invitation to the existing shareholders to subscribe to ... · ordinary disputes filed by and...

26-Sep-18 19:39 [PHD - English PSN (Final FRA Version 25.9.18).docx]

THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED

STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN.

Invitation to the Existing Shareholders to Subscribe to the Capital Increase of Palm Hills Developments SAE

I. Company’s General Data:

Name of Issuing Company: Palm Hills Developments S.A.E.

Address of Head Office: Smart Village, 6 October City, Giza Governorate.

Legal Form: An Egyptian joint stock company subject to the provisions of the

Investment Incentives and Guarantees Law No. 8 of 1997.

Governing Law: Investment Incentives and Guarantees Law No. 8 of 1997 and its

Executive Regulations and amendments thereof.

Objective of the Company: Real estate investment in cities and new urban communities;

reclaiming and cultivating desert land, provided that the land

allocated is for the purpose of reclamation and cultivation and that

modern irrigation methods are applied in farming; and no irrigation by sub-merging is applied. While taking into consideration the

Prime Ministerial Decree No. 350 of 2007 and Presidential Decree

No. 356 of 2008; and provided that the activity is practiced on the

reclaimed and cultivated plot of desert land located after two

kilometers outside the boundaries of Al Kata Area, East of the Cairo/Alexandria Desert Road –Km 49. The Company shall obtain

all necessary licenses to undertake its activity.

Duration of the Company: 25 years commencing on 10/01/2005 and ending on 09/01/2030.

Fiscal Year: The fiscal year commences in January every year and ends in

December of the same year.

Commercial Registration: 6801 on 10/01/2005.

Stock Exchange Listing

Status:

Listed on the Egyptian Exchange (EGX) in April 2008.

Central Depository Status: All of the Company’s shares are deposited in Misr for Central Clearing, Depository and Registry (MCDR), except 589 shares

that are not deposited in the central depository system.

Members of the Board of Directors:

Name Position on Board Entity

Represented

Expiry Date of

Board Membership

Yassin Ibrahim Lotfy

Mansour

Chairman and

Managing Director

self

26-Sep-18 19:39 [PHD - English PSN (Final FRA Version 25.9.18).docx] 2

Mohamed Al-Amin Ismael

Lotfy Mansour

Deputy Chairman self Until the Ordinary

General Meeting is

convened set to ratify

the annual financial

statements for the fiscal year

ending 31/12/2018

Mohamed Ahmed Sultan Ahmed

Managing Director self

Aly Thabet Sayed Farghaly Managing Director for

Financial Affairs

self

Yasser Soliman Hesham Al-

Malawyany

Board Member with

expertise

self

Hasan Mohamed Hasan

Darwiesh

Board Member self

Yousef Mohamed Medhat Yousef Al-Far

Board Member with expertise

self

Tarek Mohamed Medhat

Abdelhady Abdelrahman

Managing Director self

Auditors:

Name Address

Dr. Ahmed Shawki and Mr. Alaa Abdel-Azim

Mansour – Mostafa Shawki Office (Mazars)

153 Mohamed Farid St., Downtown, Cairo

Mr. Ehab Morad Azer - Allied for Accounting

and Auditing (Ernst & Young)

Rama Bldg., Plot 10A, Ring Road, Al-Katamia,

Cairo

Legal Advisor for the offering of the Rights Issuance:

Name Address

Mr. Mohamed Abdel Fatah – Attorney registered with the Court of Cassation – Head of Capital

Markets at Matouk Bassiouny Office

12 Mohamed Aly Ganah, Garden City, Cairo

Shareholders holding over 5%, according to the Shareholders List issued by Misr for Central

Clearing, Depository and Registry (MCDR) issued on 09/08/2018:

Name Number of

present shares

Ratio of present shares

to the Company’s share

capital

Mansour & Maghrabi for Investment &

Development, S.A.E.

955,001,787 41.361%

UPP CAPITAL INVESTMENT OWNER BY

UNION PROPERTIES ONE PERSON CO LLC

406,222,938 17.59%

Capital:

Authorized Issued Paid-up Currency of paid-up

capital

10,000,000,000 4,617,899,452 4,617,899,452 Egyptian Pounds (“EGP”)


Number of shares in current

capital: 2,308,949,726

Type of Issued Shares: Ordinary nominal shares

Nominal Value per Share: EGP 2 / share (two Egyptian pounds per share)

Status of Profits: The increase shares have the right to receive dividends for the fiscal

year ending December 31, 2018, in accordance with the decision

of the general assembly to be adopted in this regard.

