asec cement - gei · misr qena cement paid dividends of egp 16 per share for fy 2010 and egp 13.5...

ASECCEMENT

Address: 80 Street No. 250 Maadi, Cairo Egypt 11728 P.O. Box: 11 Cairo

Telephone: (202) 27558333 - 27507365/6Fax: (202) 27558399 - 25201633E-mail: [email protected]: www.asecement.com

ASEC Annual Report 2011

OVERCOMING CHALLENGESANNUAL REPORT 2011

Table of Contents

Chairman’s Letter ............................................................................................................. 02ASEC at a Glance .............................................................................................................. 062011 Milestones ............................................................................................................... 08Management Discussion and Analysis .................................................................... 10Our Strategy ....................................................................................................................... 12

Operational Review

Egypt ..................................................................................................................................... 16Sudan .................................................................................................................................... 22Algeria .................................................................................................................................. 24Syria ....................................................................................................................................... 27Key Executives ................................................................................................................... 28Board of Directors ............................................................................................................ 30Corporate Governance .................................................................................................. 32Corporate Social Responsibility ................................................................................. 33Portfolio ............................................................................................................................... 34Financial Statements ....................................................................................................... 42

ASEC Cement Annual Report 20112

Chairman’s Letter

The year 2011 was one of dramatic change in the region. The full significance of the political transformation brought about by the Arab Spring will only be understood through time. At present, the fall of the previous regime in Egypt led to democracy and freedom at the cost of reduced security and a worsening economic climate. Syria plunged into an internal conflict that has taken many lives. Sudan, even after the secession, is experiencing political instability and small scale conflicts with the southern regions. Algeria has thus far remained politically stable.

All this turmoil has no doubt had a negative impact on our performance: Greenfield projects have been delayed, new projects have been postponed and financial conditions have worsened in terms of access to credit and rising costs. These new realities, combined with the existing challenges of the last few years which included a fierce conflict between Algeria and Egypt, economic sanctions in Sudan and a global financial crisis, have given us an operating environment that is exceptionally difficult to navigate.

However, these are all circumstances beyond our control and like all businesses in the region we have to adapt and make the best of the existing situation. At ASEC Cement we have stepped up to the challenge and dealt with the problems head on in the hope that once stability returns to the region, strong growth will resume. Regional fundamentals for our industry remain strong: Rapid population growth, a young population, under-investment in infrastructure and housing, and abundant raw materials.

Difficulties aside, ASEC Cement is approaching some important breakthroughs—namely the completion of our Minya project in Egypt and a final agreement with the Algerian State for Djelfa—that if achieved, will turn around performance. Once these two vital projects are operational, ASEC Cement will have an influenced capacity of approximately 10 million tons per annum, with a strong presence in Egypt, Algeria and Sudan.

In Egypt all operating companies experienced a reduction in profitability and Misr Qena Cement was no exception. In terms of volume, performance was solid with total sales of 1.9 mtpa and a 3.9% market share. However, a significant increase in overall cement capacity nationwide resulted in a decline in prices across the board. Input costs also rose due to an adjustment in energy costs and a rise in wages at the beginning of the year in response to the pronounced social unrest that took place after the revolution. Both factors added further strain on the bottom line. On the positive front, important corporate governance measures were introduced with the adoption of proportional representation on the board and the possibility of distributing dividends on an interim basis during the year. With the company’s new management, G&A expenses were reduced by EGP 4.2 million. Misr Qena Cement paid dividends of EGP 16 per share for FY 2010 and EGP 13.5 for FY 2011. These numbers are a testament to the company’s resilience and continued ability perform positively and generate cash flow.

Dear Shareholders,

If we exclude Sudan, ASEC Cement’s standalone results were for the most part positive. With strong cost reductions and an increase in dividends, Zahana had an improved EBITDA margin of approximately 40% of sales. ASEC Ready Mix reported an increase in sales and EBITDA. Minya continued to progress throughout the turbulence of the revolution and we made important advances in reaching an agreement with the Algerian State concerning their entry into the equity of our local company.

Giorgio Bodo Chairman Of The Board & Chief Executive Officer

2011Performance

ASEC Cement Annual Report 2011 3

We have made significant progress on the construction phase of ASEC Minya, our greenfield project located approximately 50 kilometers north of Minya. Civil works are now nearly complete with the exception of a few buildings and internal roads. Fabrication of steel parts and BSD is at 90% of the total and almost all FLS equipment has been delivered to the site. Electrical works are proceeding well, as are the external roads. We are currently addressing some minor delays in the erection process with a significant increase in manpower. The progress that was achieved on Minya is remarkable in light of the many problems that we experienced throughout the year with labor unrest, local tribal disturbances and financial disputes with contractors. We expect the new plant to be operational on schedule by the end of Q1 2013. In 2011 ASEC Ready Mix (ARM) still managed to achieve positive results with a 289% increase in sales revenues and a reduction in losses from EGP 9.9 million in 2010 to EGP 5 million this year. Unfortunately the Ready Mix operation began at an inopportune time. The large infrastructure investments that were to be undertaken by Egypt’s previous government have been postponed so we had to react quickly to reposition the company towards smaller jobs, particularly real estate. In October 2011 we opened our third batching plant in Sohag. Throughout the year ARM showed steady signs of improvement until finally reaching break even for the first time in December. ARM has, however, always been EBITDA positive. In 2012 we expect a further increase in volumes and a modest net profit. Management is currently considering the possibility of expanding Ready Mix presence to two other cities in Upper Egypt.

Progress is being made in Algeria, with marked improvement in profitability in Zahana and positive developments on the situation in Djelfa.

In Zahana we have a new management team headed by an Algerian General Manager. Local regulations are still hampering our efforts to put together a multinational team as originally planned. We are however continuing to exert pressure on the Algerian authorities to modify the situation and amend the original management contract, but thus far we have not succeeded. In the months of February, March and August, we experienced some local unrest due to very high levels of unemployment in neighboring villages. The situation was gradually resolved and normal operations have resumed.

Despite the difficulties, we managed to achieve a marked improvement in financial performance due to strong reductions in costs (labor, services, outsourcing, etc.) and the increase in cement prices that took place in June 2011. Wet line production increased by 30%, while clinker production from the dry line declined by 13% as a result of ill-maintained equipment. To rectify the situation, an extensive overhaul was successfully executed over 45 days in February and March 2012. We are confident that the upgrade will lead to an increase in clinker and cement production to reach 1 mtpa in 2012. A tender for the new clinker line at Zahana was cancelled for the third time by GICA, the holding company that controls all public sector cement plants in Algeria. This delay is indicative of the difficulty involved with large investment decisions within the legal framework of the public sector in Algeria. A new tender process will begin soon and we hope that a final decision will be taken by next year.

All conditions precedent for the disbursement of the Djelfa loan were met this year but we were not able to proceed because local banks did not comply with their obligation. The issue was raised with the local authorities and we have finally received written approval from the Algerian government to enter into a partnership in Djelfa with the government accepting to take a minority


stake of 49%. This very important development is currently being finalized and should be complete within the next few months. Once the final signature has been received we will re-launch the project moving quickly to complete the two lines as originally planned.

In Sudan we completed our first full year of operations at Takamol. Overall we produced 526 kilo tons of clinker and 677 kilo tons of cement with total sales reaching 699 kilo tons. From a technical point of view, operations ran smoothly under very severe weather conditions with not only the cement plant but also the power and water treatment plants. Unfortunately local market conditions were unfavorable with demand levels of less than 3 mtpa of cement versus a nominal technical supply of about 7 mtpa. The severe overcapacity led to a sharp drop in prices while input costs continued to increase. Fuel shortages forced us to turn to more expensive imports at international prices.

We had originally planned to outsource the technical management of Takamol and make use of a take or pay solution for the Berber Power Plant—which provides electricity to Takamol—that is 51% owned by Global Energy. All contracts were negotiated and signed at a time when market conditions were totally different. As a result of the dramatic change in market conditions Takamol did not perform according to expectations with negative EBITDA of EGP 198 million and a loss of EGP 338.1 million.

Given the uncertainties that still characterize the country, we decided to impair the investment by reducing its value by EGP 80 million. Management has already taken the following proactive steps to mitigate the negative impact of the situation: The termination of the technical management contract, the reduction of G&A on all levels, and the renegotiation of the supply contract for limestone and clay. In early 2012 the Board of ASEC Cement and Takamol decided to buy out Global Energy’s 51% stake in Berber. We expect to see the tangible results of these actions in 2012 with remarkable improvement over 2011 figures.

Current financial constraints and lack of funds have forced us to sell our license in Kurdistan. Unfortunately, the Kurdish government would not allow us to keep the license beyond 2011 unless we began construction. The value of the sale fell short of the price that was paid to obtain the license in 2007, resulting in a net loss of EGP 39.7 million.

In Syria, we have been working diligently to develop a viable solution that would allow us to launch a project with the help of international investors and a major European producer. As the project was ready to move ahead, Syria

Dealing With Challenges

Like all business in the region we have to adapt and make the best of the existing situation. At ASEC Cement we have stepped up to the challenge and dealt with the problems head on in the hope that once stability returns to the region, strong growth will resume.


entered into a severe crisis and we were obliged to put everything on hold for the time being. Meanwhile we have been able to extend the duration of our license up to the end of 2012 in the hope that Syria will be able resolve its internal conflict in a peaceful manner.

The unsatisfactory financial results of 2011 are largely due to the unfortunate situation with Takamol. If we exclude Sudan, ASEC Cement’s standalone results were for the most part positive: With strong cost reductions and an increase in dividends, Zahana had an improved EBITDA margin of approximately 40% of sales; ASEC Ready Mix reported an increase in sales and EBITDA; Minya continued to progress throughout the turbulence of the revolution; and we made important advances in reaching an agreement with the Algerian State in Djelfa. We are confident that 2012 will mark a radical change in financial performance. Djelfa and Minya are our two main objectives, and we are fully committed to doing everything we can in order to achieve them.

With my best personal regards,

Giorgio Bodo Chairman Of The Board & Chief Executive Officer


Regional ExpansionASEC Cement is emerging as a leading regional cement producer that plans to control 10 million tons per annum (mtpa) of cement by 2015 in attractive, key markets in the MENA region, including Egypt, Sudan and Algeria.

In Algeria, where demand for cement outstrips the country’s production capacity, ASEC Cement has established a strong presence by acquiring a 35% stake and management control of Algeria’s government-owned Zahana Cement Company, and continues building a 3.4 mtpa greenfield cement plant in the central region of Djelfa in two phases.

Civil works at ANCC, ASEC Cement’s greenfield cement plant in Minya, are 98% complete, and the electricity contract is signed.

After one full year of operation Takamol’s Sakhr, Al-Sudan cement occupies 2nd place in the market with

a 25% market share.

Algerian Projects

98%

25%ASEC at a Glance

5

6 21

3

4

7


G&A expenses at Misr Qena Cement were reduced by EGP 4.2 million in 2011.

4.2

ASEC Cement’s 1.6 mtpa Takamol plant in Sudan began operations in August 2010. Takamol primarily serves Sudan’s sizable local market and today stands as the most technologically advanced cement plant in the country. In its first year of operation Takamol produced 526 kilo tons of clinker and 677 kilo tons of cement.

Sudanese Operations

ASEC Ready Mix is the number one ready mix

company in Upper Egypt with positive EBITDA for the entire year and cash

generation beginning Q4.

1 ARAB NATIONAL CEMENT MINYA, EGYPT

1.8 mtpaProduction Capacity

45%ASEC Cement Stake

4 AL-TAKAMOL CEMENT ATBARA, SUDAN



3 ASEC READY MIX QENA, ASSIUT AND SOHAG, EGYPT

200,000 cubic metersProduction Capacity


5 ZAHANA CEMENT ZAHANA, ALGERIA

800,000 tpaProduction Capacity


2 MISR QENA CEMENT QENA, EGYPT

1.9 mtpa (actual)Production Capacity

27.55%ASEC Cement Stake

6 ASEC ALGERIA DJELFA, ALGERIA



7 ASEC SYRIA ABUL SHAMAT, SYRIA



#1


2011 Milestones

Takamol, Sudan Takamol, ASEC Cement’s 1.6 mtpa cement plant, begins its first full year of production.

Djelfa, AlgeriaThe Algerian government declares its intention to enter into the 3.4 mtpa Djelfa cement plant with a 49% stake, giving ASEC Cement majority interest in the project.

Misr Qena Cement, EgyptA change in Misr Qena Cement’s bylaws is approved, granting ASEC Cement two board seats and allowing for the payout of interim dividends.

JANUARY 2011

MARCH 2011

4countries

2billion USD investments

10mtpa by 2015

4greenfields

2brownfields

Construction at Djelfa is now underway, with the project set for completion in 2015. The Djelfa plant will not only create 470 direct and approximately 700 indirect jobs when complete, it will also accelerate the development of surrounding infrastructure in the region.

Progress on Djelfa

Wet line production at Zahana increased by 30% over 2010 figures.

30%

3RMC stations


Sohag, EgyptProduction starts at ASEC Ready Mix station in Sohag, the company’s third batching plant in Upper Egypt.

Zahana, AlgeriaThe board of Zahana approves a contract to supply a new raw mill for the dry line.

Minya, EgyptAn electricity contract signed between the government of Egypt and ANCC securing the supply of electricity for the greenfield plant that is set to start production in the first quarter of 2013.

Zahana, AlgeriaPerequation is granted to state-owned cement plants in Algeria which results in a 34% increase in cement prices.

Kurdistan, IraqASEC Cement exits from Kurdistan by selling GRD’s assets and license to build a 1.5 mtpa cement plant.

MAY 2011

JUNE 2011

JULY 2011

OCTOBER 2011

DECEMBER 2011

Minya, EgyptASEC Cement begins erection works at ANCC, its 1.8 mtpa greenfield cement plant in Minya.

With a total investment cost of USD 335 million, the ANCC greenfield cement plant in Minya will be completed by the first half of 2013, in time to meet the projected spike in demand that will occur as several key infrastructure projects launch in Upper Egypt.

ANCC Back on Schedule

Al-Takamol Cement contributed 63% of top-

line revenues to the group in FY 2011.

63%

EBITDA over sales and a permanent increase in profitability at Zahana

Cement.

Evolution ofConsolidated Sales

Total sales from '08-'11 reached more than 9m tons

■ Zahana ■ Misr Qena ■ Takamol

40%

0.75

1.95

0.112.81

'10

0.68

1.79

2.47

0.66

0.66

Units are in Million Tons

0.75

1.94

0.69

3.37

'11'09'08


Management Discussion and AnalysisSignificant progress was made across ASEC Cement’s growing portfolio of assets in 2011 with a 149% increase in consolidated revenues. This increase reflects the first full year of operations at Takamol Cement in Sudan, which contributed 63% of total consolidated revenues and a significant rise in revenues at Algeria’s Zahana Cement following price increases and improved performance despite challenges created by local unrest and work stoppages.

ASEC Cement Consolidated Results

Consolidated revenues rose significantly in 2011, increasing 149% year-on-year to EGP 877.7 million, largely driven by the first full year of operations at Takamol Cement, which contributed 63% of total consolidated revenues. In Algeria, Zahana revenues saw a 20% increase y-o-y, mainly boosted by an increase in local cement prices and an increase in SRC volumes in the Zahana sales mix; Zahana revenues overall contributed 33% of total ASEC Cement consolidated results.

The launch of three batch plants in Upper Egypt resulted in a 289% y-o-y revenue increase for ASEC Ready Mix, allowing the company to account for 4% of overall group revenues.

ASEC Cement’s consolidated Sales, General & Administrative (SG&A) expenses increased by 97% y-o-y to reach EGP 230.6 million. Much of this is related to the first full year of operations at Takamol, including rent, warehouses and logistics charges, headcount and office-related expenses, as well as state fees on EGP 64 million of local cement sold in Sudan. Meanwhile, Arab National Cement Company’s G&A expenses increased throughout 2011, largely due to increasing headcount as well as one-off expenses associated with project development.

ASEC Cement savings initiatives—including reduction of senior management salaries, cutting bonuses, reducing personnel, enforcing strict controls on travel expenses, enacting a new mobile phone policy and revising medical insurance—generated a total G&A expense savings of 16% y-o-y, partially offsetting the increases in other business units of ASEC Cement.

Applying the equity consolidation method to the company’s 27.55% stake in Misr Qena, investment revenues registered at EGP 98 million in 2011, slightly less than revenues in 2010, resulting from the 26% decrease in Misr Qena’s net income y-o-y, driven by the impact of the Revolution on the profitability of operating units.

The rise in interest expenses to EGP 46.7 million in 2011 is related to higher utilization of ASEC Cement’s revolving medium-term loans, used to finance ongoing projects and capital increase requirements.

In Egypt, the January 25th Revolution had a major impact on the construction sector, particularly large public sector infrastructure projects. Despite the challenges, ASEC Cement’s business in Egypt proved resilient. ASEC Ready Mix contributed 4% of ASEC Cement’s total revenues in FY 2011 as production and commercial sales at its three batch plants in Upper Egypt (Assiut, Sohag and Qena) returned to stable, normal operating conditions towards year-end.

Arab National Cement Company (ANCC) is making steady progress on the construction of its Minya cement plant. The commissioning phase is expected to be complete by the end of 2012, with a launch of commercial sales operations in early 2013.

Moreover, Misr Qena Cement (MCQE) has added significant revenues to the consolidated results, via distributed dividends and profit shares.

An increase of EGP 853 million in Projects Under Construction primarily reflects the significant progress at the Minya

greenfield plant.

Focus on Egypt

853


Consolidated revenues increase 149% year-on-year to EGP 877.7 million largely driven by Takamol’s first full year of operations.

ASEC Cement G&A expenses recorded a reduction of EGP 5.8

million, an 11% decrease year-on-year.

149%

5.8

On the balance sheet, an increase of EGP 853 million in Projects Under Construction primarily reflects the significant progress at the Minya greenfield plant, in line with the targeted development schedule.

The FY 2011, EGP 46 million decrease in intangible assets represents the sale of quarry / land use rights in the GRD Kurdistan investment.

ASEC Cement Standalone Results

On a standalone basis, ASEC Cement recorded dividend income of EGP 185.2 million in 2011 compared to EGP 82.3 million in 2010, a significant increase that resulted from increases at MCQE, which distributed a dividend per share of EGP 16 in 2011 compared to EGP 10 in 2010, in addition to EGP 6.5 per share interim dividends distributed on 2011 results in advance.

Forex gains of EGP 33.8 million achieved in 2011 were a result of appreciation of USD against EGP, with monetary assets on an average of USD 30 million being revaluated, in addition to an ACH loan to Takamol of USD 101 million which was revaluated at higher rates.

