creating value - asec cement cement... · 4 asec cement annual report 2013 asec cement annual...

CREATING VALUE UNDER CHALLENGING CONDITIONS

ANNUAL REPORT 2013

ASEC CEMENT ANNUAL REPORT 2013 1

02 ASEC at a Glance 04 Chairman’s Note 08 2013 Milestones 10 Management Discussion and Analysis 12 Our Strategy

Operational Review16 Market Analysis 18 ASEC Minya Cement Company 20 Misr Qena Cement Company22 ASEC Ready Mix 24 Al-Takamol Cement Company26 Zahana Cement Company28 ASEC Algeria Cement Company29 ASEC Syria Cement Company30 ASEC Trading32 Al Muthanna Cement Company

34 Key Executives36 Board of Directors 38 Corporate Social Responsibility40 Health, Safety & Environment41 Corporate Governance 42 Portfolio 51 Financial Statements

Contents

ASEC CEMENT ANNUAL REPORT 2013 ASEC CEMENT ANNUAL REPORT 20132 3

ASEC Cement at a Glance

Rise in ASEC Cement EBITDA in 2013, reaching

EGP 140 million

Increase in revenues at Al Takamol after cement prices increased in the

Sudanese market

Increase in ASEC Ready Mix sales revenues over 2012

Total Cement Production

3.4

3.8

3.30.7

0.8

0.8

1.9

1.9

2.0

0.7

0.7

0.6 0.4

2011

2012

2013

(million tons)

greenfields4 countries4 brownfields2RMC stations4mtpa by 201610 bn USD investments2

12

3

4

5

6

78

ZAHANA CEMENT ZAHANA, ALGERIA

AL-TAKAMOL CEMENT ATBARA, SUDAN

ASEC MINYA MINYA, EGYPT

MISR QENA CEMENTQENA, EGYPT

ASEC READY MIXQENA, ASSIUT, SOHAG & ASWAN (EGYPT)

ASEC SYRIA CEMENT ABUL SHAMAT, SYRIA

ASEC TRADING EGYPT, SUDAN and LIBYA

AL MUTHANNA CEMENT SAMAWA GOVERNORATE, IRAQ

ASEC ALGERIA CEMENT DJELFA, ALGERIA

1

4

2

5

3

67

98

2.0 mtpa50%Production CapacityASEC Cement Stake

1.9 mtpa27.55%Production CapacityASEC Cement Stake

200,000 m3 55%Production CapacityASEC Cement Stake



Production CapacityASEC Cement Stake3.4 mtpa60.9%

Production CapacityASEC Cement Stake1.6 mtpa99.99%

Total Cement Sales VolumesASEC Cement Stake300,000 tons100%

Target Production CapacityUnder ASEC Management1.8 mtpa14 yrs

ASEC Cement has always pursued a strategy that has seen it invest in both greenfield cement plants and existing cement companies in attractive, high-growth markets in the Middle East and Africa. Today as we strengthen our regional presence in order to reach our goal of producing 10 million tons per annum (mtpa) by 2016, we are continuing to bolster our investments in Algeria and penetrate the lucrative market in Iraq, all while improving the production capacities of our operations in Egypt and Sudan.

Delivering Value Under Challenging Conditions2013 proved to be a challenging year for the regional cement market, impacting ASEC Cement’s holdings across its diverse regional footprint. Efforts by the company to adapt to this challenging operating climate have allowed us to close the year with a total influenced production capacity of 7 mtpa with a turnover of more than EGP 1 billion in 2013, a 25% increase over 2012. The launch of ASEC Minya contributed significantly to this achievement accounting for 12% of overall group revenues based on only two months worth of sales.

102%

24%

28%

Zahana Cement Company Misr Qena Cement Al-Takamol ASEC Minya


Chairman’s Note

Dear Shareholders,

As I’m sure you are well aware, our operational footprint has an abundance of challenges. The countries in which we operate have, for the past three years, faced tremendous political and struc-tural problems and 2013 has proven to be no exception. As a leading regional cement group that invests in the high-growth markets of Africa and the Middle East, we have become accustomed to circumventing daunting constraints to achieve the best possible results. Dealing with unexpected scenarios that are beyond our control has necessitated the formulation of an agile strategy that can minimize the negative impact of complications in our region. Take the following into consideration.

In Egypt, we had a second revolution that took place at the end of June, fol-lowed by a period of protracted violence and confrontation between opposing groups. As a consequence, security was once again a very serious concern particularly in Upper Egypt where we had to deal with waves of violence that often led to operational disruptions.

The unrest coupled with acute fuel shortages and rising energy prices took its toll on the Egyptian cement industry as a whole. Despite the increase in fuel prices, the availability of heavy fuel, gas and diesel continued to be a problem and a new quota system failed to al-locate the limited quantities of fuel in an efficient manner.

Obtaining permits and authoriza-tions from Egyptian government of-ficials, who have essentially been in crisis management mode for the better part of three years, has been a lengthy and drawn-out process that required stamina and perseverance.

In Sudan, another round of domestic problems occurred at the end of the summer. Faced with a rising budget deficit, the Sudanese government increased fuel prices by 75 % putting a further strain on the already high levels inflation and reducing purchas-ing power. The political situation in the South continues to be tense with the ongoing civil war, which has also affected the southeastern and west-ern regions of the country while the international community continues to impose sanctions.

The internal conflict in Syria has esca-lated to extremely high levels and an end to hostilities seems unlikely in the near future. The consequences of the ongoing crisis have of course had a tragic impact on civil society in the country.

Although Algeria remained relatively stable, uncertainties about the future are on the rise. Southern Algeria is also an area of concern because of its close proximity to the war in Mali and the potential threat of spillover on Algerian territory.

Within this highly volatile environ-ment, we have still managed to move our business forward. The most no-table achievement of the year for ASEC Cement was the completion of our 2.0 mtpa greenfield cement plant in Minya, Upper Egypt and its entry into produc-tion. Despite the obstacles, we began cold run testing at the beginning of 2013 with first clinker and cement production starting in June 2013. All PGT have been completed and the plant has been run-ning smoothly ever since. Completing a project of this nature in 30 months is commendable per se but when you factor in situation that we were faced with on the ground, getting the plant up

and running within the aforementioned time frame was miraculous.

ASEC Minya is a state-of-the-art plant capable of producing about 6,000 tons of clinker per day and more than 7,000 tons of cement. In the short time that the plant has been operational we have also been able to build a solid com-mercial network that has allowed us to sell 100 percent of our production capacity and compete effectively with a top-quality product line.

Today we find ourselves faced with a new challenge to secure a sufficient supply of energy for the plant. If not addressed, the lack of fuel could jeop-ardize our entire operation in Minya. During our first year of operation we had to build and operate a captive power plant to supply electricity to the plant. We are now focusing our efforts on securing connections to the national electrical grid and gas pipeline. We will also be putting into effect cost-cutting measures that will help to offset the rising cost of energy and enhance profitability. Despite the challenges, the company has already been able to generate remarkable EBITDA margins in excess of 25%.

Giorgio Bodo Chairman Of The Board & Chief Executive Officer

Misr Qena Cement, our first cement plant in Egypt, operational since 2002, continues to perform well and has not been negatively impacted by the politi-cal unrest to the same extent as Minya.

As a well-established cement plant, Qena also has the advantage of being connected to the national electricity grid.

In 2013, turnover at Misr Qena Cement reached a record EGP 956 million with EBITDA exceeding 2012 levels by 25% reaching EGP 373 million. The company continues to operate above nominal capacity with significant reserves of liquidity. With the launch of production at ASEC Minya this year we will be pri-oritizing the development of synergies between the two companies.

ASEC Ready Mix reported remarkably strong results despite the political unrest that the country experienced around mid-year. Production volumes reached 188,000 m3 at a value of EGP 63 million, while EBITDA reached EGP 6.4 million. The company was also able to post a first-time net profit of c. EGP 1 million and reduce outstanding debt by more than 60%.

Important achievements also took place at Al-Takamol Cement in Sudan.

As a leading regional cement group that invests in the high-

growth markets of Africa and the Middle East, we have become accustomed to circumventing

daunting constraints to achieve the best possible results.


For the first time since it became op-erational in 2010, the company posted significant EBITDA of SDG 16 million, equivalent to 4% of sales. A number of important measures were taken over the course of the past two years which led to the improvement in EBITDA margins, the most significant of which is the pur-chase of Berber for Electricity which has allowed us to obtain electricity at cost rather than paying a third party through expensive contracts.

Moreover, we have gradually under-taken a process to replace expatriates with local Sudanese workers whenever possible, resulting in significantly re-duced labor costs. General expenses have also been cut and we have moved to a system that allows us to directly manage our quarries to reduce the cost of the extraction of raw material. Last but not least, Takamol’s debt was reduced by more than 70%, down to SDG 43 million at the end of 2013.

Zahana Cement in Algeria also had a good year although results did not meet expectations due to unforeseen circumstances. The company was nega-tively impacted by heavy flooding that took place at the end of April in western Algeria. Additionally, Zahana Cement was not allowed to use explosives at lime-stone quarries leading to a deterioration in the homogeneity of the raw mix which negatively affected production volumes. On the positive side, we introduced a

higher quality grade 42.5 cement versus the old 32.5. Finally, works on Zahana’s new raw mill are almost complete and we expect to put it into production by March 2014.

We are still working very hard to final-ize the approval of a loan that will allow us to move ahead with our greenfield cement plant in Djelfa. In Syria, we have maintained our license while we await conditions in the country to improve.

Overall, we have witnessed a marked

improvement with all our operations in 2013. ASEC Cement now has an influ-enced capacity that is close to 7 mtpa. On a consolidated level, our Group had a total turnover of EGP 1.0 billion with EBITDA of 140 million, taking into ac-count the fact that Qena is consolidated with the equity method.

Our performance for 2014 should further improve with the first full year of production at ASEC Minya and additional upgrades at Zahana, Takamol and ASEC

Ready Mix. However, the extent to which we can produce positive results will of course be conditional upon political developments and the availability of fuel at reasonable prices. We will continue to reduce costs and expedite connectivity to the electrical grid for ASEC Minya and Takamol, and to the gas pipeline in Minya. Further investments may be required to switch to solid fuels and introduce waste heat recovery systems to generate electricity.

3.8 Mtons Total ASEC Cement Production in 2013


2013 Milestones

ASEC Minya

ASEC Minya launched commercial operations in

August 2013, and recorded total clinker production of 539,142 tons as of the end of December 2013, while the production of cement had reached 414,662 tons.

ASEC Ready Mix

Thanks to its fourth batch plant in Aswan, ARMC

strengthened its position as the market leader in Upper

Egypt, achieving a total sales volume of 188 km3

of concrete, while revenues grew by 15% as sales

reached EGP 63 million.

Misr Qena

Misr Qena became the highest performing com-

pany in the cement market in terms of utilization, with an average utilization rate of 113%, compared to a market average of 73%.

Al-Takamol

Under strained market conditions, Al-Takamol

Cement Company achieved sales revenues of SDG 430 million in 2013, a 24% increase over 2012.

Zahana

Zahana Cement Company launched a new raw mill

in March 2014, a develop-ment that is expected to boost clinker production

levels.

ASEC Algeria

ASEC Algeria is cur-rently negotiating with the Banque Exterieure

d’Algerie (BEA) to secure a loan which would see the resumption of the project.

Al Muthanna

Under a consortium with Qimat Al Iraq,

ASEC Cement signed a 14-year rehabilitation and

management contract in Iraq to operate Al

Muthanna, one of Iraq’s most important cement manufacturing plants.

ASEC Trading

ASEC Trading’s revenue growth stood a 350%

year-on-year, while net profits saw an increase of

450%.


Management Discussion and Analysis 2013

Despite the economic and security chal-lenges that Egypt faced in 2013 — the third year post revolution — ASEC Cement’s business in Egypt proved resilient.

The company reported improved lo-cal currency revenues at our portfolio companies, launched operations at ASEC Minya, and opened a new batching plant in Upper Egypt, all while keeping costs under control on both the consolidated and standalone levels.

Management considers the major achievement of 2013 to be the launch of production at ASEC Minya Cement Co. (AMCC) in the second half of 2013. ASEC Minya has a production capacity of 2.0 million tons per annum (mtpa), allowing ASEC Cement to now run a total consoli-dated production capacity of 7 mtpa, and contributing positively to a turnover of more than EGP 1 billion in 2013.

Also quite noteworthy for 2013 is the launch of ASEC Ready Mix’s fourth

batching plant in Aswan. The success-ful launch of this plant further expands ARMC’s footprint in Upper Egypt and stabilizes the leading position of its ready mix plants in Assiut, Qena and Sohag.

Consolidated ResultsOverall, ASEC Cement reports a 25% y-o-y increase in consolidated revenues to EGP 1,012.1 million, attributable to Al-Takamol Cement (42% of the group’s consolidated revenues), Zahana Cement in Algeria (36% of consolidated results), ASEC Ready Mix (6%) and ASEC Minya (12%).

Misr Qena Cement (MCQE), mean-while, delivered a solid performance and maintained good profitability, in spite of headwinds from prevailing economic conditions. The company distributed dividends of EGP 6.5 per share for 2013, contributing to ASEC Cement’s invest-ment income, albeit less so than in 2012.

The group’s consolidated sales, general & administrative expenses (SG&A) de-creased by 7% y-o-y to EGP 180 million, attributable in part to ASEC Cement’s cost control efforts, which ranged from the reduction of top management sala-ries to a hiring freeze, among other line item savings.

Investment revenues came in at EGP 59.7 million in 2013, a 14% decrease y-o-y due to a 16 % y-o-y decrease in net profit at Misr Qena Cement.

The rise in interest expenses to EGP 114 million in 2013 is related to EGP 35 million interest charged on the bank loan for AMCC, after ceasing capitaliza-tion of borrowing cost at the end of the third quarter.

A consolidated results gain of EGP 17.2 million was mainly related to AMCC deferred tax balance reverse .

On the balance sheet, a decrease of EGP 1,005 million in Projects Under

Construction is mainly due to the launch of ASEC Minya, which necessitated a re-classification of the factory from Projects Under Construction to Fixed Assets.

Standalone ResultsASEC Cement’s standalone results record-ed a dividend income of EGP 58.9 million in 2013 compared to EGP 88.9 million in 2012, a significant decrease that resulted from lower dividends distributed by Misr Qena Cement in 2013 amounting to EGP 6.5 per share compared to EGP 10.5 per share in 2012.

ASEC Cement’s cost cutting initiatives in 2013 continued to reflect positively on the company’s results, as G&A spending was reduced by EGP 3.9 million, a 9% decrease y-o-y. The savings strategy included reduc-tions in salaries at the upper management level, reverse variable bonuses, lower travel expenses, a reduction in hired manpower, and decreased advertisement fees.