Tax Status: First: Corporate Income Tax:

- The Company enjoyed a tax exemption for ten years

starting on the fiscal year following commencement of its

activities on 14 March 2005 and ending on December 31, 2015.

- The Company regularly complies with preparation of the

tax returns applicable to income tax for juristic persons in

accordance with Law No. 91 of 2005 and its executive

regulations, and delivers the tax returns within the legally

prescribed dates and settles the due tax in accordance with the tax returns.

- Years from incorporation on March 14, 2005 until

December 31, 2009: The Tax Authority claimed from the

Company a tax difference amounting to approx. EGP 49.4

million, and the Company appealed such claim for tax differences. The dispute settlement committee issued a

decision to reduce the tax differences to become approx.

EGP 32.6 million. The Company paid the amount, and the

Tax Authority has reviewed the payment receipts.

- It appears that the Company has prepared the documents required for the tax inspection for the years from 2007 to

2009, and the concerned Tax Authority has not concluded

its inspection to date.

- Years from 2010 until 2012: the concerned Tax Authority

issued Form (19) with the estimated tax differences and

the Company appealed within the specified legal timelines. The said years were referred to the internal

committee, and it was agreed with the Tax Authority that

the said years will be inspected, and currently in the

process of issuing a decree to re-inspect the said years

from a documentation standpoint. - Years from 2013 until 2017: The Company regularly

prepared its tax returns in accordance with Law No. 91 of

2005 and its executive regulations, and delivered the tax

returns within the legally prescribed dates and settled the

tax in accordance with the tax returns. - It was verified that no tax forms or claims were received

for the years between 2013 and 2017.

Second: Salary and Wages Tax:

- Years from incorporation of the Company in March 14, 2005 until December 31, 2009: examined and attached,

and the tax was paid.


- Years from 2010 until 2017: it appears that the Company

has paid the applicable tax in a consistent manner in

accordance with Law No 91 of 2005.

Third: Stamp Duty: - It appears that the Company complies with payment of the

stamp duty tax on the requisite forms in accordance with

Law No. 111 of 1980, as amended by Law No. 143 of

2006.

Fourth: Withholding Tax: - It appears that the Company complies with applying

Article 59 of Law No. 91 of 2005 and its executive

regulations.

Fifth: Value Added Tax (VAT): - It appears that the Company is not subject to VAT, as it is

not subject to the VAT Law No. 67 of 2016 and its

executive regulations.

The status of litigation filed by and/or against the Company and its subsidiaries:

Based on the certificate provided by the legal advisor of the Company, there are a number of ongoing

ordinary disputes filed by and against Palm Hills Developments and its subsidiaries, as follows:

Number of Ongoing Cases Type of Cases Total Value in EGP

1. 103 Civil 212,434,456

2. 15 Labor 9,231,985

3. 3 Tax 234,900

4. 8 Criminal (checks) 2,923,976

5. 6 Administrative 2,000,000

Total 135 Ongoing 225,025,317

In addition, there is a comprehensive statement prepared by the legal advisor of the Company specifying

all lawsuits filed by or against the Company and its subsidiaries, which is available at the Company’s

premises for review.

Net Shareholders’ Equity as

per the most recent

approved standalone

financial statements as at

31/12/2017:

EGP 6,107,032,805

Method for Distribution of

the Company’s Net Profits

as per the Statutes:

The Company’s net profits are distributed annually after deducting

all general expenses and other costs, as follows:

1. A sum amounting to 5% of the profits is deducted to form the legal reserve. This deduction ceases when the reserve

reaches 50% of the Company’s issued capital, and


deduction is resumed when the reserve falls below this

percentage.

2. Employees are entitled a share of the distributable profits

in cash, which shall not be less than 10% of the distributed

profits, provided that the distributed amount does not exceed the amount equivalent to the total annual salaries

of employees.

3. The remaining profits are distributed among the

shareholders or carried forward based on the

recommendation of the board of directors, or used to form

an extraordinary reserve or money for extraordinary use. 4. The general assembly has the right to distribute all or part

of the profits shown in the periodic financial statements of

the Company, provided that the auditor’s report is attached

thereto.