ASEC Cement savings initiatives have reflected positively on the company, as G&A expenses recorded a reduction of EGP 5.8 million, an 11% decrease y-o-y. The savings strategy included reductions in salaries at the upper management level, freezing bonuses, a hiring freeze (headcount was maintained at 68), a more controlled travel policy, reduced communication as per the updated mobile phone policy, and a revised medical insurance policy.

Moreover, the ASEC team in Zahana contributed to the savings through an additional reduction of EGP 4.6 million (a 32% decrease y-o-y) following a significant reduction in headcount (from 11 to 1) of foreign staff who were replaced by Algerians, thus reducing salaries, travel, rent and other staff related expenses.

Advisory fees of EGP 15.1 million are mainly paid to Citadel Capital as 1% of equity invested in the company. However, a limited reliance on external consulting services resulted in additional savings of EGP 12.3 million in 2011 compared to the previous year.

The above savings were partially offset by EGP 80 million in charges related to an impairment of the ASEC Cement investment in Takamol, deemed necessary due to the deteriorating political and market conditions (specifically shortages in the heavy fuel oil supply and foreign currency) in Sudan.

Moreover, the sale of ASEC Cement total shares (85%) in the GRD Cement Project in Kurdistan resulted in a total investment loss of EGP 39.7 million in 2011. Interest expense in 2011 reached EGP 36.1 million, calculated on the company’s medium term revolving loan from Arab African International Bank, which was used to finance operational projects. This expense was partially offset by credit interest and other income of EGP 8.8 million.

Investments in subsidiaries decreased by 6% to EGP 1.66 billion as at the end of December 2011 following ASEC Cement’s sale of its investment in GRD Kurdistan for EGP 52 million and the impairment of the company’s investment in Takamol by EGP 80 million.


Our Strategy

ASEC Cement seeks to establish footholds in attractive, high-growth emerging markets and develop regional platforms encompassing the Middle East and Africa's biggest economies. In order to reach its goal of producing 10 million tons per annum by 2015, ASEC Cement has pursued a strategy that has seen it invest in both greenfield cement plants as well existing cement companies, which in certain cases require an operational turnaround.

While our core vision has remained the same since we began, our strategy has gradually shifted in response to market conditions in the region, both political and economic. We began with an ambitious plan that saw us acquire licenses to build greenfield cement plants in multiple countries with high potential for growth across the region.

The 2009 global economic crisis followed by the Arab Spring in 2011 has, however, forced us to take a more conservative approach. We abandoned greenfield ventures in Libya, Ethiopia and Kurdistan, choosing instead to focus on concrete possibilities in our core markets of Egypt, Algeria and Sudan, with a particular emphasis on our two greenfield plants that are currently under construction in Minya (Egypt) and Djelfa (Algeria). While relentlessly pursuing the completion of these two very promising projects, we will also continue to improve our operating units in Zahana (Algeria), ASEC Ready Mix (Upper Egypt), and Takamol (Sudan).

Strict cost-cutting measures such as the gradual transition to local staff in all our subsidiaries, and the reduction of salary increases, travel expenses and communications costs on both the corporate and subsidiary levels, have led to significant cost savings in 2011.

Greenfield Investments

ASEC Cement typically invests in the construction of new plants in countries like Egypt, Sudan and Algeria, where abundant raw materials and low production costs will eventually lure back high levels of public and private investment into infrastructure and industrial modernization initiatives and once again boost demand for cement.

Home to the lion’s share of ASEC Cement's currently operational greenfield projects, the Egyptian and Algerian cement markets both reflect the opportunities present throughout the region.

Despite the political turmoil that is still ongoing in Egypt as the country struggles with its roadmap to democracy, ASEC Cement has forged ahead with its two greenfield projects: a 1.8 mtpa plant in Minya (ANCC), and ASEC Ready Mix, which produces ready mix cement at three separate plants in Assiut, Qena and Sohag.

ANCC’s first full year of construction coincided with Egypt’s first year post-revolution, which caused a number of delays and setbacks. Nonetheless, 98% of the civil works are now complete and the project is on track for completion in early 2013. Similarly, ASEC Ready Mix faced its own set of challenges that were overcome by moving away from supplying the large infrastructure projects that

Strong Regional Fundamentals

Despite current challenges, the region’s fundamentals and competitive advantages will in the medium term once again lead to an increase in demand:

• Rapid population growth• Young population• Large, fast-growing

consumer market• Large workforce that is

responsive to training• Under-investment in

infrastructure and housing• Availability of raw

materials and • Proximity to key global

markets


Influenced Capacity (mtpa)

were put on hold and moving towards small to medium sized commercial projects in three governorates of Upper Egypt.

Having the flexibility to alter strategy in reaction to existing market conditions has enabled ASEC Cement to minimize its losses and properly position itself for future growth once markets rebound.

ASEC Cement’s 3.4 mtpa greenfield cement plant Djelfa, Algeria, reaffirms our belief in the immense potential of the Algerian market. Despite the recent global financial crisis, Algerian cement consumption has continued to grow on the back of the current government plan for housing and infrastructure development.

In Sudan, ASEC Cement established Takamol, a 1.6 mtpa plant, which has maintained the second biggest market share after its first year of operations. This success was largely achieved through employment of technologically superior machinery imported from Europe and an effective sales strategy that has allowed it to penetrate Sudan’s most remote regions. In addition to supplying northern Sudan with cement, ASEC Cement views its Atbara-based plant as a platform from which to tap other underserved regions in Sudan and neighboring countries.

Brownfield Investments

In addition to constructing new plants, ASEC Cement also invests in already established ones, either for the purpose of a turnaround or to secure equity in strong industry players.

In the case of Algeria, ASEC Cement has undertaken a comprehensive turnaround operation in Zahana, including obtaining the approval to install a new Raw Mill, which will boost clinker production levels by 200,000 tons per annum.

ASEC Cement has also made a key investment in MCQE, one of the most profitable cement companies in Egypt. The investment has developed into a strategic partnership which has allowed ASEC Cement to further expand its share in the Egyptian cement market through projects such as ASEC Ready Mix and the aforementioned Minya-based greenfield plant.

0.7

2.7

'08 '10 '14'09 '11 '15

9.8

'12 '16

11.8

'13 '17

11.8

4.4

9.8

4.44.9

6.9

■ Algeria■ Sudan■ Egypt

Operational Review

Arab National Cement ................................................................................................... 16Misr Qena Cement .......................................................................................................... 18ASEC Ready Mix ............................................................................................................... 20Al-Takamol Cement ......................................................................................................... 22Zahana Cement ................................................................................................................ 24Algeria .................................................................................................................................. 26ASEC Syria ........................................................................................................................... 27


Arab National CementMINYA, EGYPT

The Arab National Cement Company (ANCC), ASEC Cement’s newest project under construction in the Upper Egyptian governorate of Minya, is a 1.8 mtpa cement plant in which ASEC Cement holds a 45% direct stake. After delays due to the project’s first full year of construction coinciding with the Egyptian revolution, ANCC is now back on track to begin commissioning in the last quarter of 2012 and launch production in the first quarter of 2013.

Construction at the ANCC site in Minya was impacted by the inevitable security concerns and instability that were present in Egypt throughout 2011. Ongoing protests combined with the lack of security gave rise to delays at the construction site, with work on production lines and civil works experiencing interruptions as a result. ANCC was forced to move on its own to swiftly negotiate with workers and local community stakeholders to reach compromises and restore security and activity at the construction site. The company was able to effectively address these issues and make up for lost time and productivity.

By the end of 2011, civil works on the plant had been completed, 90% of FLS mechanical equipment was delivered on site, BSD and steel structure fabrications were at 80% and total erection works reached 20%. In order to make up for lost time, ANCC and ARESCO —the contractor responsible for the steel fabrication and mechanical erection of the plant—have both devised a recovery plan to get back on schedule with mechanical and steel installations completed by Q3 2012 to allow for the startup of commissioning.

After a delay of almost a year, the electricity supply contract—an important milestone for ANCC—was signed in December 2011 to connect the plant to the national grid. Works are currently underway on a 42km transmission line that will connect ANCC to the Samalloot Power Station. ANCC has also secured the natural gas connection and water supply for the project, and infrastructure work is in progress.

In December 2011, ANCC achieved an important milestone with the signing of the electricity contract that will connect the plant to the national grid. The plant will also have its natural gas and water supply connections in place.

ANCC Signs Electricity Contract

ANCC is now back on schedule to complete mechanical and steel installations by Q3 2012 to allow for the startup of commissioning.

Q3 2012

Concrete Pouring Plan

Jan

3,4808,670

18,96029,160

41,00050,440

57,95063,970 68,570 70,910 71,520

69,50065,500

61,00055,800

47,50040,000

32,70031,50028,000

3,75013,710

1,390

22,710

71,520

May SepMar Jul

Planned Quantities (m3) Actual Quantities (m3)

NovFeb Jun OctApr Aug Dec Jan 12

71,520


The contract to build a 10-kilometer access road to connect the plant to the eastern road has also been signed and is scheduled to be complete by the second half of 2012.

Building permits, in addition to all military approvals for land and quarries, have been secured, notwithstanding an extremely difficult regulatory and bureaucratic environment.

ANCC is on record as being one of Egypt’s biggest project finance deals. In September 2010 ANCC signed an EGP 1.1 billion loan to finance the construction of its plant in Minya. The syndicated loan agreement involves a consortium of seven leading Egyptian and regional banks, which will cover 52% of the USD 335 million investment with the balance financed by the equity of ANCC.

ASEC Cement’s newest greenfield cement project

in Minya will have the capacity to produce 1.8

mtpa of cement.

1.8


Misr Qena CementQENA, EGYPT

Misr Qena Cement Company (MCQE), one of Egypt’s leading producers of cement, managed to maintain sales volumes year-on-year in 2011 with 1.9 mtpa in total sales and a 3.9% market share despite volatile market conditions that have negatively impacted the industry as a whole. With a 27.55% ownership stake, ASEC Cement is now the largest shareholder in MCQE with proportional board and executive committee representation of two seats. ASEC Cement consolidates its participation in the company on an equity basis.

Since the establishment of its Qena-based plant, MCQE’s original design capacity has stood at 1.4 mtpa of clinker and 1.7 mtpa of cement; however, the company has significantly expanded production in recent years through initiatives that have increased plant efficiency.

Challenging market conditions in 2011 saw sales income for the year decline by 11% from EGP 888 million in 2010 to EGP 791 million in 2011. This was largely due to an oversupply of cement in the market which caused cement prices to decline.

The year just passed also saw Misr Qena Cement face rising input costs. Electricity costs rose by 7%, while clay fees witnessed a 106% rise and packing materials expenses rose 10%. Quarry rental fees inflated 337%, and sales and marketing expenses rose by 57%. Despite rising costs, Misr Qena Cement’s new management implemented tighter cost controls that decreased G&A expenses by 14%.

In October 2011, MCQE distributed an interim dividend of EGP 6.5 per share by which ASEC Cement received EGP 53.5 million and raised its dividends income received to EGP 185.2 million in 2011, compared to EGP 82.3 million in 2010. Total dividends received by ASEC Cement since 2006 amount to EGP 383.7 million, while the cost of acquisition was EGP 656.7 million.

Ratio AnalysisRatio 2010 2011

COGS/Sales 44.1% 53.2%

Gross Profit % 55.9% 46.8%

GA/Sales 3.0% 3.0%

EBITDA Margin 52.6% 43.6%

EBIT Margin 43.8% 37.9%

EBT Margin 48.9% 41.0%

Net Income/Sales 48.2% 40.7%

ASEC Cement raised its dividends income received

to EGP 185.2 million in 2011, compared to EGP

82.3 million in 2010.

185.2


Egyptian Market Analysis

The events of 2011 led to a sharp decline in production in the first few months of the year by all Egyptian cement companies, as security challenges and economic uncertainty brought construction projects to a halt across the country and impeded production operations at Egyptian plants, particularly in the northern and eastern parts of the country. While these events have had a significant impact on the Egyptian cement industry as a whole, a less pronounced decline in production levels was witnessed in Upper Egypt. By the end of 2011, the market showed signs of recovery with a rebound in consumption. After the removal of the ban on cement exports at the end of 2010, and the subsequent effort made to regain export markets despite fierce competition, Egypt managed to export 663,000 tons of cement in 2011, primarily to Libya and East Africa.

The year just passed also witnessed the entry of six new production lines with a total design capacity of 11 mtpa, out of which 5.5 mtpa has been effectively added in 2011 with the balance to come online in 2012.

Total production from 20 cement plants in Egypt stood at 49 mtpa at the end of 2011. Thus far, the cement market has absorbed the impact of the first year of the revolution, with overall consumption stabilized at only 2% lower than 2010 levels, far better than the 10% decline that analysts originally predicted at the beginning of the year.

With hopes for a new president and government that will bring back stability in 2012, demand is expected to show a modest rebound, but strong market fundamentals are expected to gradually increase demand for cement during the next five years at a CAGR of 4% between 2013 and 2016.

Misr Qena Cement maintained sales volumes

y-o-y in 2011 with 1.9 mtpa in total sales and a

3.9% market share despite volatile market conditions.

3.9%


ASEC Ready MixQENA, ASSIUT AND SOHAG, EGYPT

Sales Volumes Evolution (Km3)

ASEC Ready Mix (ARM), a joint venture between ASEC Cement and MCQE, is on track to become one of the leading providers of ready mix concrete in Egypt. Since the launch of operations in May 2010, the EGP 43 million venture, in which ASEC Cement holds a 55% stake and MCQE a 45% stake, ARM has established a strong foothold in a vastly underserved market with ready mix concrete plants in Sohag, Assiut and Qena. In less than two years of steady performance ARM has positioned its brand name in Upper Egypt as a first-class supplier of ready mix.

Since launching operations in 2010, production volumes at the Qena and Assiut sites have picked up rapidly with each quarter, from 26,900 cubic meters in the third quarter of 2011 to 42,000 cubic meters in the fourth quarter, with the entry of the Sohag plant during the fourth quarter boosting production substantially. The proper market penetration strategy and the development of a diversified customer base led to a solid increase in sales.

Unfortunately the unstable security situation across Egypt presented many challenges for ASEC Ready Mix during the first months of 2011. A lack of police presence in the area, ongoing labor strikes and a general rise in security threats in Upper Egypt necessitated strong independent steps on the part of the company to restore stability and resolve issues with workers and other local actors. Fuel supplies to the plant also saw periodic disruptions in 2011 putting a further strain on operations. ASEC Ready Mix was able to address the problems, allowing the company to resume production at normal levels.

Despite these challenges, ASEC Ready Mix has positioned itself well in the Upper Egypt market, with a steadily expanding customer base. The company posted a steady increase in sales volumes throughout 2011, with volumes rising 233% quarter-on-quarter and 414% year-on-year in Q4 2011. The company also saw revenues of EGP 12.2 million in Q4 2011, up from EGP 5.0 million a year earlier, despite declining prices.

The ready mix market in Upper Egypt has traditionally been limited to large infrastructure projects such as bridges and irrigation construction. While the events of 2011 caused many of these infrastructure projects to be put on hold, impacting the company’s original sales plan, ASEC Ready Mix quickly shifted focus away from large projects towards smaller jobs. The company managed to quickly gain new market share by supplying major commercial and residential real estate projects in Upper Egypt.

8.9

18.3

26.9

12.6

24.8

41.9

Q4'10 Q3'11Q3'10 Q2'11Q1'11 Q4'11

ASEC Ready Mix has also received regulatory approvals to establish two new stations in Beni Sueif and Minya. Management is currently exploring the possibility of pursuing this expansion plan during the course of 2012.

In the fourth quarter of 2011, ARM's third plant in Sohag was launched, boosting production substantially to 42,000 cubic meters.

ARM Expansion

Sohag Launch


Ready Mix Market Highlights:

The ready mix concrete market in Egypt currently represents 11-12% of national cement consumption, approximately 5.4 MMT per year. The majority of the consumption of ready mix was in Greater Cairo, which utilizes almost 65% of the total ready mix used in the country, followed by Alexandria and the North Coast, the Red Sea and Sinai, with only 5% of the consumption coming from Upper Egypt. For a long time, ready mix application in Upper Egypt has been strictly limited to large infrastructure projects, but since many of these projects have been put on hold due to budget constraints and political instability, the ready mix market in Upper Egypt has expanded beyond infrastructure to small commercial and household use.

Governorates BatchPlants Truck Mixers Pumps

Assiut 1 batch plant 9 trucks 1 pump

Sohag 1 mobile batch plant 6 trucks 1 pump

Qena 1 batch plant 10 trucks 1 pump

Main Projects in 2011

ASSIUT● Ghabbour Service Center, with total volume of

10,000 m3.● Chamber of Commerce, with total volume of

2,500 m3.● Juhayna factory, with total volume of 10,000 m3

(on-going in 2012).

QENA● Waterline for El-Nahada factory, with total volume of

4,000 m3.● Qena Gardens Compound, with total volume of

55,000 m3 (3,500 m3 achieved during 2011 – project currently on hold).

● Al-Shafaar New Winter Palace Hotel, with total volume of 11,000 m3 (1,200 m3 achieved during 2011 – project currently on hold).

● Qena New City Mall, with total volume of 1,500 m3.

SOHAG● Juhayna juice factory and warehouses, with total

volume of 6,000 m3 (on-going in 2012).● Al Helal plastic factory, with total volume of

10,000 m3 (on-going in 2012).● National Bank of Egypt, with total volume of 1,500

m3.

ASEC Ready Mix saw revenues of EGP 12.2 million in Q4 2011, up from EGP 5.0 million a year earlier, despite

declining prices.

12.2


Al-Takamol CementATBARA, SUDAN

In 2011, its full first year of operations, Takamol sold 671,595 tons of cement, and 27,339 tons of clinker. Production levels reached 676,285 tons of cement and 526,975 tons of clinker. Total clinker and cement sales reached 698,934 tons, bringing Takamol to second position in the Sudanese market with a 25% market share.

ASEC Cement’s Takamol is Sudan’s only Euro-standard greenfield cement plant, inaugurated in November 2010. Built at a total investment cost of USD 252.7 million, ASEC Cement's 1.6 mtpa plant in Sudan benefits from the seasoned expertise of the ASEC Group, a long-standing relationship with key supplier FLSMIDTH, as well as reliable local partners including the Sudanese Pension Fund.

During its first full year of operation, Takamol was able to establish a leading presence in the Sudanese market and develop strong customer awareness of its Sakhr Al-Sudan brand, which enabled the company to maintain its 25% market share and positioned it as the number two player in the market. This achievement was primarily due to a focused sales strategy that allowed the product to be widely distributed, reaching even the most remote areas of the country. Sakhr Al-Sudan recorded a total sales volume of 671 kilo tons and sales revenue of SDG 266 million despite fierce price competition.

