to obtain the necessary licenses to carry out such

activity, as well as, contracting with engineering consultancy offices, construction companies, and all public

companies in that regard. The company may invest in companies operating in other fields.

Other Notes:

The Company is committed to the environmental conditions in accordance with Law No. 4 of 1994 and amended

by

Law No. 9 of 2009, and the company is compliant with all environmental conditions in terms of:

- Keeping a record of the company's environmental footprint according to Annex (3) of the annexes to the

executive regulation of Law No. 4 of 1994.

- The company complies with the standards and specifications of liquid waste when discharged into the sea

according to Annex (1) of

Annexes to the Executive Regulations of Law No. 4 of 1994 where:

- The company owns 5 sewage treatment plants with a capacity of 170 cubic meters / day.

- The company owns 2 industrial sewage treatment plants with a capacity of 24 cubic meters / day.

- Safety disposal of solid waste and garbage through the General Authority for Sanitation and specialized companies.

- Reduction of air pollutants by continuous maintenance of the company's equipment whether old or new.

- Maintain the cleanliness of the floors and workshops and the use of relevant materials crucial to the

removing the oil effects on the floors.

- Usage of fire alarm system.

- Maintaining safety and security measures in the protection of workers and work areas.

- The company follows a self-sufficient rodent and insect control system.

In addition to the above, the company has three Types of ISO certificates: 1- Quality Management System ISO 9001-2015 valid 12/7/2021.

2- Occupational Health and Safety System ISO 45001-2018 valid until 28/4/2022.

3 - Environmental Management System ISO 14001-2015 and valid until 14/2/2020.

Auditor: Central Auditing Organization-Maritime Transport Accounts Control - 6 Talaat Harb St. –Alexandria.

Second: The most important accounting policies:

Basis of preparation of financial statements: The financial statements are prepared on the going concern basis, the accrual basis of accounting and the historical

cost convention.




14

Compliance with accounting standards: The financial statements are prepared in accordance with the Egyptian Accounting Standards issued by the

Minister of Investment Decree No. (110) of 2015 and the laws and regulations in force.

Changes in accounting policies: the accounting principles followed since 2005 separated the company branch of a free zone and a head office and

bear the head office some expenses and because of the observations of the Central Agency has changed the

accounting policy by the placement of the free zone from the head office with some expenses.

Foreign currency translation: The combination financial statements are prepared and presented in EGP, which is the Company's functional

currency.

Transactions in foreign currencies are recorded in EGP and gains and losses resulting from their revaluation are

recognized in the income statement. Purchases are denominated in foreign currencies at the exchange rate at the

date of purchase. , And any resulting currency differences (gains / losses) are charged to the income statement.

Tax Policy: The Company provides an annual tax return on the results of the head office. The company also has a branch

operating in the free zones system in Alexandria and Dekheila ports, which are not subject to all taxes and fees

applicable in the Arab Republic of Egypt according to the investment law no. 72 for the year 2017. They are paid

for all the company's transactions at the main office and the free zone branch.

Income tax: Income taxes due from the accounts of the Head Office are calculated in the light of Law No. 91 of 2005 and its

executive regulations and all subsequent resolutions and circulars and in accordance with the regulations and

instructions in force in the Arab Republic of Egypt and are recognized in the income statement of the Head Office.

Provision is made for potential tax liabilities after conducting the necessary study and in the light of tax claims.

Deferred Taxes: Deferred tax is the tax arising on the presence of certain temporary differences arising from the difference in the

financial period in which the value of certain assets and liabilities is recognized between each of the applicable tax

rules and the accounting bases on which the financial statements are prepared.

Deferred tax is recognized as an asset because it is probable that the asset can be used to reduce the tax due on the

Company in future years. Increase the assets within the limits of the above reduction.

Tax assets or deferred tax liabilities are calculated at the end of the financial year and at the balance sheet date. This

is reflected in the income statement for the period from 1/7/2018 to 30/6/2019. The profit for the year after tax is

EGP 1 833 292 220.17. The deferred tax of EGP 71 237.95 was added to become profit for the year amount of

EGP 1 833 363 458.17.

Fixed assets: Fixed assets are stated at the cost of acquisition of the asset and all expenses necessary to prepare the asset for

operation. According to Standard No. (10), paragraph (10), the entity evaluates its assets at cost as they occur and

includes the cost of acquisition and expenses subsequently incurred to add or replace part of the asset.

Depreciation of fixed assets is calculated on a straight-line basis when the asset is in a condition and in its condition

and the economic benefits of the entity are used.

Estimated useful life of the principal groups of fixed assets shown in the financial statements According to standard No. (10) Article (57) the estimated useful life of an asset is determined by its expected use by

the entity.

Estimated useful life of major groups: Buildings and constructions from 10 to 20 years

Machinery and equipment from 6.7 to 10 years

Vehicles & transport from 10 to 15 years

Office furniture and equipment from 5 to 10 years

A study is underway to review the useful life and residual value of the Vehicles and transport of the company in

cooperation with the Faculty of Engineering.

There are no restrictions on the company's assets against loans.




15

Impairment of assets:

The book value of the assets owned by the Company is reviewed at the balance sheet date to determine

whether there is any indication of impairment. If such indicators exist, the necessary studies are performed to

determine the expected recoverable amount.Impairment losses on assets are recognized if the book value of the asset

or its cash-generating unit exceeds the recoverable amount. Impairment losses are recognized in the statement of

income.

In case of an increase in the recoverable amount of the asset, the impairment loss is reversed only in the event that the

book value of the asset is not increased, which is determined after deducting depreciation and amortization and

without deducting the impairment of the asset.

Projects under Construction: It is the amount spent to construct or purchase fixed assets until they are ready for use in the operation and then

transferred to fixed assets and the projects are evaluated at cost.

Long Term Investments: Investments are recognized in the financial statements on acquisition cost less impairment losses, if any.

Inventory: Inventories of fuel, spare parts, materials and equipment are valued at cost and cost of withdrawing is calculated based

on weighted average.

Investments and securities traded: The carrying amount of current investments is determined based on the cost of acquisition and represents an

investment class.

Cash and cash equivalents: For the purpose of preparing the statement of cash flows, cash and cash equivalents include cash on hand, bank

current accounts and term deposits with maturities of three months.

Capital management objectives and policies: The company manages the capital so that it can cover the operating expenses, shareholders' objectives and financing

investments whether to cover replacement and renewal operations or to enhance its competitiveness through self-

financing without resorting to borrowing.

Reserves: They shall be set aside in accordance with the laws, regulations and decisions in force and adopted by the General

Assembly for the set aside and the purpose of each reserve and the reserve is using in accordance to a decision of the

general assembly.

Provisions: Provisions are recognized when the Company has a present legal or constructive obligation because of a past event,

and it is expected that it will require an outflow of economic resources to settle the obligation, with the possibility of a

reliable estimate of the amount of the obligation. A provision is reviewed at each balance sheet date and determined to

reflect the best current estimate. Provisions are recognized in accordance with Standard No. (28) Paragraph (14) of the

Egyptian Accounting Standards.

Transactions with related parties: The related parties are represented in the Parent Company, its subsidiaries, major shareholders and joint stock

companies. The Board of Directors approves the terms and policies of transactions with related parties.

Revenue recognition: Revenue from the providing services is recognized based on the extent of the transaction carried out at the end of the

financial period for which final accounts and financial position are required (Standard 11). where The following

conditions are rolling met:

• Accuracy of the measurement of the revenue when the service is fully implemented

• Achieve the economic benefits of the transaction

• Fully record the costs related to the implementation of the service performed.




16

Expenses: All expenses including operating expenses, general and administrative expenses and other expenses are recognized in

the income statement in the financial year in which they are incurred.

Dividend: Dividends shall be distributed at the end of the financial year after the approval of the financial statements by the

General Assembly at the end of the financial year in accordance with the provisions of the law (203).

Financial instruments risk

Market risk: The company works in the field of containers, which has a competition from companies operating in the same field,

and for this company is doing the necessary facilities for customers and purchase of new equipment to provide

premium services to attract new shipping lines.

Foreign currency risk:

The company maintains its balance in foreign currency to meet the financing requirements in the investment plans

projects to buy new equipment from abroad to avoid the risk of fluctuations in foreign exchange rates and deal with

several banks to obtain the highest return granted for deposits as well as credit facilities in financing. Taking into

consideration that the company revalue the foreign currency at The end of each quarter.

Interest risk

The choice is made between several banks that are dealt with to reduce the risk by linking deposits (Egyptian - USD)

for a period of only 1-3 months at the highest available rates.

Employee benefits

Social Insurance: The company provides contributions to the General Organization for Social Insurance and is calculated as a

percentage of the salaries of employees and the company's obligations are limited to these contributions, which are

charged to expenses when they become due.

End of service gratuity:

The Company shall be granted an end of service gratuity to the Company's employees the entitlement to these

benefits is calculated on the basis of the last salary and length of service of the employees equivalent to two and a half

months and a provision is made.

Dividend:

Employees of the company shall receive a dividend of not less than 10%. No more than the annual basic

wages shall be disbursed in cash and shall be avoided in the account of the Services Committee in order to

finance the projects of housing workers or other social services (Law 203 of the Business Sector

Companies).

Statement of Cash Flows:

The cash flow statement is prepared using the direct method.