Insurance over the Company’s Assets:

Insured Asset Insurance Amount Expiry Type

Club EGP 106,377,200 24/7/2019 Damage insurance

Club EGP 66,712,900 6/8/2018 (renewal in

process)

Damage insurance

Club Annex EGP 24,501,400 6/8/2018 (renewal in

process)

Damage insurance

Commercial shops EGP 83,000,000 31/12/2018 Damage insurance

Content of the Smart

Village building

EGP 6,000,000 31/12/2018 Damage insurance

Golf extension warehouse EGP 100,000 4/2/2019 Damage insurance

40 Lebanon building +

content of building


Sales office (Fifth

Settlement and

Heliopolis)


Sales office (Zamalek) EGP 2,000,000 4/2/2019 Damage insurance

Kattameya project EGP 300,000,000 31/8/2018 Contractor insurance

Golf Views project EGP 383,006,049 31/8/2018 Contractor insurance

Golf extension project EGP 160,979,763 31/8/2018 Contractor insurance

Golf Views project EGP 94,140,672 31/8/2018 Contractor insurance

Commercial complex No

(8)

EGP 21,021,213 10/1/2019 Contractor insurance

45 vehicles EGP 8,801,350 31/12/2018 Owned vehicles

16 vehicles EGP 2,700,000 31/12/2018 Trucks

Mortgages and liens on the

Company’s assets:

(a) Mortgages:

- There are no commercial mortgages perfected on the Company’s assets, in accordance with the commercial

register of the Company.


- The Company’s loans are secured by certain cash flows

from several projects of the Company.

(b) Liens:

- The Company has entered into financial leasing

agreements in relation to certain assets owned by the Company with a number of companies operating in such

field. The said transactions were recorded as a guarantee

(power of attorney to sell) in return for recording the

liabilities arising from such financial transactions as a

financing activity (accounts payable) in accordance with

the nature of the transactions, since the conditions required for recording such contracts as financial leasing were not

concluded and such assets are deemed additional

guarantees.

- The value of the leasing agreements entered into has

reached EGP 641.402 million, as follows:

Asset Classification Value of Leasing

in EGP million

Botanica project Real estate

investment

289.922

Palm Hills club (6th

October City)

Fixed assets 165.025

Mall (8) 6th of

October City

Projects under

construction

114.103

Shops at Street 88 6th

of October City

Real estate

investment

63.352

Total 641.402

- The guarantees set out in the preceding provision cover part of the cost of such assets, and are not in the full value

of the asset.

Loans:

The loans’ balance as at December 31, 2017 amounted to EGP 2.926 billion, in accordance with the

following:

Bank Type of

financing

Financing

limit in

EGP

Date of

contract

Payment

term in

years

Reason for

financing

Balance at

31/12/2017

Arab

African

Medium

term

2.4 billion 8

September

2014

6.5 Financing

Company’s

projects

2.002

billion


International

Bank

syndicated

loan

National

Bank of

Egypt

Medium

term

syndicated

loan

852 million 27 January

2017

8.5 Finance the

Company’s

project in 6th of

October

City with an

area of 190

feddan.

623.590

million

Arab Bank Bank

overdraft

300 million 27 February

2016

renewed

annually

Company

financing

299.999

million

The Company obtained the above loans based on guarantees on certain cash flows from several projects

of the Company.

Business Risks:

(a) Interest Risk:

The interest risk comprises of the potential change in the

interest rates and its impact on the current and future financial

obligations, which includes interest and commissions on bank debts (overdraft), which may have a negative impact on the

business results. The Company utilizes long-term financing

sources without interest, comprising of the balance of down

payments made by clients, in addition to adopting a policy for

managing its available funds to reduce the risk of change in the interest rates.

(b) Credit Risk:

The credit risk comprises of the inability of clients to pay their

outstanding dues. This risk appears to be limited given that the

Company deals with clients having good net worth, in addition to the fact that the Company does not deliver the contracted

units prior to deposit by the client of negotiable bank

instruments against the unpaid installments at the time of

delivery.