By implementing precise quality control processes and comprehensive assurance tests, which bring the final product into compliance with the requirements of Sudanese and European standard specifications, Takamol supplies its market with some of the highest quality cement available.

The Sudanese cement industry faced challenging market conditions during 2011. Low demand relative to existing capacity, declining prices and fuel shortages all contributed to an overall slowdown in production at Takamol and other local plants, resulting in a low utilization. As a consequence of the challenging operating environment, Takamol is currently operating at 45% capacity.

ASEC Cement has sought to address these issues head on by implementing cost-cutting measures across Takamol’s operations. Towards this aim, Takamol officially terminated its technical management contract with ASEC Engineering, signed in 2010. Throughout 2011, ASEC Cement gradually replaced ASEC Engineering staff with Takamol staff ahead of the official termination of the contract on 31 December 2011. The company has made every effort to hire Sudanese nationals, and, in ongoing efforts to improve

Takamol’s competitive advantage in Sudan lies in the plant's technological sophistication, an uninterrupted power supply, and the creative strategies of its sales team. This has supported Takamol’s rapid growth to second position in the Sudanese market.

Cement Sales Points

■ Khartoum W.H. 79%■ Obayyed W.H. 6%■ Neyall W.H. 8%■ Juba W.H. 7%

Market Leadership

First Full Year of Operations


Takamol’s bottom line, Egyptian employees will continue to be replaced with Sudanese professionals following knowledge transfer to reduce costs and rely more heavily on local labor. The plant is running smoothly under ASEC Cement’s management.

ASEC Cement has also moved to re-acquire Global Energy’s 51% stake in Berber Energy, the operator of Takamol’s dedicated power plant. Given that Takamol is operating at 45% capacity, the contract-stipulated minimum quantity of energy that Takamol must purchase from Berber Energy is excessive for its current needs, leading to unnecessary expenditures and waste. Negotiations to buy out Global Energy’s stake have been ongoing since the decision was taken in 2011, and the purchase will proceed during 2012. This transaction is expected to improve Takamol’s financials.

Further cost-cutting measures at Takamol will include the use of coal or alternative fuels as a replacement or supplement to the highly volatile heavy fuel oil that is currently in use.

Sudanese Market Analysis

Declining prices, oversupply and insufficient energy resources continue to make the Sudanese market a challenging one to operate in. Stagnating domestic demand, paired with the difficulty of exporting due to transport challenges, presented a difficult market landscape in 2011. Moreover, the political instability and the segregation of North and South Sudan have added to the logistical constraints that have had a negative impact on the cement industry as a whole in Sudan.

Notwithstanding an installed design capacity of 7 mtpa, total cement demand in Sudan did not exceed 3 mtpa in 2011, bringing the per capita consumption to a modest 70 kg per capita. The political tensions, coupled with economic sanctions, have directly impacted Sudan’s economic growth rate. The six cement plants that are currently in Sudan will continue to operate at decreased rates of utilization and work on minimizing costs in order to survive.

2011 Quarterly Sales ('000 tons)

Q1 Q3

180

129

228

162

Q2 Q4


Zahana CementZAHANA, ALGERIA

Zahana Cement Company, one of ASEC Cement’s key brownfield investments located in western Algeria, has shown a marked improvement in profitability in 2011. With a 35% stake and management control of the government-owned plant, ASEC Cement has been investing to upgrade facilities and expand production capacity at Zahana since 2008.

In 2011, social unrest impacted operations at Zahana, with local residents from surrounding villages staging protests to demand jobs at the public-sector company. The ongoing protests led to several weeks’ loss in production and sales at the plant. ASEC Cement managed to address these issues and reached a compromise that put an end to the protests and resumed production at the plant. Zahana saw a 13% drop in dry clinker production due to a maintenance delay resulting from the unavailability of spare parts, while wet clinker production jumped 30% in 2011 due to the successful revamping of the plant’s wet kiln.

As the global cement market struggles with oversupply and low prices, and as competition increases, ASEC Cement is working continuously to increase Zahana’s competitiveness by reducing the cost of production and upgrading facilities at the plant. ASEC Cement is actively phasing out Egyptian employees at Zahana and has replaced them with Algerian staff, a measure that will help to reduce costs, while promoting goodwill among locals. In May 2011, an Algerian General Manager was appointed as part of a management restructuring. The company is also taking measures to better control the plant and reduce unnecessary overtime and outsourcing.

Plans to install a second production line have been delayed as part of a nationwide moratorium on capacity expansion at Algerian cement plants. In light of this, ASEC Cement has chosen to focus on upgrading Zahana’s existing line during 2012 with an eye towards pushing forward with the planned second line when conditions will allow.

Obtaining the approval to install a new Raw Mill was a major milestone for Zahana in 2011. The new Raw Mill will take 20 months to complete and will

2008 A

355 400546

1,167

1,452

55 58149

651

863

2011 A2010 A 2012 B2009 A

■ EBITDA■ Net Income

All figures in DZD million

A decision by the Algerian governement to increase cement sale prices by an avarage of 27% contributed positively to sales revenues, which jumped 45% y-o-y in Q4 2011.

The approval to install a new Raw Mill was a major milestone for Zahana in 2011. The new Raw Mill will take 20 months to complete and will boost clinker production levels by 200,000 tpa.

Revenues Increase in 2011

New Raw Mill


boost clinker production levels by 200,000 tpa. The Raw Mill is considered the single most important investment approval for Zahana in the past 20 years.

Zahana’s EBITDA has seen continuous improvement in recent years, with 2011 representing a significant breakthrough with a large increase due to revenue enhancement, COGS containment, and overall improved control at the plant. EBITDA margin rose to 40% y-o-y compared with 18% in 2010. The plant’s improved profitability reflected positively on net income levels in 2011. A 27% increase in average cement sale prices contributed positively to sales revenues, which jumped 45% y-o-y in Q4 2011.

In 2011, ASEC Cement took the decision to initiate a major maintenance shutdown in February 2012. The work undertaken will reflect negatively on the plant’s Q1 results, but will have a positive impact on Zahana’s productivity and financials for the remainder of the year.

Located in western Algeria, 40 kilometers away from Oran, Zahana is one of three cement manufacturers supplying West Algeria. Until ASEC Cement’s partial takeover, the factory produced a yearly average of 650,000 tons of cement per annum, roughly 55% of the original design capacity. In addition to improving on-site facilities, ASEC Cement has also focused considerably on establishing cooperative ties with the Algerian trade unions and other local bodies.

Algerian Market Analysis

Algerian cement consumption continued to grow in 2011 on the back of current government plans for major housing and infrastructure development projects. Given current market conditions and delays in project implementation, growth in demand is expected to outpace that of supply, likely resulting in a supply demand gap during 2012. Delays in new capacity additions and extensions are expected to contribute to a persistent supply gap during the next six years, with the gap estimated to level at 2.8 million tons in 2017.

Cement consumption in Algeria grew at a CAGR of 9% between 1999 and 2009, and it is expected that consumption will witness 7% growth during the coming six years, accompanied by constant growth in consumption per capita from the current level of 596 kg to 802 kg in 2017.

Wet clinker production jumped 30% in 2011 due to

the successful revamping of the plant’s wet kiln.

30%

EBITDA margin rose to 40% y-o-y compared with

18% in 2010.

40%


ASEC AlgeriaDJELFA, ALGERIA

Construction on Djelfa to Move forward on 2012After many delays conserning the disbursement of the Djelfa loan AACC has finally received written approval from the Algerian government to enter into a partnership in Djelfa with the government accepting to take a minority stake of 49 percent.

ASEC Algeria Cement Company (AACC) is ASEC Cement’s 3.4 mtpa, USD 579 million greenfield cement plant in Djelfa, located 300 kilometers south of Algiers. Construction on AACC began in 2009 but progress on the project has been compromised for the past two years due to a lack of funding and lengthy bureaucratic procedures.

The company is, however, pleased to report that delays due to negotiations with the Algerian government and the implementation of new investment laws and financing issues were largely resolved in 2011. The most significant milestone of the year was the Algerian government’s approval to hold a minority stake of 49% in the plant, giving AACC majority control of operations, an arrangement not granted to any other cement company operating in the country.

The due diligence process was completed in 2011 with a favorable report regarding the quality of work completed, equipment chosen, and technical solutions followed, indicating that Djelfa remains in compliance with international best practices. No critical elements appeared in the report, which will significantly increase the momentum of the project in 2012.

The Algerian authorities have indicated a willingness to proceed with a two line turnkey solution with FLS. A draft turnkey contract from FLS is currently in progress. While the contract is complex due to the fact that 50% of work on the first line has already been completed, the Algerian government has expressed their commitment to providing a timeline for concluding the transaction. The government has also agreed to select two international advisors to evaluate the financial and legal aspects of the project.

In 2011 strict cost-cutting measures were implemented which led to a significant reduction in G&A. New premises commanding a lower rent generated EGP 780,000 in savings, controlled spending on legal consulting fees conserved EGP 1.2 million, and a more conservative utilization of external consulting and auditing services saved an additional EGP 813,000.

49%

The most significant milestone of the year was the Algerian government’s approval to hold a minority stake of 49% in the plant,

giving AACC majority control of operations.


ASEC SyriaABUL SHAMAT, SYRIA

ASEC Syria Cement Company obtained a license at the beginning of 2007 to construct a USD 333 million greenfield plant with a design capacity of 4,500 tpd or 1.6 mtpa in Abul Shamat, 85 kilometers northeast of Damascus. By the end of 2009, Takla Engineering had finished constructing the plant's auxiliary infrastructure, including the administrative offices, health clinic, restaurant, fences and guard towers.

At the end of 2010 the project had made significant progress, with the company preparing to finalize an agreement with foreign partners in order to proceed with the construction of the production line.

Following the outbreak of unrest in 2011, the project’s potential investors opted to back out. Participation in the project by international lenders became untenable, and raising capital from local and foreign banks became extremely difficult. As a result, the project has been put on hold indefinitely. ASCC was granted an extension of its license until the end of 2012, and the company plans to reevaluate the situation by the end of the year to determine the future trajectory of the project.

Syrian Market Analysis

In recent years, expanding demand for cement in Syria has been fueled by a number of growth drivers in the construction sector, including an increased government focus on tourism projects and related infrastructure, the lifting of a ceiling placed on foreign ownership of real estate, as well as increasing interest in building projects from investors in the Gulf States. The outbreak of unrest in 2011 has radically altered the face of the market, with most major projects and investments currently on hold pending a resolution of the ongoing conflict.

The Syrian cement industry consists of six state-owned factories which produced a total of approximately 6 mtpa in 2010, leaving a supply gap of 1.7 mtpa to be filled by imports from Turkey and Lebanon. Operating on average at about 80% of their nominal design capacities, Syrian cement plants are crippled by aged equipment, obsolete technologies, and bureaucratic hurdles to upgrading or even maintaining production sites. However, recent reforms have led to the privatization of Syrian industry, and as the local cement market becomes more competitive, privately owned plants are likely to replace imports in filling the supply deficit.

The Syrian market has a supply gap of 1.6 mtpa to be filled by imports.

The construction of ASEC Syria's 1.6 mtpa plant could

fill this gap.

1.6


Key ExecutivesGIORGIO BODO | CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER Mr. Bodo joined ASEC Cement in May 2008 as Chairman of the Board and Chief Executive Officer. He was promoted in 2010 to be ASEC Group CEO. Prior to joining ASEC Cement, Mr. Bodo acted as Chief Financial Officer of Italcementi & Ciments Français starting in 2004. He was responsible for the Group’s M&A activities and was personally involved in the acquisition of major cement companies in Egypt including Suez Cement, among other regional activities. Beyond the cement industry, Mr. Bodo has an accomplished career in finance with many organizations including FIAT and Bank of Italy. He holds a BA in Economics from the University of Rome and an MSc in Economics from the University of York, UK.

TAREK EL GAMMAL | CHIEF FINANCIAL OFFICERMr. El Gammal joined ASEC Cement in March 2008 as Strategic Planning Director and was promoted to Chief Financial Officer in January 2010. Prior to joining ASEC Cement, he spent eight years at CEMEX worldwide where he held a range of posts in both emerging and mature markets including Egypt, Spain, Germany and Puerto Rico. Before CEMEX, Mr. El Gammal was Corporate Finance Manager at Egyptian Anglo for Financial Investments, a boutique investment banking firm that provided corporate finance and portfolio management services. He holds an MBA from the American University in Cairo.

TAMER YAKOUT | BUSINESS DEVELOPMENT DIRECTOR Mr. Yakout joined ASEC Cement in April 2006 as Business Development Director. Before ASEC Cement, he participated actively in the restructuring of Helwan Portland Cement Company after its acquisition by ASEC Holding in 2001 and was responsible for implementing the latest quality management systems in all areas of production, sales & marketing and environmental protection. Prior to HPCC, Mr. Yakout was a member of a project management team at Sereland S.A, one of the biggest construction companies in Spain with offices in Madrid, Barcelona and Andalucía. He holds a BSc. in Architecture from Cairo University and an MBA from the Maastricht School of Management in Holland.

AMR GEMEIYE | COMMERCIAL DIRECTOR Mr. Gemeiye joined ASEC Cement in January 2009 as the company’s Commercial Director. Prior to joining ASEC Cement, Mr. Gemeiye spent two years of his career with Lafarge as the Commercial Director for the United Arab Emirates. He had spent the previous seven years with CEMEX Egypt where he held a range of posts in both the Commercial and Ready Mix operations. Mr. Gemeiye holds a BSc in Civil Engineering from Alexandria University and an MBA from the American University in Cairo.


HASSAN GHALLAB | TECHNICAL DIRECTORMr. Ghallab joined ASEC Cement in January 2007 as the company’s Technical Director. Prior to joining ASEC Cement, Mr. Ghallab spent more than 30 years within the ASEC Group contributing to a broad field of Project Management and Engineering projects for greenfield cement plants as well as the rehabilitation, upgrading and modernization of the existing plants of Suez, Assiut, Qena, Sinai II, Tourah and Helwan. Mr. Ghallab holds a BSc in Mechanical Engineering from Cairo University.

KHALED EL SEBAIE | GENERAL MANAGER Mr. El Sebaie joined ASEC Cement in 2006 and is currently the General Manager for ASEC Syria. He is also the Chairman of United Foundries, Vice Chairman and Board member of ASEC Holding and Board Member at ARESCO. Additionally, Mr. El Sebaie sat on the boards of numerous other companies including ASEC Engineering, ASEC Automation and ASCOM. Mr. El Sebaie holds a BSc in Mechanical Engineering from Cairo University.

IMAN ABDEL GHAFFAR | HUMAN RESOURCES DIRECTORMrs. Iman Abdel Ghaffar joined ASEC Holding (NDT) as Group Compensation and Benefits Manager in August 2005. After a few months she assumed the responsibility of the Group Human Resources. In January 2008, she was officially nominated as the Group Human Resources Manager then joined ASEC in 2011. Prior to joining ASEC Holding, she served in reputable private sector corporations for more than 13 years, including the Commercial International Bank and the Olympic Group. Mrs. Abdel Ghaffar is a holder of an HR Diploma from the American University in 2003. She graduated in 1992 from the Faculty of Economic and Political Science at Cairo University.

MOHAMED EID | DIRECTOR OF INTERNAL AUDITMohamed Eid joined ASEC Cement in June 2010 as Director of Internal Audit. He has more than 20 years of experience in the field of audit, information systems, internal controls and corporate governance applications. Mr. Eid obtained a bachelors degree in accounting from Helwan University in 1991 and became a Certified Internal Auditor from the Institute of Internal Auditors in the USA in 2003. He also completed international management programs at the Stanford School of Business (USA), the Insead School of Business (France), and Tec de Monetrrey (Mexico).

KHENAFI AMAR | MANAGING DIRECTOR ZAHANA CEMENT COMPANYMr. Khenafi joined ASEC Cement in April 2010 as Managing Director of Zahana Cement Company, Algeria. Prior to joining ASEC Cement Mr. Khenafi was Director of Cement Projects at SNMC and ENDMC, Director of Ain Touta Cement (BATNA), as well as President and Managing Director of SCIMAT (ERC), all in Algeria.


Board of Directors

Giorgio Bodo | Chairman of the Board and Chief Executive Officer, ASEC CementMr. Bodo joined ASEC Cement in May 2008 as the company’s Chairman and Chief Executive Officer. He was promoted in 2010 to be CEO of the ASEC Group. Prior to joining ASEC Cement Mr. Bodo was the Chief Financial Officer of Italcementi & Ciments Francais since 2004. He was responsible for the Group’s M&A activities and was personally involved in the acquisition of major cement companies in Egypt including Suez Cement, among other regional activities. Mr. Bodo has an accomplished career in finance with many organizations including FIAT and Bank of Italy. He holds a BA in Economics from the University of Rome, Italy, and an MSc in Economics from University of York, UK.

Ahmed Heikal | Chairman and Founder, Citadel Capital Prior to founding Citadel Capital in 2004, Mr. Heikal was an executive board member and Managing Director of EFG Hermes, which transformed during his tenure from a small financial consultancy into the leading investment bank in the Arab world. Mr. Heikal hired EFG Hermes’ current CEO, CIO, CFO and Head of Brokerage. In addition to landmark capital markets and M&A transactions, he spearheaded highly successful private equity investments, one leading to the creation of Raya Holding, Egypt’s leading IT company, and another to Genco, the nation’s largest natural gas distribution company. Mr. Heikal holds a Master’s degree and a PhD in Industrial Engineering and Engineering Management from Stanford University.

Hisham El-Khazindar | Managing Director and Co-Founder, Citadel CapitalPrior to co-founding Citadel Capital in 2004, Mr. El-Khazindar was Executive Director of Investment Banking at EFG Hermes, where he advised on key transactions including the IPOs of Orascom Construction Industries, Ezz Steel and Orascom Telecom. In 1999, he was on secondment to Goldman Sachs in London, where he advised European firms on strategic options and M&A transactions. Mr. El-Khazindar sits on the boards of leading regional companies including ASEC Holding and El Sewedy Cables. He is the Chairman of the Capital Markets and Investment Committee at the American Chamber of Commerce in Egypt and a board member of the Egyptian Capital Markets Association. He holds a BA in Economics from the American University in Cairo and an MBA from Harvard Business School.

Abdalla ElEbiary | Managing Director, Citadel CapitalBefore joining Citadel Capital in February 2006, Mr. ElEbiary was a banker with the Investment Banking Division at Merrill Lynch & Co., where he participated in M&A transactions in addition to public and private financing, including the comprehensive financing of telecom and media companies such as Clearwire and Valor Communications Group. Previously, he was Business Analysis Manager in the Corporate Finance Department of the MeadWestvaco Corporation. He sits on the boards of Citadel Capital platform companies including Nile River Transportation Company (NRTC), ASEC Cement and Gozour. Mr. ElEbiary holds a BA in Economics from the American University in Cairo and an MBA from Columbia University in New York.