Interest expenses increased in 2013 to reach EGP 47.5 million, which resulted from higher utilization of the company’s medium-term loan used to finance operational projects. Notably, interest expenses in 2012 included commitment fees for EGP 2.4 million.

Interest income in 2013 included EGP 22.3 million related to interest dues cal-culated on the AC intercompany loan to Al-Takamol for USD 100 million.

Forex gains of EGP 78.2 million achieved in 2013 were a result of a revision of an AC intercompany loan to Takamol (USD 112 million) which includes its accrued interest from USD (original loan currency) to SDG (loan settlement currency).

Investments in subsidiaries in-creased by 5% to EGP 75.5 million as of December 2013, following ASEC Cement’s contribution to the capital increase of ASEC Ready Mix, bringing

ACH’s total shares to 54.99% in the new company capital.

Further contributions include an outlay to increase the company’s share in Berber to 37.65% (breaking down as 30.97% direct and 6.68% indirect through Al-Takamol) up from 24% in 2012.

OutlookNotwithstanding the political and social turmoil that characterized 2013, management is confident that 2014 will be a strong year for ASEC Cement and our portfolio companies. Downside risks include challenges arising from energy shortages at all our plants, but especially ASEC Minya and Al-Takamol. Management is work-ing to counteract the energy crisis by converting plants to run on both solid and alternative fuels, as well as imple-menting efficient energy management systems and training.

EGP 1.0 bn Total ASEC Cement

Consolidated Revenues


Our Strategy

ASEC Cement’s footprint includes some of the most attractive, high-growth emerg-ing markets in Africa and the Middle East. Despite a highly volatile climate, cement volumes at ASEC Cement have increased from 0.7 million tons in 2008 when the company had only one operating unit in Algeria (Zahana) to 3.8 million tons in 2013 with three operating units in Egypt, Sudan and Algeria and two active licenses in Djelfa-Algeria and Syria. Volumes are expected to grow even further reaching 5.4 mtpa in 2014. The company is also a strong player in the Egyptian ready mix market with four batching plants in Upper Egypt. The fifth plant in Beni Suef is expected to come online towards the end of 2014. Executing plans to expand the mobile equipment of all batching plants have already begun.

In order to reach its goal of produc-ing 10 million tons per annum by 2016, ASEC Cement has pursued a strategy that has seen it invest in greenfield

cement plants as well as acquire sig-nificant stakes in existing cement com-panies, which in certain cases require an operational turnaround.

While our core vision has remained the same since the beginning, 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.

Market conditions today have, however, forced us to adopt a more conservative approach. We abandoned greenfield ventures in Libya, Ethiopia and Kurdistan, choosing instead to focus on our core markets of Egypt, Sudan and Algeria, particularly our two greenfield plants ASEC Minya in Egypt and Al-Takamol in Sudan.

Despite the three and a half years of political uncertainty in Egypt, ASEC

Cement has forged ahead with its two Egyptian greenfield projects: ASEC Minya and the expansion of ASEC Ready Mix (ARMC), which currently produces ready mix cement at four separate plants in Assiut, Qena, Sohag, and Aswan.

ASEC Cement’s most significant mile-stone for 2013 has been transforming ASEC Minya from an under-construction greenfield into an operational asset. The year 2013 marked the entry to production for the Minya plant, which is currently op-erating at a very high capacity utilization. Connections to the national gas grid are now complete but cost and availability of gas continue to be a problem.

In January 2014, ASEC Minya began to produce SRC (Sulfate Resistant Cement) in addition to the standard OPC cement. Being able to quickly diversify its product line to meet market demand has given ASEC Minya a large competitive advan-tage and allowed the company to sell bundles to traders. Today it is one of

only two producers that can supply SRC to the Upper Egyptian market. As a result the company has quickly gained market share in this increasingly important region as more infrastructure projects begin to come online post revolution.

Energy ChallengesPolitical and economic difficulties in the region have led to a severe energy crisis. In 2013, fuel costs in Egypt and Sudan have risen sharply as a result of supply shortages. ASEC Cement is currently evaluating a new energy strategy that it will implement across the board. The new measures will involve a significant reduction in the company’s dependence on HFO and natural gas with a shift to coal and other alternative fuels as a source of energy.

In Egypt, the government is proposing a new energy mix for cement manu-facturers, which would be comprised of coal, waste fuels, and the traditional

fossil fuels. Fully converting the ASEC Minya plant to solid fuel will entail installing a mill to grind the coal, a process that takes approximately 12 months, pending final government approval to import coal. In the short term however already ground coal could be used. Additionally, the installation of Waste Heat Recovery Units in all of ASEC Cement’s production facilities is expected to reduce energy costs by 30%. A combination of the above-mentioned measures should help relieve the burden of procuring large quantities of fuel to run our plants.

Operational EfficiencyASEC Cement is continuing to stream-line all operations and cut costs wher-ever possible in Egypt and Sudan while maintaining efforts to solve problems in Algeria. 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, are translating into significant cost savings.

We have also upped our branding and marketing efforts in 2014 with an eye on maximizing synergies between Misr Qena Cement and ASEC Minya in terms of commercial strategy and procurement.

OutlookGiven the current climate, ASEC Cement will not be carrying out significant ac-quisitions or investing in new greenfield projects until the end of 2015. However, by the end of 2014 we expect that the de-leveraging process that the company began two years ago will have advanced significantly allowing for a new phase of growth. Our interest will still be directed towards the MENA region, but we may also look at opportunities in East Africa, a region with high potential and relatively easy to access from Egypt.


Operational Review16 Market Analysis18 ASEC Minya Cement Company20 Misr Qena Cement Company 22 ASEC Ready Mix 24 Al-Takamol Cement Company 26 Zahana Cement Company 28 ASEC Algeria Cement Company29 ASEC Syria Cement Company30 ASEC Trading32 Al Muthanna Cement


Market Analysis

Egyptian Market AnalysisThroughout 2013, the Egyptian market was marked by strained macroeco-nomic conditions in all sectors of the economy, but especially the cement market. Clinker and cement production market-wide witnessed a decrease of 8% and 3% respectively, with volumes falling well short of potential capacity. Total clinker production amounted to 43.8 million tons, representing 71% of the available capacity while total cement production recorded 51.4 million tons representing 77% of the nominal capacity. Average utilization of the cement capacity stood at 73%. Notably, however, Misr Qena Cement, in which ASEC Cement holds 28%, was the highest performer in the market, achieving a utilization rate of 113%.

Faltering market conditions in the cement industry can be attributed to a number of major externalities which led to drastic changes to basic market dynamics in 2013. Major political devel-opments in July and August (tradition-ally high energy consumption months)

impeded government efforts in securing fuel supplies for the summer months, which led to shortages that directly correlate to a significant decline in dis-patches, sales, production, utilization and global exports over the same period. These political developments include the enforcement of long curfew hours throughout the country from August to November, which hampered the ability to transport cement and other supplies. Furthermore, political instability led to a decline in development projects, adversely affecting demand.

The aforementioned extreme short-ages and market forces caused cement prices to jump to a high of EGP 630 per ton in 2013.

As expected in a depressed economy characterized by rising costs and an uncertain security environment, demand fell 2.3% in 2013, which consequently had a direct negative impact on local dispatches, which amounted to 50 mtpa in the year, a drop of 2.4%. Exports of cement fared significantly worse, wit-nessing a decline of 47%, while there

were no clinker exports after the second quarter of 2013.

Survival in this challenging and highly competitive market will depend on in-novative ways to reduce costs and secure energy by both the government and the private sector, in particular because the gradual removal of subsidies on natural gas and Heavy Fuel Oil (HFO) is expected to lead to further increases in the price of cement going forward.

There have been some positive de-velopments. April 2014 saw the govern-ment approve a plan to permit the use of solid fuels (coal and petcoke) as well as alternative fuel sources in cement production. Future innovations include ASEC Cement’s plan to install Waste Heat Recovery units in its production facili-ties. Also, a proliferation of infrastructure projects in Upper Egypt, in which ASEC is strategically positioned, is expected to improve market performance. Demand is expected to rebound over the coming years as Egypt progresses towards po-litical stability while retaining its strong market fundamentals.

Sudan Market AnalysisIn 2013, the Sudanese market was plagued by political tensions, fuel shortages and currency depreciation which led to mount-ing inflation throughout the year.

Despite this, demand saw a rise in the first half of 2013, which recorded a 20% increase. In order to mitigate the effects of mounting fuel and energy costs, cement companies were forced to increase selling prices, which jumped 57% in 2013 to reach 800 SDG/ton by the end of the year. This, coupled with intense fuel shortages and increased inflation in the summer season saw demand drop dramatically in the second half. Looking forward, a reversal is expected to take place in overall market demand in 2014.

Supply, on the other hand, rose 2% in the year, narrowing the demand gap, as production reached 3.3 million tons. This number is expected to grow to 3.7 mtpa by the close of 2014.

Amid this highly fluctuating market, the market shares of the five leading cement producers saw changes as well. ASEC Cement’s Al Takamol Cement Company

(Al-Takamol) achieved a second-place position in the third quarter of 2013. However, shortages of fuel supplies due to the National Petroleum Company demanding advance payment led to frequent production stoppages. This in turn saw Al-Takamol’s market share slide from 28% in September to 19% for the full year, falling behind Atbara’s 33% and Al Shamal’s 21%. The competition between the five leading companies is expected to intensify as demand con-tinues to increase and fuel shortages are expected to continue.

Algeria Market AnalysisThe Algerian cement market remains an attractive and lucrative position due to strong growth drivers such as an abundant energy supply at favorable prices, large government infrastructure and housing projects, the abundance of raw materials and the development of Algeria’s southern region.

These factors have created a market where demand far outpaces supply. This becomes evident when analyzing

utilization rates: in 2013, the cement industry saw average utilization for state-owned plants reach 100%. Total volumes sold were essentially steady, from 19.02 mtpa in 2012 to 19.06 mtpa in 2013, in-dicating that supply is struggling to keep up with demand.

In order to cope with this growth, Algeria imports between 2-3 million tons of cement annually. Recognizing the need to expand its domestic supply significantly over the coming years, the government announced new greenfields in 2013 and plans to upgrade existing production lines.

The struggle to meet demand despite strong growth drivers can be attributed to a lack of competition in the market. Growth in the Algerian cement sector is dominated by two players: the state-owned GICA, whose current market share stands at 60%, and Lafarge, which controls the balance. Prices for all state owned-cement plants are fixed and distribution is centralized through government trading entities. If the market remains uncompetitive, it is expected that demand will continue to outpace supply for the foreseeable future.

51.4 Mtons Total Cement Production

in Egypt


ASEC Minya Cement Company

ASEC Minya Cement Company, ASEC Cement’s 2.0 million ton per annum (mtpa) greenfield cement plant in Minya, Upper Egypt, in which the company holds a 45% direct stake, became fully operational in 2Q13, with construction and testing having been completed on schedule at the beginning of the year. The completion of the plant in 28 months under extremely difficult circumstances is a testament to ASEC Cement’s ability to achieve operational targets regardless of market volatility and political risk.

The project’s construction journey co-incided with an unprecedentedly com-plicated context in Egypt which brought about a multitude of unforeseen social, economic and political difficulties. The project construction started one month before the burst of the January 25th revolution and in order to arrive to the production phase, the company had to deal with the implications of the deteriorated security conditions, bureaucracy and multiple changes in governmental officials, numerous fuel shortages and labor unrest.

Despite of all this, the project’s con-struction schedule was met over 30 im-pressive months. Performance Guarantee Tests (PGT) were successfully completed for all of the technical departments and units. Furthermore, implementation of fire fighting and environmental control systems is underway throughout all of the production line departments. The plant is currently in the process of secur-ing and completing its connection to the natural gas network.

Since the launch of operations in July of 2013, the USD 360 million plant has achieved a number of important operational milestones, including record-breaking, month-on-month production levels. As of December 2013, clinker production exceeded nominal produc-tion capacity with kiln output of more than 5,800 tons per day, 300 tons greater

than the nominal daily capacity. As of the end of December 2013, ASEC Minya had recorded total clinker production of 539,142 tons, while the production of cement had reached 414,662 tons.

The strong operational performance figures for 2013 are considered very promising for a recently launched pro-duction facility. It is also a substantial accomplishment in light of the domestic fuel supply shortages, which began in August of 2013 and nearly halted cement production nationwide.

ASEC Minya also achieved significant commercial milestones that are no less impressive than its production accom-plishments. As operations expanded and broke nominal daily capacity records in November, the company reached an average sales dispatch rate of 4,300 tons per day in Upper Egypt, with Minya as the main market. Although Minya remains the company’s core market, record sales volumes have been achieved elsewhere in the country, which accounted for 56% of total sales at year-end. At the end of December, a new daily dispatch milestone of 6,500 tons was achieved. That same month, ASEC Minya’s total domestic cement sales reached 348,334 tons, while total export sales volumes climbed to 20,605 tons.

To capitalize on its operational success and expand sales growth, ASEC Minya’s commercial department has devised a comprehensive commercial strategy that has thus far allowed the company to sell 100% of its production capacity. The company has a diversified product range, selling both Ordinary Portland Cement (OPC) and Sulfate Resistance Cement (SRC), at a premium quality. ASEC Minya’s superior logistical support (including delivery and transport), incen-tives and network of warehouses in five governorates that bring product closer to the end-user, allow the company to maintain product pricing at premium

levels. The commercial department has earmarked these warehouses to serve as sales outlets, further facilitating access to its products by end-users

An aggressive advertising campaign, road shows and a series of activities and loyalty programs targeting select customers has helped ASEC Minya to capture an increasing market share that stood at 2.5% in its core market of Minya and Upper Egypt as of December

2.0 mtpa Greenfield Cement Plant

2013, while adopting a bulk direct sales tactic to target contractors, government contractors and construction companies, ready-mix companies and block factories.

As we work to stabilize our operations, we view the energy cost and availability as our key challenge. We are ramping efforts to connect to the National Grid to ensure stable power supply, which is expected by 2016 given the drown-out official approval process. Though the

NG connection line is complete, the NG supply will not be guaranteed before 2015. These two major measures, when achieved, are expected to improve our cost structure massively.

Looking ahead, we are quite aware that the energy challenges have turned to be a national concern given the domestic shortage of NG, diesel and electricity. Resorting to alternative energy solutions is no more optional,

thus we are currently exploring all pos-sibilities to ensure the sustainability of our operations. The government approved the use of coal/pet coke for the cement industry in April 2014, yet no formal process or regulations have been announced. We are closely moni-toring the official measures with this regard, while continuing our relent-less endeavors to reach the optimum energy solution for our plant.