Significant Accounting

Policies Applied:

The financial statements were prepared in accordance with

Egyptian Accounting Standards in light of Egyptian laws and

regulations in force and the related laws and historical cost, and the

financial statements are presented in Egyptian pounds.

Relations with Related

Parties:

Related parties are those having direct or indirect relations with the

Company, its subsidiaries or affiliates, or companies having a common interest, in addition to relations between the Company and key members of its top management or employees having significant impact, directly

or indirectly, on making decisions. A related party transaction is any transaction, operation, or exchange of resources, services and obligations,

arising between the Company and such parties, which must be concluded

on the same basis as transactions with unrelated parties.

A. Transactions with related parties :


Party Type Nature of

transaction

Value of

transaction in EGP

Palm Hills Middle East for Real Estate

Investment Company S.A.E.

Subsidiary Financing 1,841,532,585

Royal Gardens Real Estate Investment

Company S.A.E.

Subsidiary Financing 20,286,493

Middle East for Real Estate and Touristic

Development Company S.A.E.


Gouda for Commercial Services Company

S.A.E.


Rakeen Egypt for Real Estate Investment Company S.A.E.


Saudi Company for

Urban Development Company S.A.E.


Nile Palm Al Naeem

S.A.E.

Subsidiary Financing 169,860

El Etehadeya for Real Estate Investment S.A.E.


East Cairo for Real

Estate Development Company S.A.E.

Affiliate Financing 3,974,642,971

Palm October for Hotels Company

S.A.E.


New Cairo Company for Real Estate

Development S.A.E.


Al Naeem for Hotels and Tourist Villages Company S.A.E.


Gamsha Tourist



United Engineering Company for

Engineering and Contracting S.A.E.


Mansour & Maghrabi

for Investment & Development, S.A.E.

Main

Shareholder

Financing 282,300,518

Palm Gamsha for Hotels Company

S.A.E.


Palm North Coast for Hotels Company S.A.E.


Palm for Real Estate




Palm for Investment

and Real Estate Development Company S.A.E.


Palm Hills Real Estate

Company S.A.E.


Palm Hills for Touristic and Real Estate Development

Company S.A.E.


Palm Hills for Touristic Investment Company

S.A.E.


Palm Hills Resort Company S.A.E.


Palm Hills for Hotels Company S.A.E.


Palm Alexandria

Company for Real Estate Investment Company S.A.E.


Esten College

Company S.A.E.


Palm El Alamein Real Estate Development

Company S.A.E.


Palm Club Management Company S.A.E.


Palm Hills for

Education Company S.A.E.


B. Balances resulting from transactions with related parties :

Party Item in Financial

Statements

December 31, 2017

in EGP

Palm Hills Middle East for Real Estate Investment Company

Related parties - current (receivable)

1,215,330,584

Royal Gardens Real

Estate Investment Company

Related parties -

current (receivable)

649,729

Middle East for Real Estate and Touristic

Development Company

Related parties - current (payable)

(149,057,655)

Gouda for

Commercial Services Company

Related parties -

current (payable)

(54,164,780)

Rakeen Egypt for Real Estate

Investment Company


235,845,531

Saudi Company for Urban Development Company


199,994,003

Nile Palm Al Naeem Related parties -

current (payable)

(44,636,227)


El Etehadeya

Company

Related parties -


182,461,048

East Cairo Company Related parties - current (receivable)

189,952,312

Palm October for Hotels Company


11,304,588

New Cairo Company Related parties -


18,194,354

Al Naeem for Hotels and Tourist Villages Company


(127,390,624)

Gamsha Tourist

Development Company

Related parties -


68,718,945

United Engineering

Company for Engineering and Contracting

Related parties -

current (payable)

(11,249,000)

Mansour & Maghrabi

Company

Related parties -


45,411,298

Palm Gamsha Company


2,550

Palm North Coast for Hotels Company


(642)

Palm for Real Estate

Development Company

Related parties -


21,309,180

Palm for Investment

and Real Estate Development Company

Related parties -


13,343,514

Palm Hills Real

Estate Company

Related parties -


87,103

Palm Hills for Touristic and Real Estate Development

Company


25,701,656

Palm Hills for Touristic Investment

Company


63,476,568

Palm Hills Resort Company


179,609

Palm Hills for Hotels Company


100,305,574

Palm Hills for

Education Company

Related parties -


3,544,368

Baltan Saudi Company


269,320

Coldwell Banker Palm Hills Company


20,480

Palm for Urban

Development

Related parties -


31,047,431

Palm Club Management


(23,313,811)