17

1. Property, plant and equipment

The additions and disposals of Property, plant and equipment from 1/7/2018 to 30/6/2019 represented as follows:

Description Balance

1/7/2018

Additions Disposals Balance

30/6/2019

Accumulated

Depreciation

Net assets

Building and

constructions

88 587 093 32 452 348 225 681 120 813 760 32 024 898 88 788 862

Machinery and

equipment

15 576 771 4 009 047 150 158 19 435 660 8 172 487 11 263 173

Vehicles & transport 1 483 000 002 342 233 977 30 855 435 1 794 378 544 677 100 978 1 117 277 566

Tools 2 525 469 185 467 9 190 2 701 746 1 720 880 980 866

Furniture and

office equipment

20 689 886 5 031 726 590 087 25 131 525 12 253 781 12 877 744

Total 1 610 379 221 383 912 565 31 830 551 1 962 461 235 731 273 024 1 231 188 211

Accumulated Depreciation from 1/7/2018 to 30/6/2019

Net historical value of fixed assets:

• Equipment obsolete (Transportation) retained until disposal, its historical cost EGP 7.381 million.

• Depreciated equipment (Transportation) and still used, amounting EGP 199.395 million with its historical

cost.

Project under construction

2. Project under construction

Description Balance

1/7/2018

Additions Disposals Balance

30/6/2019

Buildings 65 834 325 54 393 416 19 486 682 100 741 059

Machines -- 4 267 419 4 228 419 39 000

Vehicles & transport 1 116 576 341 008 393 341 631 590 493 379

Tools 275 603 173 752 185 467 263 888

Furniture 153 172 4 133 802 4 018 786 268 188

Total 67 379 676 403 976 782 369 550 944 101 805 514

3. Advance payment

Description Balance

Advanced payment 22 377 214

Letters of credit 14 732 409

Total 37 109 623

4. Investment prperty

The land has been reclassified at EGP 2 412 898 to investment property at the head quarter.

Description Balance

1/7/2018

Depreciation Depreciation for

disposed assets

Balance

30/6/2019

Building depreciation 24 748 523 7 472 572 196 197 32 024 898

Machines depreciation 6 974 100 1 348 545 150 158 8 172 487

Vehicles & transport depreciation 570 827 156 133 782 257 27 508 435 677 100 978

Tools depreciation 1 586 555 143 515 9 190 1 720 880

Furniture depreciation 10 260 233 2 582 427 588 879 12 253 781

Total 614 396 567 145 329 316 28 452 859 731 273 024




18

5. Intangable assets

It recorded by cost less its amortization ( its amortized based on straight line method) and its useful life from 5

to 10 years and represented in:

• Capitalized expenditure: amounting to EGP 1.532 million, represents in right of use of el dekheila station assets.

• Assets non-owned unit: amounting to EGP 10.682 million, its expenditure related to) sewage works and soft

wear for the system). To serve its purposes.

Description Balance

1/7/2018

Additions Depreciation Balance

30/6/2019

Capitalized Expenditure 2 681 136 -- 1 149 606 1 531 530

Assets non-owned 3 385 306 7 776 615 479 609 10 682 312

investments

6. Investment in subsidiary: (Contribution ratio more than 50%)

NON

Investment in associate: (Contribution ratio more than 20%)

Company name

Balance 1/7/2018 Change Balance 30/6/2019

Contribution

percentage

Value No. of

shares

Value No. of

shares

Value No. of

shares

Mmphis for

Shipping Agencies

44% --

880 000 -- -- --

880 000

Amon for Shipping

Agencies

44% --

880 000 -- -- --

880 000

Abo sembl & Teba

for Shipping

Agencies

44%

--

880 000

-- -- --

880 000

Total -- -- 2 640 000 -- -- -- 2 640 000

investment in other companies: (Contribution ratio less than 20%)

Company name

Balance 1/7/2018 Change Balance 30/6/2019

Contribution

Percentage

Value No. of

shares

Value No. of

shares

Value No. of

shares

Egyptian Company

for Garages

(Torgoman Group)

6,544%

11 544 000

1 300 000

652 200

65 220

12 196 200

1 365 220

Egyptian Maritime

navigation Co.

2%

--

200 000

--

--

--

200 000

Total -- 11 544 000 1 500 000 -- -- 12 196 200 1 565 220 • The company's share in the capital of the Egyptian Company for Garages (Torgoman Group) has been

increased by EGP 652 200.

• The provision made during 2015/2014 was used for Memphis for EGP 12 961 387 and the remaining

investments of EGP 11 243 237 were deducted as extraordinary losses during 2014/2015.

• The value of the investment in Amount was deducted because of calculating the impairment of these

investments and deducting them from the value during the financial year 2008/2009.

• The value of the investment to Abu Sambl and Taiba was deducted as a result of calculating the impairment

of those investments and deducting them from the value during the financial year 2014/2015 amounting to

EGP 15 404 623.

• The provision made during 2014/2015 was used for the Egyptian Company for Maritime Navigation for EGP

7 214 272 and the remaining investments of 2 500 000 EGP were deducted as extraordinary losses.




19

• The value of the investment in the Egyptian Company for Garages (Torgoman Group) has been deducted as a

result of calculating the impairment value of these investments and deducting them from the value during the

financial year 2016/2017 amounting to EGP 1 456 000.

7. Lons & Long - term debt balances

An amount of EGP 9 004 700 loan without interest for Egyptian Maritime Company.

8. Inventory pricing and valuation

The Company measures the value of inventories on a cost basis in accordance with Standard No. (2), Paragraph

(9). The nature of the Company's inventory consists of spare parts required for maintenance of equipment, which

are specialized equipment whose spare parts are imported from abroad. Materials and equipment are items

required for cleaning and other operations. Pricing is carried at cost of purchase. Expenditure from inventory is

priced at an average weighted price on all different inventory items.

The balance of stagnant inventory on 30/6/2019 amounting EGP 420 000.

9. Analysis of Receivables and other Trading balance

Description Amount EGP

Other debit balances 65 826 414

Accounts payable to authorities 17 331 798

Insurance from others 1 325 899

Creditors for purchasing investments 831 412

Total 85 315 523

Other debit balances

It represents in amounts due from employees in the form of irregularities and damages caused by drivers and

employees of the company's equipment, the costs of training courses due from some employees, taxes due from

employees and advances to employees, deducted on monthly installments during the year.

10. Treasury bills

Treasury bills are used as a saving account for available cash balances in accordance with their rate of return and

long term higher than the rate of return on deposits and in accordance with the size of available cash balances. 20% withholding tax, 22.5% tax is added on the yield of treasury bills as indicated by the tax return from

21/2/2019 till 30/6/2019.

11. Cash and cash equivalents

The balance of cash and cash equivalents as of June 30, 2019 amounting to EGP 3 121 341 995 represented as

follows:

EGP

Banks- current account 157 264 056

Bank time deposit 2 579 858 584

Cover letters of guarantee 47 760 225

Deposit for letters of credit 336 459 130

For the purpose of liquidity, the amounts of letters of guarantee and deposits against latter of credit are excluded.




20

Equity

Authorized capital EGP 1000 million.

12. The movement of issued and paid capital.

The issued and paid capital EGP 744 876 700 the value of each share is EGP 00.50 per share. The number of

shares is (1 489 753 400). The Extraordinary General Assembly approved on 13/8/2018 to split the value of the

company's shares from (5) EGP/Share to (00.50) EGP/Share.

Description

No. Shares

Contribution

Percentage

Capital at

30/6/2019

Capital at

30/6/2018

Holding Company for Maritime

and Land Transport

824 865 720

55.369%

412 432 860

412 432 860

Alexandria Port Authority 590 400 000 39.631% 295 200 000 295 200 000

Free Trading 74 487 680 5% 37 243 840 37 243 840

Total 1 489 753 400 100% 744 876 700 744 876 700

13.Reserves

Legal Reserve

Part of the profits should be set aside by 5% of the net profit for the year to form a legal reserve until it

reaches 50% of the issued capital. The reserve shall be used according to a decision of the general

assembly in accordance with the proposal of the board of directors. The balance of 30/6/2018 included

the amount of EGP 162 509 861.4 represents in the value of the premium on the increase of free

trading shares to adjust the situation.

Statutory reserve

Part of the profits should be set aside by10% to cope with the increase in asset prices and to Support the

company's financial position in accordance with the provisions of Article (45) of the Company's

Articles of Association.

Reserves for project support

Part of the net profits of the company after the legal and statutory reserve shall be set aside and 5% of

the capital to shareholders and employees as a first share and a deduction of no more than 5% to the

members of the Board of Directors. This reserve shall be set aside to face the projects support. The

project support reserve amounted to EGP 374 704 167 on 30/6/2019 (before the dividend distribution

project).

Capital Reserves

The value of disposing of a fixed asset or compensating it shall be allocated to return the assets of the

company to what it was or buy new assets.

Analysis of other reserves

Description Amount The difference between the nominal value and the fair value resulting from the increase in

the contribution to the Egyptian Maritime Navigation Company.

6 997 952

Revaluation of foreign currencies in EGP. 6 541 024

The value of compensation of the National Insurance Company for a winch accident. 117 711

Increasing investments in agencies against free shares issued by shipping agencies in 2004. 3 300 000

The value of the assets of gifts supplied by the companies as well as the value of equipment

and winches supplied based on letters of credits.