28,007

0

34,138

86,01886,504

153,370 151,105

300

19,305

17,370

65,97974,099

118,444

120,439

Jun Jul Aug Sept Oct Nov Dec

Clinker Production Cement Production

Clinker & Cement Production (Tons)


Misr Qena Cement Company

In the midst of a floundering Egyptian cement market, Misr Qena Cement Company (MCQE), one of Egypt’s leading cement producers, was able to improve sales volumes in 2013 to more than 2 mtpa, compared to 1.9 mtpa in 2012. Revenues and gross profits also rose during the year, although the company experienced a reduction in profitability as severe fuel shortages led to a significant decrease in overall cement production capacity nationwide, while contributing to a significant increase in input costs. Furthermore, 2013 marks the first year in which MCQE accrued taxes.

Turbulent market conditions in 2013 significantly affected the profitability

of all local market players, with the single most detrimental event of the year — from a manufacturing per-spective — being the fuel shortages, which peaked in the second quarter of 2013. These challenging conditions were compounded by a 2.4% decrease in demand, an inevitable result of the political instability which peaked around July of 2013. Further obstacles include a nationwide curfew in August, hamper-ing transportation. Yet despite these challenges, 2013 saw MCQE’s cement production increase by 6.1% to settle slightly above 2 million tons. In terms of utilization, Misr Qena was the high-est performing company in the cement

market, with a utilization of 113%, while the market average was 73%.

On par with its exceptional operational performance, 2013 saw total sales revenues increase by 28% from EGP 746 million in 2012 to EGP 956 million in 2013. This can be attributed primarily to a comparable 21% increase in the selling price and a 6% increase in sales volume, as the average factory sales price jumped from EGP 393 per ton in 2012 to EGP 474 per ton in 2013.

Significant price increases were a direct consequence of a staggering 62% jump in fuel costs, as prices of heavy fuel oils jumped from EGP 1,060 per ton in 2012 to EGP 1,712 per ton in 2013. Overall, although total costs of goods sold saw a

31% increase to EGP 558 million, MCQE achieved a gross profit of EGP 398 million, an effective 24% growth over 2012.

General and Administrative expenses saw an 8% increase year on year as a result of a rise in donations, and a 12% increase in salaries and Board of Director allowances. These were offset by strong FOREX gains amounting to EGP 15.1 million in 2013 on the back of dollar denominated deposits valued against a weakened Egyptian pound.

While costs of goods sold rose sharply in 2013, MCQE managed to generate EBITDA of EGP 373 million, a 25% year-on-year rise. Net profits for the year came in at EGP 273 million, a 16% decline from 2012.

This is an admirable feat considering that taxes were accrued for the first time on MCQE’s financial statements, affecting bottom line figures. Tax rates were 20% of taxable income up to EGP 10 million and 25% on amounts exceeding this threshold. Total corporate taxes for 2013 amounted to EGP 89 million.

This development did not significantly damage MCQE’s cash position and it was able to distribute dividends worth EGP 3.5 per share in April 2013 as well as interim dividends of EGP 3 per share in November 2013.

In an attempt to mitigate the mounting costs of fuel, MCQE — with the support of ASEC Cement — has been studying

the option of utilizing coal or petcoke as an alternative fuel source. On 3 April 2014 the government approved a plan which would permit cement companies to develop mechanisms for the utilization of coal as a fuel source in production. The plan would decrease reliance on natural gas, which remains in extremely short sup-ply, although full implementation of solid fuel utilization will take one year. The com-pany has also proposed installing a Waste Heat Recovery system to generate up to 8 MW of electricity. This project piqued the interest of the European Bank for Reconstruction and Development, which is conducting technical due diligence in order to finalize their funding offer.

EGP 955 mn Total Revenues in 2013

, ,2 014 993 1 ,898,339 574,050 462,840

185 157

176

140

277

224

295

240

474 393

485

399

20132012Q4'13Q4'12

Sales Volume (Ktons)EBITDA/TonCOGS/TonWAP

Sales, Volumes and Profitability (Ktons Tons/EGP)


ASEC Ready Mix

ASEC Ready Mix (ARMC), an EGP 36.4 million joint venture in which ASEC Cement holds a 55% stake and Misr Qena Cement (MCQE) a 45% stake, now has four years of solid performance behind it, and moves up to one of Egypt’s top 6 producers of ready mix concrete and the number one producer in Upper Egypt.

ARMC’s production capacity has grown in its brief history to a total of four ready mix stations in the Upper Egyptian governorates of Assiut, Qena, Sohag and Aswan, with the company having successfully developed a reputation as a quality producer of ready mix in the

region, growing its brand recognition. Accordingly, in 2013, ARMC strength-ened its position as the market leader in Upper Egypt achieving a total sales volume of 188 km3 of concrete. ARMC’s expanding customer base in Upper Egypt includes both large and small real estate, residential and commercial projects.

To effectively serve this growing cus-tomer base, ARMC has plans to launch two additional batching plants in Minya and Beni Suef within the coming year. Land for the Beni Suef plant has already been secured and plans are underway to acquire additional land in Minya.

The Egyptian cement sector experi-enced a particularly difficult year in 2013, with severe shortages in fuel supplies in the summer curbing the national cement production capacity. The year 2013 was marked by political instability, which translated into a stagnating national economy. As a result of this Egypt was subject to a four month curfew from August to November, which greatly obstructed transportation. Yet despite these macroeconomic challenges, ASEC Ready Mix maintained its positive per-formance, and revenues grew by 15% as sales reached EGP 63 million on the back

of a 13% growth in sales price reaching EGP 343/m3 compared to EGP 302/m3 in 2012, in addition to an expanding cus-tomer base in Upper Egypt and increase in sales volumes of 1%.

Full year 2013 EBITDA came in at EGP 6.5 million, up from EGP 5.8 million in 2012 amounting to an increase of 11%. Notably, EBITDA margins for 4Q 2013 in-creased by 85% over the average margin from the previous three quarters, which marked the highest EBITDA margins since the launch of operations. Net profit for 2013 came in at EGP 0.74 million, compared to EGP -0.44 million in 2012.

Despite high prices, demand for con-crete in Upper Egypt rose throughout the year, as Qena and Sohag both launched major projects. These include Qena University in Qena, and the Al Kawamel Railway Station and Al Azhar Institute in Sohag. Management is optimistic that aid money from the Gulf that is ear-marked for major infrastructure projects will lead to demand increasing further in the coming year.

ARMC’s positive results and robust growth in 2013 despite the political unrest, security breakdowns, and fuel shortages that plagued the industry

throughout the year show the strong foundations on which the company stands. In the event of another chal-lenging year in 2014, management anticipates that the company will once again prove capable. In concrete terms, the establishment of batching plants in Minya and Beni Suef will help mitigate any negative impact from fuel short-ages or other shocks. The effects of any future fuel shortages will also be mitigated by the April 2014 regulatory decision approving the adoption of solid fuels, such as petcoke and coal for use by the cement sector.

111.

5

2011 2012 2013 2011 2012 2013

35.3

185.

2

54.8

187.

7

63.3

Sales Volumes (Ktons) Sales Volumes (EGP)

4 Batching Plants,

making it the top producer in Upper

Egypt


Al-Takamol Cement Company

Al-Takamol Cement Company, ASEC Cement’s USD 253 million, 1.6 mtpa greenfield cement plant in Sudan, is the only European-standard greenfield ce-ment plant. Operational since 2010, the company became Sudan’s first cement manufacturer to succeed in exporting excess volumes when it sold 66,000 tons of cement to Eritrea and Kenya in 2012.

On the heels of a challenging 2012, market conditions in Sudan during 2013 remained strained. Companies faced severe difficulties in obtaining fuel, inflationary pricing on fuels, currency devaluation, protests and an overall

increase in the costs of raw materials and consumables, all of which had a negative impact on ATCC’s cement operations. That said, operational improvements throughout 2012 and 2013 resulted in Al-Takamol achieving a rise in overall sales revenues and clinker production and only a slight drop in cement production.

Total clinker production for the year reached 526 thousand tons (ktons), up from 484 ktons in 2012, an 8.7% y-o-y improvement. The climb in clinker production came as the result of an al-location of 40.2 ktons of fuel for clinker production. Total cement production in

2013 witnessed a decline of 6.5% from 677 ktons to 633 ktons.

Despite the difficult market, there was a marked rise in sales revenue in 2013 to SDG 430 million, a 24% increase over 2012, while EBITDA amounted to SDG 18.9 million. Net profits, meanwhile, came in at SDG -38.2 million for the year, compared to SDG -251 million in 2012.

Al-Takamol’s cost control strategies have been at the heart of the com-pany’s ability to withstand the difficult political and economic environment in Sudan. Most significantly, variable costs have been reduced as a direct result of

Al-Takamol’s investment in the Berber power plant: today the company is charged for the actual amount of electric-ity that is consumed rather than through the minimum off-take agreement that was in effect prior to the acquisition of the Berber plant.

Mitigating the impact of fuel shortages is a primary focus for controlling costs in this energy intensive sector. In addition to the acquisition of the Berber plant, Al-Takamol has the ability to utilize and is well-supplied with petcoke and is op-erationally capable of shifting between heavy fuel oils and petcoke, which is a

much less expensive source of energy. Transportation costs decreased by SDG 22 per ton due an increase in ex-works sales versus delivered. At the same time, gross WAP increased by SDG 147 per ton, a 34% increase over 2012, while net WAP increased by 55% to reach SDG 463.

Other successful steps in cost control have been the phasing out of expatriate employees and replacing them with local staff across all departments. This process began in 2012 and was nearly complete as of the end of the first quar-ter of 2014. Further measures include taking over management of the quarries

and avoiding the fixed USD fee versus a deflating SDG.

Furthermore, in an attempt to sup-port the working capital needs of the company, Al-Takamol has proposed a capital increase which will aim to sup-ply the company with a SDG 85 million cash injection in 2014. This cash influx will be utilized towards settlement of outstanding dues to suppliers such as Nile Petroleum, allowing ATCC to procure more quantities of fuel to guarantee continuity of operations and increase the utilization of its production line, which will improve cash generation.

Clinker Production (Kton) Cement Production (Kton)

484

677

526

633

2012 20122013 2013

SDG

430 mn Sales Revenue in 2013


Zahana Cement Company

Zahana Cement Company is a key brownfield investment, at which ASEC Cement has implemented a successful turnaround program. Since it assumed the management of the company, ASEC Cement has worked to upgrade facilities, improve working and living conditions for employees, and expand production capacity at the plant, which is located in western Algeria 40 kilometers away from the city of Wahran.

ASEC Cement acquired a 35% stake and management rights at Zahana in 2008 from the Algerian government, which still holds the balance of the

equity through its holding company GICA, which controls all public-sector construction material facilities.

In 2013, Zahana suffered a number of operational setbacks that impacted production. Heavy rains in 2Q13 led to heavy flooding inside the plant and quarries, and production of clinker was halted for two weeks; also in 2013, the Algerian government instituted a ban on the use of heavy explosives in the quarry (a standard practice which maximizes quarry yield) leading to an in-adequate raw mix product. Furthermore, the equipment utilized in the wet line

production is by now obsolete, and pro-curing new spare parts and machinery has proven to be impossible. This was compounded by a shortage of water to run the wet line.

Overall clinker production dropped 4% from 672 ktons in 2012 to 645 ktons in 2013. Accordingly, cement production dropped from 812 ktons to 785 ktons, which amounts to a decline of 3%. Efforts to mitigate the impact of lower clinker production were hampered by protests in Banisaf which prevented the purchase of additional quantities of clinker. The decline in cement production is reflected

in the total sales of cement which wit-nessed a 4% decline in sales. Despite this decline, total sales were 15% higher than the 2008 production average of 650 ktons, reaching 772 ktons.

These operational setbacks are, for the most part, temporary. Zahana’s management is continuing with its major overhaul projects to improve the dry line clinker facilities, which began in mid-January 2014 and is expected to be complete in mid-February. Likewise, the plant’s new raw mill, which is expected to boost clinker production levels from the current 2,000 tons per day to 2,500

tpd, has been successfully installed and will begin operations once the rest of the dry line facilities are overhauled.

Zahana’s revival prospects remain high on account of future investments. In 2012, a tender process for a new 4,500 tons per day production line was launched for the fifth time. This is ex-pected to significantly increase Zahana’s operational and production capacity. As it stands now, tender offers have been submitted by FCB, Polysius and CBMI along with their technical and financial offers, and are currently being evaluated.

Zahana’s management is steadfast

in implementing the organizational reforms which began in 2012 and led to a sales record achievement in that year. These include developing local resources and augmenting them with international expertise. ASEC Cement has strengthened its base of Algerian technicians, engineers and managers in a manner that will allow the plant to smoothly accommodate future growth. Further improvement in working condi-tions for laborers and improving the en-vironmental impact of the plant will help Zahana realize a significant turnaround and resurgence by 2014.

Zahana’s manage-ment is continuing with its major overhaul projects to improve the dry line clinker facilities.

Clinker Production (Kton)Cement Production (Kton)

672

809

645

785

20122012 20132013


ASEC Algeria ASEC Syria

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

In 2011, the Algerian government offered ASEC Cement to participate in ASEC Algeria’s capital with a 49% mi-nority stake through GICA, the public sector holding company that controls Algerian cement plants. However, in January 2013 GICA informed ASEC Cement of its intention to reverse their original decision and announced their withdrawal from the joint venture.

AACC submitted a written request to

the Algerian Investment Authority in 2012 to extend the project’s develop-ment period. The request was approved in February 2013, extending the project’s validity up to January 2014 which was renewed for an additional three years.

In order to obtain funding for the project after GICA’s withdrawal, ASEC Algeria approached the Banque Exterieure d’Algerie (BEA) Algeria for securing a loan. By early 2013, new technical and accounting due diligence were conducted for AACC. The process will lead to a number of important shifts in the structure of the company, most prominent of which is ASEC Cement’s full and complete ownership of the company.

Despite the drawbacks that the project has endured, ASEC Cement is still confident that the same strong

fundamentals that made the project a viable investment in 2009, still stand today. In recognition of the importance of the project, the Algerian Ministry of Industrial Development and Investment Promotion is attempting to facilitate a resolution between ASEC Cement and BEA. In November 2013 the Ministry favored more relaxed terms for the loan guarantee required by BEA and offered to assist ASEC in expediting exemptions from regulations governing share trans-fers and right of refusals.

The renewed support on the part of the Algerian government is a testament to the project’s importance and the gov-ernment’s recognition that the additional capacity from the Djelfa plant alone is capable of replacing the need for cement imports in Algeria.

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 inter-national 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. Meanwhile, ASEC Cement is in contact with the Syrian Ministry of Industry through the company’s Syrian partner in order to maintain the validity of the Syrian license.