Palm Alexandria

Company for Real Estate Investment

Related parties -


11,206

Esten College Company


274,571


Palm El Alamein

Real Estate Development

Related parties -


22,594,753

Shareholders loans balances


(46,292,990)

Disclosures by Juristic

Persons:

1. Mansour & Maghrabi for Investment & Development, S.A.E.,

is owned 60.48% by Mr. Yassin Ibrahim Lotfy Mansour.

2. UPP CAPITAL INVESTMENT OWNER BY UNION

PROPERTIES ONE PERSON CO LLC, is owned 100% by

UNION PROPERTIES PJSC, which is listed on the Dubai

Financial Market stock exchange.

Disclosures by Subsidiaries: A. Investments in Subsidiaries and Affiliates:

First: Direct investments in subsidiaries and affiliates, as follows:

Name of Company Shareholding

Percentage

Palm Hills Middle East for Real


99.99%

Gouda for Commercial Services

Company

99.996%

New Cairo Company for Real Estate Development

99.985%

Rakeen Egypt for Real Estate

Investment Company

99.9454%

Palm for Real Estate Development

Company

99.4%

Palm for Investment and Real Estate

Development Company

99.4%

Palm Hills for Touristic and Real Estate Development Company

99.4%

Palm Hills for Touristic Investment

Company

99.4%

Palm for Touristic Resorts Company 99.4%

Palm for Urban Development

Company

99.4%

Palm Hills Real Estate Company 99.2%

Palm for Clubs Company 99.2%

Palm Alexandria Company 99.2%

United Engineering Company for

Engineering and Contracting

98.88%

Palm Hills for Hotels Company 98%

New East Cairo Company for Real

Estate Development (Capsi)

89%

Palm Hills for Education Company 71.04%

Macor for Securities Investment

Company

60%

Al Naeem for Hotels and Tourist Villages Company

60%

Gamsha Tourist Development

Company

59%


Royal Gardens Real Estate

Investment Company

51%

Nile Palm Al Naeem for Real Estate

Development

51%

Saudi Company for Urban Development

51%

Coldwell Banker Palm Hills for Real


49%

El Alamein Real Estate Development

Company

39.99%

Palm October for Hotels Company 00.24%

Second: Indirect Investments:

Name of Company Shareholding

Percentage

Palm North Coast for Hotels

Company

97.412%

Middle East for Real Estate and

Touristic Development Company

87.50%

Palm Gamsha for Hotels Company 96.04%

New East Cairo Company for Real

Estate Development (Capsi)

10.988%

Esten College for Education

Company

71%

Related Party Contracts The Ordinary General Meeting (OGM) of the Company dated

26/2/2017 approved the related party contracts between Palm Hills

Developments and Royal Insurance Company in relation to

insurance policies for the Company’s vehicles and projects, as well as all types of insurance policies.

II. Subscription Data:

1. Basis for the capital increase resolution:

According to the resolution of the Extraordinary General Meeting (EGM) convened on 6/9/2018, which approved the capital increase

and amendment of Articles 6 and 7 of the Articles of Association

of the Company pursuant to the outcome of subscription.

2. Amount of the capital

increase:

Increase of the authorized capital from EGP 6,000,000,000 to EGP

10,000,000,000, and increase of the issued capital from EGP

4,617,899,452 to EGP 6,157,199,270, by way of a capital increase

in cash amounting to EGP 1,539,299,818 through issuance of

769,649,909 shares, in a rights issue made available for

subscription by the existing shareholders pro rata their shareholding in the Company’s capital. The increase shall be at the

nominal value of the share amounting to EGP 2 per share, in

addition to the issuance expenses at an amount of three piasters

constituting 1.5% of the share’s nominal value, provided that

trading of the right shall be separate from the original share.

3. Right to subscription: According to the resolution of the Extraordinary General Meeting

(EGM) convened on 6/9/2018, the existing shareholders of Palm


Hills Developments S.A.E and holders and purchasers of the shares

until end of the trading session on October 14, 2018, shall have the

right to subscribe at the ratio of 33.3% of the shares owned by each

shareholder in the issued capital prior to the capital increase. They

shall also have the right to sell the subscription right in full or in part separately from the original share. The fractions of the

subscription rights and increase shares shall be rounded in favor of

the minority shareholders in an ascending order until there are no

further fractions remaining.