1 027 843

Value of used Caravan as a gift was supplied from Emco Consulting Office 3 000

Reserve for the rise in the prices of fixed assets (depreciated assets before the

implementation of the decision of the Central Agency No. 204 of 2001 on the amendment of

the accounting system)

8 141 332

Total 26 128 862




21

14. Retained Earnings (losses)

The difference between previous years 'revenues and previous years' expenses has been dealt with

in retained earnings (losses) in the statement of financial position as of 30/6/2017.

The balance of the retained earnings as at 1/7/2018 amounted to EGP 31 343 872, in addition to the

previous years' income by EGP 15 742 754 and deducting the previous year’s expenses by

EGP 94 418 080 to be the balance at 30/6/2019 with the amount of EGP (47 331 454).

Analysis of previous year’s revenues


Revenue from previous years (Receivable) 14 261 491

The value of court rulings in favor of the company 147 184

Against the membership of the Board of Directors (Turjuman Group) 2 500

Agencies compensation 64 155

Rent Contner for previous years 1 592

The value of the 6 winches adjustment is settled with the supplier 792 593

Confiscation of insurance for supply orders 9 339

The value of reconciliation in cases filed by the company against the

power of Arkas

463 900

Total 15 742 754

Analysis of previous year’s expenses

Description Amount Employees Vacation 695 988

Maintenance expense 981 506

Employer share in social insurance 2 609 909

Storage expense 3 614 005

Judicial rulings expense 159 266

Accident compensation 596 045

Remuneration difference 1 710 995

Difference between Resolution No (800) & Resolution No (67) For Alexandria

Port Authority

1 424 294

Accrued sales tax 2015/2016 33 567

Deprecation of winch for the period of the accident 5 047 533

Commission for pervious years 60 078 984

Right of use of Port Authority 17 465 988

Total 94 418 080

15. Non-current liabilities

Long term loans

NON

Bonds

NON




22

Current liabilities

16. Provisions

Amounts at EGP

Description

Balance 1/7/2018 Adding during

the period

Used during

the period

No longer

require

Balance

30/6/2019

Trade provision 3 645 623 -- -- -- 3 645 623

Tax Provision 35 331 984 -- 8 247 884 2 300 386 24 783 714

Legal disputes

provision 59 897 788 28 868 246 1 280 000 7 910 592 79 575 442

Other provisions :

Provision To face the

differences of claims

of the Port Authority

24 719 089

--

--

21 519 089

3 200 000

End of service

Provision

8 898 571

14 039 959

9 495 580

--

13 442 950

Total 132 493 055 42 908 205 19 023 464 31 730 067 124 647 729

17. Suppliers and other credit balance

Description Amount

Suppliers 51 526 614

Accounts payable to Authorities and Bodies 41 368 885

Dividends payable * 100 000

Accrued expenses 249 752 215

Receivable 11 669 938

Other Credit balance 91 707 525

Total 446 125 177

Note that there are no short-term loans or over draft

Dividends payable: The remaining share of the board of directors for the previous financial year is 100 000

EGP and it distributed in the proposed distribution project for the financial year ending 30/6/2019.

18. Analsis of other credit accounts at 30/6/2019

Description Amount

Payable for purchasing assets 31 756 872

Deposits to others 10 084 487

Other credit accounts* 49 865 666

Other debit accounts 500

Total 91 707 525

The nature of the other credit account is deductible from certain employees (penalties, taxes accrued,

trade unions).




23

Related party transactions

In Thousands EGP

Company name Nature of relationship Transaction

size

Holding Company

for Maritime and

Land Transport

Shareholders in the capital of the company by 55,369% and there are

financial transactions are allowances to attend committees and rent

warehouse bushra and contribute to advertising

1 064

Alexandria Port

Authority

Shareholders in the capital of the company by 39.621% and there are

financial transactions affecting the financial statements and is in exchange

for the right to use the land and buildings and their cleaning fees

264 779

Abu Simbel & Taiba

Shipping Agencies Co

The company contributes to the capital of Abu Simbel and Taiba Shipping

Agencies by 44% Affiliated company There are financial transactions that are customs clearance

1 498

Memphis Shipping

Agencies

The company contributes to the capital of Memphis Shipping Agencies by 44% Associate company There are financial transactions that are reports of

dismantling and installing containers and renting containers

13 216

Amoun Shipping

Agencies Co

The company contributes to the capital of Memphis Shipping Agencies by 44%

Associate company There are financial transactions that are rent containers 36

Egyptian Maritime

navigation Company

The company contributes to the capital of Memphis Shipping Agencies by 2%

There are financial transactions that are loan without interest and rent

office.

9 058

Revenues

Gross profit is calculated on the basis of the deducted the operating income from the costs of

producing or purchasing the units sold

19. Investment income

Interest income is recognized on an accrual basis and in respect of the accounting period

On 21/2/2019 Law No. )10( of 2019 and Minister of Finance Decree No. )335( of 2019 on the treatment of

proceeds on treasury bills were applied as an independent vessel and loaded with its own costs of obtaining

consciousness.

Credit interest: EGP 196 751 545.

Income from treasury bills: EGP 18 304 108.

20. Other Income and losses


Capital gain 5 836 024

Profits from sale of waste 1 802 327

Losses of currency differences (100 419 666)

Total (92 781 315)

Currency differences are calculated on 30/6/2019 for EGP 100 419 666 which is charged to the income

statement.




24

21. Other revenues


Credit Rent 611 137

Compensation and fines 6 961 144

Revenue from selling brochures 900 527

Total 8 472 808

22. General & admenstrative esxpenses


Raw materials and spare parts 5 959 346

Salaries 128 474 648

Purchased services 18 425 680

Depreciation & amortization 9 547 657

Rent property 10 337 126

Indirect tax 17 820 258

Deduct finance expenses (493 149)

Total 190 071 566

23. Other Expeses


Up normal losses 30 693

Miscellaneous losses 10 915 423

Total 10 946 116

24. A statement of the tax position till 30/6/2019

First: Joint Stock Companies Tax The Tax Appeal Committee for the years 2007/2008 to 2011/2012 has been finalized and is being settled

with the collection department at the Tax Office.

For the years 2012/2013 and up to years 2015/2016 were examined and the claim was received in the

amount of EGP 21 294 807 and accordingly was allocated a tax provision of EGP 18 million to face the

aspects of the dispute with the tax authority and an internal committee was determined resulting in a partial

agreement was transferred to the appeal committee and awaiting the decision of the appeal committee.

The balance of accounts payable to the interests and authorities (Tax Authority - deduction from the source)

owes EGP 13 956 663.69 for the tax on the treasury bills and the withholding taxes from the source by the

customers It is settled immediately after the final assessment due to the change of tax bases where the

deduction is within the tax due for each year separately.

Second: salary taxes

The tax examination has been completed until 2012 and accounting, payment and examination for years

2013, 2014, 2015, and 2016 underway.

The tax settlement resulted in the existence of financial differences paid in excess of 2013 and 2018 by

EGP 1.413 thousand and EGP 2.241 thousand due to the amendment of the provisions of the income tax

law, which gave financiers an increase in personal exemptions as well as increasing the value of the tax

deduction for each tranche. Finishing the tax inspection for those years.




25

Third: stamp taxes

The examination was completed until 20/6/2015 and there are no claims or irregularities.

Fourth: Sales Tax

The sales tax inspection and accounting was finalized until 2015/2016 and payment was made.

Fifth: Real estate tax

On 30/6/2018, EGP 9 million used part of the provision allocated to meet the real estate tax claim.

Rights, privileges and restrictions on dividends

There is no.

Overdue Distributions of Preferred Shares

There are no preferred shares.

25. Dividends

Dividends are distributed at the end of the financial year after the General Assembly approves the financial

statements at the end of the financial year in accordance with the provisions of Law 203. The value of the

coupon is calculated by dividing the shareholders' share by the number of shares (1 489 753 400 shares).

The share of dividends represents the total distributable profit / number of actual shares.

The dividend per share is dividends: the shareholders' share in the dividends / actual number of shares,

knowing that the company's shares are ordinary.

26. Unrecorded capital commitments in books

Amounts in EGP Thousands

Amont Description

23 466 Supplie of (4) containers loading containers

1 754 Supply (11) medium voltage cells of type VACUUM

2 226 Establishment of an administrative building

708 (1) fork winch 5 tons

766 Transformer 1.6 Mega capacity 5.5 K 400 V

246 Development and upgrading of spare parts store

2 664 2 MVA Dry Transformer Including Prefabricated Copper Bars for TCI Station

2 )low pressure plate including (TC1 - TC4) plate

4 829 Establishment of a yard to increase the capacity of the refrigerator containers by 350

containers

1 200 Deepening of Sidewalk 96 with a length of 350 meters (second stage)

1 243 Repair important wharf 49-54

13 511 Deepening the process of dredging Sidewalk 96 (Suez Canal Authority)

22 786 Curtains for the installation of fenders

75 399 Total

27. Other Notes

- The Board of Directors has approved the financial statements for the year ended 30/6/2019 at

24/9/2019.

- The remuneration for the previous fiscal year was dealt with at the expense of retained earnings and

losses and the value of twenty-five months was raised under the deficit and the increase at the expense

of wages in accordance with the instructions of the Central Auditing Organization.

- As of the financial year ended 30/6/2016, the marketing expenses were included in the profit and loss

account and not in the trading account in accordance with the Egyptian Accounting Standard No. (1).