Hesham Gabr | Board MemberHesham Gabr joined ASEC Holding in April 2006 and served as the group CEO and Managing Director until March 2011. Bringing 27 years of expertise in managing national and multinational enterprises with complex structures and diversified


operations, Hesham Gabr is heading the strategic business transformation of ASEC Group. Since joining the group, he has implemented a dynamic and flexible management model and fostered operational and functional integration among the group companies. Under his leadership, the ASEC Group is being re-positioned as a regional player in the cement industry. His track record includes more than 10 years in the IT and Telecom sectors, during which he was the Managing Director for Nile Telecom Company and Triangle-MCS Company. Prior to that, he was the General Manager for the Egyptian Subsidiary of the French IT Group Bull. Hesham Gabr holds an MBA from the American University in Cairo and a BSc in Electrical Engineering from Ain-Shams University, Cairo.

Sohail Hajjar | Representing MAF TrustEstablished in June 2002, Majid Al Futtaim Trust is dedicated to the professional management of proprietary funds. The investment philosophy is geared towards achieving superior returns across the full spectrum of investments in domestic and international markets. The overall objective is to deliver consistent, value-added medium to long term absolute return through optimal asset allocation and security selection decisions.

Pekka Ettala | Representing Rashed Abd Al Rahman Al Rashed & Sons Co.The Al-Rashed Group of Companies was founded in the year 1950. The various divisions of the group contribute to almost every sector of the national economy. In partnership with other leading Saudi and foreign organizations, Al-Rashed has formed several industrial and commercial joint ventures in which it holds substantial equity interest with management responsibilities.

Yasseen Ibrahim Mansour | Representing al Mansour & al Maghraby Investment and Development CompanyIn cooperation with the El-Maghraby Group, another well-respected Egyptian conglomerate, the Mansour Group established the Mansour-Maghraby Investment and Development Company (MMID). MMID is particularly active in Egypt’s financial sector, with equity in several investment banking and insurance firms. MMID also participates in Egypt’s tourism, real estate development and marketing sectors, as well as in industrial and information technology projects.

CIB Representative | Board Member varies each sessionUnder the slogan “To grow and help others grow”, CIB has gone from strength to strength and now holds the largest market capital in the Egyptian banking sector, amounting to approximately EGP 18 billion. CIB is recognized as a market leader in adopting international best practices regarding Corporate Governance and Disclosure, and creating tremendous opportunities in Retail and SME banking. CIB is recognized as the bank with the strongest brand equity in Egyptian corporate banking and has also been consistently recognized on a global level as the “Best Bank in Egypt”, an award it has received on numerous occasions from publications such as The Banker, Global Finance, Euromoney and Emerging Markets.

Mustafa Abdalla | Representing Al Rajhi Holding GroupMr. Mustafa Abdalla is responsible for all investment activities at Al Rajhi Holding and also represents Financial Holding International on the boards of several other companies in the banking, telecommunications, petrochemical, oil and gas, technology, and manufacturing sectors. Mr. Abdalla began his professional career with First National Bank of Chicago (now JP Morgan Chase), as a Vice President, where he held various senior executive management positions in cash management, sales and marketing, investment banking and commercial lending. He also headed the Corporate Banking division for the National Commercial Bank (NCB), Saudi Arabia’s largest bank. Additionally, Mr. Abdalla was appointed for a three-year term as Senior Public Service Administrator for the State of Illinois, and also served as a part-time professor at Northeastern University, where he was actively involved in the formation of the university's graduate school for business.


Corporate Governance

ASEC Cement believes a strong, hands-on approach to corporate governance is key to the integrity of any corporation. Since its incorporation, ASEC Cement has taken significant steps to bring its practices into conformity with global standards at all levels, from the Board of Directors to on-site operations.

In addition to observing international best practices, ASEC Cement benefits greatly from the managerial expertise of its parent holding companies, Citadel Capital and ASEC Holding. In the area of corporate governance, ASEC Holding’s code of business ethics provides comprehensive guidelines for all of its subsidiaries aiming to foster a culture of honesty and transparency. ASEC Cement seeks to surpass these general parameters which include fair dealing, consistent and accurate reporting, proper use of company assets and the reduction of various conflicts of interest, to name a few.

ASEC Cement’s Board of Directors, the governing body responsible for overseeing the affairs of the company and serving the shareholders’ best interests, consists of ten members, most of whom are non-executive directors (bios included on pp. 30):

Giorgio BodoChairman and Chief Executive Officer, ASEC Cement

Sohail HajjarRepresenting Majid Al Futtaim (MAF) Trust

Ahmed HeikalChairman and Founder, Citadel Capital

Mr. Pekka EttalaRepresenting Rashed Abd Al Rahman Al Rashed & Sons Co.

Hisham El-KhazindarManaging Director and Co-Founder, Citadel Capital

Mr. Yassin Ibrahim MansourRepresenting Al-Mansour & Maghraby for Investment and Development

Abdalla ElEbiaryManaging Director, Citadel Capital

CIB Representative

Hesham GabrBoard Member of ASEC Holding

Mustafa AbdallaRepresenting Al Rajhi Holding Group

The participation of major players from the finance industry in the decision-making processes of ASEC Cement has, among other things, helped the company strengthen its balance sheet as well as optimize the use of its existing assets.

Beyond the excellent financial performance of the company, ASEC Cement’s directors have also pushed it to lead the regional cement industry in matters related to environmental awareness and social responsibility.


As a major industry player, ASEC Cement continues to employ technologies and practices aimed at making its operations among the safest and most environmentally sound in the region. Since it expanded its operations outside Egypt to include greenfield plants in Sudan and Algeria, these policies have focused primarily on two areas of good practice: employee health and safety, and environmental sustainability.

The Zero Harm Project

Cement manufacturers face exposure to a wide range of risks related to the safety and health of their staff as well as the surrounding environment. For this reason, the ASEC Group launched an initiative known as the Zero Harm Project, which aims to protect the company’s people, physical assets and surrounding environment by implementing a comprehensive system of work regulations.

In addition to rolling out these regulations, ASEC Cement registered a number of accomplishments in terms of worker safety in 2011, including:

Environmental Sustainability

In addition to worker safety, environmental sustainability forms a key pillar of ASEC Cement’s operations. ASEC Cement’s insistence on using the most energy efficient systems in all of its production facilities in Egypt, Algeria and Sudan comes from a firm belief that economic wellbeing and respect for the environment go hand in hand.

ASEC Cement’s operations in Algeria and Sudan are particularly illustrative examples. Prior to ASEC Cement’s takeover of the Zahana Cement Company, the plant’s dilapidated pipes not only accounted for a 3% loss in production but were also in breach of environmental standards. In addition to replacing the pipes, ASEC Cement improved the overall efficiency of the plant by renovating the wet kiln, installing a new electrical tunnel, paving all of the surrounding roads and eliminating excessive scrap and dust. Meanwhile, the company’s decision to use state-of-the-art technologies at Al-Takamol, its 1.6 mtpa cement plant in Sudan, will significantly raise efficiency standards in the Sudanese cement industry where cheap substandard equipment imported from China is the norm.

Beyond the policies implemented at each individual operation, ASEC Cement is also committed to ensuring that, as a whole, the group’s environmental management systems remain in compliance with the international system standard 14001. By 2013, ASEC expects all of its plants to be ISO 14001 certified.

Corporate Social Responsibility

Portfolio


Arab National CementInformation Sheet

TECHNICAL IFORMATION(ONE LINE)

Crusher■ EV 200 X 300■ 1,200 t/hr

Raw Mill■ Atox50■ 480 t/hr

Pre-Heater■ 1 string 5 stage■ 5,500 tpd

Kiln■ 3-base 4.75x74m■ 5,500 tpd

Cooler■ SF 4x6 cross bar cooler■ 5,500 tpd

Clinker Storage■ Circular■ 60,000 ton

Cement Mills■ UMS 54X16■ 2x200 ton

Cement Silos■ CFS■ 2x20,000

Packing Plant■ Ventomatiic■ 3x120 t/hr

■ (Type) ■ (Capacity)

PROJECT PARTIESTurnkey ContractorN/A

Equipment SupplierF.L.Smidth

Project ConsultantASEC Engineering

Quarry OperatorASCOM

Greenfield

27 Employees

EgyptMinya - 250 Kms south of Cairo

45.1% ASEC Cement30.7% Safari Investments13.88% Misr Qena9.22% IFU/FLS1.07% Others

2013

PROJECTT Y P E

BEGININGOF

OPERATIONS

LOCATION

OwnershipStructure


Misr Qena CementInformation Sheet

TECHNICAL IFORMATION

Crusher ■ LARON IMPACT

Crusher- IM 13 R■ 300 T/h

Raw Mill ■ FRM48/350 Fuller

Roller Mill ■ 450 T/h

Pre-Heater ■ FLS - ILC 5.1 ■ 4500 T/24 h

Kiln ■ FLS - Coolax RK - 4.75

X74 m ■ 4500 T/24 h

Cooler ■ F.L.S - Coolax 1490 C

- 2HY-EX■ 4500 T/24 h

Clinker Storage■ ■ 2 X 30000 MT

Cement Mills ■ F.L.Smidth Unidan

UMS , 4.6 X 16■ 2 X 140 MTPH

Cement Silos ■ CFI 20 ■ 3 X 15000 MT

Packing Plant ■ VENTOMATIC ROTARY

PACKER GEV/8 PLUS■ 4 X 100 MTPH






Brownfield

512 Employees

EgyptQena – South Egypt

27.55% ASEC Cement

OwnershipStructure

2002

PROJECTT Y P E

BEGININGOF

OPERATIONS

LOCATION


ASEC Ready MixInformation Sheet

TECHNICAL IFORMATION(THREE STATIONS)

Concrete Batch Plant ■ Texnokat ■ 110 M3 per hour

Cement Storage Silo ■ Local Fabrication ■ 150 tons

Aggregates vibrating system ■ Local Fabrication ■ 150 m3/hr

Electrical Generators ■ Caterpillar ■ 410 KVA per hour

Underground Water Tank ■ Local Fabrication ■ 50M3

Mobile Concrete Pump ■ Putzmeister ■ BSF 36-4.16H

Truck Mixer ■ MAN TGA 33-360■ 9 M3

Lab Equipment ■ In-house testing lap ■ Full In-house testing lap



Equipment SupplierTexnokat, Sphinx, Mantrac, Kastoor, Man - Putzmeister

Project ConsultantN/A

Quarry OperatorN/A

Greenfield

124 Employees

Assiut plant New Asyut City - industrial zoneSohag Plant Al Esawia - SohagQena Plant Qena Safaga Road 8Km.

55% ASEC Cement45% Misr Qena Cement

OwnershipStructure

JUN.2010 Qena Batch Plant OCT.2010 Assiut Batch Plant OCT.2011 Sohag Batch Plant

PROJECTT Y P E

BEGININGOF

OPERATIONS

LOCATIONS


Al-Takamol CementInformation Sheet

TECHNICAL IFORMATION(ONE LINE)

Crusher■ EV 200 X 200■ 1,060 t/hr

Raw Mill■ Atox40■ 355 t/hr

Pre-Heater■ 1 string 5 stage■ 4,500 tpd

Kiln■ 3-base 4.75x77m■ 4,500 tpd

Cooler■ SF 4x5 cross bar cooler■ 4,500 tpd

Clinker Storage■ Circular 25x45■ 45,000 ton

Cement Mills■ UMS 46X15.5■ 2x200 ton

Cement Silos■ CFS■ 2x15,000

Packing Plant■ Ventomatiic■ 3x120 t/hr


PROJECT PARTIESTurnkey ContractorARESCO

Equipment SupplierF.L.Smidth – Denmark

Project ConsultantHoltec - India


Greenfield

227 Employees

SudanAtbara - 300 Kms North of Khartoum

51% ASEC Cement49% Sudanese

Pension find

OwnershipStructure

2010

PROJECTT Y P E

BEGININGOF

OPERATIONS

LOCATION


Zahana CementInformation Sheet

TECHNICAL INFORMATION(TWO LINES)

Crusher■ DRAGON DUO 08■ 1200 T/h

Raw Mill■ FCB Annulaire■ 300 T/ha

Pre-Heater■ 2 towers 4 stages

Kiln■ L=84m D= 5,6 m■ 3000 T/j

Cooler■ Fuller

Clinker Storage■ Silos■ 7 x 7500 T

Cement Mills■ FCB et KHD■ 150 T/h et 100 T/h

Cement Silos■ 6 Silos■ 3 x 2500 ; 2 x 4000 ; 15000

Packing Plant■ 4 Packers ■ 100 T/h



Equipment SupplierMixed

Project ConsultantN/A

Quarry OperatorN/A

Brownfield

789 Employees(As of Dec 31 -2011)

OranWest Algeria

35% ASEC Cement65% GICA (The holding

company for state-owned cement plants)

Jan2008

PROJECTT Y P E

BEGININGOF

OPERATIONS

LOCATIONS

OwnershipStructure


ASEC AlgeriaInformation Sheet

TECHNICAL INFORMATION(TWO LINES)

Crusher ■ EV 200 X 300 ■ 1,200 t/hr

Raw Mill (x2)■ Atox50 ■ 400 t/hr

Pre-Heater (x2) ■ 1 string 5 stage ■ 4,500 tpd

Kiln (x2)■ 3-base 4.75x77m ■ 4,500 tpd

Cooler (x2)■ SF 4x5 cross bar cooler ■ 4,500 tpd

Clinker Storage ■ Circular ■ 60,000 ton

Cement Mills ■ UMS 54X16 ■ 2x200 ton

Cement Silos ■ CFS ■ 2x20,000

Packing Plant ■ Ventomatiic ■ 3x120 t/hr





Quarry OperatorN/A

Greenfield

20 Employees

AlgeriaDjelfa 300 Kms south of the Capital

17% ASEC Cement83% Djelfa Offshore - 67% AC - 23% Noor Holdings - 10% IFU/FLS

OwnershipStructure

2015

PROJECTT Y P E

BEGININGOF

OPERATIONS

LOCATION


ASEC Cement Company(An Egyptian Joint Stock Company)

Consolidated Financial Statementsand Auditor’s ReportFor The Financial Year Ending December 31, 2011

ContentsAuditor’s Report ............................................................................................................... 44Consolidated Balance Sheet ........................................................................................ 45Consolidated Income Statement ............................................................................... 46Consolidated Cash Flows Statement ........................................................................ 47Consolidated Statement of Changes in Shareholders’ Equity ........................ 48Notes to the Consolidated Financial Statements ................................................ 49


Auditor’s Report

To The Shareholders of ASEC CEMENT COMPANY:

Report on the Consolidated Financial StatementsWe have audited the accompanying consolidated financial statements of ASEC Cement Company S.A.E, which comprise the consolidated balance sheet as at December 31,2011, and the consolidated income statement, statement of changes in equity and statement of cash flows for the financial year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Consolidated Financial StatementsThese consolidated financial statements are the responsibility of Company’s management. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accor-dance with the Egyptian Accounting Standards and in the light of the prevailing Egyptian laws, management responsibility includes, designing, implementing and maintaining internal control relevant to the prepara-tion and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; management responsibility also includes selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether 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 as-sessment 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 reason-ableness 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.

OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of ASEC Cement Company S.A.E. as at December 31, 2011, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the Egyptian Accounting Standards and the Egyptian laws and regulations relating to the preparation of these financial statements.

KPMG Hazem HassanCairo, March 14, 2012


Consolidated Balance Sheet

12/31/2010L.E

12/31/2011L.E

NoteNo.

RestatedLong term assets

1 637 488 8951 722 303 312(3/4,5)Fixed assets (Net)1 352 705 3872 205 840 426(3/5,6)Projects under construction

792 929 149706 153 465(3/1,8)Investments in associates6 263 3527 048 024(9)Other assets5 752 6035 401 822(3/19,10)Employee benefits

261 883 073214 136 432(3/6,7)Intangible assets 164 958 718164 958 718(3/7)Goodwill

4 221 981 1775 025 842 199Total long term assetsCurrent assets

223 523 202 211 750 117 (3/8,11)Inventories 1 959 627 10 417 140 (3/9,12)Trade receivable

63 711 978 36 865 734 (13/A)Due from related parties 268 772 540 237 412 752 (3/9,14)Debtors & other debit balances 410 175 583 347 689 695 (3/10,15)Cash on hand & at banks

968 142 930 844 135 438Total current assetsCurrent liabilities

50 020 899 44 179 243 (3/11,16)Provisions 113 297 134 107 096 842 (18)Loans & bank facilities - Short term 23 206 120 19 175 940 Trade & notes payables

315 985 376 508 971 375 (13/B)Due to related parties 115 429 965 184 977 572(3/12,19)Creditors & other credit balances617 939 494864 400 972Total current liabilities350 203 436(20 265 534)Excess of current liabilities over current assets/Working capital

4 572 184 6135 005 576 665Total investmentsFinanced as follows:Equity

2 857 348 086 3 158 877 540 (20)Issued & paid up capital 301 529 454 - Payments under capital increase

290 353 290 353 (3/13)Legal reserve 7 140 704 7 890 704 Other reserves

(83 368 946)(44 384 284)Translation reserve 28 274 837 (50 889 309)(Carried forward losses) / retained earnings

(85 010 214)(149 898 022)Net loss for the year3 026 204 2742 921 886 982Equity attributable to the equity holders of the company

958 749 088 942 814 995 (21)Non controlling interest3 984 953 3623 864 701 977Total equity

Long term liabilities537 973 7411 090 564 727 (18)Long term loan

- 3 226 000 Operating lease payable49 257 51047 083 961(3/14,25)Deferred Tax

587 231 2511 140 874 688Total long term liabilities4 572 184 6135 005 576 665Total equity & long term liabilities

* The accompanying notes form an integral part of these financial statements and to be read therewith.

Chief Executive OfficerMr. Giorgio Bodo

Group Chief Financial Officer Mr. Tarek El-Gammal


Consolidated Income Statement

2010L.E

2011L.E

NoteNo.