ASEC Trading

ASEC Trading is ASEC Cement’s grow-ing international cement, clinker and alternative fuels trading division. The company utilizes cement inventory produced at ASEC Cement’s operational plants in Egypt and Sudan as well as local and international third parties to supply and serve the Egyptian and Libyan markets. Launched in 2011, ASEC Trading has experienced exponential growth in the past three years and is now on track to become Egypt’s leading exporter of cement, clinker and alterna-tive fuels by 2014.

With the advent of the energy crisis in 2011, which reached its apex in mid-2013, the urgency for an entity that facilitates the movement of cement,

clinker and energy supplies to the re-gional market became paramount. ASEC Cement recognized the opportunity to not only relieve its energy strained operations but to supply the region, which witnessed declining supplies of cement and clinker and a sharp rise in demand. The company’s efforts to seize upon this opportunity culminated in the establishment of ASEC Trading in 2011.

By 2012, ASEC Trading was export-ing cement and clinker to the Libyan, Algerian, Kenyan and South Sudanese markets. However, fuel shortages and the resulting lag in cement supplies in Egypt has led to a scaling down of regional operations with a focus on injecting ce-ment, clinker and alternative fuel supplies

into the domestic market. Another driver in this decision was the growing instabil-ity in some of ASEC Trading’s strongest markets, such as South Sudan. As a result, revenues in 2013 were generated from operations in Egypt, which constitutes 20% of total revenues, and Libya, which holds the balance.

Despite these exigent circumstances, ASEC Trading continued to achieve consistent and significant growth. Since its launch, ASEC Trading’s fi-nancials demonstrate record highs, as 2012 saw cement export volumes grow by a remarkable 300% year-on-year with revenues increasing by 250%. This growth was carried on into 2013, as revenue growth stood a 350%

year-on-year, while net profits saw an increase of 450%.

Operational highlights include ce-ment sales volumes reaching c.300 ktons, a 700% increase year-on-year. This came on the back of operational gains in ASEC Minya’s facility which launched in 2013. Taken in the con-text of the severity of fuel shortages these results constitute a substantial achievement. It is worth noting that 160 ktons of cement was sold in the Libyan market. In Egypt, cement sold through ASEC Trading held a 14% market share in Upper Egypt, with overall Egypt sales reaching 85 ktons.

Operational successes came as a result of management’s ability to adapt

to strained regional market conditions. These strategies included diversifying ASEC Trading’s range of suppliers by importing from the Gulf. Cost cutting measures were adopted division-wide, while logistical operations were made more efficient. A major strategy that buoyed sales was the customer pricing strategy, which shielded ASEC Trading’s customers from the massive fluctua-tions of cement prices which occurred in 2013.

Shortages of conventional fuel supplies marred the Sudanese and Egyptian economies in 2013. As a result, parent company ASEC Cement began instituting major changes to cope with strained conditions and meet increasing

demand. The new measures consist of phasing out dependence on expensive fuels such as HFO and natural gas, and substituting it with coal and petcoke.

Regulatory approval for the use of solid fuels came in April 2014. The move will see ASEC Trading expand its scope of operations to include providing both the know-how and the material — namely coal and petcoke — for ce-ment industry players who are looking to convert their manufacturing facilities to solid fuels. In line with the company’s diversification strategy, ASEC Trading has sought out coal and petcoke sup-pliers from all over the world, includ-ing Australia, Venezuela, South Africa, Ukraine and the US Gulf.

700

% y-o-y increase in Sales

Volumes


Al Muthanna Cement

In a bid to expand its regional and international presence, ASEC Cement entered into a joint venture in 2010 with Qimat Al Iraq to completely overhaul Al Muthanna Cement, one of the largest cement manufacturing facilities in Iraq. Due to legal externalities outside of ASEC Cement’s control, the project was put on hold shortly after inception, but was revived and the contract was signed with the Iraqi state in August 2013

As the technical partner on the project, it is ASEC Cement’s mission to draw up and implement plans to bring the Al Muthanna plant’s annual production capacity to 1.8 million tons.

Al Muthanna Cement, which began operations in 1984, was one of Iraq’s most active state-owned cement pro-duction facilities. As a consequence of the First Gulf War and the subsequent sanctions imposed on Iraq, government-owned plants were neither renovated nor maintained and production de-clined throughout the 1990s. After the Second Gulf War, the Iraqi government established a program of rehabilitating production facilities in conjunction with the private sector, under agreements which give the private sector free reign to oversee rehabilitation and operation of the facilities.

Leading Iraqi manufacturer, Qimat Al Iraq, approached ASEC Cement to bid for the Al Muthanna rehabilitation project, and the company beat out two competi-tors in 2010. After a three-year delay, the project was revived when ASEC-Qimat AL Iraq consortium signed a contract with the Iraqi government in August 2013. Three months later, ASEC Cement submitted its rehabilitation plan, which was approved by the Iraqi government and operations are expected to begin upon the full handing over of the plant.

The Al Muthanna facility, located 315 kilometers south of Baghdad in the Samawa Governorate, is comprised

of two 3,200 tons per day KHD produc-tion lines, with a total design capacity of 2 mtpa. However, under the effects of the domestic turmoil, the facility is currently producing at about 10% of its capacity due to its poor state and lack of proper maintenance.

The conditions of the ASEC Cement-Qimat Al Iraq Consortium’s contract with Southern Cement Company — the state-owned holding company in charge of operating cement plants in the Iraq’s southern region — stipulate that full rehabilitation must be conducted within 24 months, with the consortium assum-ing management duties for a period of

14 years. The consortium must install and operate its own captive power plant with a capacity of 40 megawatts. The consortium will also provide technical and operational training for the labor force employed at the facility in prepara-tion to have the plant under complete Iraqi management in the future. Monthly payment obligations to the Southern Cement Company will take the form of an agreed upon quantity of cement. Under this agreement the Iraqi government will guarantee the ease of entry for foreign employees and imported equipment.

As with all of ASEC Cement’s projects, the consortium plans to engage with

the local community and helping in its development, through various corporate social responsibility activities in conjunc-tion with the local governorate.

ASEC Cement is no stranger to ven-turing into challenging markets and has consistently proven that it can adapt to and meet the needs of whichever market it operates in. That proven expertise, coupled with the company’s technical and managerial experience — which are regionally significant enough to draw the attention of the Iraqi government and a major leading manufacturer — will make Al Muthanna one of the ASEC’s most promising projects to date.

14 year Management Contract

As the technical partner on the project, it is ASEC Cement’s mission to draw up and implement plans to bring the Al Muthanna plant’s annual production capacity to 1.8 million tons.


Key Executives

GIORGIO BODO | CHAIRMAN OF THE BOARD & CHIEF EXECUTIVE OFFICER (April 2008 – April 2014) 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 DIRECTORMr. 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 construc-tion 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 DIRECTORMr. 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.

Adel Khallaf | TECHNICAL DIRECTORMr. Khallaf joined ASEC Cement Company in March 2007 as the company Technical Director for Civil Activities and was promoted to Group Technical Director in July 2013. Mr. Khallaf’s experience within ASEC group spans 17 years where he accumulated vast expertise in engineering projects for greenfield cement plants including the Assiut cement plant, Misr Qena Cement plant and extensions in the Helwan Cement plant. Prior to joining ASEC, he served for nine years in Yanbu Cement Company - KSA as a member of the project committee managing Project Engineering, construction and commissioning of the cement production lines and their upgrades. He spent 5 years in Misr Development Contracting Company as a resident engineer for the Helwan cement plant and other various projects. Mr. Khallaf holds a BSc of Civil Engineering from Ain Shams University.

SAMIR IBRAHIM RIAD | HUMAN RESOURCES DIRECTORSamir Ibrahim Riad is the Group Human Resources Director of ASEC Cement with 32 years of experience in the field of Human Resources and Administration in an array of multinational companies operating in Egypt. He Holds a Master of Business Administration degree from The American University in Cairo and a Professional Diploma in Business Administration from the same university. He also holds a Personnel and training Diploma from Cornell University, Ithica, New York, and Bachelor of Arts in Hotels Management. He is also a member of “The Egyptian Institute of Directors” and “The American Chamber of Commerce in Egypt, HR Core Committee”.

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 CapitalPrior 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 Capital Prior 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 EL-EBIARY | Managing Director, Citadel CapitalBefore joining Citadel Capital in February 2006, Mr. El-Ebiary 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. El-Ebiary 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.


As an industry leader, it has always been a key part of ASEC Cement’s mission to advance development and progress in the communities in which it operates. This mission translates beyond its business strategy and is a founding principle of the company’s corporate engagement policy. As such, ASEC Cement is committed to employing its vast resources to address some of the major issues affecting com-munities across Egypt. These include education, occupational health and safety, community and youth development, and climate change.

ASEC Cement’s most recent corpo-rate social responsibility programs

Corporate Social Responsibility

have focused on development in Upper Egypt, one of its key operational re-gions, with an eye working to alleviate hunger and poverty while promoting education, vocational training and hu-man resource development.

Addressing Hunger and Poverty in MinyaRampant poverty in Upper Egypt has kept children from completing their educations as large numbers of youth are forced to drop out of school to work and support their families, particularly in the governorate of Minya where poverty rates exceed 30%.

Fully aware of the negative impact of the poverty situation on school children in Minya, ASEC Cement chose to engage with the UN’s World Food Program (WFP) in a nutrition program that aims to im-prove children’s class attendance rates and cognitive capabilities by providing them with better nutrition.

In 2012, ASEC Cement donated EGP 2 million to the WFP in support of its school meals program in Minya, an initiative which provides for a quarter of the daily nutritional needs of over 3,200 children in 113 one-classroom commu-nity schools, as well as take-home rations for their families.

The program benefited close to 16,000 people across some of Minya’s poorest districts in 2013. In an attempt to encourage school attendance in lieu of child labor as a means of augment-ing family incomes, ASEC Cement contributed 18 metric tons of fortified dates to around 3,200 children and 222 metric tons of rice to the take-home rations program. According to the WFP, the success of this initiative has led to increased enrollment rates exceeding 80% in the community schools that are supported by the program.

Going forward, ASEC Cement plans to contribute 128 metric tons of cereal

to the take-home rations program and increase its supply of dates to 20 metric tons. Furthermore, ASEC Cement and the WFP will hold awareness workshops tar-geting teachers and educators in order to create more awareness on the relationship between poverty, education and nutrition.

Fostering Stronger Community Ties as Sponsors of the Minya Football TeamSince its inception, ASEC Minya has played an active role in the local com-munity. In 2013 ASEC Minya became the proud sponsor of the local Minya Football Team that has recently qualified for the

Egyptian Premier League after leading the ranks in Group Two by scoring 46 points. The sponsorship includes EGP 120,000 per season for team uniforms, EGP 80,000 to fund participation in two training camps as well as performance based financial incentives for the team.

To celebrate the team’s ascent to the Premier League ASEC Minya hosted a gala event that was attended by the Governor of Minya. The well-received event not only marked the rise of the local team, but also helped foster a greater sense of community spirit, which solidified the relationship between ASEC Cement and the local community.


Health, Safety & Environment

Corporate Governance

Health and SafetyThe intensity of the cement manufac-turing process comes with inevitable risks to both health and safety. To miti-gate these risks, over the years, ASEC Cement, which is a firm believer in the paramount importance of maintain-ing a healthy and safe work force, has implemented numerous programs to ensure that staff remain as such. None of these have been more successful than its Zero-Harm Program, an initia-tive which began in 2013, and which aims to protect the company’s employ-ees, physical assets and surrounding environment by implementing a comprehensive system of work regula-tions. Since the implementation of the program in the Minya greenfield plant, there have been no injuries reported. The program is being implemented across all operating plants.

Zero-Harm is a highly effective feedback loop that relies on constant and vigilant assessment, analysis and deliberation, followed by training

and implementation of new regula-tions. A risk evaluation system starts the process by identifying risks and analyzing risk factors. These results are then taken to the Health and Safety Committee which regularly meets with workers to properly discuss and as-sess matters of health and safety. The committee’s decisions are then imple-mented through safety management systems that include hazard warnings, permits to work in certain areas, timed lock-outs and imposing height limits. The most effective aspect of the en-tire initiative is the rigorous training that workers receive on site. Since its launch, the Zero-Harm initiative has provided over 654 hours of training to its staff and the results have exceeded expectations.

Environment and SustainabilityEnvironmental sustainability remains a key pillar of ASEC Cement’s CSR plat-form, shown through our commitment to use only the most energy efficient systems across all of our production facilities in Egypt, Algeria and Sudan.

Over the past two years, ASEC Cement has invested in a series of systems upgrades to its facilities to reduce emissions and pollutants, in ad-dition to increasing efficiency in energy consumption and the proper disposal of waste in accordance with interna-tional best practices. Furthermore, the company conducted feasibility studies to install new technologies that will allow for higher energy efficiency, such as the waste heat recovery units designed to reduce consumption of electricity by 30%.

ASEC Cement is now focused on de-signing and installing new and specific systems that accurately and constantly measure factors that contribute to ef-ficiency and emissions, in addition to seeking alternative fuel sources. The severe shortage of fuel stock in Egypt led to regulatory changes in early 2014 that now permit ASEC Cement to try to implement the use of solid and al-ternative fuels. In particular, a move to alternative fuels would be in line with international cement industry trends of the past two decades in Europe, the United States and some regions of the Far East.

A new environmental management system is now being implemented across all of ASEC Cement’s facilities, which will constantly monitor, measure and record levels of pollutants emitted at each facility. The data will then be analyzed and immediate measures will be taken if these exceed the high stan-dard set by regulators. A similar system that measures waste and disposal of hazardous material in the environment is now fully functional.

In the interest of transparency and constant improvement of our standards and practices concerning the environ-ment, ASEC Cement constantly com-municates its results and analyses to the Egyptian Environmental Affairs Agency (EEAA). The company hopes to use this connection, in addition to communica-tions with other local environmental agencies across its geographic footprint, to maintain its stringent adherence to environmental regulations and to en-sure that it is continuously contributing to the cause of environmental sustain-ability in the region.

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 (biographies included on page 36 of this Annual Report):

Giorgio BodoChairman and Chief Executive Officer, ASEC CementAhmed HeikalChairman and Founder, Citadel CapitalHisham El-KhazindarManaging Director and Co-Founder, Citadel CapitalAbdalla El-EbiaryManaging Director, Citadel CapitalHesham GabrBoard Member of ASEC HoldingSohail HajjarRepresenting Majid Al Futtaim (MAF) TrustPekka EttalaRepresenting Rashed Abd Al Rahman Al Rashed & Sons Co.Yassin Ibrahim MansourRepresenting Al-Mansour & Maghraby for Investment and DevelopmentCIB Representative Board Member of ASEC Holding, varies each sessionMustafa AbdallaRepresenting Al Rajhi Holding

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 direc-tors have also pushed it to lead the regional cement industry in matters related to environmental awareness and social responsibility.