- Land: Valley Cotton Ginning Company, owner of the land of Al Balina, registers the common share in

the name of the Holding Company for Maritime and Land Transport under the Real Estate Registration

No. 410/2018 submitted on 3/12/2018 provided that the Holding Company re-registration of the

company.




26

The process of deepening Berth 96 (Canal Ports Company):

The Canal Company for Ports and Major Projects (executing the project) is currently executing the works

related to the operation.

-The General Assembly held on 4/4/2019 approved the amount of EGP 21.603 million for the repair of

Winch Berth 2010ZMPC at Dekheila Station from the capital reserve.

-The Extraordinary General Meeting held on 27/6/2019 approved the application of the cumulative

voting method to allow for proportional representation in the election of the Board of Directors.

-The judgment of the Court of Appeal in Alexandria was issued on 3/9/2019 No. 1621/94 BC, filed by Ikla

Coaster and Zioni Generali to contribute to the company to pay the amount of 919322.21 US dollars,

knowing that the company was not informed of the executive version of the fine prescribed by law.

- Renewal of the license for Dekheila Container Terminal is in process.

-The annual renewal issued by the Civil Protection Department of the company's branches is in process.

Letters of guarantee guaranteeing by deposits with a total amount of EGP 34 596 416:

• 10 000 EGP letter of guarantee in favor of the Egyptian Telecom Company. The value of international

calls expires on 1/2/2020.

• The amount of 40 000 EGP letter of guarantee for Misr Petroleum Company the value of the coverage of

oil withdrawals Expiry Date

• The amount of 903 829 EGP a letter of guarantee for Alexandria Port Authority value of 10% final

insurance for the lease of the sorted square 3 years expiry date 9/10/2019.

• An amount of 73 800 EGP for a letter of guarantee for Alexandria Port Authority with a value of 25%.

• The amount of 200 000 EGP letter of guarantee for the Port Authority value of 5% of customs taxes and

estimated taxes for the average storage capacity Expiry date 28/11/2019.

• The amount of 42 600 EGP letter of guarantee in favor of the Port Authority value of 25% minimum value

of the included trading for an area of 7 100 m 2 sorted yard expiry date 2/9/2019.

• An amount of 458 270 EGP letter of guarantee in favor of the Port Authority the value of the final

insurance for the right of exploitation 7 100 m 2 sorted expiry date 14/11/2019.

• The amount of 409 563 EGP letter of guarantee for the benefit of the Port Authority for the purpose of the

right to exploit an area of 5 060 m 2 sorted expiry date 10/11/2019.

• An amount of 33 900 EGP letter of guarantee for the benefit of the port authority for the purpose of

exploiting the area of 5 060 m 2 sorted expiry date 10/11/2019.

• The amount of 200 000 EGP letter of guarantee in favor of the Customs Authority Value of taxes and

estimated fees for the average expected storage value on an area of 7 100 m 2, 565 m 2 Expiry date

23/5/2020.

• An amount of 900 000 EGP letter of guarantee in favor of Alexandria Port Authority (Licensing

Department) for the activity of loading and unloading of container ships expiry date 15/5/2020.

• An amount of 2 762 784.40 EGP letter of guarantee in favor of Alexandria Port Authority, a value of 10%

insurance against the use of the rent of the yard for three years. Expiry date 17/9/2019

• An amount of 14 500 000 EGP letter of guarantee in favor of the General Authority of Alexandria Port

against a final insurance for the areas allocated to the company Expiry Date

• An amount of 1 464 000 EGP letter of guarantee in favor of a port authority in Alexandria regarding the

right to exploit an area of 7 257 m 2 in the third area and the insurance covered annual trading date

expires 9/11/2019

• The amount of 1 665 000 EGP letter of guarantee in favor of the General Investment Authority the value

of what is due to the company as a private free zone of obligations expiry date 5/1/2020.

• An amount of 3 800 000 EGP letter of guarantee in favor of the Northern and Western Region Customs.

• The amount of 1 616 157 EGP letter of guarantee for the benefit of Alexandria Port Authority, the value

of the final insurance for the use of two yards 7100 m 2, 5 680 m 2 until 27/11/2019.




27

• 3 800 000 EGP letter of guarantee to the Customs of the Northern and Western Region Value of taxes and

estimated fees for the expected average storage capacity on an area of 5 650 m 2 and an area of 7 100 m2

Expiry date 30/4/2020.

• An amount of 50 000 EGP letter of guarantee to the General Authority of Alexandria Port.

• The amount of 908 913 EGP letter of guarantee for the benefit of the General Authority of Alexandria

port value of 10% of the return for the use of 3 years the right to exploit an area of 5 942 m2 in the second

area of Dakhia and 25% securing the minimum annual circulation expiry date 5/7/2019.

• The amount of 400 000 EGP letter of guarantee in favor of Misr Petroleum Company the value of the

coverage of petroleum products withdrawals Expiry date 30/11/2019.

• An amount of 57 600 EGP letter of guarantee to the General Authority of Alexandria Port.

• The amount of 150 000 EGP letter of guarantee in favor of the customs of the northern and western region

in Alexandria.

• The amount of 150 000 EGP letter of guarantee in favor of the customs of the northern and western region

in Alexandria.

Note: - The decrease in distributable surplus is due to the following reasons:

First: Revenues

- The decline in the exchange rate of the dollar from 17.78 last year to 16.65 EGP this year, which

negatively impacted the revenues of the activity as the tariff is in of the dollar and the equivalent is

collected in EGP.

- Increasing the export containers of the current year from the previous year containers by 11%.

According to the State's policy of encouraging exports, the export tariff is 50% of the import tariff,

which negatively affected the revenues of the activity.

- Decrease in the revenues of securities and interest income by 35% from the previous year due to the

distribution of EGP 1.3 billion of reserves according to the decision of the General Assembly on

22/5/2018.

- Incidental revenue earned by the company as a result of the Alonchin accident the previous year.

Second: Expenses:

Increase in expenses by 15% over the previous year.

• Increased wages as a result of combining periodic and special allowances.

• Increased rentals of squares as a result of the implementation of resolution 800.

• Increase in indirect taxes as a result of an increase in storage services, Resolution 394 and the addition of

a container handling fee.

• Increase in the use of licenses due to the increase in the number of containers handled.

• Increase in depreciation expense due to the introduction of new equipment.

• Increase in burdens and losses from the previous year, including losses of currency differences by 100

million EGP as a result of the decline in the dollar exchange rate from 17.78 to 16.65.




28

Dividends account for the year 2018 / 2019

Amounts in EGP

Description Partial Aggregate

Distributable surplus before tax 1 837 580 667 Less: Retained losses (47 331 454)

Less : Income tax (4 288 447) Less : Capital gain (5 836 024)

Distributable surplus 1 780 124 742 Legal reserve --

1.5% sports activity (26 701 871) 10% Statutory reserve (178 012 474)

(204 714 345)

Remaining after legal, statutory reserves & sports activity 1 575 410 397 5% from Capital (first dividend) 37 243 835

Remaining after 5% from Capital (first dividend) 1 538 166 562 Less : Board of Directors remuneration 1 300 000

Remaining after first dividends & Board of Directors remuneration 1 536 866 562 0 % Reserve for project support --

Retained earnings --

Second dividend 1 536 866 562 Add : Surplus of Board of Directors remuneration for year 2017/2018 100 000

Remaining (Second dividend to shareholders & Employees) 1 536 966 562 Shareholders & Employees’ profit share

First share 37 243 835 Second share 1 536 866 562

Surplus of Board of Directors remuneration for year 2017/2018 100 000

Distributes as follows :- 1 574 210 397 90% shareholders’ share 1 416 789 357

10% Employees’ share 157 421 040 1 574 210 397


Accountability State Authority

Audit of Marine Transportation Department

6 Talaat Harb- Alexandria

29

AUDITOR’S REPORT

On the Amended Financial Statements

Of Alexandria Container & Cargo Handling Company

At 30/6/2019

To the Shareholders of the company

Report on the Financial Statements:

We have audited the accompanying financial statements of Alexandria Container and Cargo Handling Company

(An Egyptian subsidiary joint stock company subject to Law No. 203 of 1991) which comprise the statement of

financial position as of 30/6/2019 with a total assets amounted to EGP 5107,210 million and the statement of

income for the year then ended with a net profit amounted to EGP 1833,363 million, as well as the statements of

comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant

accounting policies and other explanatory notes.

Management's responsibility for the Financial Statements:

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

Auditor's Responsibility:

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Egyptian Standards on Auditing and in the light of relevant Egyptian laws and regulations. Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.





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Basis of Qualified Opinion: 1- The comparative figures in the statement of financial position as of 30/6/2019 appeared affected by the

dividends of year 2017/2018 departure from paragraph (12) of the Egyptian Accounting Standard No. (7)

Subsequent events.

The necessary correction had to be made.

2- The existence of weaknesses and severe deficiencies in the internal control system, financial auditing and

internal control procedures of the company, as well as the absence of a cost system adequately as a tool of

internal control and this was supported by the report of the Audit Committee dated 26/8/2019 for the period

from 1/7/2018 to 30/6/2019 and the results of the company's activities for the same period as the minutes of the

meeting page (4) paragraph (5) from the item first section “current activity” contains the following :

-"The Committee is of the view that the internal control system should be developed and amended to

allow for the assurance of the nature of income and expense and its classification in the right

direction and to make sure to review what is entered in the computer program from the reality of

documents and records with the need to develop the computer program to allow to be there an

accurate automated system with the need to inform the Audit Committee of what is being taken in

this regard."