Restated352 586 550877 784 988(3/15,27)Operating revenue

Less:(312 038 534)(906 250 748)Cost of sales

40 548 016(28 465 760)Gross (loss) / profitAdd / (Less):

(133 026 017)(241 930 564)General & administrative expenses(9 648 419)(9 563 139)(3/4)Depreciation

(24 234 966)(2 649 752)(3/11,16)Provision-2 729 071(3/11,16)Provisions no longer required

(674 264)( 69 393)(17)Impairment losses of trade receivables-(12 940 891)(14)Impairment losses of debtors and other debit balances

(127 035 650)(292 890 428)Add / (Less):

1 856 1313 543 176Other income-(17 368 463)Losses From Investments Sale

7 000-Capital gain on sale of fixed assets(122 686 665)(10 491 873)Foreign exchange loss(52 819 726)(57 552 309)Finance cost

5 042 8487 669 383Interest income112 234 82698 445 553Share of profit of associate company

(56 365 586)24 245 467(183 401 236)(268 644 961)Net loss before tax

(4 985 578)(14 504 182)(3/14)Current tax(2 852 822)3 356 408(3/14)Deferred tax

(191 239 636)(279 792 735)Net loss after taxAttributable To:

(85 010 214)(149 898 022)Equity holders of the company(106 229 422)(129 894 713)Non controlling interest

(191 239 636)(279 792 735)Net loss for the year(0.298)(0.475)(3/22,29)Losses per share


Consolidated Cash Flows Statement

Note No.

2011L.E

2010L.E

Cash Flows from Operating Activities:Net Loss before tax (268 644 961) (183 401 236)

Adjustments to reconcile net loss to net cash provided from Operating activitiesDepreciation 94 063 811 58 347 169Interest income (11 888 918) (4 433 693)Finance cost 52 862 179 52 819 726 Provision formed 5 890 484 24 234 966 Provision no longer required (2 729 071) -Impairment losses of trade receivables 69 393 674 264 Impairment losses of debtors and other debit balances 12 940 891 -Share of profit of associate company 86 775 685 (112 234 826)Foreign exchange from sale of investments (711 675) -losses from sale of investments 17 368 463 -Capital gain - (7 000)Share-based payments 750 000 750 000 Dividends income (185 221 238) -Capital call interest - 301 756 Translation adjustment (1 667 029) 4 850 593

(200 141 986) (158 098 281)Changes In Working Capital Inventory 31 036 022 (201 246 058)Trade receivables ( 633 362) (1 854 987)Debtors and other debit balances 45 558 262 (157 934 424)Trade payables 2 180 311 8 061 403 Net change in due from / to related parties 170 545 734 360 489 086 Creditors and other credit balances 13 234 279 21 628 133 Provision used (10 984 043) (3 868 881)Employee benefit - (5 715 209)Cash provided by (used in) operating activities 50 795 217 (138 539 218)Interest received 11 888 918 4 433 693Interest paid (52 305 171) (52 819 726)Net cash provided by (used in) operating activities 10 378 964 (186 925 251)Cash Flows From Investing Activities:Payments for purchase of fixed assets, assets related to acquisition of investments and projects under construction (844 139 422) (797 407 459)

Proceeds from selling fixed assets - 439 582 Dividends income 185 221 238 82 320 550 Restricted time deposits (44 713 000) (38 063 000)Net cash used in investing activities (703 631 184) (752 710 327)Cash Flows From Financing Activities:Amounts paid from loans and bank facilities 483 185 377 457 263 449 Proceeds from paid under capital increase 98 766 500 17 798 667Proceeds from disposal of subsidiaries that does not result in loss of control - 448 334 026

Cash acquired from acquisition of subsidiaries - 6 468 125Net cash provided by financing activities 581 951 877 929 864 267Net changes in cash & cash equivalents (111 300 343) (9 771 311)Cash and cash equivalents at the beginning of the year 410 175 583 383 905 498 Effect of exchange rate fluctuation on cash held 4 101 455 (2 021 604)Cash and cash equivalents at the end of the year (3/10,15) 302 976 695 372 112 583

* The accompanying notes form an integral part of these financial statements and to be read therewith.


Consolidated Statement of Changes In Shareholders’ Equity

Equi

ty h

olde

rs o

f the

Com

pany

Shar

e ca

pita

lL.

E.

Paym

ents

un

der

capi

tal

incr

ease

L.E.

Lega

l Re

serv

eL.

E.

Tran

slat

ion

rese

rve

L.E.

Oth

er

rese

rves

L.E.

(Car

ried

fo

rwar

d lo

sses

) /

Reta

ined

ea

rnin

gsL.

E.

Net

pro

fit

/ (lo

ss) f

or

the

year

L.E.

Tota

lL.

E.

Non

-co

ntro

lling

in

tere

stTo

tal e

quit

y

Bala

nce

as a

t Jan

uary

1,2

010

2 85

7 34

8 08

628

3 73

0 78

729

0 35

3(4

9 62

7 64

6) 6

088

948

(4

6 65

1 45

1)55

090

087

3 10

6 26

9 16

465

2 43

3 20

93

758

702

373

Paym

ents

und

er c

apita

l inc

reas

e-

17 7

98 6

67-

--

--

17 7

98 6

67-

17 7

98 6

67Tr

ansf

er to

Car

ried

forw

ard

loss

es-

--

--

55 0

90 0

87(5

5 09

0 08

7)-

--

Chan

ge in

ow

ners

hip

that

doe

s no

t res

ult i

n lo

ss o

f con

trol

--

--

-19

836

201

-19

836

201

-19

836

201

Capi

tal c

all i

nter

ests

rese

rve

--

--

301

756

--

301

756

-30

1 75

6 Sh

are

base

d pa

ymen

ts re

serv

e-

--

-75

0 00

0 -

-75

0 00

0-

750

000

Tran

slat

ion

rese

rve

--

-(3

3 74

1 30

0)-

--

(33

741

300)

(28

115

704)

(61

857

004)

Net

loss

for t

he y

ear

--

--

--

(85

010

214)

(85

010

214)

(106

229

422

)(1

91 2

39 6

36)

Chan

ge in

non

-con

trol

ling

inte

rest

--

--

--

--

440

661

005

440

661

005

Bala

nce

as a

t D

ecem

ber

31,2

010

2 85

7 34

8 08

630

1 52

9 45

429

0 35

3(8

3 36

8 94

6)7

140

704

28 2

74 8

37(8

5 01

0 21

4)3

026

204

274

958

749

088

3 98

4 95

3 36

2Ba

lanc

e as

at J

anua

ry 1

,201

12

857

348

086

301

529

454

290

353

(82

472

385)

17 2

03 5

6018

211

981

(88

188

027)

3 02

3 92

3 02

295

6 62

1 20

83

980

544

230

Prio

r yea

r adj

ustm

ents

--

-(8

96 5

61)

(10

062

856)

10 0

62 8

563

177

813

2 28

1 25

22

127

880

4 40

9 13

2Pa

ymen

ts u

nder

cap

ital i

ncre

ase

301

529

454

(301

529

454

)-

--

--

--

-Tr

ansf

er to

reta

ined

ear

ning

s-

--

--

(85

010

214)

85 0

10 2

14-

--

Shar

e ba

sed

paym

ents

rese

rve

--

--

750

000

--

750

000

-75

0 00

0Ch

ange

in o

wne

rshi

p th

at d

oes

not r

esul

t in

loss

of c

ontr

ol-

--

--

5 84

6 06

8-

5 84

6 06

8-

5 84

6 06

8

Tran

slat

ion

rese

rve

--

-38

984

662

--

-38

984

662

21 4

43 7

5160

428

413

Net

loss

for t

he y

ear

--

--

--

(149

898

022

)(1

49 8

98 0

22)

(129

894

713

)(2

79 7

92 7

35)

Chan

ge in

non

-con

trol

ling

inte

rest

--

--

--

--

92 5

16 8

6992

516

869

Bala

nce

as a

t D

ecem

ber

31,2

011

3 15

8 87

7 54

0-

290

353

(44

384

284)

7 89

0 70

4(5

0 88

9 30

9)(1

49 8

98 0

22)

2 92

1 88

6 98

294

2 81

4 99

53

864

701

977

* T

he a

ccom

pany

ing

note

s fo

rm a

n in

tegr

al p

art o

f the

se fi

nanc

ial s

tate

men

ts a

nd to

be

read

ther

ewith

.

Notes To The Consolidated Financial StatementsFor the financial year ended December 31, 2010


1 General1-1 Background

ASEC Cement Company is an Egyptian joint stock company incorporated under the provision of Law no. 159 for the year 1981 and its executive regulations with consideration to Law no. 95 for the year 1992 and its executive regulations. The company was registered in the commercial registry under registration no. 16960 - Cairo, on November 30, 2005.

The Company was established with the name ASEC Cement Manufacturing, as per the extraordinary general assembly meeting held on December 25, 2006, the Company’s name was modified to be ASEC Cement Company and this was approved in the commercial registry during January 2007.

The headquarters are located in New Maadi – Cairo. The main shareholder’s of the company are:

1. National Development & Trading Company (NDT) with 61.05 %2. Rashed Abd El Rahman Al Rashed & his Sons with 15.17 %

The company is considered a holding company as it has the ability to control the financial and op-erating policies of the following subsidiaries which are included in the consolidated financial state-ments as at December 31, 2011 as follows:-

Company Name Percentage of contribution

Acquisition date * Legal structure

Al Takamoul for Cement* Company- Limited 51% 1/5/2006 Limited Liability Company in SudanASEC Algeria Cement Company (ASECCIMENT)* 60.892% *** 25/1/2007 Joint Stock Company in AlgeriaASEC Syria Cement Company* 99.99% 23/5/2007 Joint Stock Company in SyriaSociete Des Ciments De Zahana ** 35% 31/12/2007 Joint Stock Company in AlgeriaDejalfa Offshore* 54.53% 5/1/2009 BVIBenaa for Import and Export* 99.88% 22/7/2009 Joint Stock Company in EgyptASEC Ready Mix* 54.99% 20/10/2009 Joint Stock Company in EgyptArab National Cement Company 45.12% 23/5/2010 Joint Stock Company in Egypt

* The acquisition date is the date on which subsidiaries companies were established as ASEC Cement Company is one of the main founders of those companies.

** The acquisition date of Societe Des Ciments De Zahana is the date on which ASEC Cement Company had the ability to control the financial and operating policies of Societe Des Ciments De Zahana according to a contract dated December 31, 2007 to delegate management of Societe Des Ciments De Zahana to ASEC Cement Company.

*** Percentage represents the direct contribution of ASEC Cement Company in ASEC Algeria Cement Company (ASECCI-MENT) with 13.994 % and indirect contribution with 46.898 %.

1-2 Purpose of the companyThe purpose of the company is establishing, owning and managing industrial projects related to the manufacturing of construction materials specially cement, including the importing of machinery and equipments necessary for the company purposes. The company may join in any aspect with companies having and performing same kind of business and in which they may assist the company to achieve its purposes in Egypt or abroad, the company may also merge with those companies or acquire them according to the law and its executive regulations.

1-3 Purposes of subsidiaries companies

Al Takamoul Cement Company –LimitedThe company’s purpose is to perform the following main activities:• Establishing cement plants with all its types, supplements, derivatives, building materials and ma-

terials necessary for such products.• Managing, utilizing those mines and quarries.• Importing, exporting, and commercial agencies related to the Company’s purposes.• Contribution with local or foreign companies that perform similar activities to achieve its purposes.• The company is allowed to perform all operations and integrated activities to enable the company

to achieve its purposes.



ASEC Algeria Cement Company (ASECCIMENT)The company’s purpose is to perform the following main activities:• Establishing, owning, managing and operating the industrial projects related to cement manufac-

turing in all types and building materials and quarries extracts related to this activity for which the company is allowed to use and utilize quarries.

• Manufacturing sacks and packing materials necessary for packing the company’s products.• Owing motor vehicles and transportations necessary for production supplies of the company as

well as its products and employees.• Importing machinery and equipments for the company’s purpose. • Importing production supplies (e.g. raw materials). The company may export its products abroad.

ASEC Syria Cement Company The purpose of the company is establishing and investing in the Black Portland Cement project and importing all supplies necessary for producing and contributing in similar projects.

Societe Des Ciments De ZahanaThe purpose of the company is utilizing and operating Zahana cement plant for producing and sell-ing all types of cement

Benaa For Import And ExportThe company’s purpose is to import and export all the materials, machinery and equipments re-lated to the construction and decoration including wood, aluminum, gypsum, steel, cement, clinker, ceramic, marble, and material of paints and insulation.

ASEC Ready MixThe company’s purpose is to establish and operate factory for cement and concrete products.

Arab National Cement CompanyThe company’s purpose is to establish and operate a cement factory to produce all cement types and to utilize the quarry material, produce construction materials and also produce bags needed for packing the company’s products.

2 Basis of preparation of the consolidated financial statements

2-1 Compliance with the accounting standards and laws The consolidated financial statements have been prepared in accordance with Egyptian Accounting Standards and applicable laws and regulations.

2-2 Basis of measurement

The consolidated financial statements have been prepared on historical cost basis except for the as-sets and liabilities which are stated at fair value through profit and loss and available for sale invest-ments.

2-3 Functional currency and presentation currency

The consolidated financial statements are presented in Egyptian Pound which is the company’s func-tional currency.

2-4 Use of estimates and judgments

The preparation of the consolidated financial statements in conformity with Egyptian Accounting



Standards requires management to make judgments, estimates and assumptions that may affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. These estimates and associated assumptions are based on management’s historical experience and other various factors which could be reasonable in the light of current events and actions upon which the book values of assets and liabilities are determined. Actual results ultimately may differ from those estimates.The estimates and underlying assumptions are reviewed on a going basis. Revisions to accounting esti-mates are recognized in the year in which the estimate is revised if the revision affects only that year or in the year of the revision and future years if the revision affects both current and future years.The following are the most important items for which estimates and judgments are used:• Measurement of the recoverable amounts of investments. • Provisions for contingent liabilities.• Impairment losses of trade receivables.• Impairment losses of inventory.• Recording deferred tax.

3 Significant accounting policiesThe accounting policies set out below have been applied consistently to all years presented in these con-solidated financial statements; some comparative figures have been reclassified to comply with the current presentation of the consolidated financial statements.

3-1 Basis of consolidation

A. Business combinations The Group measures goodwill as the fair value of the consideration transferred including the rec-ognised amount of any non-controlling interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. When the excess is negative, a bargain purchase gain is recognised immedi-ately in profit or loss.

The Group elects on a transaction-by-transaction basis whether to measure non-controlling interest at its fair value, or at its proportionate share of the recognised amount of the identifiable net assets, at the acquisition date.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

B. Subsidiaries Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed when neces-sary to align them with the policies adopted by the Group.

C. Acquisitions of non-controlling interests

Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders. Therefore no goodwill is recognised as a result of such transac-tions.

D. Acquisitions from entities under common controlBusiness combinations arising from transfers of interests in entities that are under the control of the shareholder that controls the Group are accounted for as if the acquisition had occurred at the beginning of the earliest comparative year presented or, if later, at the date that com-



mon control was established; for this purpose comparatives are revised. The assets and liabilities acquired are recognised at the carrying amounts recognised previously in the Group control-ling shareholder’s consolidated financial statements. The components of equity of the acquired entities are added to the same components within Group equity except that any share capital of the acquired entities is recognised as part of share premium. Any cash paid for the acquisition is recognised directly in equity.

E. Investment in associates Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Significant influence is presumed to exist when the Group holds between 20 and 50 percent of the voting power of another entity. Investments in associ-ates are accounted for using the equity method (equity accounted investees) and are recognised initially at cost. The Group’s investment includes goodwill identified on acquisition, net of any accumulated impairment losses. The consolidated financial statements include the Group’s share of the income and expenses and equity movements of equity accounted investees, after adjust-ments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest, including any long-term investments, is reduced to nil, and the recognition of further losses is discontinued except to the extent that the Group has an obliga-tion or has made payments on behalf of the investee.

F. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unre-alised gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee.2 Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impair-ment.

G. Available for sale investmentsAvailable for sale investments are stated at fair value, then at the date of balance sheet the change in fair value ( whether profit or loss ) is directly recognized in owners’ equity except for impairment losses in investment which is recognized in the income statement. In case of sale of investment, the cumulative gain or loss which previously recognized in the owners’ equity are recognized in the income statement. Fair value of available for sale investments is determined ac-cording to active prices in the stock exchange in an active market at the balance sheet date, while Investments which are not listed in the stock exchange and not in an active market, are stated at cost less the impairment loss.

H. Investments valued at fair value through profit and losses An investment is classified at fair value through profit and loss if it is held for trading or if the company manages such investments and makes purchase and sale decisions based on their fair value. Costs related to these investments are recognized in profit and loss. Such investments are measured at fair value and changes therein in profit and loss.

3-2 Foreign currency translation

Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denomi-nated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the



exchange rate at the end of the reporting year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available-for-sale equity instruments, which are recognised in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.The company maintains its accounts in Egyptian pounds, transaction denominated in foreign curren-cies are translated into Egyptian pounds at the exchange rates prevailing at the date of the transac-tion.At the balance sheet date, balances of monetary assets and liabilities denominated in foreign cur-rencies are retranslated at the prevailing exchange rates declared by the banks that company deals with, at that date. Exchange differences resulting from settlement of transactions and retranslation at the balance sheet date are taken to the income statement. Non-monetary assets and liabilities evaluated in foreign currency historical value is translated using the rate prevailing at transaction date.

3-3 Foreign currency translation for foreign subsidiary companies

At the consolidated balance sheet date, assets and liabilities represented in the financial statements of foreign subsidiary companies and denominated in foreign currencies are translated at the pre-vailing exchange rates declared at the date of preparation of the consolidated financial statements. Revenues and expenses are translated based on the average exchange rate during the financial year for which the financial statements are prepared while translation adjustments are classified in the owners’ equity in the consolidated balance sheet.

3-4 Fixed Assets & Depreciation

3-4-1 Recognition and MeasurementFixed assets that are used in production, providing goods & services or for administrative purpos-es are stated at historical cost less accumulated depreciation and cumulative impairment losses resulted from impairment in the values of fixed assets (note no. 3-15). Cost includes expenditures that are directly attributable to the acquisition of the asset and necessary to have the asset ready for use in the purpose for which the asset was acquired.When parts of an item of fixed assets have different useful lives, they are accounted for as separate items (major components) of fixed assets.Assets are stated in the construction phase for production or for rent or for administrative purpos-es at cost less cumulative impairment losses. Cost includes professional fees and all direct costs related to the asset. Deprecation of these assets starts when they are completed and prepared for use in a specific purpose.Strategic spare parts related to fixed assets are included in the category of machinery and equip-ment and then depreciated over the estimated useful lives to which they are related.The cost of self-constructed assets includes the cost of materials, direct labor and any other costs directly attributable to bringing the asset to a working condition for its intended use.

3-4-2 Subsequent costsThe costs of replacing fixed assets or replacing a major part of an item of fixed assets after the acqui-sition date are capitalized. Any subsequent costs are capitalized when they are probable that future economic benefits embodied with the item will flow to the Company and the costs can be measured reliably. All other costs are recognized in the income statement as an expense when incurred.