Portfolio ASEC Minya Cement Company Misr Qena Cement Company ASEC Ready Mix Al-Takamol Cement Company Zahana Cement Company ASEC Algeria Cement Company


Minya - 250 Kms south of Cairo

LOCATIONS

LOCATIONS

420 EmployeesEMPLOYEES

EMPLOYEES

ASEC Minya Cement CompanyInformation Sheet

Misr Qena CementInformation Sheet

2013

BEGINNING OF OPERATION


512 Employees

Greenfield

Brownfield

PROJECT TYPE

PROJECT TYPE

50% ASEC Cement (effective)*30.7% Safari Investments13.88% Misr Qena Cement9.22% IFU/FLS

27.55% ASEC Cement10.85% Misr Insurance Company10.04% Egyptian Company For

Investment Projects9.37% Misr Life Insurance

Company9.87% Kuwaiti-Egypt Investment

Company7.53% Al-Ahly Capital7.53% Misr Asset Management17.25 Others

OwNERSHIP STRUCTURE

OwNERSHIP STRUCTURE

Crusher EV 200 X 300 1,200 T/hr

Raw Mill Atox50 480 T/hr

Pre-Heater 1 string 5 stage 5,500 tpd

TECHNICAL INFORMATION (ONE LINE)

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 1x12,000

Packing Plant Ventomatiic 3x120 T/hr

PROJECT PARTIESTurnkey ContractorN/A

Equipment SupplierFLSmidth

Project ConsultantASEC Engineering

Quarry OperatorASCOM

TECHNICAL INFORMATION (ONE LINE)

PROJECT PARTIESTurnkey ContractorARESCO

Equipment SupplierFLSmidth - Denmark

Project ConsultantHoltec - India


Qena - South Egypt2002

Crusher Ev 200 X 200 1,060 T/Hr

Raw Mill (X2) Atox50 355 T/Hr

Pre-Heater (X2) 1 String 5 Stage 4,500 Tpd

Kiln 3-Base 4.75 X 777m 4,500 Tpd

Cooler SF 4X5 Cross Bar Cooler 4,500 Tpd

Clinker Storage Circular 25 X 45 45,000 Ton

Cement Mills UMS 46 X 15.5 2 X 200 Ton

Cement Silos CFS 2 X 15,000

Packing Plant Ventom 3 X 120 T/Hr

(Type) (Capacity)

(Type) (Capacity)

* Including indirect ownership through Misr Qena Cement’s share in the company


Al Takamol CementInformation Sheet

227 Employees Greenfield

51% ASEC Cement49% Sudanese Pension

Fund

TECHNICAL INFORMATION (ONE LINE)PROJECT PARTIESTurnkey ContractorARESCO

Equipment SupplierFLSmidth - Denmark

Project ConsultantHoltec - India


SudanAtbara - 300 Kms North of Khartoum

2010




Kiln 3-Base 4.75 X 777m 4,500 Tpd

Cooler SF 4X5 Cross Bar Cooler 4,500 Tpd

Clinker Storage Circular 25 X 45 45,000 Ton

Cement Mills UMS 46 X 15.5 2 X 200 Ton


Packing Plant Ventom 3 X 120 T/Hr

(Type) (Capacity)

(Type) (Capacity)

ASEC Ready MixInformation Sheet

124 Employees Greenfield

55% ASEC Cement45% Misr Qena Cement

TECHNICAL INFORMATION (THREE STATIONS)

Assiut Plant Sohag Plant Qena Plant Aswan Plant

JUN 2010 Qena Batch Plant OCT 2010 Assiut Batch Plant OCT 2011 Sohag Batch Plant NOV 2012 Aswan Batch Plant

Concrete Batch Plant Texnokat 110 M3 /hr

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 Caterpillar 410 KVA per hour

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

LOCATIONS

LOCATIONS

EMPLOYEES

EMPLOYEES



PROJECT TYPE

PROJECT TYPE

OwNERSHIP STRUCTURE

OwNERSHIP STRUCTURE


Wahran, West Algeria

789 Employees(As of Dec 31 - 2011)

Zahana CementInformation Sheet

ASEC AlgeriaInformation Sheet

January 2008

19 Employees

Brownfield

Greenfield

35% ASEC Cement65% GICA (The hold-

ing company for state-owned cement plants)

60.9% ASEC Cement32.3% NOOR Holdings LTD3.4% The Fund3.4% FLSmidth

Crusher Dragon Duo 08 1,200 T/Hr

Raw Mill Fcb Annulaire 300 T/Hr

Pre-Heater 2 Towers, 4 Stages

Kiln L=84M D=5,6M 3,000 T/J

TECHNICAL INFORMATION (TWO LINE)

Cooler Fuller

Clinker Storage Silos 7 X 7,500 Ton

Cement Mills FEB and KHD 150 T/Hr & 100 T/Hr

Cement Silos 6 Silos 3 X 2,500; 2 X 4,000; 15,000

Packing Plant 4 Packers 100 T/Hr


Equipment SupplierMixed

Project ConsultantN/A

Quarry OperatorN/A

TECHNICAL INFORMATION (TWO LINE)


Equipment SupplierF.L.Smidth

Project ConsultantASEC Engineering

Quarry OperatorN/A

AlgeriaDjelfa 300 Kms south of the Capital

Expected 2016\2017




Kiln (X2) 3-Base 4.75 X 77m 4,500 Tpd

Cooler (X2) SF 4X5 Cross Bar Cooler 4,500 Tpd

Clinker Storage Circular 60,000 Ton

Cement Mills UMS 54X16 2 X 200 Ton


Packing Plant Ventomatiic 3 X 120 T/Hr

(Type) (Capacity)

(Type) (Capacity)

LOCATIONS

LOCATIONS

EMPLOYEES

EMPLOYEES



PROJECT TYPE

PROJECT TYPE

OwNERSHIP STRUCTURE

OwNERSHIP STRUCTURE


ASEC Cement Company(An Egyptian Joint Stock Company)

Consolidated Financial Statementsand Auditor’s Report

For the financial year ended December 31, 2013

ContentsAuditor’s Report .................................................................................................................... 52Consolidated Balance Sheet ............................................................................................. 54Consolidated Income Statement .................................................................................... 55Consolidated Cash Flows Statement ............................................................................. 56Consolidated Statement of Changes in Shareholders’ Equity ............................. 57Notes to the Consolidated Financial Statements ..................................................... 58


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, 2013, 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 preparation 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 assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presenta-tion of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of account-ing estimates made by management, as well as evaluating the overall presentation of the financial state-ments.

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, 2013, and of its Con-solidated 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.

Emphasis of matter

Without qualifying our opinion Regarding to what has been mentioned in details in Note No.(30), the total value of ASEC Cement Company’s assets amount to 26 million Egyptian Pound as at 31 December 2013. The Company was unable to obtain the appropriate data, which could enable it to disclose the effect of the current events on The Arab Republic of Syria on the values of the assets, liabilities and the results of operations in the foreseeable future, since these amounts and results may differ significantly in the foreseeable future when reliable indicators and signs be-come available, which enable the use of those indicators and signs in determining the extent and the impact of the current events on the carrying value of the assets and liabilities included in the financial statements.

Report on Other Legal and Regulatory RequirementsThe financial information included in the Board of Directors’ report, prepared in accordance with Law No. 159 of 1981 and its executive regulations, is in agreement with the Company’s books of account.

KPMG Hazem HassanCairo, May 4, 2014


Consolidated Balance SheetAs at December 31, 2013

Translation of Financial StatementOriginally Issued in Arabic

31/12/2012L.E

31/12/2013L.E

NoteNo.

RestatedLong term assets

1 114 075 1333 137 819 957(3/4,5)Fixed assets (Net)2 633 082 1811 627 388 265(3/5,6)Projects under construction

639 236 865558 607 618(3/1,8)Investments in associates7 566 5928 893 602(9)Other assets

371 532 870379 139 492(3/6,7)Intangible assets 164 958 718164 958 718(3/7)Goodwill

4 930 452 3595 876 807 652Total long term assetsCurrent assets

113 922 481 233 063 188 (3/8,10)Inventories 4 157 486 5 163 675 (3/9,11)Trade receivable

27 743 509 39 044 637 (12/A)Due from related parties 204 396 499 232 516 329 (3/9,13)Debtors & other debit balances 246 357 381 118 127 644 (3/10,14)Cash on hand & at banks

596 577 356 627 915 473Total current assetsCurrent liabilities

41 791 418 88 926 365 (3/11,15)Provisions 239 009 477 202 503 590 (17)Loans & bank facilities 87 249 498 177 878 065 Trade & notes payable

- 20 485 298 Trade receivable -credit balances 434 712 594 301 156 259 (12/B)Due to related parties 141 507 729 183 967 019(3/12,18)Creditors & other credit balances

944 270 716 974 916 596Total current liabilities(347 693 360)(347 001 123)Excess of current liabilities over current assets4 582 758 9995 529 806 529Total investments

Financed as follows :Equity

3 158 877 610 3 158 877 610 (19)Issued & paid up capital 290 353 290 353 (3/13)Legal reserve

8 640 704 16 395 733Other reserves 25 288 332 72 015 895 Translation reserve

(262 802 552)(728 551 649)Carried forward losses(461 952 542) 29 291 029 Net profit / (loss) for the period / year

2 468 341 9052 548 318 971Equity attributable to the equity holders of the company868 439 1511 164 024 869 (20)Non controlling interest

3 336 781 0563 712 343 840Total equity Long term liabilities

1 183 903 157 1 755 190 322 (17)Loans & bank facilities62 074 78662 272 367(3/14,24)Deferred Tax

1 245 977 9431 817 462 689Total long term liabilities4 582 758 9995 529 806 529Total equity & long term liabilities

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

Chief Executive OfficerMr. Giorgio Bodo

Group Chief Financial Officer Mr. Tarek El-Gammal

Consolidated Income StatementFor the Financial year ended December 31, 2013


2012L.E

2013L.ENote No.For the financial year ended December 31,

Restated821 515 2361 021 100 501(3/15,26)Operating revenue

Less:(729 896 737)(861 137 039)Cost of sales

91 618 499159 963 462Gross profit(Less) / add:

(139 453 702)(139 642 643)General & administrative expenses(52 648 101)(39 949 437)Selling expenses

- (494 542)Other expenses1 630 2543 663 131Other income

(98 853 050)(16 460 029)Operating lossAdd / (less):

(487 947 939)68 004 168Foreign exchange gain / (loss)(70 128 026)(114 445 892)Finance cost

4 812 3743 123 097Interest income

(553 263 591)(43 318 627)Net finance cost69 587 46559 663 370Share of profit of associate companies

(582 529 176)(115 286)Net loss before tax(15 706 281)(14 657 378)(3/14)Current tax(5 847 720)17 204 067(3/14)Deferred tax

(604 083 177)2 431 403 Net profit/(loss) after taxAttributable To :

(461 952 542)29 291 029 Equity holders of the company(142 130 635)(26 859 626)Non controlling interest

(604 083 177)2 431 403Net profit/(loss) for the year(1.46)0.09 (3/22,28)Earnings/(losses) per share


Consolidated Cash Flows StatementFor the Financial year ended December 31, 2013


Note No.

2013L.E

2012L.E

Cash Flows from Operating Activities :Net loss before tax (115 286) (582 529 177)

Adjustments to reconcile net loss before tax to net cashDepreciation 102 085 206 95 334 007 Interest income (2 930 377) (5 213 589)Finance cost 78 716 389 70 128 026 Provision formed 14 284 993 9 331 255 Provision no longer required - (217 388)Share of profit of associate companies (59 663 370) (72 959 642)Impairment losses of trade recieivable 44 455 - Share-based payments 750 000 750 000 Capital gain on sale of fixed assets - (179 382)Unrealized forex (4 971 455) (2 309 124)

128 200 555 (487 865 014)Changes In Working Capital Inventories (101 042 024) 37 928 633 Trade receivable (935 510) (131 891)Debtors and other debit balances (20 126 924) 33 475 688 Trade and notes payable 63 633 478 53 425 608 Net change in due from / to related parties (119 388 439) 480 596 422 Creditors and other credit balances 40 362 281 (61 894 706)Trade receivable - credit balances 20 485 298 - Provision used - (9 787 592)Financial assets (241 841) 5 214 038 Employees dividends (11 014 366) -

Cash (used in) / provided by operating activities (67 492) 50 961 186 Interest received 2 930 377 4 363 247Interest paid (67 294 191) (86 366 422)Income tax paid (3 228 000) (1 500 000)

Net cash used in operating activities (67 659 307) (32 541 989)Cash Flows From Investing Activities :Payments for purchase of fixed assets, assets related to acquisition

(612 662 120) (379 935 847)

Proceeds from sale of fixed assets 485 941 241 271Dividends received from associated companies 53 508 359 81 875 109 Acquisition of subsidiary, net of cash 374 981 -

Net cash used in investing activities (558 292 839) (297 819 467)Cash Flows From Financing Activities :Proceeds from loans and bank facilities 491 066 965 253 556 363 Proceeds from capital increase - 70 Restricted time deposits 32 697 250 - dividend to non controling intrest (9 903 593) - change in non controling intrest - 1 574 930

Net cash provided by financing activities 513 860 622 255 131 363Net changes in cash & cash equivalents (112 091 523) (75 230 093)Cash and cash equivalents at the beginning of the period 201 644 381 303 020 935 Effect of exchange rate fluctuation on cash held 16 559 036 (26 146 461)

Cash and cash equivalents at the end of the period (3/10,14) 106 111 894 201 644 381

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

Consolidated Statement of Changes In Shareholders’ Equity Translation of Financial Statement

Originally Issued in Arabic

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.

Carr

ied

forw

ard

loss

es

L.E.

Net

(los

s)

/ pr

ofit

for

the

year

L.

E.To

tal

L.E.

Non

-co

ntro

lling

in

tere

stL.

E.To

tal e

quit

yL.

E.