The most important manifestations of shortages were:

a- The desegregation between the accounts receivables of the free zone and the headquarter (Alex. Station) in

order to be sure from the revenue of each of them.

b- The desegregation between the collections of the free zone and the Headquarter (Alex. Station)

c- Lack of separate serial numbers for the bills of the Free Zone and the Headquarter.

d- The existence of joint invoices for the same customer, including transactions related to the free zone and

transactions belonging to the Headquarter which does not allow to verify the validity of separation

between the free zone and the Headquarter, and indicates to the inaccuracy of the financial statements

prepared for the both of free zone and the headquarters. In a way that does not achieve the full separation

in accordance with the decision of the President of the General Authority for Investment and Free Zones

No. 4797/1 of 2004 issued on 28/12/2004 and contrary to what was stated in the company's letter No.

149 dated 28/2/2019 that the revenues and expenses of the free zone are separated from the Headquarter.

e- Manifestation of the revenue system, which includes "revenue, revenue review, customer accounts"

resulting in overlap between the revenues of the free zone and the Headquarter was the subject of our

report to the company for the documentary examination for the year 2018/2019 dated 10/7/2019 reported

the fiscal year 2018/2019 about EGP 82.204 million according to the count had been made by the

company and under its responsibility.

f- The company charged to the expenses of the Headquarter about EGP 48.359 million, equivalent to 31% of

the total administrative and financing expenses in Alexandria station "by the presentage of the number of

containers of Alexandria’s Headquarter to the total number of containers handled in Alexandria stationand

and the overlooked the share of the Dekheila station of those 486,272 containers In addition, the Board of

Directors has not been presented as the issuing authority for the financial statements in accordance with the

relevant articles of the executive regulations of Law 203 of 1991 on the public business sector, especially

as this procedure is for the first time. Regarding the non-submission to the Board of Directors as the

issuing authority of the financial statements in accordance with the relevant articles of the Executive

Regulation of Law 203 of 1991 on the public business sector, especially as this procedure is for the first

time and without study in the light of absence of a cost system as it was conducted after the inclusion of

about EGP 82.204 million referred to in the above paragraph, which could not verify the amount.

g-The absence of an annual cap on expenses without documents, which leads to a lack of control

over those expenses.





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h-It was determined that some supplies and spare parts were purchased under account statements at the

Dekheila and Alexandria container stations from the standby loan and originally, the purchase should be

through a tax invoice in accordance with Article No. (12) of the Value Added Tax Law No. 67 of 2016,

Article No. (13) of the Implementing Regulations thereof, Article 78 of Law No. 91 of 2005 on the

General Tax on Income and Articles 99 bis 1, 99 bis 2 of the executive regulations of the same law.

i-The existence of some cases of theft at Dekheila and Alexandria stations, for example, the loss of 4 laptops

for EGP 42 872 from the materials and supplies store in Dekheila on 23/1/2019, MSC Power of Attorney

issued a statement against the company under No. 11 h on 17/12/2018 for steal 2 compressors of 3

refrigerator containers from al-Fawarej Square in Dekheila, loss of 2 hydraulic jacks, 2 large torque

wrenches, 2 switches with drill bits from the container for the maintenance of the pavement cranes in the

yard issued on 19/8/2018 at Alexandria Container station.

The company's reply in its letter No. 5202 dated 25/9/2019 and received for management under No. 381

dated 26/9/2019 in response to the detailed report of the preliminary financial statements for the same

year and notified to the company under No. 303 dated 5/9/2019 stated that "The company is in the

process of developing the internal control system and is contracting with one of the specialized

advisory bodies in this regard."

The necessary procedures should be taken quickly to address the deficiencies and weaknesses with

the development of the internal control system and the cost system to achieve control and follow-up

performance and take into account the impact of the above on the accuracy of the financial

statements of the Free Zone and Headquarter as of 30/6/2019 due to the impact of the accuracy of

the calculation of the fees payable to the Investment Authority in accordance with Law 72 of 2017

and the tax due on the headquarter in accordance with Law 91 of 2005 on the general tax.

3- The financial statements are affected on 30/6/2019 by the issuance of Administrative Order No. 616 of 2019

on 15/9/2019 to form a committee to calculate the revenues and expenses of the external yards for the

previous five years “the period of tax limitation” from 2013/2014 until 2017/2018, on the basis of our

observation regarding the inclusion of revenues of the Headquarter within the revenues of the free zone

amounted to EGP 82.204 million for the fiscal year 2018/2019, and the company's response to the detailed

report on the audit of the financial statements on 30/6/2019 included that, based on the results of the

Committee's work, the necessary adjustments will be made to the income statements of the Free Zone and

Headquarters, as well as the amendment of the tax returns amended for the years referred to.

The amended income statements shall be submitted to us after being approved by the Board of

Directors as the issuing authority of the financial statements in accordance with the relevant articles of

the Executive Regulation of Law 203 of 1991 on the Public Business Sector and the tax returns

amended for the five years in the light of the results of the Committee's work in accordance with the

provisions of Article 91 of Law 91 of the year 1991. 2005 so that the company does not fall under article

133, paragraph 5, of law 91 of 2005 added by law 11 of 2013 so that the auditor’s report on the

amended tax return for those years can be issued.

4- We had not been provided by a certificate from the General Authority for Investment in the validity of the

balance of $ 2.855 million, equivalent to about EGP 47.530 million where the confirmation was sent by letter

of the company No. 5083 on 19/9/2019 as a result of calculating the fee of the Commission in accordance

with Article No. 35 of Law No. 8 of 1997 and its executive regulations and not in accordance with Law 72 of

2017 until the expiry of the license to practice the activity in accordance with the letter of the General

Authority for Investment No. 2498 on 12/5/2019 and the advisory opinion of the Council of State file No.

37/2/802 on 10/2/2019 in this regard.

We must provide by a certificate from the General Investment Authority confirming the

balance on 30/6/2019.





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5- The Company's mistake in its practice of calculating the fees of the Investment Authority every six months

by calculating the value of the dollar according to the exchange rate at the end of the financial period. Or

average price during the year in accordance with paragraphs (39 and 40) of the Egyptian Accounting

Standard No. (13) the effect of changes in foreign exchange rates resulting in the existence of a difference of

about 350 thousand dollars owed to the General Investment Authority as follows:

due to the General

Investment Authority

Fee in accordance with

Standard No. 13

Fee in accordance with

the Company's account

Description

$ 341 thousands $ 1.982 million $ 1,641 million 2016/2017

$ 9081 $ 3 828 637 $ 3 819 556 2017/2018

The management has previously raised this with its financial position reports on 31/12/2018, financial

position on 31/3/2019 and the latest detailed report on the preliminary financial statements on 30/6/2019 and

the company stated in its responses to the financial reports and the documentary examination report no. 318

dated 18/6/2019 that the company is not subject to the Egyptian Accounting Standard No. (13) As the

company applies only one condition of the scope of the standard while the application of the standard

requires the availability of 3 conditions a B C"

This is a disagreement by the company of paragraph (16) of the Egyptian Accounting Standard No. 1

presentation of financial statements, and then the company reported its letter No. 5202 on 25/9/2019

received to the Department under No. 381 on 26/9/2019 in response to the detailed report on the preliminary

financial statements on 30/6/2019 which notified to the company under No. 303 dated 5/9/2019 that it is in

accordance with paragraphs (19) and (20) of the criterion (1) that it will not apply the standard and disclose

it in the notes.

In this regard, we note that the conflicting responses of the company and its justifications in this

matter have no application in relation to the rights of the Investment Authority as the sovereign

resources of the State in accordance with Law No. 72 of 2017.

Revenue in foreign currency (which is the basis for calculating the fee of the Investment Authority)

should be recalculated in compliance with the Egyptian Accounting Standard No. (13) and in the light

of the fatwa of the State Council file No. 37/2/802 dated 10/2/2019.

6- The company did not calculate and pay the fees due to the General Authority for Investment on about EGP

790.535 million , which were included in the reserve currency differences shown in the retained earnings

after the exchange rate liberalization on 3/11 /2016 according to the decision of the Minister of Investment

No. 16 of 2017, of which about 750 million pounds have been distributed according to the General

Assembly resolution dated 23/5/2018 as it is realized profits of currency differences in accordance with

paragraphs (4 and 3) of the Investment Authority letter No. 10566 dated 10/10 According to Article 42 of

Law 72 for the year 2017 and Article 105 of the Executive Regulations of the same law on the value of

currency differences.

The due to the Investment Authority shall be paid in accordance with the provisions of the law in this

regard and shall be taken into account on the specific accounts and financial statements.

7- The company used to not include what is related to the Headquarter “Alexandria station" from the profits of

currency differences resulting from dealing with customers of the Headquarter "external yards" in the tax

return as a result of not separating the customers of the Headquarter "Alexandria station" from customers of

the free zone of the same station. It should be noted that the gains of currency differences as a result of the

liberalization of the exchange rate on 3/11/2016 resulted in about EGP 791 million of which about EGP 750

million were distributed in accordance with the Assembly's decision on 23/5/2018.