3-4-3 DepreciationDepreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each type of asset or the useful lives of major components of an item of fixed assets which



are accounted for individually. (Land is not subject to depreciation).The estimated useful lives are as follows:

Asset Useful lifeYears

Buildings & constructions 20Machinery & equipment 5-15Quarries 50Computers & software 3 - 5Furniture & fixtures 4-10Motor vehicles 5 – 6.5Leasehold improvements Lower of lease contract term or useful life

Deprecation of fixed assets begins when an asset is prepared and becomes available for use in its specific purpose.The fixed assets individually costing less than USD 2 000 is expensed in the year of purchase.

3-4-4 Gains & losses from disposal of fixed assetsGains and losses from disposal of fixed assets are determined by comparing net disposal proceeds of an asset to its net book value, resulted gain and losses are recorded in the income statements.

3-5 Projects under construction

Projects under construction are stated at cost. The cost includes all expenditures related directly to have the asset ready to its intended use.Projects under construction are transferred to fixed assets based on their nature when the asset is ready for its intended use.

3-6 Intangible assets related to acquisition of investments

A. Recognition Non monetary assets that have no physical existence acquired for the business purposes and ex-pected to generate future economic benefits are recorded as intangible assets. Intangible assets mainly include license fees and invention rights.

B. Measurement Intangible assets are measured at cost which is represented in the cash amount at the recogni-tion date. Intangible assets are presented at net of amortization (3-5-d) and impairment losses (3-15).

C. Subsequent expenditures

Subsequent expenditures are capitalized over intangible asset when those expenditures expected to increase the future economic benefit related to the asset. Other costs are expensed when incurred.

D. Amortization Amortization is charged to the income statement on a straight line basis over the estimated useful lives of intangible assets, as well utilization rights are amortized over their contract years. License fees are amortized over license years. If useful lives of intangible assets are indefinite, so impairment test must be done regularly at the balance sheet date. Amortization of intangible assets starts from the date on which they become available for use.



3-7 Goodwill

Goodwill that arises upon the acquisition of subsidiaries is included in intangible assets. For mea-surement of goodwill at initial recognition, see note (3-1,B).Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transac-tions.

Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted investee.

3-8 Inventory

Inventory is stated at cost or net realizable value whichever is lower. The net realizable value is rep-resented in estimated selling price during the normal operations less estimated completion cost and selling expenses.Cost of inventory includes all the costs that the company bears for purchasing and having inventory to its suitable condition and location.Cost of inventory is determined according to following:• Materials, spare parts and supplies: Actual cost and cost is calculated using moving average

method. • Finished goods and work in process: Specific costs determined by the parent company including

direct & indirect costs.

3-9 Trade receivables, debtors and other debit balances

Trade receivables, debtors and other debit balances, that do not carry an interest are stated at their nominal value and are reduced by impairment losses, impairment losses are formed when there are objective evidence that the company did not collect the amounts due according to the original terms of the contracts. Impairment represents the difference between book value & the net realiz-able value which are represented in excepted cash flow that the company expects.

3-10 Cash and cash equivalents

For the purpose of preparing the consolidated statement of cash flows, cash and cash equivalents comprise cash at banks and on hand, time deposits - less than 3 months, checks under collections and banks - overdraft that are payable on demand and form an integral part of the company’s cash management.

3-11 Provisions

Provisions are recognized when the company has a legal or constructive obligation as a result of past events, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. If the effect of time value of money is material, provisions are determined by discounting the expected future cash flows by using dis-counting rate before tax which reflects the current estimates of the market for time value of money and obligation risks if appropriate. Provisions are reviewed at the balance sheet date and adjusted - when necessary - to reflect the best current estimate.



3-12 Creditors & Other Credit Balances

Creditors & other credit balances are stated at their cost

3-13 Reserves

As per the company’s law and the company’s articles of incorporation, 5% -at least- of net profit for the year is set aside to form the legal reserve. Transfer to the legal reserve may be suspended once the reserve reaches 50% of the company’s issued share capital. However, if the reserve balance falls below 50% of the company’s issued share capital then transfers to the legal reserve become required to be resumed, this legal reserve is non-distributable but can be used to increase the issued share capital or offset losses. Transfers to legal reserve are recorded during the financial year in which the ordinary general assembly meeting approves such transfers.

3-14 Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is rec-ognized in the income statement except to the extent that it relates to items recognized directly in owners’ equity, in which case it is recognized directly in owners’ equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognized using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax assets/liabilities provided is deter-mined using tax rates enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized

3-15 Revenue recognition

• Sales revenues are recognized when risks & rewards associated with goods are transferred to the buyer, revenues are recorded net of discounts and allowances. Revenues are not recognized unless they are realized.

• Revenues from services are recognized when service is done and invoices are issued.• Profit or loss from sale of investments are recognized at the date of the sale transaction when

significant risks and rewards of ownership of the investments are transferred to the buyer, this profit or loss resulted from the difference between cost and selling price less selling expenses and commissions

• Dividends income is recognized in the income statement when the right to receive dividends (real-ized after the acquisition date) exists.

• Interest income is recognized in the income statement on an accrual basis and by using the effec-tive interest rate.

3-16 Impairment of assets

a- Financial assetsA financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value.Individually significant financial assets are tested for impairment on an individual basis. The



remaining financial assets are assessed collectively in groups that share similar credit risk charac-teristics.All impairment losses are recognized in income statement. Any cumulative loss in respect of an available-for-sale financial asset recognized previously in owners’ equity is transferred to the income statement.An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost and financial assets that are debt securities, the reversal is recognized in income statement. For available-for-sale financial assets that are equity securities, the reversal is recognized directly in owners’ equity.

b- Non-financial assetsThe carrying amounts of the Company’s non-financial assets, other than, investment property and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is es-timated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date.An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in the income statement. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are dis-counted to their present value using a pre-tax discount rate that reflects current market assess-ments of the time value of money and the risks specific to the asset. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior years are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been rec-ognized.

3-17 Interest – bearing borrowings

Interest – bearing borrowings are recognized initially at fair value, net of attributable transaction costs incurred .Borrowings are subsequently stated at amortized cost using the effective interest rate basis ; any differences between cost and redemption value is recognized in the income statement over the year of the borrowing.

3-18 The cost of borrowing

Borrowing costs are recognized in the income statement as an expense when incurred using the effective interest rate method. Borrowing costs related directly to acquire or constructing assets, are capitalized until the date of having these assets available for use, capitalization is temporarily sus-pended during the years in which construction of assets is temporarily suspended. Capitalization is permanently stopped when all essential activities to have the asset ready for use are completed ac-cording to the alternative accounting treatment stated in the Egyptian Accounting Standard No. (14).

3-19 Employee benefits

a- Pension obligationsThe Company contributes to the government social insurance system for the benefit of its per-sonnel in accordance with the social insurance law No. 79 for the year 1975 and its amendments.



The Company’s liability is confined to the amount of its contribution. Contributions are charged to the income statement using the accrual basis of accounting.

b- Employees profit sharingThe company pays 10% of its cash dividends as profit sharing to its employees which should not exceed their total annual wages. Employees’ profit sharing is recognized as profits distribution in the statement of the shareholders’ equity and as an obligation during the financial year in which the shareholders approved these distributions. The employees’ profit sharing in the undistributed profits is not recognized as an obligation.

3-20 Share capital

Common stocks are reclassified in owner equity.

3-21 Dividends

Dividends are recognized as a liability in the financial year in which they are declared.

3-22 Earnings per share

The company presents its basic earnings per common share. Basic earnings per share are calculated by dividing profit or loss related to shareholders for their contribution in common shares by the weighted average of the number of common shares during the year.

3-23 Statement of Cash Flows

Statement of cash flows is prepared according to the indirect method.

4 Acquisition of subsidiaries and non controlling interest

A. Business combination

• On 23 May 2010, the Group obtained control of Arab National Cement Company (ANCCC), a company establishing cement plants for manufacture of all types of cement, aggregates, other building materials and materials necessary for such products by increasing the paid up capital of ANCC of LE 245 510 000 with no cash outflow but through the transfer of the Group’s payable balance at ANCC. As a result the Group’s equity interest in ANCC increased from 4.497 percent to 96.26 percent.

• The following table summarises the major classes of consideration transferred, and the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

Identifiable assets acquired and liabilities assumed: EGPCarrying valueProperty, plant and equipment 20 501 008Intangible assets 200 640 015Trade and other receivables 7 984 140Cash and cash equivalent 6 468 125Trade and other payables (1 741 901)Deferred tax liabilities (15 987)Total carrying value 233 835 400Fair value adjustments – intangible assets 21 674 600Fair value of Identifiable assets acquired and liabilities assumed 255 510 000



The management has accounted for measuring the non-controlling interest at its proportionate interest in the fair value of the identifiable assets and liabilities assumed in the above acquisi-tion.

Fair value was recognised as a result of acquisition as follows:Total consideration transferred 245 510 000Fair value of the previous interest in the acquire 449 700Fair value of net identifiable assets acquired 245 959 700

There measurement to fair value of the Group’s existing 4.497%, interest in the acquire has not re-sulted in any gain or loss.

B. Acquisition of additional controlling interest in subsidiary

On 25 May 2010, the Group acquired an additional 2.47 percent interest in ASEC Cement Djelfa Offshore for USD 6 million in cash (LE 33 345 000), increasing its ownership from 59.38 percent to 61.84 percent. The acquisition was through subscription of the subsidiary’s capital increase. The group recognised an increase of non controlling interest and a decrease in retained earn-ings of LE 213 530.On 25 August 2010, the Group acquired an additional 1.49 percent interest in ASEC Cement Djelfa Offshore for USD 4 million in cash (LE 22 810 000), increasing its ownership from 61.84 percent to 63.33 percent. The acquisition was through subscription of the subsidiary’s capital in-crease. The group recognised an increase of non controlling interest and a decrease in retained earnings of LE 265 421.On 27 December 2010, the Group acquired an additional 2.90 percent interest in ASEC Cement Djelfa Offshore for USD 8 830 000 in cash (LE 50 996 150), increasing its ownership from 63.33 percent to 66.23 percent. The acquisition was through subscription of the subsidiary’s capital in-crease. The group recognised an increase of non controlling interest and a decrease in retained earnings of LE 730 717.On 29 March 2011, the Group acquired an additional 0.9 percent interest in ASEC Cement Djelfa Offshore for USD 3 070 000 in cash (LE 18 296 634), increasing its ownership from 66.23 percent to 67.13 percent. The acquisition was through subscription of the subsidiary’s capital increase.

C. Disposal of subsidiaries that does not result in loss of control

The table below summarise the disposal of subsidiary ASEC Cement Djelfa Offshore (Dejalfa) that does not result in a loss of control through the subscription of non controlling in the subsidiary capital increase:

Date

Non controlling interest subscription of capital increase of

(Dejalfa)L.E

The group percentage of

shareholding before disposal

The group percentage of

shareholding after disposal

11 November 2009 145 352 500 100 67.528 April 2010 61 600 000 67.52 59.38

During 2010 the Group recognised an increase in retained earnings of LE 10 983 013 through a de-crease in non controlling interest.During 2011 the Group recognised an increase in retained earnings of LE 5 846 068 through a de-crease in non controlling interest.



D. Disposal of subsidiaries that resulted in loss of control

The table below summarises the disposal of subsidiary GRD Cement Plant Company that resulted in a loss of control, this table summarises the net assets of GRD Cement Plant Company, and the recog-nised amounts of these net assets at the disposal date:

EGPProperty, plant and equipment (Net) 5 121 287Intangible assets 5 855 463Projects under construction 4 624 703Total long term assets 15 601 453Debtors and other debit balances 34 857Cash on hand and at banks 67 754Total current assets 102 611Due to related parties 13 601 185Creditors and other credit balances 165 104Total current liabilities 13 766 289Excess of current liabilities over current assets (13 663 678)Total Investments 1 937 775



5 Fixed Assets

Land

L.E.

Build

ings

L.E.

Mac

hine

ry &

Eq

uipm

ent

L.E.

Qua

rrie

sL.

E.Co

mpu

ters

L.E.

Furn

itur

e &

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E.

Mot

or

Vehi

cles

L.E.

Leas

e ho

ld

Impr

ove-

men

tsL.

E.To

tal

L.E.

Cost

as

at 1

/1/2

011

49 8

67 7

4421

0 06

0 70

11

630

553

412

173

772

465

6 94

8 31

112

348

133

41 3

04 2

431

749

161

2 12

6 60

4 17

0

Addi

tions

dur

ing

the

year

- 19

499

771

30

693

687

- 1

219

937

744

638

2 14

3 78

110

495

940

64 7

97 7

54

Tran

sfer

s du

ring

the

year

- 12

123

074

- -

- (1

2 12

3 07

4) -

-

Dis

posa

ls d

urin

g th

e ye

ar -

- -

- (5

661

) -

(141

105

) -

(146

766

)

Tran

slat

ion

adju

stm

ents

1 45

4 02

1(1

4 81

4 97

9)31

545

956

4 23

8 35

3 3

4 41

4(1

46 2

13)

1 28

4 74

120

100

036

43 6

96 3

29

Cost

as

at 3

1/12

/201

151

321

765

226

868

567

1 69

2 79

3 05

5 17

8 01

0 81

88

197

001

12 9

46 5

5832

468

586

32 3

45 1

372

234

951

487

Acc.

dep

reci

atio

n as

at 1

/1/2

011

286

771

114

421

341

342

138

932

12 2

44 3

224

550

304

5 57

3 62

78

994

547

905

431

489

115

275

Dep

reci

atio

n ch

arge

for t

he y

ear

60

406

13 2

17 8

5365

518

557

3 68

6 29

31

584

445

1 23

3 77

65

306

008

2 41

7 80

693

025

144

Dis

posa

ls a

ccum

ulat

ed -

- -

- (2

643

) -

- -

(2 6

43)

Tran

slat

ion

adju

stm

ents

33

672

(3 2

54 9

15)

(72

079

973)

198

641

(43

820)

(218

673

)(3

14 5

63)

6 19

0 03

0(6

9 48

9 60

1)

Acc

. dep

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tion

as

at 3

1/12

/201

1 3

80 8

4912

4 38

4 27

933

5 57

7 51

616

129

256

6 08

8 28

66

588

730

13 9

85 9

929

513

267

512

648

175

Net

boo

k va

lue

as a

t 31

/12/

2011

50 9

40 9

1610

2 48

4 28

81

357

215

539

161

881

562

2 10

8 71

56

357

828

18 4

82 5

9422

831

870

1 72

2 30

3 31

2

Net

boo

k va

lue

as a

t 31

/12/

2010

49 5

80 9

7395

639

360

1 28

8 41

4 48

0 16

1 52

8 14

32

398

007

6 77

4 50

632

309

696

843

730

1 63

7 48

8 89

5

Dur

ing

the

finan

cial

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r end

ed D

ecem

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1 20

11 th

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as c

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timat

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l life

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ne o

f its

sub

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arie

s (A

SEC

Read

y M

ix) c

erta

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ems

with

in

the

Mac

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Equ

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ent

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gory

to b

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ears

inst

ead

of fi

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and

the

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as E

GP

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1 78

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se in

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tion

char

ge.



6 Projects under construction31/12/2011

L.E31/12/2010

L.EASEC Cement Company 19 525 -ASEC Algeria Cement Company 1 038 516 226 957 906 950Al Takamol Cement Company Limited 4 814 075 -Societe Des Ciments De Zahana 100 415 234 25 737 215GRD Cement Plant Company - 4 524 562ASEC Syria Cement Company 25 928 608 32 702 641ASEC Ready Mix Company 506 541 6 466 389Arab National Cement Company 1 035 640 217 325 367 630

2 205 840 426 1 352 705 387

7 Intangible assets related to acquisition of investments31/12/2011

L.E31/12/2010

L.E

License fees for constructing cement plant – Minya 200 650 015 200 645 015

An amount of approximately USD 2 million against waiving of the license to establish a black cement factory for ASEC Syria Cement Company in the Arab Republic of Syria according to the agreement signed on January 4, 2005.

11 013 629 12 715 088

Paid compensation for project works 2 472 788 2 854 800

An amount of USD 6.7 million paid for the right to use quarries and land assigned to establish the factory of GRD Cement Plant for Manufacturing and Trading Cement Limited, USD 2.125 million paid for capital increase of GRD Cement Plant for cement manufacturing and trading, as well as geological researches for quarries and land also for GRD Cement Plant for Manufacturing and Trading Cement Limited (USD 759 000).

- 45 668 170

214 136 432 261 883 073

Amortisation has not been commenced because the cement plants have not been constructed yet.

8 Investments in associatesPercentage of

ownership31/12/2011

L.E31/12/2010

L.EBerber for Electricity – Ltd. 24% 92 358 496 60 777 732Misr Cement Company –Qena * 27.55% 613 794 969 732 151 417

706 153 465 792 929 149

* On 21/3/2009, the Chairman and Chief Executive Officer of ASEC Cement Company, Mr. Giorgio Bodo, was appointed as a member of the board of directors as well as member of the executive committee of Misr Cement Company-Qena representing ASEC Ce-ment Company. Based on that, the company now has significant influence over the financial and operating policies of Misr Cement Company-Qena, and therefore, the investment has been transferred from Available for sale to investment in associates.

The difference between the acquisition cost and the company’s share of the net book value of Misr Cement Company - Qena is considered goodwill only.

9 Other assets 31/12/2011

L.E31/12/2010

L.EThis balance mainly represents in the equivalent to 1 000 000 USD deposited at Syria Central Bank as a performance guarantee to establish the company’s plant. This amount shall be refunded after the start up of the production operations.

7 048 024 6 263 352

7 048 024 6 263 352



10 Employee benefits31/12/2011

L.E31/12/2010

L.EPensions- past service cost* 6 384 000 6 232 000 Past service costs depreciated (982 178) (479 397)

5 401 822 5 752 603

* This retirement indemnities of Societe Des Ciments De Zahana that have been renegotiated and resulted in LE 6 384 000 equivalent to DZD 80 000 000 in increase in Pension Provisions as a result of past service cost (Note no. 16). This amount have been capital-ized and will be amortized over the average duration of employee career (12 years).