4. Conditions of payment The value of the subscription amounting to EGP 2.03 (two

Egyptian pounds and three piasters) per share shall be paid in full

(which comprises of EGP 2 as nominal value + EGP 0.03 as

issuance expenses per share).

As for the separate subscription right, the opening trading price for trading of the subscription right shall be determined in the first

trading session according to the applicable rules, which will be

announced on the Egyptian Exchange (EGX) screens, as well as

any price change thereto.

5. Date of subscription The subscription period shall commence on October 17, 2018 and

end on November 15, 2018. The subscription period may be closed

in the case where the subscription amount is covered in full.

6. Recipient of subscription Subscription shall be received by the Arab African International

Bank and its following branches:

Branch Address

Heliopolis branch 24 Cleopatra St.

El Merghany branch 140 El Merghany St.

El Hegaz branch 33 El Hegaz St. – in front of

Maryland

Aswan branch 1 Abtal El Tahrir St.

Mohandessin branch 48 Geziret El Arab St.

El Maadi branch Road 9, Maadi Palace

Building

6th of October branch Fourth Industrial Zone, 2/3,

Banks Sector

Damietta branch Beginning of Damietta Road,

Ras El Bar, Corniche El Nil,

Zaher Intersection, El

Sanateya

El Horeya Road branch 73 El Horeya Road,

Alexandria

El Golf branch 13 El Nozha St.


Shooting Club branch 12 Nadi El Seid St.

Tanta branch 95 El Geish St., Tanta

Cairo branch 44 Abdel Khalek Tharwat St.

Kasr Al Ainy branch 8 Ibrahim Naguib St., Garden

City

Nasr City branch 33 Abo Dawood Al Zahry St.

Alexandria branch 47 Albert the First St.,

Smouha

10th of Ramadan branch Third Industrial Zone – City

Center

Mansoura branch 199(b) El Gomhoreya St.,

Kasr Al Nile Tower

Port Said branch 21 23rd of July St., Eastern

District, Port Said

Smart Village Building B15, Smart Village –

Cairo Alexandria Desert Road

K24

7. Trading of the

subscription right

The shareholders of the Company have the right to trade the

subscription right separately from the original share during the period starting on October 17, 2018 (opening date of subscription)

until November 12, 2018 (three days prior to the closing date of

subscription), provided that the Company shall obtain the prior

approval of Misr for Central Clearing, Depository and Registry

(MCDR) for registration of the subscription right and apply for registration of the trading of the subscription right at the Egyptian

Exchange (EGX), at least five business days prior to the date

specified for opening the subscription window, in accordance with

the securities listing and delisting rules of the Egyptian Exchange

(EGX) and its executive regulations.

8. Required documents A copy of the National Identification Card for natural persons or

the commercial register for juristic persons.

In addition to the document evidencing the ownership of the shares on the date indicated in the announcement (statement of account

issued by the custodian showing the balance of shares owned or

subscription rights on the date indicated in the announcement).

9. In the event subscription

is not covered

In the event subscription is not covered in the first subscription

round, the subscription window will be opened for another round

for the remaining shares not subscribed to, which shall be available

to the existing shareholders that have not sold their subscription right and the purchasers of the subscription right, without

limitation to the subscription percentages. In the event of

oversubscription in the remaining shares, the allocation shall be

prorated based on the number of shares requested and number of


remaining shares available, and the fractions shall be rounded in

favor of the minority shareholders. The bank shall reimburse

overpaid amounts received for the subscription to the remaining

shares within one (1) week from the date of closing the

subscription, to be collected from the bank receiving the subscription to be announced at such time.

10. Plan of the Company for

using the funds:

1. Develop the Badya project in West Cairo with an area of

3,000 feddan:

In September 2017, Palm Hills Developments signed the definitive

co-development agreement with the New Urban Communities

Authority with the objective of a joint development with revenue

sharing, for a fully-fledged residential project spreading over 3,000

feddan in West Cairo. The project is considered a fully integrated residential city that includes apartments, as well as standalone

units, complemented with a wide range of facilities and

commercial, educational and entertainment services. The

Company launched the reservations and sales for the residential

units in the first phase of the project in Q2 2018, and the project achieved unparalleled success in terms of sales and new

reservations. The Company seeks to commence development of the

project’s infrastructure in terms of internal utilities, building

works, and main developing components.