Correction should be made to preserve the sovereign resources of the state.





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8- The amount of tax due on 30/6/2019 according to the tax return is about EGP 4.288 million and we conclude

the followings:

a-About EGP 1.270 million represents in the amount used from the provisions for the benefit of Egypt Air,

Majid Mohamed Sobhy, heirs of Imad Rashwan as a result of the issuance of court rulings against the

company for errors belonging to one of its affiliates, which is not a tax deductible in accordance with

paragraph 2 of Article 24 of Law 91 for the year Article (24) stipulates that "from costs and expenses

which are not deductible" fines, financial penalties and compensation on the tax payer because of an

offense he did or committed by one of its affiliates or wilful misdemeanour. "

b-Provisions no longer required with a total amount of EGP 31.731 million, including about EGP 17.466

million, representing differences against the use of land allocated to the company at Alexandria and

Dekheila stations. The amendment was carried out on the free zone and was mistakenly included in

provisions that were no longer required for the Headquarter.

c-About EGP 274 thousand has not been added to the corporate profit base and represents the value of the

costs associated with the treasury bills calculated according to the provisions of Law 10 of 2019 issued

on 20/2/2019 and the Minister of Finance Decree No. 335 of 2019 issued on 16/5/2019.

The tax return should be amended to comply with the provisions of Law 91 of 2005 and take into

account the impact on the financial statements for the issuance of the auditor's report.

9- Related to the above, there are errors in the tax return for the year 2017/2018 represented in charging

expenses to the Headquarter with an amount of EGP 12.425 million belonging to the free zone as follows:

• About EGP 9.247 million representing the value of the real estate tax on real estate in the free zone.

• An amount of EGP 2 million royalty fees paid to the Customs Authority at the company's stations in

Alexandria and Dekheila.

• About EGP 1.178 million claims for customs evasion in favour of the Customs Authority, as well as

violations of paragraph 2 of 24 of Law 91 of 2005.

The amendment of the financial statements of both the Free Zone and the Headquarters should have

been made taking into consideration at the conclusion of the committee formed by Administrative

Order No. 616 of 2019 referred to above in the light of the above in order to preserve the sovereign

resources of the State.

10- The company issues invoices to customers with the value of storage service "grace period" zero and without

charging the customer with the value added tax number 67 for the year 2016, despite the issuance of the

invoice, which leads to the realization of the incident originating the tax in accordance with the provisions of

Article (5) and Article (1).

The company responded to the detailed report on the financial statements on 30/6/2019 "The Company is

editing a document" was mistakenly called the zero bill and this procedure will be adjusted in accordance

with the business requirements of the company"

The tax research sector should be consulted in this regard.

11- The company did not study the impairment of about EGP 9.005 million of the good loan granted to the

Egyptian Navigation Company with the approval of the Holding Company for Maritime and Land Transport

during the period from 11/4/2017 until 31/3/2019, which does not meet any guarantees despite the inability

of the company to pay about EGP 7.005 million of it expired deadline for payment on 15/5/2018 and despite

the approval of all shareholders of the Egyptian Company for Maritime Navigation to freeze its activities

due to the company's current situation of the poor technical condition of ships and poor efficiency of land

and sea workers and lack of liquidity with the increase of indebtedness due to them, as per the Board of

Directors Resolution No. 122 dated 17/7/2019.

Liability shall be determined and the impairment of such indebtedness considered and the necessary

adjustment made in light of the impact on the Company's financial statements.





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12- The total outstanding balance on customers as at 30/6/2019 was about EGP 191.240 million and it was

found the followings:

• The company did not provide us with an analytical statement of customer balances on 30/6/2019 including

the billing numbers and values due to the company with these customers, despite requesting it in writing on

21/7/2019.

• Clients make payments from under the account, resulting in the inability to identify the invoices that have

been discontinued and which may be disputed with the client and not disclosed by the company's accounts.

• The company does not enter into contracts for the handling of filled containers with major customers that

specify the obligations and rights of each party, such as Arcas and Maersk

• The company does not have a credit regulation specifying the periods granted by the company to

customers to repay the debts owed to them as well as the late fines due in case of non-payment within the

specified periods.

• The amount of indebtedness due from Mediterranean power of attorney on 30/6/2019 amounted to EGP

74.064 million, representing 38.73% of the total indebtedness due from customers on 30/6/2019,

corresponding to 4 letters of guarantee amounting to EGP 1.5 million.

• The irregularity of Mediterranean in payment, where the collection rate during year 2018/2019 ranged

between 4.15% and 70.8%, although the exchange permits received from the agencies of the company

included that there is no objection to the agent to disburse the policy covered where the agency fees and

storage expenses were paid.

• Insufficient value of letters of guarantee obtained by the company from customers to cover the value of

indebtedness due to these customers on 30/6/2019.

The reasons for this should be examined with the need to set credit limits and set periods for the

collection of the company's dues, taking into account the compatibility of the letters of guarantee with

the debts owed by customers.

13- The existence of outstanding debts for years about EGP 2.622 million , some dating back to 1998 and filed

cases, according to the statement submitted by the company offset by provision of about EGP 3.646 million

with an increase of about EGP 1.024 million.

The necessary adjustment shall be made to cancel the increase in the amount of the provision and to

inform us of the status of the issues related to these debts.

14- The receivables included about EGP 131 thousand due from National Shipping Company on 30/6/2019,

while the confirmation received from the client confirm that the outstanding balance is zero.

The reasons for this should be considered and reported.

15- The insurance account with others included about EGP 1.194 million, insurance payable with the General

Authority of Alexandria Port, while a certificate was received from the General Authority of Alexandria

Port on 4/8/2019 stating that the value of such insurance is about EGP 662 thousand with a difference of

about EGP 532 thousand.

The reasons for this should be examined and the necessary adjustments made and reported.

16- The capital reserve account was reduced by mistake by about EGP 21.603 million against the reduction of

the investment spending account with the same amount of repairing the berth winch No. 2010 referred to

above. On 4/4/2019, the general assembly of the company approved the reduction while the amount

represents the cost of repairing and not overhauling according to the memorandum submitted by the

company and the Accountability State Authority qualified on the general assembly decision based on the

followings:





35

This decision would not reflect the income statement as it is, which would, in accordance with

paragraph 41 of the Egyptian Accounting Standard (5), “the financial statements shall not be

considered to comply with the Egyptian accounting standards if they include errors committed with a

view to reaching a specific presentation of the financial position of the entity or its results. Or cash

flow, etc. "

The repair of the winch is included in the amended investment plan of the company in accordance with

the decision of the general assembly of the company on 23/5/2018.

The capital reserve is a capital resource used only to finance fixed assets.

Moreover, what is considered as an indirect distribution of the capital reserve in contravention of

Article 39 of the Executive Regulation of Law 203 of 1991, which stipulates that "the profits realized

by the Company as a result of disposing of an asset or fixed compensation shall not be distributed and

the company form from these profits reserve to restore their assets to what they were, to buy new fixed

assets or to pay off the company's debts.

The general assembly of the company had to take into account that the company is subject to law 95

of 1992 and its executive regulations on the capital market and is committed to the application of the

Egyptian accounting standards in accordance with article 45 of the rules of registration and deletion

issued by the decision of the Board of Directors of the Financial Supervisory Authority No. 11 of 2014

and amended by resolution 122 of 2017 The correction must be made by uploading to the income

statement.

17- The comparative figures are affected by about EGP 243.825 million in the current activity in the previous

year, the amount of what has been lost in the accident. The berth numbered 2010 and 2011 at Dekheila

Container station on 11/11/2017 obtained by the company from COSCO Shipping Agency for the ship

causing the accident. This is without cost, while its accuracy compensation and fines, which reflected on the

inaccuracy of the comparative figures , as well as it represents what has been lost from gain since the date of

the incident on 11/11/2017 and for a period of 12 and a half months ending on 30/11/2018.

Comparative figures have to be adjusted in accordance with paragraphs 41 and 42 of IAS 5

Accounting Policies and Changes in Accounting Estimates and Errors, subject to disclosure in

accordance with paragraph 49 of the same Standard.

18- Fixed assets included about EGP 105.306 million book value of the berth Winch 2010 at Dekheila Container

station on 30/6/2019, which had been added to assets on 19/6/2017. The winch No. 2010 and 2011 had an

accident on 11/11/2017 and the company received compensation of $ 19.9 million From COSCO Shipping

Lines Egypt, as the shipping agent of the ship that caused the accident, about 16.9 million dollars to buy 2

new winch according to ZPMC's price offer and the remaining $ 3 million is the value of the insurance for

the winches and lifting the engagement and the we found out the followings:

• Do not exclude the berth winch No. 2010 from the records despite obtaining compensation and the

company’s waving from about 449 thousand dollars the value of the damage caused to the electric cables of

the cranes 5, 7, 8 and damage to the crane bars pavement in the accident area and damage the stopper in

exchange for retaining the two damaged winches No. 2011, 2010.

• The capital reserve included the full amount that the company received as compensation for the winch

2010 as a capital gain of about EGP 150.241 million, while its accuracy was EGP 31.977 million, although

the book value of the winch was not excluded from the records.

The necessary adjustments should have been made to exclude the winch No. 2010 from the records

and to include the amount of the compensation awarded and take into account the impact on the

financial statements.