Bala

nce

as a

t Ja

nuar

y 1,

2012

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

2 9

42 8

14 9

95

3 86

4 70

1 97

7 Re

stat

emen

ts-

--

(435

923

)-

(43

382

443)

(17

837

390)

(61

655

756)

(14

037

067)

(75

692

823)

Rest

ated

bal

ance

as

at J

anua

ry

1,20

123

158

877

540

-29

0 35

3(4

4 82

0 20

7)7

890

704

(94

271

752)

(167

735

412

)2

860

231

226

928

777

928

3 78

9 00

9 15

4

Paid

up

capi

tal

70

--

--

--

70

96 8

00 0

40

96 8

00 1

10

Paid

und

er c

apita

l inc

reas

e-

--

--

-1

575

018

1 57

5 01

8 Tr

ansf

er to

reta

ined

ear

ning

s-

--

--

(167

735

412

)16

7 73

5 41

2 -

-D

ivid

ends

pai

d Fo

r non

con

trol

ling

inte

rest

--

(3 8

78 0

52)

(3 8

78 0

52)

Empl

oyee

s di

vide

nds

-(7

95 3

88)

(795

388

)(2

097

667

)(2

893

055

)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

--

-70

108

539

-

--

70 1

08 5

39

(10

607

480)

59 5

01 0

59

Net

loss

for t

he y

ear

--

--

--

(461

952

542

)(4

61 9

52 5

42)

(142

130

636

)(6

04 0

83 1

78)

Rest

ated

bal

ance

as

at D

ecem

ber

31,2

012

3 15

8 87

7 61

0-

290

353

25 2

88 3

328

640

704

(262

802

552

)(4

61 9

52 5

42)

2 46

8 34

1 90

586

8 43

9 15

13

336

781

056

Bala

nce

as a

t Ja

nuar

y 1,

2013

3 15

8 87

7 61

0-

290

353

24 3

68 5

61

8 64

0 70

4 (2

62 0

82 4

27)

(456

421

476

)2

473

673

325

868

781

630

3 34

2 45

4 95

5 A

djus

tmen

ts-

--

919

771

-(7

20 1

25)

(5 5

31 0

66)

(5 3

31 4

20)

(342

479

)(5

673

899

)Re

stat

ed b

alan

ce a

s at

Jan

uary

1,

2013

3 15

8 87

7 61

0 -

290

353

25 2

88 3

32

8 6

40 7

04

(262

802

552

)(4

61 9

52 5

42)

2 46

8 34

1 90

5 86

8 43

9 15

1 3

336

781

056

Paid

up

capi

tal

--

--

--

--

1 57

5 01

8 1

575

018

Paid

und

er c

apita

l inc

reas

e-

--

--

--

-(1

575

018

)(1

575

018

)Tr

ansf

er to

car

ried

forw

ard

loss

es-

--

--

(461

952

542

)46

1 95

2 54

2 -

-In

crea

se in

net

Ass

ets

from

ac

quis

ition

of C

ompa

nies

und

er

com

mon

con

trol

--

--

7 00

5 02

9 -

- 7

005

029

7

005

029

Incr

ease

in n

on c

ontr

ollin

g in

tere

sts

from

acq

uisi

tion

durin

g th

e Ye

ar-

--

--

--

-28

9 69

3 75

4 28

9 69

3 75

4

Div

iden

ds p

aid

For n

on c

ontr

ollin

g in

tere

st-

--

--

--

-(9

962

066

)(9

962

066

)

Empl

oyee

s di

vide

nds

--

--

-(3

796

555

)-

(3 7

96 5

55)

(7 1

59 3

38)

(10

955

893)

Shar

e ba

sed

paym

ents

rese

rve

--

--

750

000

--

750

000

-75

0 00

0 Tr

ansl

atio

n re

serv

e-

--

46 7

27 5

63

--

-46

727

563

49

872

994

96

600

557

N

et lo

ss fo

r the

yea

r-

--

--

-29

291

029

2

9 29

1 02

9 (2

6 85

9 62

6)

2 43

1 40

3 Re

stat

ed b

alan

ce a

s at

Dec

embe

r 31

,201

33

158

877

610

-29

0 35

372

015

895

16 3

95 7

33(7

28 5

51 6

49)

29 2

91 0

292

548

318

971

1 16

4 02

4 86

93

712

343

840

* 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, 2013

ASEC CEMENT ANNUAL REPORT 2013 59ASEC CEMENT ANNUAL REPORT 201358


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 Board of Directors approved the financial statements on May 4, 2014.

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 operat-ing policies of the following subsidiaries which are included in the consolidated financial statements as at December 31, 2013 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 BVIASEC Trading Company (Formally Benaa Company for Import and Export)*

99.88% 22/7/2009 Joint Stock Company in Egypt

ASEC Ready Mix* 54.99% 20/10/2009 Joint Stock Company in EgyptASEC Minya cement Company (formally Arab National cement company)

45.12% 23/5/2010 Joint Stock Company in Egypt

Al Takamoul for Cement Company- Limited (Sudan South)

51% 9/7/2010 Limited Liability Company in Sudan

Berber for Electricity – limited 51% 31/12/2013 Limited Liability Company in Sudan

* 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 (ASECCIMENT) with 13.994 % and indirect contribution with 46.898 %.

1-2 Purpose of the company

The purpose of the company is establishing, owning and managing industrial projects related to the manufacturing of construction materials specially cement, including the importing of machin-ery 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 companiesAl 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 materials 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 manufactur-ing in all types and building materials and quarries extracts related to this activity for which the com-pany 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 Zahana CompanyThe purpose of the company is utilizing and operating Zahana cement plant for producing and selling all types of cement

ASEC Trading Company The company’s purpose is to import and export all the materials, machinery and equipments related to the construction and decoration including wood, aluminum, gypsum, steel, cement, clinker, ceram-ic, marble, and material of paints and insulation.

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

ASEC Minya cement Company (formally Arab National cement company)The 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 pack-ing the company’s products.

Berber for Electricity – limitedThe company’s purpose is electricity generating, transferring, and distributing. providing raw materi-als needed specially electric cables, generators, wires and towers.

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 es-timates 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 consolidated 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 recognised 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 inter-est 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 common 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 controlling 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 associates 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 adjustments to align the accounting policies with those of the Group, from the date that significant influence until the date that significant influence 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 obligation 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 according to ac-tive 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.

I. Acquisitions of subsidiaries under common controlCommon control is defined as a business combination in which all of the combining entities (sub-sidiaries) are ultimately controlled by the same party both before and after the business combina-tion, and control is not transitory. The cost of an acquisition of a subsidiary under common control is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Any costs directly attributable to the acquisition are written off against reserves. On acquisition the carrying values of assets and liabilities are not restated to fair value. The acquirer incorporates assets and liabilities at their pre-combination carrying amounts. Any excess/deficit of the purchase price over the pre-combination recorded ultimate holding company’s net asset value of the subsidiary is adjusted directly to equity. Any differences to values of the subsidiary’s underlying assets and liabilities compared to those presented by the ultimate holding company and adjustments to achieve harmonisation of accounting policies will be adjusted on consolidation. Under this approach comparatives are not restated.

3-2 Foreign currency translation

Transactions in foreign currencies are translated to the respective functional currencies of Group enti-ties at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between am-ortized 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 curren-cies 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 curren-cies 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 prevailing 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 & Depreciation3-4-1 Recognition and Measurement

Fixed assets that are used in production, providing goods & services or for administrative purposes are stated at historical cost less accumulated depreciation and cumulative impair-ment 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 neces-sary 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 purposes 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 equipment 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 acquisition 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 state-ment 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 period of pur-chase.

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




3-5 Projects under constructionProjects 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 expected 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 recognition date. Intangible assets are presented at net of amortization (3-6-d) and impairment losses (3-16).

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 in-curred.

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 measure-ment 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 transactions.

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 Inventories

Inventories are stated at cost or net realizable value whichever is lower. The net realizable value is represented 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 receivable, 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 realizable 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 discounting 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 recog-nized in the income statement except to the extent that it relates to items recognized directly in own-ers’ 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 be-tween 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 determined 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 signifi-

cant 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 (realized after the acquisition date) exists.

- Interest income is recognized in the income statement on an accrual basis and by using the effective 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 re-maining financial assets are assessed collectively in groups that share similar credit risk character-istics.

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 in-come 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 indica-tion of impairment. If any such indication exists then the asset’s recoverable amount is estimated. 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 recognized.

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 period of the borrowing.

3-18 The cost of borrowing

Borrowing costs are recognized in the income statement as an expense when incurred using the ef-fective 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 periods 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 person-nel 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 DividendsDividends are recognized as a liability in the financial period 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 period.

3-23 Statement of Cash Flows

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

4 Acquisition of subsidiaries A. Business combination

- On 31 December 2013, the Group acquired an additional direct and indirect controlling stake of Ber-ber for Electricity – limited Company (Berber), a company owns power generation Station located in Sudan, the group acquired an additional direct stake of 6.97% and indirect stake of 6.68% through Al Takamoul for Cement Company- Limited (one of the groups subsidiaries) in addition to the group old stake of 24%.

- The group intend to increase the stake owned to reach 51% by increasing the paid up capital of Ber-ber.

- 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:Carrying value

Property, plant and equipment 331 626 197Project under construction 13 475 068Due from related parties 299 374 019Inventory 4 604 102Debtor and other debit balance 186 152Cash and cash equivalent 372 545Provision (28 491 722)Due to related parties (20 860 406)Creditors and other credit balances (2 589 164)Deferred tax liabilities (14 544 573)

Total carrying value 583 152 217

The management has accounted for measuring the non-controlling interest at its proportionate interest in the Book value of the identifiable assets and liabilities assumed in the above acquisition

Net Assets acquired 170 066 429Consideration paid 163 061 399

Negative goodwill 7 005 030

5 Fixed Assets

Land

L.E.

Build

ings

L.E.

Mac

hine

ry&

Equ

ipm

ent

L.E.

Com

pute

rsL.

E.

Furn

itur

e &

Fix

ture

sL.

E.

Mot

orVe

hicl

esL.

E.

Leas

e ho

ldIm

prov

emen

tsL.

E.

Tota

lL.

E.

Cost

as

at 1

/1/2

013

50 5

20 3

2519

9 34

6 53

51

311

493

807

10 1

22 2

519

423

012

35 2

10 3

0632

829

230

1 64

8 94

5 46

6Ad

just

men

ts o

n co

st a

s at

31/

12/2

012

4 20

9 97

5(4

209

975

) -

(9

6 82

2)(6

3 52

8)(1

34 0

00)

3 57

8(2

90 7

72)

Cost

as

at 1

/1/2

013

Adj

uste

d54

730

300

195

136

560

1311

493

807

10 0

25 4

299

359

484

35 0

76 3

0632

832

808

1 64

8 65

4 69

4Ad

ditio

ns d

urin

g th

e ye

ar -

58

7 48

2 20

31

140

980

326

1 86

8 73

46

000

117

7 16

7 89

612

6 95

617

43 6

26 2

32D

ispo

sal d

urin

g th

e ye

ar -

-

(3

90 2

58)

-

-

(1 3

22 9

13)

(12

288)

(1 7

25 4

59)

Tran

slat

ion

adju

stm

ents

5 31

4 88

918

422

434

189

702

307

506

006

(6 8

15)

608

504

3 05

2 12

021

7 59

9 44

5co

st o

f fixe

d as

sets

acq

isiti

on (b

erbe

r) 3

46 4

868

251

552

246

773

193

156

176

1 15

5 90

872

3 67

2 -

25

7 40

6 98

7

Cost

as

at 3

1/12

/201

360

391

675

809

292

749

2 88

8 55

9 37

512

556

345

16 5

08 6

9442

253

465

35 9

99 5

963

865

561

899

Acc.

dep

reci

atio

n as

at 1

/1/2

013

223

246

127

767

668

365

912

308

6 90

8 83

36

154

842

16 5

05 1

3912

478

568

535

950

604

Adju

stm

ents

on

Acc.

dep

reci

atio

n as

at

31/1

2/20

12-

(1 1

57 7

43)

-

(112

564

)(7

4 86

8)(7

530

)(1

8 33

8)(1

371

043

)

Acc

. dep

reci

atio

n as

at

1/1/

2013

Adj

uste

d22

3 24

612

6 60

9 92

536

5 91

2 30

86

796

269

6 07

9 97

416

497

609

12 4

60 2

3053

4 57

9 56

1D

epre

ciat

ion

char

ge fo

r the

yea

r35

728

11 5

56 9

9479

602

654

1 72

4 22

31

328

600

3 75

5 81

33

167

770

101

171

782

Dis

posa

l acc

umul

ated

- -

(390

432

)-

- (1

261

552

)(1

2 28

8)(1

664

272

)Tr

ansl

atio

n ad

just

men

ts21

489

12 1

47 5

9534

234

293

342

881

160

595

282

080

1 16

7 47

448

356

407

Acc.

dep

reca

tion

fixed

ass

ets

acqi

sitio

n32

473

2 17

7 48

941

707

642

95 3

6072

5 83

455

9 66

6 -

45

298

464

Acc

. dep

reca

tion

as

at 3

1/12

/201

3 3

12 9

3615

2 49

2 00

352

1 06

6 46

58

958

733

8 29

5 00

319

833

616

16 7

83 1

8672

7 74

1 94

2N

et b

ook

valu

e as

at

31/1

2/20

1360

078

739

656

800

746

2367

492

910

3 59

7 61

28

213

691

22 4

19 8

4919

216

410

3 13

7 81

9 95

7N

et b

ook

valu

e as

at

31/1

2/20

12 A

djus

ted

54 5

07 0

5468

526

635

945

581

499

3 22

9 16

03

279

510

18 5

78 6

9720

372

578

1 11

4 07

5 13

3




6 Projects under construction31/12/2013

L. E31/12/2012

L. EProduction lines work 369 548 336 1 571 005 000Civil work 735 010 613 711 115 492Licenses 118 118 365 107 621 907Researches work - 1 134 399Consultancy work 31 395 868 48 243 335Geological work 9 594 184 13 396 129Rent – factory land 7 948 180 4 236 333Loan interest - 101 099 235Customs and Clearance 756 161 16 020 390Designs 1 852 988 12 001 661Tools & office equipment 114 424 152 31 071 843Hard and software 1 195 047 11 922Commissioning - -Others 237 544 371 16 124 535

1 627 388 265 2 633 082 181

7 Intangible assets 31/12/2013

L.E31/12/2012

L.ELicense fees for constructing cement plant – Minya 200 650 015 200 650 015An 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.

4 992 302 8 323 900

Paid compensation for project works 1 120 875 1 868 887

206 763 192 210 842 802Cost of quarries exploration rights 198 310 297 180 687 672Accumulated amortization (25 933 997) (19 997 604)

Net book value 172 376 300 160 690 068379 139 492 371 532 870

8 Investments in associatesPercentage of

ownership31/12/2013

L.E31/12/2012

L.EBerber for Electricity – Ltd. 24% - 88 028 145Misr Cement Company –Qena * 27.55% 558 607 618 551 208 720

558 607 618 639 236 865

* 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 represent-ing ASEC Cement Company. Based on that, the company now has significant influence over the financial and operating poli-cies 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 assets31/12/2013

L.E31/12/2012

L.EThe balance represents the equivalent to 1 000 000 USD (824 742 EURO) 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.