Required funding: EGP 989,299,818.

2. Develop the commercial area in Palm Hills New Cairo

project, East Cairo spreading over 100 feddan:

Palm Hills Development seeks to increase its investments in the

commercial sector by adding new commercial projects to its

current list of projects in East Cairo, through a development on an

area of around 100 feddan in the Palm Hills New Cairo project. It is expected that the project will include a mall, international

schools, offices, administrate buildings and a social club.


3. Develop a commercial/residential project in West Cairo

spreading over 205 feddan:

Palm Hills Developments seeks to increase its land bank by

entering new projects and co-developments on a revenue sharing

basis, as currently adopted by the state. This includes bidding for a

prime land plot in Sheikh Zayed City overlooking the 26th of July

Corridor, with a total area of 205 feddan. The plot of land was

awarded to Palm Hills, and is currently awaiting for issuance of the final allocation letter and signing the definitive co-development

agreement.

It is worth noting that in September 2017, the New Urban

Communicates Authority announced a bid for several plots of land

in the new urban communities, including the plot of land mentioned above. Palm Hills had entered the bid for purchase of


this plot through Palm Hills El Alamein for Real Estate

Development Company (one of its subsidiaries and owned by

40%).

In the event the bid is not awarded to the Company or the Company

fails to reach a final agreement on the revenue sharing contract, the funds will be allocated in a savings deposit until an alternative

investment opportunity is available, or to cover the Company’s

cash liquidity needs resulting from existing projects.


4. Develop the Crown project in West Cairo spreading over

190 feddan:

The Company entered into a contract with the Ministry of Housing

and Urban Communities in January 2017 regarding the acquisition

of a land plot spreading over 190 feddan in the Eastern Extension

Area in 6th of October City. In May 2017, the Company launched

the project and sales, achieving new sales amounting to EGP 907

million until June 30, 2018.


11. Expected return from this utilization:

- Develop the infrastructure for the Badya project, in terms of internal utilities, building works, and main developing

components that will assist the Company in achieving new

sales and reservations for the remaining phases.

- Expand the Company’s commercial sector by adding new

commercial projects to its current list, and secure a consistent

and recurring source of revenue, expected to represent 25% of

the net profits in 2020.

- Increase the Company’s land bank by entering new co-

development projects and revenue sharing arrangements, as

currently implemented by the state.

Significant financial indices according to the financial statements for the last three years pursuant

to the most recent financial position as of:

Significant financial indices

Statement 31/12/2017 31/12/2016 31/12/2015

Liquidity ratio Current assets/

Current liabilities

1.74 1.56 1.83

Equity structure Total Equity/

Total assets

39.25% 47.26% 52.46%

Equity structure Total liabilities/

Total assets

60.75% 52.74% 47.54%

Profitability ratio Gross Profit / Total assets

4.43% 4.22% 7.37%

Profitability ratio Net profit /

Total assets

1.56% 2.36% 6.01%


Profitability ratio Net profit / Total

Equity

3.98% 5.00% 11.46%

Investor Relations’ Officer: Mamdouh Abdel Wahab; Radwa Aboul Naga

Address: Smart Village, Abou Rawash, 6th of October City

Telephone: +202 353 51200

Fax: +202 353 51208

Significant disclosure concerning purchasers of the subscription right: The investors who purchased the subscription right separately from the original share shall take note of

the following:

1. The period for purchase and sale of the subscription right commences on October 17, 2018 and

ends on November 12, 2018, after which the subscription right will be delisted from the Egyptian

Exchange and no trading thereon shall be effected. 2. The holder of the right is entitled to subscribe to the capital increase from October 17, 2018 until

November 15, 2018.

3. The right to subscribe to the capital increase shares against the number of the rights purchased

thereby during the subscription period commences on October 17, 2018 and ends on November

15, 2018. 4. In the event subscription to the increase is not covered in the first round, the subscription window

will be opened again for the shares not subscribed in, and the existing shareholders that have not

sold their subscription right and purchasers of the subscription right shall have the right to

subscribe in the second round without limitation to their shareholding percentage. An

announcement to this effect will be made after approval of the Egyptian Financial Regulatory Authority (FRA).