36

19- Conformity between the company and the General Authority of Alexandria Port on the credit balance of

about EGP 19.858 million on 30/6/2019 had not been made and the last conformity with the Authority was

for the year 2013, although the value of the differences between the company and the port authority

amounted to about EGP 32.952 million, according to the statement submitted by the company a provision

had been formed by the same amount - of which about EGP 3.200 million in the account of other provisions

and the remainder is about EGP 29.752 million in the account provisions for litigation. The dispute between

the two parties has not been resolved despite the authorization of carrying out the work of loading and

unloading works issued by the Authority to the company No. 1 of 2015 and approved by the Minister of

Transport on 8/9/2015 that it was agreed to reconcile and settle all outstanding technical, financial and legal

situations between the two parties within one year from the date of The Minister of Transport approves the

Authority's Board of Directors' decision to renew the Company's license.

The necessary conformity shall be made and the disputes with the General Authority of Alexandria

Port should be settled quickly.

20- Provision for legal disputes amounted to approximately EGP 79.575 million according to the statement

submitted to us by the company, the statement did not present the litigation degree for each claim separately

along with the potential for gain and loss for each claim in order to verify the validity of the provision made

in accordance with the requirements stipulated in paragraph (14) of the Egyptian Accounting Standard No.

(28) Provisions and assets and contingent liabilities.

We note that the company has separated the provision according to the activity of "free zone, headquarter"

for the first time this year based on the detailed report mentioned above because of its impact on the tax

return of the company.

Moreover that the company provide us with a statement of labour claims attached with the reply to the

detailed report by the company letter No. 5202 on 25/9/2019 and received by the management under No.

381 on 26/9/2019 in response to the detailed report of the preliminary financial statements for the same year

and notified to the company under No. 303 dated 5/9/2019 which we are not assured with the accuracy of

the statement of legal disputes that have provided to us by the company.

A detailed study of the provision is required in order to judge its adequacy.

21- The tax provision amounted to about EGP 24.787 million, of which EGP 18 million belonging to corperate

tax provision for the years 2012/2013 until 2015/2016 the interanal committee concluded by its minutes

dated 19/5/2019 that the taxble amount in dispute is as followings:

Total 2015/2016 2014/2015 2013/2014 2012/2013 Statement

64 339 688 9 198 810 23 817 561 11 549 743 19 773 574 Taxable amount

14 476 429 2 069 732 5 358 951 2 598 692 4 449 054 Tax

From the above, there is an increase in the provision by about EGP 3 523 571.

They should have been excluded from the provision in exchange for provisions no longer intended.

Qualified Opinion

Except for the effect of matters referred to in the basis of qualified opinion paragraph, in our opinion, the

financial statements mentioned above, present fairly, in all material respects, the financial position of

Alexandria Container and Cargo Handling Company as of 30, June 2019, and its financial performance and

its cash flows for the year then ended in accordance with Egyptian Accounting Standards issued by the

decision of the Minister of Investment No. 110 of 2015 and in the light of the relevant Egyptian laws and

regulations.





37

Without qualifying our opinion, it has been shown that:

The physical count of fixed assets and inventory and matching its results the records on 30/6/2019 had been

made by the company and under our supervision within the limits of available resources, depreciation was

calculated in accordance with the rules and rates as in previous years.

The important notes are as followings:

1- The proposed dividend did not include the elimination of the balance of retained losses shown in the

statement of financial position by about EGP 47.331 million from the dividend payable balance, which

resulted in the incorrect of the dividends and earning per share and the incorrect of dividends proposed

in the report of the Board of Directors prepared for presentation to The general assembly of the

company.

Corrections need to be made as it affects the correct dividends

2- Net profit in the income statement by about EGP 1 833.363 million, while in the profit and loss account

by about EGP1 833.292 million, with a decrease of about EGP 71 thousand , the value of deferred tax.

It should be remedied.

3- The company did not achieve any return on investments in other companies by about EGP 90.214

million, of which about EGP 78.014 million have been impaired in previous years and the remaining

about EGP 12.196 million represents investments in the Egyptian Integrated Projects Company (El

Torgoman Group) and the total losses according to its financial statements in 31/12/2017 about EGP

70.461 million.

The economic feasibility of these investments should be studied.

4- The total value of the investment in the Egyptian Company for Maritime Navigation was about EGP

9.714 million, while a certificate was received from the company on 7/8/2019 that the value of the

investment is only EGP 2 million.

The reasons for this must be provided to us.

5- The balance of investment property amounted about EGP 2.413 million, the value of the company's

common share in the land purchased in the reins of Balina, Sohag. The Company's Ordinary General

Assembly Resolution was issued on 27/4/2008 approving the company's contribution to purchase the

land to establish schools to serve the citizens with the consideration of this contribution as an investment

property, although the amount does not represent a fixed asset or investment property and up to date, the

registration of this land in the name of the company has not been completed.

We recommend that the land be registered quickly in the name of the company and submitted to

the general assembly of the company for its affairs as the authority that agreed to contribute.

6- Spare parts inventory included stagnant items from previous years, the value of which was determined

by the company about EGP 421 thousand , and its value has not been estimated on the basis of cost or

net realizable value, whichever is dis agreement with paragraphs 9, 28 and 34 of IAS 2 Inventories

The provisions of the standard should be adhered to in this regard with the economic disposition of these

items so as not to represent disabled money.

7- Wages amounted to EGP 612.226 million at 30/6/2019, representing 51% of the total costs and expenses

and it was included the followings:

About EGP 123.915 million the value of the incentive rate of performance record during the period

from 1/7/2018 to 30/6/2019, where the value of revenues of the current activity during the same

period about EGP one billion, while the company set the standard performance rate of EGP 450

million annually on an average basis of current activity revenues during the ten years from

2004/2005 to 2013/2014 and according to the decision of the Board of Directors No. 161 dated

17/8/2016 to calculate the incentive to exceed the rate of performance measurement (increase

production) by 5% of the increase in revenues achieved, which ensures the Board of Directors to





38

reconsider this rate in the light of various variables, most notably The exchange rate on 3/11/2016

and tariff increases. The company said in its reply to the document report submitted to the

company under No. 242 dated 10/7/2019 in its letter No. 4840 dated 8/9/2019 it will review the

benchmark performance rate in a timely manner and in accordance with the decision of the Board

of Directors

We recommend reviewing this rate in light of the significant development in the company's

revenues, which represents 650% of the value of the benchmark performance rate set by the

company to motivate employees to increase production and raise their motivation at work.

About EGP 59.200 million the value of incentive bonus (21 months) for employees of the company for

the period from 1/7/2018 to 30/6/2019 entry No. 4433 on 30/6/2019 according to the approval of the

Board of Directors of the Company at the 8th session note No. 106 dated 18/6/2019 like the previous

year where the employees were granted a bonus of about EGP 51.900 million in document No. 4376 on

24/6/2018 and the administrative regulations of the company did not include that in addition, the

memorandum presented included "awarding remuneration to employees of the company who

participated in achieving outstanding results for the company during the period from 1/7/2018 to

30/6/2019", despite that wages were charged by about EGP 69.666 million the value of the reward for

excellence for the fiscal year 2018 / 2019.

The company said in its response to the detailed report referred to earlier that "the authority to approve

the remuneration of the competence of the managing director to grant a bonus to employees for their

efforts in the work during the year was presented to the Board of Directors, which was approved

unanimously ... etc.".

In this regard, we refer to the State Council advisory opinion stipulates that “incentive bonus and

incentives for the production of one sex as both an incentive while the latter is regulated by

predetermined regulatory controls applicable to objective cases and the first is of an individual nature,

and none of these constitutes a model that accepts replication on the basis of certain conditions or

Specific cases in accordance with objective controls set in advance and except for that they agree on the

origin of the leave in terms of the nature of grants and the area of eligibility.

(Fatwa No. 1289 dated 29/11/1997 File No. 86/4/1355 session 22/10/1997)

The company's general assembly shall be submitted for approval.

8- The company bears about EGP 12.191 million representing an incentive value exceeding the benchmark

performance rate - decided by the company's board of directors decision No. 161 dated 17/8/2016 on the

amount of EGP 243.825 million (total what lost from income), which was mistakenly included in the

revenues of the current activity last year and its accuracy was compensating and fines as the company

obtained it as a result of the accident and the construction of the Winches’ berth No. 2010, 2011 at

Dekheila Container station on 11/11/2017.

Liability should be determined.

9- Company's violation of Article (2) of the Minister of Business Sector Decree No. (11) of 2016 issued on

9/5/2016, Article (111) of the Social Insurance Law No. 79 of 1975 where the company hires some

workers referred to the pension to perform some work monthly and regularly for about EGP 27 thousand

per month and without a contract with them.

The provisions of the decision of the Minister of Public Business Sector and the Social Insurance

Law in this regard shall be complied with.

10- The company did not pay the value of donations directly to the bodies that have been approved by the

General Assembly of the company to donate them, where some of them are paid to suppliers of supplies

requirements for these agencies amounted to about EGP 1.105 million.

The value of donations must be paid directly to the parties mentioned in the General Assembly

resolution of the company in accordance with internal control.





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11- The number of neglected containers inside the yards at Alexandria and Dekheila stations during the

period from 1/7/2018 to 30/6/2019 was 1621 containers according to the company statement, some of

which dates back to 1992.These data included most of the names of the agencies and their stakeholders.