7 904 058 6 889 756

Other financial assets 989 544 676 836

8 893 602 7 566 592

10 Inventories31/12/2013

L.E31/12/2012

L.ERaw materials 41 568 863 24 541 065Finished goods 19 424 573 6 919 330Oil & Lubricants 14 666 323 4 277 091Packaging 1 196 026 3 203 637Spare parts 112 170 769 63 299 866Production in process 41 494 251 6 009 637Goods in transit 2 435 933 5 671 855Goods in consignment 106 450 -

233 063 188 113 922 481

11 Trade receivable31/12/2013

L.E31/12/2012

L.ETrade receivable 2 763 713 2 634 065Notes receivable 2 499 886 1 945 188(Less): Impairment (99 924) (421 767)

5 163 675 4 157 486




12 Related parties transactionsTransactions with related parties during the period as the following :

Related party Type of relationship Nature of transactions

Total transaction

during period ended31/12/2013

L. E.

Total transaction

during period ended31/12/2012

L. E.National 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

149 110 4 754 091

AL-Hydeer Trading Company

Owned by a Shareholder in ASEC Syria Cement Company

Pays expenses on the Company’s behalf

51 551 1 672 242

Arab Swiss Engineering Company (ASEC)

A subsidiary of (NDT) with 99.9%

Provides the company projects with consultancy services

21 432 251 3 257 010

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.

14 291 062 63 653 033

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 ACH.The company lent ARESCO an amount of 9 m EGP.Group settlement agreement (ARESCO dues from ASEC Algeria).Down payment to perform steel works at ANCC

54 571 628 143 950 032

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

17 659 115 32 191 284

ASEC Automation Subsidiary of National for development & trading (NDT)

Operation and construction works 5 038 474 80 957 397

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 ANCC

15 448 003 20 830 998

Global Energy Subsidiary of Taqa Arabia (Citadel Capital Portfolio Companies)

Cash transfer under Acquisition of Berber Company

173 707 525 54 405 035

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

17 141 966 15 160 541

Interest / Loan to Citadel Capital 806 073 22 210 544Current account and group settlement agreement

114 789 894 1 032 719

National Sudanese Pensions Fund

Owns 49% of El Takamol company in Sudan

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

21 367 594 3 028 657

FLSmith Owns 4.61% of Arab National Cement

Supply the production line (included in P.U.C. balances)

- 54 115 497

Berber for Electricity An associate company with 24%

Construction of electric station in Sudan and pay to Contractors on behalf of Berber Company.

- 150 539 450

ERCO Group The major shareholder of Societe des Ciments De Zahana, owns 65%

Provides services & goods for the company

- 8 409 177

Balances of related parties:a- Due from related parties

31/12/2013L.E

31/12/2012L.E

National Development & Trading Company (NDT) 11 118 179 11 056 002Financial Holding Investments Company (FHI) 9 500 000 9 500 000El Hydeer Trading Establishment 79 694 46 924Citadel Capital - 7 140 583ESACO Manufacturing and Engineering*** 2 831 774 -ASEC for Manufacturing and Industrial Projects (ARESCO)**** 1 721 084 -National Sudanese Pension Fund* - -ASENPRO 42 500 -FL smith 13 751 406 -

39 044 637 27 743 509

b- Due to related parties 31/12/2013

L.E31/12/2012

L.EArab Swiss Engineering Company (ASEC) *** 33 524 232 51 219 250ASEC for Manufacturing and Industrial Projects (ARESCO) - 53 185 148Ascom for Carbonate and Chemicals Manufacturing 13 553 651 27 068 030National Sudanese Pension Fund* 30 957 127 8 196 558ERCO Group** 43 421 617 39 456 963Citadel Capital 124 086 628 -Berber Company - 136 498 997Misr Cement Company –Qena 6 140 951 4 742 174ESACO Manufacturing and Engineering - 11 005 709ASENPRO - 127 500ASEC Automation **** 15 478 549 15 260 042Global Energy 16 996 816 30 279 656Others 16 996 688 57 672 567

301 156 259 434 712 594

* 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 164 324 for engineering supervision**** Excludes down payment balance of EGP 124 828 for electrical works within the balance of project under construction.




13 Debtors and other debit balances 31/12/2013

L.E31/12/2012

L.EAdvances to suppliers 24 584 271 22 464 446Tax authority 90 150 568 75 388 813Prepaid financial cost - 1080 748Prepaid expenses 2 354 522 2 360 288Deposits with others 4 551 917 875 504Employees entrust and loans 8 655 969 3 563 274Borrowings to TCP 3 023 342 3 023 342Borrowings to Mahda 5 614 078 5 198 652Borrowings to Energya 22 857 000 21 607 600Letter of guarantee cover 32 334 063 34 609 963Other debit balances 9 192 166 4 359 836Amounts due from sale of investment of GRD Cement Plant 27 814 000 28 479 600Accrued Interest – Shareholders 1 384 433 1 384 433Amounts due from GRD Company 12 940 891 12 940 891

245 457 220 217 337 390Impairment in due from GRD (12 940 891) (12 940 891)

232 516 329 204 396 499

14 Cash on hand and at banks31/12/2013

L.E31/12/2012

L.EBanks – Current accounts 81 080 118 170 597 357Banks - Time deposits * 34 993 487 75 117 385Cash on hand 1 192 607 485 459Checks under collection 861 432 157 180

118 127 644 246 357 381

* Time deposits include a restricted cash amounted to L.E. 15 750 against issuing letter of guarantee issued from the bank in favour of Industrial Development Authority, also includes a restricted amount of L.E 12 000 000 as collateral for the pay-ment of interest on the loan (Note no. 20).

Cash and cash equivalents31/12/2013

L.E31/12/2012

L.ECash on hand and at banks 118 127 644 246 357 381(Less): Restricted cash (12 015 750) (44 713 000)

106 111 894 201 644 381

15 ProvisionsDescription

Balance as at 31/12/2012

L.E

Formed during the period

L.E

Provision from acquisition

L.E

Translation adjustment

L.E

Balance as at 31/12/2013

L.EProvisions for claims 15 042 707 4 684 898 28 678 035 1 370 332 49 775 972Pension provision* 26 748 711 9 600 084 - 2 801 598 39 150 393

Total 41 791 418 14 284 982 28 678 035 4 171 930 88 926 365

- 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 Egyptian Accounting Standards because such disclosures may materially affect the negotiations with those parties.

16 Impairment of trade receivableThis account represented as follows:

Description

Balance as at

31/12/2012L.E

Formed during the

periodL.E

Used during the period

L.E

Translation adjustment

L.E

Balance as at

31/12/2013L.E

Impairment of trade receivable 421 767 44 455 (399 409) 33 111 99 924

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

17-1 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 Qena Cement Company which is amount-ed to 8 232 055 shares, this loan amounted to 280 million EGP for financing the investing 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 instalments 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.

31/12/2013L.E.

31/12/2012L.E.

Total withdrawal amount 364 921 250 379 921 250Less:Transaction Cost (1 170 151) (1 671 643)

363 751 099 378 249 607

31/12/2013L.E

31/12/2012L.E

Short term loan - 95 000 000Long term loan 363 751 099 283 249 607

363 751 099 378 249 607

The Company did not pay the first installment of a long-term loan and outstanding at May 1, 2013.And according to Article No. (14) of the loan agreement, the loan balance became payable in full and thus is included in current liabilities. the company has reached the advanced stages of negotiating with the lender to reschedule the loan.

17-2 Societe Des Ciments De Zahana

The company has been granted a loan from External Bank of Algeria, guaranteed by the holding com-pany ERCO, with the amount of 750 000 000 Algerian dinars payable on 5 years.




The remaining amounts are represented in the due instalments:31/12/2013

DZD31/12/2012

L.ELoan from Erco Group 346 050 000 30 763 845BEA loan – Long term part 3 475 134 000 308 939 387BEA loan – Short term 187 500 000 16 668 750

4 008 684 000 356 371 982

17-3 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 67 Million, with amount withdrawn 242.8 Million SDG and the repayments amounted to 100 Million SDG and the remaining portion amounted to 142.8 Million SDG divided into a short-term part of 80 Million SDG and a long-term part of 52.4 Million SDG in a form of “Murabha” secured over machinery and equipment of the plant.

31/12/2013SDG

31/12/2012L.E

Short term loan 46 279 137 53 989 241Long term loan 60 583 713 70 676 960(Less):Deferred finance cost (19 589 832) (22 853 498)

87 273 018 101 812 703

17-4 ASEC Algeria Cement Company (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 14 059 billion for the pur-pose 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 instalments. No cash withdrawal from this loan took place so far.

17-5 ASEC Ready Mix Company

According to the signed contract with the Commercial International Bank dated March 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:31/12/2013

L.E31/12/2012

L.ETotal withdrawal amount 9 408 000 14 784 000Transaction Cost (76 671) (116 673)

Loan Balance 9 331 329 14 667 327

Short term loan 5 376 000 5 376 000Long term loan 3 955 329 9 291 327

9 331 329 14 667 327

B. Principal repaymentsThe loan repaid on constant quarterly installments commence till August 1, 2015 and amounted to 1 344 000 EGP except the last installment which is amounted to 1 340 000 EGP.

C. Liabilities and interests related to the loan- Interest is calculated based on spread of 1.75%-2.75% over the prevailing corridor lending rate

at the -entral 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 unused amounts and non-abolitionist

throughout the period of withdrawal. - Arrangement commission by 0.75% paid with signing the contract.- The company obligated to bay 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

instalment and the accrued interest from the date of maturity till the date of actual payment.

17-6 ASEC Minya cement Company (formally 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 three 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 period 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 September 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.

- Tranche C:Facility not exceeding L.E. 125 million (one hundred and twenty five million Egyptian Pounds) in-cluding capitalized interests in the form of a medium term loan for the purpose of partially financ-ing the establishment, installation and commissioning of cement production line in Minya.Whereas, the Banks have agreed to increase the Facility Amount as well as other amendments to the Facility Agreement requested by the Borrower, subject to the conditions referred to in this Addendum. Now, Therefore, the Parties hereto agree to enter into this Addendum which is consid-ered an integral part of the Facility Agreement and complementary thereto.the repayments will be 13 equal annual installments beginning of September 30, 2014 and ended on September 30, 2020 each by an amount of EGP 9 615 000 million.

- 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 security agent.

- CommitmentsThe 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 distribution.

Loan 31/12/2012

L.E.31/12/2013

L.E.805 180 1551 140 507 905Total Withdrawal amount

Less:(16 529 984)(14 081 088)Transaction cost

788 650 1711 126 426 817

31/12/2013L.E

31/12/2012L.E

Short term loan 126 469 599 83 230 000Long term loan 999 957 218 705 420 171

1 126 426 817 788 650 171

On June 12, 2013 an amendment to the agreement was done increasing the loan amount from 1.102 million Egyptian pounds to 1.227 million Egyptian pounds, and the repayments to become 13 equal annual installments beginning of September 30, 2014 instead of September 30, 2013. each by an amount of EGP 92 845 000 million to be ended on September 30, 2020 agreed that all terms, condi-tions, commitments, representation and warranties contained in the original contract and its amend-ments will remain as it is.

18 Creditors and other credit balances31/12/2013

L.E.31/12/2012

L.E.Accrued expenses 37 388 794 18 236 538Fixed assets suppliers 18 799 960 10 420 569Tax authority 35 923 169 30 016 476Social Insurance authority 4 900 959 4 984 097Other credit balances 9 578 470 4 184 097Accrued loan interests 633 431 2 630 880Down payments 61 682 026 62 720 954Accounts receivable - credit balances 784 898 -Salary tax 6 915 145 2 091 521Withholding tax 2 930 393 812 208Accrued finance cost 4 429 774 5 410 389

183 967 019 141 507 729

19 Share capitalIssued & paid up capital

According to the decision of the extraordinary general meeting assembly on June 15, 2007, the is-sued capital will increase from EGP 909 438 770 to be EGP 1 818 877 540 with an increase 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 commercial 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 certificate from the Arab African International Bank in January 6, 2008, and notarized in commer-cial 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 instalment 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 instalment of EGP 301 529 454 to increase the paid up capital to EGP 3 158 877 540 which was notarized in the commer-cial registry dated 18th of January 2011.

• Pursuant to the resolution of the extraordinary general assembly meeting dated 30 May 2011, which approved reduction of total issued capital of the Company to the level paid-in, and further ad-just payments of respective shareholders to avoid fractions of shares, total paid-in capital reached EGP 3 158 877 610, and which was rectified in the Company’s commercial register on 13 October 2011.

• The shareholders’ contribution as at December 31, 2013 represented as follows:

Shareholder Paid up capitalL.E.

Percentage of contribution

National Development and Trading Company (NDT) 1 928 408 070 61.05 %Rashid Bin Abd El Rahman Al Rashid and Sons 479 334 200 15.17 %Al Mansour and Al Maghrabi for Investments and Development 190 039 740 6.02 %Commercial International Bank-Egypt 149 791 940 4.74 %Mohamed Abdullah bin Edwan 99 861 300 3.16 %Dr. Ahmed Mohamed Hasneen Heikel 350 0.00 %Hisham Hussen Alkhazendar 350 0.00 %Karim Hassan Sadek 350 0.00 %United Group for property investment and industrial tourism 9 986 130 0.32 %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 20 021 300 0.63 %Power Investments Europe 70 109 000 2.22 %Fares Farouk Abdelrazek 1 497 920 0.05 %MAF Trust Company 99 861 300 3.16 %Tamer Abd El Hamid Abo Bakr 16 141 000 0.51 %Abd El Aziz Abdullah El Aziz Al Ghorair 29 958 390 0.95 %Omran Bin Mohamed Bin Abd El Rahman Al-Omaran 29 958 390 0.95 %Yakoob Youssof Algwaan 9 986 130 0.32 %Hassan Mohamed Hassan Darwish 12 144 000 0.38 %Pakinam Mohamed Ilhamy Kefafy 2 434 000 0.07 % 3 158 877 610 100 %




20 Non controlling interestThe amount is represented in the other shareholders’ contribution in the subsidiary companies as fol-lows:

Name Non controlling interest percentage

Al Takamol Cement Company Limited 49%ASEC Syria Cement Company 0.001%Societe Des Ciments De Zahana 65%ASEC Trading Company (Formally 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%ASEC Minya cement Company (formally Arab National cement company) 54.88%Berber for electricity ltd. Company 49%

21 Contingent liabilitiesThe contingent liabilities for the group as at December 31,2013 are as follows:

21-1 ASEC Cement Company - an Egyptian Joint Stock Company

Contingent liability regarding the corporate tax inspection for years 2006, 2007 and 2008 and the dispute is currently in internal committee of the tax authority.


Contingent liabilities as at December 31, 2013 as follows:-- Euro 9 000 000 that equivalent to EGP 86 372 100 that represents letter of guarantee issued by the

company from Arab African international bank and in favor of FLSmidth.- Euro 138 500 that equivalent to EGP 1 329 171 that represents letter of credit issued by the company

from Arab African international bank and in favor of Pietro Fiorentini.- EGP 12 000 000 that represents letter of guarantee issued by the company from Arab African interna-

tional bank and in favor of Mantrac.