5. The right to trade the subscription right, either by sale or by purchase on the Egyptian Exchange,

is effective during the period from October 17, 2018 until the end of the trading session on

November 12, 2018, as long as no subscription was made to the capital increase shares

corresponding to the number of the rights purchased thereby.

6. In the event of exercising the subscription right, the subscriber is not entitled to trade all or a part of the shares subject of the capital increase upon depositing the subscription value.

7. In the event of continuing to hold the right without subscription during the two subscription rounds

referred to above (i.e. first and second subscription rounds), the right shall have no value, and

shall have no legal or financial effect vis-à-vis the issuing company.

In the event where the last subscription day is an official holiday, the last subscription day shall be the

following first business day.

Managing Director for Financial Affairs

Aly Thabet Sayed Farghaly

Disclaimer

The information contained herein is restricted and is not for publication, distribution or release, directly or indirectly, in or into, the United States of America, Canada, Australia or Japan.


This document does not constitute or form part of any offer or invitation to sell, or any solicitation of

any offer to purchase nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. The capital increase and the distribution of this

document and other information in connection with the capital increase in certain jurisdictions may be

restricted by law and persons into whose possession any document or other information referred to

herein comes should inform themselves about and observe any such restriction. Any failure to comply

with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

The price and value of, and income from, the securities issued in the capital increase may go down as

well as up. Persons needing advice should consult a professional adviser.

The capital increase is not being made in or into the United States of America or to any U.S. person (as

defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act")). These materials are not an offer for sale of any securities in the United States. Securities may

not be offered or sold in the United States absent registration or an exemption from the registration

requirements of Securities Act. The Company has not registered, and does not intend to register, any

portion of the capital increase in the United States, and does not intend to conduct a public offering of

any securities in the United States.

No person has been authorized to give any information or to make any representations other than those

contained in this announcement and, if given or made, such information or representations must not be

relied on as having been authorized by the Company. In addition, no agent or representative of the

Company accepts any responsibility whatsoever for the contents of this document and no representation or warranty express or implied, is made by any agent or representative as to the information set out in

this document.

Neither the content of the Company's website (or any other website, including but not limited to the

websites of the Company's subsidiaries, joint ventures or restricted affiliates) nor the content of any

website accessible from hyperlinks on the Company's website (or any other website, including but not limited to the websites of the Company's subsidiaries, joint ventures or restricted affiliates) is

incorporated into, or forms part of, this announcement.

This document contains forward-looking statements, which include all statements other than statements

of historical facts, including, without limitation, any statements preceded by, followed by or including the words "targets," "believes," "expects," "aims," "intends," "may," "anticipates," "would," "could" or

similar expressions or the negative thereof. Such forward-looking statements involve known and

unknown risks, uncertainties and other important factors beyond the Company's control that could cause

the Company's actual results, performance or achievements to be materially different from future

results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and

future business strategies and the environment in which it will operate in the future. These forward-

looking statements speak only as at the date of this document. The Company expressly disclaims any

obligation or undertaking to disseminate any updates or revisions to any forward-looking statements

contained herein to reflect any change in its expectations with regard thereto or any change in events,

conditions or circumstances on which any of such statements are based.

This communication is only directed at (i) persons who are outside the United Kingdom; (ii) investment

professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial

Promotion) Order 2005 (the "Order"); and (iii) high net worth entities, and other persons to whom it

may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The securities referred to herein are only available to,

and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will

be engaged in only with, relevant persons. Any person who is not a relevant person should not act or

rely on this communication or any of its contents.


Any offer of securities to the public that may be deemed to be made pursuant to this communication in

any EEA Member State that has implemented Directive 2003/71/EC (as amended and together with any applicable implementing measures in any Member State, the "Prospectus Directive") is only addressed

to qualified investors in that Member State within the meaning of the Prospectus Directive. This

document is an advertisement and not a prospectus for the purposes of the applicable measures

implementing the Prospectus Directive and as such does not constitute an offer to sell or the solicitation

of an offer to purchase securities.

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