Refer to those agencies to withdraw them and pay the company's dues for them as the accumulation and

non-withdrawal due to the non-activation of the provisions of articles (126, 128, 130) of the Customs

Law No. 66 of 1993 and its amendments, which resulted in the existence of unused storage areas for

which the company bears the value of the right of use in addition to wages Labor allocated to follow up

the movement of those containers

Agencies and their stakeholders shall refer to such containers for withdrawal and payment of the

Company's dues thereof and take the necessary measures towards the speedy enforcement of the

provisions of the Customs Law and its executive regulations in this regard.

12- Renting an area of 7180 m 2 on berth 55 on 17/8/2017 in Alexandria port from the Arab company for

loading and unloading with a rental value of 10 million pounds annually. The company response came

in its book no 306 dated 9/6/2019 based on our book dated 18/4/2019 The yard to reduce the congestion

of containers and increase the speed of performance to serve customers in the main terminal and we

were unable to exploit them optimally because the holding company was unable to obtain a customs

deposit license from the customs according to what is agreed upon. This deposit may only be licensed to

the original tenant, which made it impossible to exploit the yard. Optimal utilization despite our

assistance In overcoming all procedural and financial obstacles, such as paying fees to the Customs

Authority to allow us to store empty containers until the completion of the procedures of licensing the

yard as a deposit. Due to the difficulty of this matter, the company decided to terminate this agreement

and the yard is in the possession of the Arab Company for loading and unloading as of 1/7 / 2018.

Liability should be determined.

13- The company did not claim Canal Company for Ports and major projects implemented for the project of

deepening the berth 96 at Dekheila Container Terminal with a gain from the delay due to the

implementation of the project, which was scheduled for completion on 29/10/2016, according to the

minutes of the Ordinary General Assembly meeting on 9/2/2017.

We must provide the reasons for the delay in the implementation of the first phase of the project

and refer to the executing company for the value of lost profits.

14- The company did not pay for the use of licenses to carry out the activity of loading and unloading in the

common warehouse at Dekheila Container Terminal, which is located within the boundaries of the

terminal, which belongs to the activity of the headquarter of the company in violation of Article No. 11,

paragraph 2 of the Minister of Transport Resolution No. 800 of 2016, which stipulates in item 2.2 to pay

EGP 4. Every ton of general cargo.

The reasons for this shall be communicated to us and the provisions of the said resolution shall be

complied with.

15- The company did not pay 1% of its net profits to the Training Financing Fund in violation of Article 134

of the Labor Law No. 12 of 2003.

The reasons for this shall be communicated to us, and the provisions of this law shall be complied

with due to its impact on the Company's financial statements.

16- The allocation of cars 7814 and 6933 to Mr. Chairman of the Board of Directors and Managing Director

in accordance with the statement submitted by the company and ended the fatwa management fatwa

head of the Republic and the Presidency of the Council of Ministers No. 75/21/2167 Record No.

331/2005 paragraph (c) to the inadmissibility of granting the heads of the boards of directors of

companies subject to the law of public business sector companies No. 203 of 1991 in kind benefits

"treatment - cars ...." in addition to their lump sum salaries.





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The fatwa or the matter must be adhered to the General Assembly of the Fatwa and Legislation

Departments of the State Council and report.

17- Reassignment of the company to a legal advisor for some time from the State Lawsuits Authority at the

request of Mr. Major General Chairman of the company and the managing director and after the

approval of His Excellency the Chancellor and the Minister of Justice, which is renewed annually, as of

10/11/2016 until 9/11/2019 and the following was found out:

There is no provision for this by the Public Business Sector Law No. 103 of 1991 or the Law of Joint

Stock Companies No. 159 of 1981.

The presence of a legal department in the organizational structure of the company.

The company stated in its letter No. 4840 dated 8/9/2019 in response to the management letter No. 242

dated 10/7/2019 regarding the documentary examination that the competent person to assess the extent

of the company's need for legal counsel or not is the company and that has been working since the start

of the company

In this regard, Article 11 of the promulgation Articles of Law No. 102 of 1991 stipulates that "The

aforementioned companies may request the State Council, through the competent minister, to give a

reasoned opinion in matters relating to the affairs of its employees, members of its boards of directors or

other matters which Related to any of its affairs”

We recommend that the matter be submitted to the State Council for legal opinion in this regard.

18- The value of real estate taxes demanded by the Real Estate Tax Authority on 10/7/2019 amounted to

about EGP 21.645 million under the record of the administrative detention of the debtor with others

pursuant to Law No. 308 of 1955 on administrative attachment was paid EGP 5 million under check No.

507492853 on 13/7/2019 and on 25/7/2019, a claim was received for about EGP 17.705 million after

excluding the amount paid, corresponding to a provision for the same amount. The claim included that

the commission is in the process of applying interest in accordance with article 27 of Law 196 of 2008

on the remaining amount. Offset by a provision of the same amount.

Disclosure should be made in the supplementary explanations of the “tax situation - real estate tax”.

19- Services Committee

The Committee did not apply the withholding tax system under in accordance with the provisions of the

Income Tax Law No. 91 of 2005 for all expenses in the calculation of revenues and expenses for the

fiscal year 2018/2019.

The responsibility and calculation of the due tax shall be determined and supplied to the Tax

Authority.

The amount spent on family treatment reached about EGP 18.610 million. It was found that there is no

pharmacist in the committee to review the claims of the pharmacist and verify their validity, which

represents a defect in the control and control procedures.

We recommend taking the necessary steps to avoid this.





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The Board of Directors of the Company approved by Resolution No. 113 dated 16/7/2018 on the

distribution of financial savings, which was transferred to the Services Committee for the period from

1/11/2016 to 30/6/2017 as a result of the General Assembly Meeting on 23/5/2018 The distribution of the

share of employees and shareholders of the profits resulting from the foreign exchange float differences

reflected in the balance sheet of 30/6/2017 through a prepaid purchase card through the National Bank as a

result, the transfer to the National Bank of Egypt according to the income and expenses account for the

fiscal year 2018/2019 amounted to EGP 58.389 million and the account included about EGP 55.464 million

was transferred to the bank under the name of the project of buying furniture and equipment to be used by

workers in the same card, in violation of Article No. (40) Of the Executive Regulation of Law No. 203 of

1991, which stipulates that “… Workers shall not be paid in cash more than their total annual basic wages

and more than that shall be avoided in a special account to establish workers housing projects and provide

social services to them as determined by the general assembly of the company.”

Responsibility in this regard shall be determined and comply with the provisions of Law No. 203 of

1991 and its executive regulations.

Report on Other Legal and Regulatory Requirements

1. Expiry of the legal period of the Board of Directors on 31/12/2018 and the Ordinary General Assembly of the company approved on 4/4/2019 the decision of the Board of Directors of the Holding Company for Maritime and Land Transport at its meeting on 18/1/2019 regarding the approval of the continuation of the board of directors of the company in the current composition in the exercise of work pending the restructuring of the new board and presentation to the general assembly of the company In a forthcoming session, in violation of Article (12) of the Public Business Sector Law, which requires that the Board of Directors of the Company be appointed for a period of three years, renewable, in addition to the following:

a-Formation of the current Board of Directors of the company consists of 8 members in contravention of Article No. 19 of the Company's Articles of Association, which stipulates that "The management of the company shall be conducted by a Board of Directors consisting of an individual number of not less than five members and not more than nine including the Chairman of the Board" and Article No. 22. Of the Public Business Sector Law 203 of 1991, which requires that the Council be composed of an individual number of members not less than five and not more than nine, including the Chairman of the Council.

b-The above-mentioned decision did not specify the shareholding bodies represented by part-time members with experience in contravention of Article No. (22-b) of the Public Business Sector Law No. 203 of 1991, so as not to allow the application of Article 79 of Chapter II of the Executive Regulation of the same law, which stipulates " The Holding Company shall have access to the records of the subsidiary and request detailed data on its balance sheet, profit and loss accounts and the auditors' report for the previous three years and all other documents Through the representatives of the holding company in the board of directors of the subsidiary, and they may accompany experts and get extracts of papers”

2. The Company maintains proper books of accounts that include all that is required by the Law and the Company’s Articles of Association, and the amended financial statements are in agreement therewith except for the followings:

a. Record of the meetings of the Board of Directors did not include the discussions of the members of the Board where it was shown to include only the decisions issued in violation of the provisions of Articles 81 and 75 of Law No. 159 of 1981.

b. Non-ratification of the minutes of the meetings of the General Assembly of the company as well as the minutes of the meetings of the board of directors from the Financial Supervisory Authority in accordance with resolution No. 505 of 2014 issued by the Financial Supervisory Authority on 29/6/2014 Law No. 95 of 1992.





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3. The company's cost system is inadequate and needs further development to track performance, assess and meet the needs of the company.

The cost system should be developed.

The financial information included in the Board of Directors’ report, prepared in accordance with Law No. 159

of 1981 and its executive regulations, is in agreement with the Company’s books of account. Within the limits,

that such information is recorded there in.

Frist Deputy Director of the Department

Deputy Minister Accountant\ Esam El-din Ibrahim El-sayed

Deputy Director of the Department Director Manager

Accountant\ Gaber Gomaa

Approve,,,,, First Undersecretary

Director manager Accountant/ Eman hussin salem

Date: 8/10/2019





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alexandria container & cargo handling financial statements

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