11 Inventory31/12/2011

L.E31/12/2010

L.ERaw materials 24 210 249 14 797 729Finished goods 29 857 870 156 827 019Oil & Lubricants 11 168 455 2 762 253Packaging 9 451 439 3 314 976Spare parts 68 469 353 37 962 205Production in process 64 596 219 4 289 174Goods in transit 3 996 532 3 569 846

211 750 117 223 523 202

12 Trade receivable31/12/2011

L.E31/12/2010

L.E

Trade receivable 2 864 359 3 547 151

Notes receivable 8 570 550 -

(Less): Impairment (1 017 769) (1 587 524)

10 417 140 1 959 627

13 Related parties transactionsTransactions with related parties during the year were similar to non related entities on an arm’s length basis

Related party Type of relationship Nature of transactions

Total transaction during year

ended31/12/2011

L.E


ended 31/12/2010

L.ENational Development & Trading Company (NDT)

· The major shareholder, owns 61.05% of the company’s share capital

(NDT) finances the company’s projects, in addition of paying some expenses on the company’s behalf

1 470 889 3 544 317

ERCO Group· The major shareholder of

Societe des Ciments De Zahana, owns 65%

Provides services & goods for the company 99 351 2 599 835

AL-Hydeer Trading Company

· Owned by a Shareholder in ASEC Syria Cement Company

Pays expenses on the Company’s behalf - 705 563

Arab Swiss Engineering Company (ASEC)

· A subsidiary of (NDT) with 99.9%

Provides the company projects with consultancy services 102 040 667 31 682 155

ESACO company· Subsidiary of National for

development & trading (NDT) with A percentage of 50.9%

Provides the company projects with civil works and gets loans from the company.

161 539 085 127 650 471



Related party Type of relationship Nature of transactions


ended31/12/2011

L.E


ended 31/12/2010

L.E

ASEC for Manufacturing and Industrial Projects (ARESCO)

· A subsidiary of the major shareholder (NDT)

Payment amounts to Aresco related to AL Takamoul company which is a subsidiary to ACHThe company lent ARESCO an amount of 9 m EGPThe company purchased steel from ARESCO with an amount of 9 m USDDown payment to perform steel works at ANCC

102 260 881 221 575 929

Ascom for Carbonate and Chemical Manufacturing

· Affiliate company, it is a subsidiary company of Citadel Capital Company with a percentage of 61.5% which is the main shareholder of (NDT)

Rendering geological services for the company’s projects - 8 477 336

ASEC Automation · Subsidiary of National for development & trading (NDT) Operation and construction works 32 990 686 42 608 500

Misr Cement Company –Qena

· Shareholder in ASEC Ready Mix with 45%

Misr Cement Company- Qena supplies cement to ASEC Ready MixAsec Cement paid USD 158 145 on behalf of Misr Cement Company –Qena as part of its participation in the share capital increase of ANCCMisr Cement Company- Qena paid EGP M 52 under capital increase in ANCC

23 459 084 56 294 904

Global Energy· Subsidiary of Taqa Arabia

(Citadel Capital Portfolio Companies)

Cash transfer under the investment of Berber company - 74 361 004

Citadel Capital · The main shareholder of (NDT)

Rendering financial advisory services with a percentage of 1% of excess equity invested in the company beyond the 1.818 billion

14 635 666 14 444 814

National Sudanese Pensions Fund

· Owns 49% of El Takamol company in Sudan

Funding El Takamol company and paying expenses on the company’s behalf

4 130 343 8 329 487

Berber for Electricity · An associate company with 24%Construction of electric station in Sudan and pay to Contractors on behalf of Berber Company.

309 318 426 137 413 049

Balances of related parties:

a- Due from related parties31/12/2011

L.E31/12/2010

L.EEL Hydeer Trading Establishment 37 189 732 168Financial Holding Investments Company (FHI) 9 500 000 9 500 000ASEC Automation* - 7 683 600Berber Company - 24 371 074Juba Company 5 227 193 -National Development & Trading Company (NDT) 9 290 886 9 096 761Global Energy 12 810 466 12 328 375

36 865 734 63 711 978

* Excludes down payment balance of Euro 3 093 315 equivalent to EGB 24 070 321 and EGP 9 735 361 for electrical works within the balances of projects under construction.



b- Due to related parties31/12/2011

L.E31/12/2010

L.ENational Development & Trading Company (NDT) 245 789 1 623 855Arab Swiss Engineering Company (ASEC) ***** 72 188 089 45 089 635ASEC for Manufacturing and Industrial Projects (ARESCO)**** 55 878 008 74 394 658Ascom for Carbonate and Chemicals Manufacturing 2 729 523 2 622 021National Sudanese Pension Fund* 5 871 804 9 012 790ERCO Group** 47 474 855 46 066 477Citadel Capital 15 079 995 14 658 210Berber Company 199 070 359 -Misr Cement Company –Qena 2 431 535 56 304 199ESACO Manufacturing and Engineering*** 27 139 830 23 159 158ASENPRO 127 500 127 500ASEC Automation 9 958 668 -Others 70 775 420 42 926 873

508 971 375 315 985 376

* A shareholder in Al Takamol Cement Company with 49%** A shareholder in Societe Des Ciments De Zahana with 65%*** Excludes down payment balance of EGP 4 513 763 for civil works within the balances of projects under construction.**** Excludes down payment balance of EGP 75 107 753 for steel fabrication works within the balances of projects under construction.***** Excludes down payment balance of EGP 570 627 for engineering supervision

14 Debtors and other debit balances 31/12/2011

L.E31/12/2010

L.EAdvances to suppliers 3 205 473 6 996 002Tax authority 39 639 526 77 159 657Prepaid financial cost 30 382 149 31 454 931Prepaid expenses 4 125 321 4 728 770Deposits with others 8 426 121 7 773 660Employees entrust 2 562 965 2 300 341Minority GRD Cement plant* - 2 208 750Borrowings to TCP 3 023 342 2 775 000Borrowings to Mahda 5 001 280 4 560 075Borrowings to Energya 18 014 000 -Letter of Guarantee cover 83 695 015 111 693 900Other debit balances 10 334 908 15 239 383Employees loans - 497 638Amounts due from sale of investment of GRD Cement Plant 27 144 000 -Accrued Interest – Shareholders 1 384 433 1 384 433Accrued Interest 266 592 -Down Payment 207 627 -Amounts due from GRD Company 12 940 891 -

250 353 643 268 772 540Impairment in due from GRD (12 940 891) -

237 412 752 268 772 540

* Represents payments on behalf of the minority shareholders share of GRD Cement Plant Company LTD for cement manufacturing and trading of the share capital.



15 Cash on hand and at banks31/12/2011

L.E31/12/2010

L.ECash on hand 1 111 389 197 281Banks – Current accounts 168 060 317 114 619 060Banks - Time deposits * 178 015 518 282 848 112Checks under collection 20 000 17 917Cash in transit - 12 493 213Letter of Guarantee 482 471 -

347 689 695 410 175 583

* Time deposits include a restricted cash amounted L.E. 63 000 against issuing letter of guarantee issued from the bank in favor of Industrial Development Authority, also includes a restricted amount of L.E 44 650 000 as collateral for the payment of interest on the loan (Note no. 22).

Cash and cash equivalents31/12/2011

L.E31/12/2010

L.ECash on hand and at banks 347 689 695 410 175 583(Less): Restricted cash (44 713 000) (38 063 000)

302 976 695 372 112 583

16 Provisions

Description

Balance as at 1/1/2011

L.E

Made during the year

L.E

Used during the

yearL.E

No longer required

L.E

Translation adjustment

L.E


L.EProvisions for claims 43 788 899 2 649 752 (11 179 769) (2 729 071) 1 960 193 34 490 004Pension provision* 6 232 000 6 635 659 (3 238 265) - 59 845 9 689 239Total 50 020 899 9 285 411 (14 418 034) (2 729 071) 2 020 038 44 179 243

• Provisions for contingent liabilities are related to probable claims from others concerning the activities of the company and its subsidiaries.

• Information which is usually published regarding provisions is not disclosed here according to the Egyp-tian Accounting Standards because such disclosures may materially affect the negotiations with those parties.

*an amount of LE 6 384 000 equivalent to DZD 80 000 000 has been recognized as a result or the re negotiation of the pension indemnity program of Societe Des Ciments De Zahana (Note no.10).

17 Impairment of trade receivablesThis account represented as following:

Description


L.E

Made during the year

L.E

No longer required

L.E

Translation adjustment

L.E


L.E

Accounts receivable 1 587 524 69 393 (694 834) 55 686 1 017 769

18 Loans and bank facilitiesThis account represents the loan for the following:



18-1 ASEC Cement Company – an Egyptian Joint Stock Company

The company made an agreement with Arab African International Bank to grant revolving medium-term facility agreement guaranteed by company’s shares in Misr Cement Company - Qena which is amounted to 8 232 055 shares, this loan amounted to 280 millions EGP for financing the invest-ing activities and for general purposes for the company. The loan will be financed over two years from the bank starting from the loan agreement signature date till April 2011, On August 24, 2010 an amendment to the agreement was done increasing the loan amount from 280 million Egyptian pounds to 380 million Egyptian pounds, and the repayments to become 6 equal annual installments beginning of 1 May 2011 instead of five equal installments.The company has got an approval to reschedule the loan repayments to be 4 equal installments each by an amount of EGP 95 million starting from 1st of may 2013 and to be ended on may 2016 agreed that all terms , conditions, commitments , representation and warranties contained in the original contract and its amendments will remain as it is.

L.ELong term loan 310 510 950Less: Transaction Cost (2 173 135)

308 337 815

18-2 Societe Des Ciments De ZahanaThe company has been granted a loan from External Bank of Algeria, guaranteed by the holding company ERCO, with the amount of 750 000 000 Algerian dinars payable on 5 years. The remaining amount is represented in the due installments:

DZD L.ELoan from Erco Group 346 050 000 27 614 790BEA loan – Long term part 646 221 000 51 568 436BEA loan – Short term 281 250 000 22 443 750

1 273 521 000 101 626 976

18-3 Al Takamoul Cement Company Limited

An agreement with Sudanese Egyptian Bank was made to finance on a loan portfolio granted to the company through a group of syndicated banks totalling USD 60 million, with amount withdrawn 181.8 Million SDG and the remaining portion amounted to 125.6 Million SDG divided into a short-term part of 37.8 Million SDG and a long-term part of 87.8 Million SDG in a form of “Murabha” secured over machinery and equipment of the plant.

SDG L.EShort term loan 37 837 482 79 277 092Long term loan 87 815 325 183 990 670

125 652 807 263 267 762

18-4 ASEC Algeria Cement Company for the (ASECCIMENT)

The company signed a long-term loan agreement with External Bank of Algeria on January 12, 2010 with an amount of USD 180 Million equivalent to DZD 12 780 billion for the purpose of financing the project. The loan is insured by pledging company’s shares and mortgage assets, with ten years tenor starting from the date of first withdrawal and including thirty months deferred payments after that the loan is to be settled in thirty equal quarterly installments.No cash withdrawal from this loan took place so far.



18-5 ASEC Ready Mix Company

According to the signed contract with the Commercial International Bank dated June 11, 2010 the company has been granted a credit facility amounted 28 million EGP with a maximum limit of the original total amount not exceeding 21.5 million EGP for the purpose of financing a maximum of 50% from the investing activities which is amounted to 43 million EGP to establish and operate plants for concrete products in the city of Minya ,Assiut and Qena with a total production capacity 374 400 m3 per year.

A. Loan balance is represented as follows:L.E

Total withdrawal amount 21 500 000Less: Transaction Cost (156 675)Loan Balance 21 343 325

Short term loan 5 376 000Long term loan 15 967 325

21 343 325

B. Principal repaymentsThe loan will be repaid on sixteen constant quarterly instalments commence on February 1, 2012 till November 1, 2015 and amounted to 1 344 000 EGP except the last instalment which is amounted to 1 340 000 EGP.

C. Liabilities and interests related to the loanInterest is calculated based on spread of 1.75% over the prevailing corridor lending rate at the Central Bank of Egypt. Interests are calculated daily on the actual number of days elapsed in a year and are payable every three months.Monthly administrative expenses by 0.05% on the debit balance to be paid every three months.Engagement commission by 0.25% calculated on the undrawn amounts and non-abolitionist throughout the period of withdrawal. Arrangement commission by 0.75% paid with signing the contract.Commission on the issuance of letters of credit by 60% from the bank for the issuance of LCs.An accelerated commission by 0.5% calculated on the accelerated amounts paid.Delay commission by 1% annually over the current interest at that time, is calculated on the in-stalment and the accrued interest from the date of maturity till the date of actual payment.

D. Guarantees and commitmentsFirst rank FDC Mortgage pledge on all tangible and intangible assets of the company for Minya, Qena and Assiut in favor of the bank. Assignment of insurance policies related to the project for the Bank which covering at least 110% of medium-term financing.The company is committed to transfer all the company’s revenues to the company’s accounts in the bank.The company is committed not to enter into any merger or acquisition of any legal entities or any expansion of capital except in an amount up to a maximum 1 300 000 EGP with the excep-tion of year 2010 or not to make any investment without obtaining prior written approval from the Bank.The company is committed not to ensure or borrowing from or lending to others without obtain-ing prior written approval from the Bank.The company is committed that its leverage will not exceed 1.4 in 2010 and 1.95 in 2011 and 1.45 in 2012 and 1.0 from 2013: 2015 and until full repayment of revenue and commissions and any amounts due.



The company is committed to conclude and maintain insurance policy against the risks on the construction, which covers a minimum of 110% from the total value of the facility granted to the company.

18-6 Arab National Cement Company

On 30 September 2010 the company signed a syndicated loan contract by an amount of EGP 1,102 million with- Arab African International Bank- (Loan Agent).This loan is in the form of two tranches:

- Tranche A:Medium term loan to finance the establishment and installation of AL Minya cement production line, with a tenor of 9 years from signature date and a grace year of 30 months (2.5 years) by an amount of EGP 1,082 million will be repaid on 13 semiannual equal installments each by an amount of EGP 83, 2 million with interest rate 1.75 % above CBE corridor rate and the interest will be repaid quarterly.The first installment is due on 30 September 2013 and the last installment is due on 30 Septem-ber 2019.

- Tranche B:Revolving facility with an amount of EGP 20 million to finance the working capital, with a tenor of 3 years from signature date renewed annually at the sole discretion of this tranche’s bank, 30 days prior to the final maturity date or the expiry date.Every withdrawn amount shall be repaid after 4 months from withdrawing; the interest rate is 1.25 % above CBE corridor rate in case of withdrawing in EGP and 3.75 % above LIBOR in case of withdrawing in foreign currency.

- Loan securities:• First priority commercial mortgage over tangible and intangible existing and new assets of the

company in favor of the security agent (Arab African International Bank).• First priority real estate mortgage over existing and new land and buildings of the company in

favor of the security agent.• Custody of and pledge on the company’s shares owned by ASEC Cement Company in favor of

the security agent.• Insurance over the pledged assets covering 110 % of the facility package in favor of the secu-

rity agent.

- Commitments:The borrower shall not declare or pay any dividends, unless the following conditions are satisfied:• The project completion date shall have occurred.• First loan installment is paid.• All payments due under the loan contract have been fully paid.• No event of default shall have occurred and is continuing or would result from such distribu-

tion.

Loan balance is represented as follows:L.E522 064 572Total withdrawal amount (18 978 881)Less: Transaction cost503 085 691



19 Creditors and other credit balances31/12/2011

L.E31/12/2010

L.EDeposits from others 28 196 240 17 932 635Accrued expenses 29 717 848 18 702 049Creditors-purchase fixed assets 78 750 157 500Tax authority 35 614 265 10 739 946Social Insurance 3 789 730 3 023 502Other credit balances 3 607 742 12 640 948Accrued loan interests 5 621 987 4 012 040Services suppliers 41 780 818 37 653 448Payment under sale of investment 15 421 988 -Down payments 20 536 157 10 567 897Accounts receivable - credit balance 612 047 -

184 977 572 115 429 965

20 Share capitalIssued & paid up capitalAccording to the decision of the extraordinary general meeting assembly on June 15, 2007, the issued capital will increase from EGP 909 438 770 to be EGP 1 818 877 540 with an in-crease of EGP 909 438 770, this increase will be as follows:• The first 50% of the increase with an amount of EGP 454 719 385 is approved and notarized in the com-

mercial registry on September 5, 2007. Therefore the paid up capital became EGP 1 364 158 155.

• The second 50% of the increase with an amount of EGP 454 719 385 was fully paid up according to cer-tificate from the Arab African International Bank in January 6, 2008, and notarized in commercial registry for the company on February 21, 2008. Therefore, issued and paid up capital became EGP 1 818 877 540 distributed amongst 181 887 754 shares with nominal value 10 EGP per share.

• According to the resolution of the extraordinary general assembly meeting dated April 3, 2008, the Issued capital of the company was increased to become EGP 4 052 147 530 with an increase of EGP 2 233 269 990 distributed amongst 223 326 999 new ordinary shares of nominal value 10 EGP each. Therefore, The paid up capital was increased to EGP 2 448 858 537 according to the commercial registry.

• Based on the decision made by the board of directors on December 11, 2008 to call for the second instal-ment of EGP 368 489 549 to increase the paid up capital to EGP 2 857 348 086 which was notarized in the commercial registry dated December 23, 2008.

• According to the resolution of the extraordinary general assembly meeting dated 3rd of April 2008 in respect of the Issued capital increase to be EGP 4 052 147 530 to call for the third installment of EGP 301 529 454 to increase the paid up capital to EGP 3 158 877 540 which was notarized in the commercial reg-istry dated 18th of January 2011.

The shareholders contribution represented as follows:

Shareholder Paid up capitalL.E.

Percentage of contribution

National Development and Trading Company (NDT) 1 928 408 062 61.05 %Rashid Bin Abd El Rahman Al Rashid and Sons 479 334 195 15.17 %Al Mansour and Al Maghrabi for Investments and Development 190 039 732 6.02 %Commercial International Bank-Egypt 149 791 934 4.74 %Mohamed Abdullah bin Edwan 99 861 291 3.16 %Dr. Ahmed Mohamed Hasneen Heikl 349 0.00 %Hisham Hussen Alkhazendar 349 0.00 %Karim Hassan Sadek 349 0.00 %United Group for property investment and industrial tourism 9 986 126 0.32 %



Shareholder Paid up capitalL.E.

Percentage of contribution

Esam Hassan Mohamed Allam 3 114 580 0.10%Magdy Hassan Mohamed Allam 3 114 580 0.10%Mohamed Medhet Hassan Allam 3 114 590 0.10%Principal Investment Limited 20 021 296 0.63 %Power Investments Europe 82 253 000 2.60 %Fares Farouk Abdelrazek 1 497 917 0.05 %MAF Trust Company 99 861 291 3.16 %Tamer Abd El Hamid Abo Bakr 18 575 000 0.59 %Abd El Aziz Abdullah El Aziz Al Ghurair 29 958 386 0.95 %Omran Bin Mohamed Bin Abd El Rahman Al-Omaran 29 958 386 0.95 %Yakoob youssof Algwaan 9 986 127 0.32 % 3 158 877 540 100 %

21 Minority interestThe amount is represented in the other shareholders’ contribution in the subsidiary companies as follows:

Name Minority interest percentage

Al Takamol Cement Company Limited 49%ASEC Syria Cement Company 0.003%Societe Des Ciments De Zahana 65%Benaa Company for Import and Export 0.12%ASEC Ready-Mix Company 45.01%ASEC Cement Djelfa Offshore Limited 45.47%ASEC Algeria Cement Company (ASECCIMENT) 39.108%Arab National Cement Company 54.879%

22 Contingent liabilitiesThe contingent liabilities for the group as at December 31, 2011 are as follows:

22-1 ASEC Cement Company - an Egyptian Joint Stock Company

Contingent liabilities as at December 31,2011 amounted to EGP 315 000 that represents Letter of Guarantee issued by the company from Arab African International Bank and in favor of Industrial Development Authority, also contingent liabilities with an amount of USD 1 000 000 is equivalent EGP 6 032 000 that represents Letters of Guarantee issued by the company from National Society General Bank in favor of Societe des Ciments De Zahana

22-2 ASEC Algeria Cement Company (ASECCIMENT)

The contingent liabilities as at December 31, 2011 amounted to DZD 225 000 000 represents letter of guarantee issued by the company from Société Générale Algérie in favor of Société Des Ciments De Zahana guaranteed by deposit (Note no. 15).


Contingent liabilities as at December 31, 2011 as follows:-• Euro 11 500 000 that equivalent to EGP 89 486 100 that represents letter of guarantee issued by



the company from Arab African international bank and in favor of FLSmidth.• Euro 6 854 903 that equivalent to EGP 53 340 742 that represents letter of credit issued by the

company from Arab African international bank and in favor of FLSmidth.• Euro 500 000 that equivalent to EGP 3 890 700 that represents letter of guarantee issued by the

company from Arab African international bank and in favor of cement plant consultant.

23 Capital commitments The capital commitments for the group as at December 31, 2011 are as follows:

23-1 ASEC Cement Company – an Egyptian Joint Stock CompanyContractor Contract amount Not completed

part Currency

Consultancy Contract 5 625 000 4 500 000 USD

23-2 ASEC Algeria Cement Company (ASECCIMENT)Contractor Contract amount The part not

completed Currency

FLSmidth Denmark Company 57 000 000 57 000 000 EuroESACO Manufacturing engineering Company 29 639 408 4 116 918 USDESACO Manufacturing engineering Company 959 176 838 167 159 951 DZDSARL MHDA 12 500 000 4 214 379 USDASCOM for mining Company 763 160 30 220 EuroASEC Automation company 400 366 42 42 366 400 EuroEnergya Company 23 699 815 10 836 915 USDEnergya Company 9 015 848 3 796 441 USDTCB Company 2 909 211 1 292 646 EGPCTC Company 39 500 000 14 188 400 DZDCetim Company 122 850 000 89 337 500 DZD

23-3 Arab National Cement CompanyCurrencyNot completed

PartContract AmountContractor

Euro8 064 59256 501 121FLSmidthEGP1 069 5902 898 950ASCOMEGP25 301 126179 500 000ESACO (Production line)EGP6 524 33730 000 000ESACO (Administrative office)Euro8 787 30411 243 238ASEC Automation – ASAEGP64 902 40779 359 692ASEC Automation – ASAEGP150 215 509290 000 000ARESCOEGP20 018 62620 348 048Nile valley gas companyEGP9 197 53512 500 000Arab Swiss engineering co.EGP581 296581 296Union Trading and ElectricEGP17 450 75017 450 750Engineering office paving a road

24 Share based paymentSome of the directors of the company have been granted an option to purchase the company’s equity instruments which constitutes equity settled share based payment. Equity settled share based payments are measured at fair value determined at the grant of the equity settled share based payments. The fair value of the share based payment is charged over the vesting year based on the company’s estimate of awards that will eventually vest.



25 Deferred tax liabilities31/12/2011

L.E31/12/2010

L.EDeferred tax liabilities resulting from Zahana 45 928 730 46 521 880Fixed assets (ASEC Cement) (27 114) 26 083Deferred tax assets resulting from ANCC (11 244) (11 244)Deferred tax liabilities resulting from Ready Mix 1 193 589 2 720 791Net liabilities resulted from deferred tax 47 083 961 49 257 510

Unrecorded deferred tax assets

The deferred tax assets related to the carry forward losses was not recorded and that is due to the lack of an assurance to the benefit of these assets in the future.

26 Tax status 26-1 ASEC Cement Company - An Egyptian Joint Stock Company

First: corporate tax The company presents the tax returns for years 2006 till 2009 on due dates, and the company has not been inspected yet., knowing that the company has received a notice from the specialized tax authority for the purpose of tax inspection of previous years from the inception of business till De-cember 31, 2008, inspection is currently under progress. The tax return for the year ended December 31, 2010 has been delivered to the tax authority on the legal date.

Second: Salary taxThe company has not been inspected yet, and the company deducts Salary tax and pays it to tax authority regularly and no tax inspection has been done yet.

Third: Sales taxThe company’s activity is not subject to tax on sales yet.

Fourth: withholding tax The company complies with withholding tax rules on its transactions with others, according to in-come tax law No. 91 of 2005 and pays it on legal time.

Fifth: stamp tax The company was notified with estimated tax payable from 27/11/2005 to 31/7/2006.

26-2 Al Takamoul Cement- Limited

I: Business profit tax:• The company registered at the tax chamber Khartoum tax office, the company is subjected to tax

law for year 1986.• According to the amended law of supporting the investments for year 2007 for cancellation of the

exemption of the companies from tax and due to the second paragraph of the exceptional condi-tions from the law of encouraging the investments, which stats of continuance of strategic projects which granted exemption of tax and not started its operation to have that interest of exemption till the starting of activity or operation for 3 years from the amendment of the law of investment , the company presented letter to the tax authority stats the start of company’s activity in August 2010, hence the company presented to the investment authority to have that exemption from tax.

• The company had inspected from the tax authority for the period from inception its activity till 31 December 2009, and finish the disputes to pay the tax differences.



II: Value added tax• The company is subjected to value added tax law and the company submits its tax returns regu-

larly.• The company submits its tax return monthly and pay the tax due regularly. • The company has prepared to inspect, documentation from inception its activity till June30, 2011.

III: Personal Income Tax • The company deduct tax from employees according to income tax law for the 1986 and pay it to

the responsible tax office.• The company has prepared to inspect, documentation from inception its activity till June30, 2011.

V: Elzakat• The company is registered to elzakat chamber by which the company is subjected to elzakat law

for the year 2002.• The company has been inspected by elzakat chamber for the year from the company incepted its

activity on May 2006 till December 2008 and the company paid the accrued amount to elzakat authority for that period.

• The company presented its zakat return for years ended December 31, 2009 & 2010 and paid the accrued amount to elzakat authority.

26-3 ASEC Algeria Cement Company (ASECCIMENT)

I: Corporate tax The company has not started operation up till date and there is no inspection for the company and its books.

II: Salary taxThe company deducts tax on salaries and wages and pays it to the tax authority and no inspection has been done yet.

III: (TVA) Sales tax• According to Order No. 01-03 of 2001, as amended by order 06-08 of 2006 and also after the ap-

proval of the Algerian investment authority, the company has been exempted from TVA for non-exceptional goods and services imported or procured locally and directly used in the completion of the investment.

• Despite that the company the exemption that was granted to the company from TVA for goods and services imported or procured locally and directly used in the completion of the investment. The company paid the TVA on some suppliers’ invoices before the completion of the exemption procedures and these amounts has been paid by the suppliers to the tax authority, the company has the right to recover these amounts or deduct it from future tax due on the company’s products in accordance with the provisions of the law and instructions in this regard.

• The company hasn’t started its activity and currently not subject to the sales tax.• The tax authority including an amount of DZD 178 233 883 (TVA) as at December 31, 2011

IV: Other taxes According to order no. 01-03 of 2001, as amended by Order 06-08 of 2006 and also after the ap-proval of the Algerian investment authority, the company has been exempted from following taxes:• Exemption from customs duties for goods and services imported or procured locally and which

directly used in the completion of investment.• Exemption from real state ownership transfer fees.

26-4 ASEC Syria Cement Company

ASEC Syria Cement Joint Stock Company is exempted from income tax for five years commencing



from date of production- which has not started yet – in accordance with the relevant provisions of the investment law no. 10 for the year 1991, and its amendments.

26-5 Societe Des Ciments De Zahana

I: Corporate income taxThis tax is called “Impot sur les benefice”, it is the tax on the annual profit of the company.The company submits its tax return annually to the Tax Authority at the announced legal dates; the company pays the accrued tax based on those tax returns. Discussions are made with the financial In-charge of the group and any differences are settled. The company has not been inspected ex-cept for what is mentioned before. In all cases, and in the light of applicable tax law in Algeria, that inspection is enough for governmental entities. Tax Authority is not allowed to inspect any past year exceeds four years, as tax liabilities abates by passage of time.

II: Salary taxThis tax is called “impot sur revenue global” and due from employees. The company deducts the amounts due on a monthly basis and to be delivered to the Tax Authority which in turn inspects them, and in case of any differences, the company is notified to settle such differences. The Tax Authority should be informed with the annual adjustments for the employees and any differences –if any- are settled.

III: Sales tax This type of tax is called “taxe sur valeur ajoutee (TVA)” It is a tax paid by the buyer and the company in turn delivers it to the Tax Authority. Delivery of tax is done at the announced legal dates and it is monthly inspected by the Tax Authority as the company sends an authorized person to discuss the submitted tax return, settlements are done monthly.

IV: Professional activity taxThis tax is called “Taxe sur activite professionally (TAP)” and it is a type of tax that the company bears by 2% on sales with a deduction of 30%. The company delivers such tax to the Tax Authority at the announced legal dates. Inspection is done on a monthly basis by the Tax Authority as the company sends an authorized person to discuss the submitted tax return. Settlements –if any- are done im-mediately.

V: Pollution taxThis tax is called “taxe polluante” and the company uses to pay this tax upon the annual notification from the Tax Authority, and payments are made at the announced legal dates.

VI: Real estate taxThe company pays such tax upon receiving notification from the Tax Authority. This tax is called “taxe fonciere”

VII: Area taxThis tax is called “taxe superfiiare” and the company uses to pay this tax upon the annual notification from the Tax Authority and payments are made at the announced legal dates.

26-7 Benaa Company for Import & Export

I: Corporate tax The company is registered in the Cairo tax authority of joint stock companies and the operation starting date has been considered on July 21, 2009 as recorded in tax card. The tax return for the year ended December 31, 2010 has been delivered to tax authority on the legal date.



II: Salary taxThe company has not been inspected yet, and the company deducts salary tax and pays it to tax authority regularly and no tax inspection has been done yet.

III: Sales taxThe company’s activity has not started yet.

IV: Stamp tax Tax stamp has not been estimated yet.

26-8 ASEC Ready Mix Company

I: Corporate tax The company is registered in the commercial register in October, 2009 in the tax authority of invest-ment in December, 2009. The company has not been inspected yet and the tax return for the year ended December 31, 2010 has been delivered to the tax authority on the legal date.

II: Salary taxThe company deducts tax on salaries and wages and pays it to the tax authority.

III: Sales taxThe company is registered in tax authority of sales and provides the sales tax return to the tax au-thority on the legal dates.

IV: Stamp tax Stamp tax has not been estimated yet.


I: Corporate tax The company provided the tax return to the tax authority for the financial year ended at December 31, 2010 on the legal date. No tax inspection has been done yet.

II: Salary taxThe company deducts salary tax and pays it to tax authority regularly and no tax inspection has been done yet.

III: Sales taxThe company’s activity is now not subject to tax on sales. The Company was registered at tax author-ity and provided the sales tax return to it timely.

IV: Withholding tax The company applies withholding tax rules on its transactions with others, according to income tax law No. 91 of 2005 and pays it on legal time.

V: Stamp tax The tax authority determined the tax estimate for stamp duty due on the company from start of activity until July 2006 and the company objected on this estimation and this dispute is transferred to the competent committee.



27 RevenueRevenues are represented in the following:

31/12/2011L.E

31/12/2010L.E

Operating revenues from El-Takamoul 551 569 722 103 142 244Operating revenues from Societe Des Ciments De Zahana 290 868 049 240 377 850Operating revenues from Ready Mix Company 35 296 985 9 066 456Benaa Company for import and export 50 232 -

877 784 988 352 586 550

28 Financial instruments and related risk managementFinancial instruments are represented in financial assets (balances of cash on hand and at banks, due from related parties, and some monetary items in the debtors and other debit balances) as well as financial liabili-ties, due to related parties, some balances of creditors and other credit balances.

28-1 Foreign exchange risk

This risk is represented in the risk of fluctuation in exchange rates, which in turn affects the compa-ny’s cash inflows and outflows as well as the value of assets and liabilities in foreign currencies.

The net balances of foreign currencies as at December 31, 2011 are shown below:Surplus Million

EGPForeign Currency

555.05USD244.2EUR(16)DZD0.54GBP

And as stated in note (3/2) “Foreign Currency Translation”, the above mentioned balances of foreign currency assets and liabilities were valued using the prevailing exchange rate at the balance sheet date.

28-2 Interest risk

This risk is represented in the changes in interest rates which may influence the value of financial assets and liabilities. The company reduces this risk by negotiations with lenders and banks to obtain the best conditions and interest rates as well as settlements of liabilities.

28-3 Fair value of financial InstrumentsAccording to the valuation policies in evaluating assets and liabilities of the company shown in the accompanying notes to the financial statements, no material difference between the fair value of the financial instruments and its book value at the balance sheet date.

29 Earnings per shareNote No.

31/12/2011L.E

31/12/2010L.E

Net loss for the year after tax (149 898 022) (85 010 214)Number of shares (21) 315 887 754 285 734 809Losses per share (0.475) (0.298)



30 Comparative FiguresSome comparative figures in the consolidated financial statements were reclassified to be consistent with the current presentation as at December 31, 2011.

31 Prior year adjustmentTable (A)

2010L.E

RestatedReclassifications* Adjustments

2010L.E

As reported

352 586 550--352 586 550Operating revenueLess:

(312 038 534)-8 965 614(321 004 148)Cost of sales40 548 016-8 965 61431 582 402Gross (loss) / profit

(Less):(133 026 017)(7 713 223)-(125 312 794)General & administrative expenses

-7 713 223-(7 713 223)Pre-operating expenses(9 648 419)--(9 648 419)Depreciation

(24 234 966)--(24 234 966)Provision( 674 264)--( 674 264)Impairment losses of trade receivables

(127 035 650)-8 965 614 (136 001 264)Add / (Less):

1 856 131--1 856 131Other income 7 000-- 7 000Capital gain on sale of fixed assets

(122 686 665)-(2 798 519)(119 888 146)Foreign exchange loss(52 819 726)--(52 819 726)Finance cost

5 042 848--5 042 848Interest income112 234 826--112 234 826Share of profit of associate company

(56 365 586)-(2 798 519)(53 567 067)(183 401 236)-6 167 095 (189 568 331)Net loss before tax

(4 985 578)--(4 985 578)Current tax(2 852 822)--(2 852 822)Deferred tax

(191 239 636)-6 167 095 (197 406 731)Net loss after taxAttributable To:

(85 010 214)-3 177 813(88 188 027)Equity holders of the company(106 229 422)-2 989 282(109 218 704)Non controlling interest

(191 239 636)-6 167 095(197 406 731)Net loss for the year(0.298)(0.309)Losses per share



Table (B)12/31/2010

L.ERestated

Reclassifications* Adjustments12/31/2010

L.EAs reported

Long term assets1 637 488 895--1 637 488 895Fixed assets (Net)1 352 705 387--1 352 705 387Projects under construction

792 929 149--792 929 149Investments in associates6 263 352460 389-5 802 963Other assets5 752 603--5 752 603Employee benefits

261 883 073--261 883 073Intangible assets - (460 389)- 460 389Financial assets

164 958 718--164 958 718Goodwill4 221 981 177--4 221 981 177Total long term assets

Current assets 223 523 202 -13 765 139 209 758 063 Inventories

1 959 627 -- 1 959 627 Trade receivable 63 711 978 -- 63 711 978 Due from related parties

268 772 540 -- 268 772 540 Debtors & other debit balances 410 175 583 -- 410 175 583 Cash on hand & at banks

968 142 930-13 765 139 954 377 791Total current assetsCurrent liabilities

50 020 899 -- 50 020 899 Provisions 113 297 134 -- 113 297 134 Loans & bank facilities - Short term 23 206 120 -6 557 488 16 648 632 Trade & notes payables

315 985 376 -2 798 519 313 186 857 Due to related parties 115 429 965 -- 115 429 965 Creditors & other credit balances617 939 494-9 356 007608 583 487Total current liabilities350 203 436-4 409 132345 794 304Working capital

4 572 184 613- 4 409 1324 567 775 481Total investmentsFinanced as follows:Equity

2 857 348 086 --2 857 348 086 Issued & paid up capital301 529 454 --301 529 454 Payments under capital increase

290 353 --290 353 Legal reserve- (5 640 704)-5 640 704 Capital call interests reserve- (1 500 000)-1 500 000 Share based payments reserve

7 140 704 (2 922 152)-10 062 856 Other reserves(83 368 946)-(896 561)(82 472 385)Translation reserve 28 274 837 10 062 856-18 211 981 (Carried forward losses) / retained earnings

(85 010 214)-3 177 813(88 188 027)Net loss for the year

3 026 204 274-2 281 2523 023 923 022Equity attributable to the equity holders of the company

958 749 088-2 127 880956 621 208Non controlling interest3 984 953 362-4 409 1323 980 544 230Total equity

Long term liabilities537 973 741--537 973 741Long term loan49 257 510--49 257 510Deferred Tax

587 231 251--587 231 251Total long term liabilities4 572 184 613- 4 409 1324 567 775 481Total equity & long term liabilities

* The balance of retained earnings, non-controlling interest as at December 31, 2010 as well as the net loss for the year ended De-cember 31, 2010 were changed due to some adjustments related to our subsidiaries Al Takamoul for Cement Company and Arab National Cement Company.

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ASECCEMENT

Address: 80 Street No. 250 Maadi, Cairo Egypt 11728 P.O. Box: 11 Cairo

Telephone: (202) 27558333 - 27507365/6Fax: (202) 27558399 - 25201633E-mail: [email protected]: www.asecement.com

ASEC Annual Report 2011

OVERCOMING CHALLENGESANNUAL REPORT 2011

asec cement - gei · misr qena cement paid dividends of egp 16 per share for fy 2010 and egp 13.5...

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