22 Capital commitments The capital commitments for the group as at December 31, 2013 are as follows:

22-1 ASEC Algeria Cement Company (ASECCIMENT)The Capital commitments as at December 31, 2013

Contractor Contract Currency

Contract amount

The part not completed in original currency

Not completed part in

31/12/2013L.E


31/12/2012L.E

FLSmith Denmark Company EUR 57 000 000 57 000 000 527 319 960 476 565 600ESACO Manufacturing engineering Company

USD 29 639 408 4 116 918 29 183 740 26 055 151

ESACO Manufacturing engineering Company

DZD 959 176 838 167 159 951 14 860 520 13 539 956

SARL MHDA USD 12 500 000 34 603 245 291 218 995ASCOM for mining Company EUR 763 160 30 220 279 572 252 663ASEC Automation company EUR 42 366 400 42 366 400 391 941 199 354 216 997Energya Company USD 23 699 815 3 683 591 26 112 000 23 312 711Energya Company USD 9 015 848 3 755 669 26 622 942 23 768 878TCB Company EGP 2 909 211 1 292 646 1 302 644 1 292 646CTC Company DZD 39 500 000 14 188 400 1 261 349 1 149 260Cetim Company DZD 122 850 000 89 337 500 7 942 104 7 236 338

1 027 071 321 927 609 195


Capital commitments as at December 31, 2013Not completed

part in 31/12/2012

L.E


31/12/2013L.E

Not completed part in original

currency

ContractAmount

Contract CurrencyContractor

481 291--2 898 950EGPASCOM7 185 944--30 000 000EGPESACO (Administrative office)

11 847 1742 887 440300 87211 243 238EuroASEC Automation – ASA14 955 081--290 000 000EGPARESCO19 352 277--78 359 692EGPASEC Automation – ASA6 384 415--20 348 048EGPNile valley gas company5 852 1102 808 9102 808 91012 500 000EGPArab Swiss engineering company

342 364--581 296EGPUnion Trading and Electric13 148 777--17 450 750EGPEngineering office paving a road

689 390309 075309 0752 040 000EGPMatcom engineering construction & Trading company

8 631 857253 061253 0162 050 150EGPMatcom engineering construction & Trading company

3 363 187522 731522 7319 335 000EGPVeolia water system5 000 000--5 000 000EGPASEC Automation – ASA

13 033 500--1 558 882EuroASEC Automation – ASA-25 558 55525 558 55528 401 505EGPElject

110 267 36732 339 772

23 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 date 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.




24 Deferred tax liabilities31/12/2013

L.E31/12/2012

L.EDeferred tax liabilities resulting from Zahana 44 889 655 47 245 842Fixed assets (ASEC Cement) - (27 114)Deferred tax liabilities resulting from ANCC - 13 005 005Deferred tax liabilities resulting from Ready Mix 2 743 029 1 851 051Berber for electricity ltd. Company 14 639 683 -

Net liabilities resulted from deferred tax 62 272 367 62 074 784

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.

25 Tax status 25-1 ASEC Cement Company - An Egyptian Joint Stock Company

The company is subject to all types of tax.

First: corporate tax The company presents the tax returns from inception till 2012 on due dates, and knowing the com-pany has been inspected for the years 2006 till 2008. the company has received a notice from the tax authority with the total amount due and the appeal on the tax form by the company in the legal dates. Tax amounted to the reality of the following tax form:

2006L.E.

2007L.E.

2008L.E.

Taxable amount according to Tax authority 29 091 873 38 030 004 33 659 771

Tax due 5 818 375 7 606 001 6 731 954Total separetable taxable income according to article 56 from law no 91 of year 2005

1 757 264 12 158 235 12 971 444

Tax due 351 453 2 431 647 2 594 289

Total tax due 6 169 828 10 037 648 9 326 243

The dispute has been discussed in the internal committee and result the following:2006L.E.

2007L.E.

2008L.E.

TotalL.E.

Taxable amount according to internal committee 13 237 229 - 8 751 637 21 988 866

Tax due 2 647 446 - 1 750 327 4 397 773Less:Taxable amount paid (1 422 368) - - (1 422 368)Amount paid after the committee signature - - - (1 500 000)

Total Tax amount expected - - - 1 475 405Plus penaltiesFor the difference in the proposed tax 15% 397 117 - - 397 117For the difference in the proposed tax 80% - - 1 400 262 1 400 262

Expected net tax due plus penalties - - - 3 272 784

Items which transferred to Appeal committee:2006L.E.

2007L.E.

2008L.E.

TotalL.E.

Geological research and consultants 1 757 240 11 886 003 12 971 444 26 614 687Credit interest 4 530 895 14 301 451 1 364 217 20 196 563

The file is being settled in the collection department and the reconsidering committee As an amount of L.E 4 728 000 has been paid on account till date.

Second: Salary taxThe company has not been inspected yet, and the company deducts Salary tax and pays it to tax au-thority 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 income tax law No. 91 of 2005 and pays it on legal time.

Fifth: stamp tax The company was notified with estimated tax payable from inception to July 2006 and dispute is cur-rently with the competent committees.

25-2 Al Takamoul Cement Company - Limited

• The company registered at the tax chamber Khartoum tax office, the company is subjected to tax law for year 1986 which is amended in year 2003.

I: Corporate tax:• The company presents the tax returns for the financial year ended at December 31, 2012 on due

dates.• The company had inspected from the tax authority for the period from inception its activity till

December 31 2009, and finish the disputes to pay the tax differences.• The company has been exempted from tax for ten years from inception its activities according to

the law.

II: Value added tax• The company is subjected to value added tax law and the company apply this tax upon its sales

invoices and deduct the tax which already paid for machinery and equipments imports which was imposed, and the company can settle it legally.

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

sible tax office. • The company is currently inspected for the year ended 2008 till 2012 and not received any re-

quest for payment

V: Elzakat• The company has been inspected by elzakat chamber for the year from the company incepted

its activity till December 2009 and the company paid the accrued amount to elzakat authority for that period. and from other side the final settlements for amounts due for year ended December 31,2010 and is agreed and all the tax will be paid on instalment completed before the end of current year. The year ended December 31, 2011 has been inspected. and year ended December 31, 2012 is currently in inspection.




25-3 ASEC Algeria Cement Company (ASECCIMENT)I: corporate tax

• The company has not started operation up till now and there is no inspection for the company and its books.

II: Salary tax• The company deducts tax on salaries and wages and pays it to the tax authority and no inspec-

tion 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

approval of the Algerian investment authority, the company has been exempted from TVA for 3 years for non-exceptional goods and services imported or procured locally and directly used in the completion of the investment.

• Despite that the company 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 prod-ucts 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 178 787 359 (TVA) as at December 31, 2013.

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.

25-4 ASEC Syria Cement Company

ASEC Syria Cement joint stock company is exempted from income tax for a period of five years com-mencing from date of production- which has not started yet – in accordance with the relevant provi-sions of the investment law no. 10 for the year 1991, and its amendments, tax return for the years till December 31, 2012 has been delivered to tax authority.

25-5 Societe Des Ciments De Zahana

I. Corporate income taxThis tax is called “Impot sur les Benefices”, 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 year that exceeds four years, as tax liabilities abates by passage of time.

II. Salary taxThis tax is called “Impôt 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 com-pany 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 Professionelle (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 an-nounced 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 immediately.

V. Pollution taxThis tax is called “Taxe Polluante” and the company uses to pay this tax upon the annual notifica-tion 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 Superficiare” and the company uses to pay this tax upon the annual notifi-cation from the Tax Authority and payments are made at the announced legal dates.

25-6 ASEC Trading Company

First: Corporate tax The company is registered in the Cairo tax authority of joint stock companies and the operation start-ing date has been considered on July 21, 2009 as recorded in tax card. The tax return for the year ended December 31, 2012 has been delivered to tax authority.

Second: Salary taxThe company deducts salary tax and pays it to tax authority regularly.

Third: Sales taxThe Company was registered in sales tax authority at April 2013 the company delivering monthly sales tax return regularly. Fourth: stamp tax Tax stamp has not been estimated yet.

25-7 ASEC Ready Mix Company

I: Corporate tax The company is registered in the commercial register in October, 2009 and in the tax authority of investment in December, 2009. The company has not been inspected yet and the tax return for the year ended December 31, 2012 has been delivered to 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 the tax authority of sales and provides the sales tax return to the tax authority 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, 2012 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 has started its activity from August 2013. The Company was registered at tax au-thority and provided the sales tax return 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.

25-9 Al Takamoul Cement Company - Limited S.S.

I. RegistrationThe Company was established at the republic of South Sudan, and was registered at the tax au-thority at Juba for tax purposes.

II. Corporate taxThe Company notified the competent tax office in Juba that the first tax return of the company will be overlapping period commencing from July 9, 2011 until December 31, 2012 and thus be the first tax return for this period for the year ending 2012.

III. Personal income taxThe Company calculates the personal income tax and deducted from the employees of the com-pany and supplied to tax the legal dates.

IV. Value added taxThe Company was registered for VAT purposes, and the company delivering monthly value add tax return regularly according to the tax law begine form 1 st, May 2013.

25-10 Berber for electricity ltd. Company

I: Corporate tax:• The company presents the tax returns for the financial year ended at December 31, 2012 on due

dates.• The company had inspected from the tax authority for the period from inception its activity till

December 31 2012.• The company has registered as manufacturing activity not services activity.• The company has been exempted from tax for ten years from inception its activities according to

the law.

II: Value added tax• The company has been exempted from value added tax activities for production of electricity

according to the law.

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

sible tax office. • The company has not been inspected till now.

V: Elzakat• The company paid the accrued amount to elzakat authority for the year 2010. • There is no accrued amount to elzakat authority from the beginng of 2011. therefore the com-

pany elzakat amount incurred paid by Al Takamoul Cement Company (associate company) form amount due from it.

26 RevenueRevenue are represented in the following:

31/12/2013L.E

31/12/2012L.E

Operating revenue from El-Takamoul 429 798 918 435 932 055Operating revenue from Societe Des Ciments De Zahana 367 145 814 317 280 453Operating revenue from Ready Mix Company 63 183 196 54 813 855Operating revenue from ASEC Trading Company 46 150 655 2 241 602

Operating revenue from El-Takamoul SS LTD 6 858 251 11 247 271Asec Minya Cement Company 107 963 667 -

1 021 100 501 821 515 236

27 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 liabilities, due to related parties, some balances of creditors and other credit balances.

27-1 Foreign exchange risk

This risk is represented in the risk of fluctuation in exchange rates, which in turn affects the company’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, 2013 are shown below:Surplus/(Deficit)

MillionEGP

Foreign Currency

361.87USD5.08EUR

(11.5)DZD

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.

27-2 Interest risk

This risk is represented in the changes in interest rates which may influence the value of financial as-sets 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.




27-3 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.

28 Earnings / (losses) per shareNote No.

31/12/2013L.E

31/12/2012L.E

Net profit / (loss) for the period after tax 29 291 029 (461 952 542)Number of shares (21) 315 887 761 315 887 761Earnings / (losses) per share .09 (1.46)

29 Comparative FiguresSome comparative figures in the consolidated financial statements were reclassified to be consistent with the current presentation as at December 31, 2013.

30 Significant Events The Arab Republic of Syria is experiencing since 2011 negative events that have a significant impact on the economic sector in general and which consequently led in most conditions to a significant decrease in economic activities.

The impact of these events depends on the duration in which they are expected to end and on their related consequences.

These events suspended the construction work in the company’s plant since 2011 due to restrictions related to flow funds in foreign currency to and from The Arab Republic of Syria.

31 Impact of Subsidiaries adjustments and reclassificationsTable (A)

2012Restated

L.ERestated

ReclassificationsAdjustements

2012As reported

L.EAs reported

821 515 236--821 515 236Operating revenue-Less:

(729 896 737)-(21 997 774)(707 898 963)Cost of sales

91 618 499-(21 997 774)113 616 273Gross loss

(Less) / Add:(192 101 803)-18 530 726(210 632 529)General & administrative expenses

---Selling expenses 217 388- 217 388Provision no longer required 593 314- 593 314Reversal of impairment losses of trade receivable 179 382- 179 382Capital gain on sale of fixed assets 640 170 35 433 604 737Other income

(98 853 050)-(3 431 615)(95 421 435)Operating loss(Less) / Add:

(487 947 939)-(801 266)(487 146 673)Foreign exchange loss(70 128 026)--(70 128 026)Finance cost

4 812 374-(401 215)5 213 589Interest income

(553 263 591)-(1 202 481)(552 061 110)69 587 465-(3 372 177)72 959 642Share of profit of associate companies

(582 529 176)-(8 006 273)(574 522 903)Net loss before tax(15 706 281)- 365 782(16 072 063)Current tax(5 847 720)--(5 847 720)Deferred tax

(604 083 177)-(7 640 491)(596 442 686)Net loss after taxAttributable To :

(461 952 542)-(5 531 066)(456 421 476)Equity holders of the company(142 130 635)-(2 109 425)(140 021 210)Non controlling interest

(604 083 177)-(7 640 491)(596 442 686)Net loss for the period(1.46)(1.44)Losses per share


ASEC CEMENT ANNUAL REPORT 201390

Table (B)12/31/2012

L.ERestated

Reclassifications* Adjustments12/31/2012

L.EAs reported

Long term assets1 114 075 133- 160 690 068 1 080 2721 273 684 929Fixed assets (Net)2 633 082 181-(3 213 617)2 636 295 798Projects under construction 639 236 865--639 236 865Investments in associates

7 566 592--7 566 592Other assets 371 532 870 160 690 068-210 842 802Intangible assets

Defered finance cost 164 958 718--164 958 718Goodwill

4 930 452 358-(2 133 346)4 932 585 704Total long term assetsCurrent assets

113 922 481-(199 044)114 121 525Inventories4 157 486--4 157 486Trade receivable

27 743 509--27 743 509Due from related parties204 396 499-(11 567 215)215 963 714Debtors & other debit balances 246 357 381-(75 782)246 433 163Cash on hand & at banks

596 577 355-(11 842 042)608 419 397Total current assetsCurrent liabilities

41 791 418--41 791 418Provisions 239 009 477--239 009 477Loans & bank facilities 87 249 498-5 055 08182 194 417Trade & notes payable

Trade receivable -credit balances 434 712 594 3 834 155(7 304 811) 438 183 250Due to related parties 141 507 729-(6 051 759) 147 559 488Creditors & other credit balances

944 270 7163 834 155(8 301 489)948 738 050Total current liabilities(347 693 361)-(3 540 553)(340 318 653)Excess of current liabilities over current assets4 582 758 997-(5 673 899)4 592 267 051Total investments

Financed as follows :Equity

3 158 877 610--3 158 877 610 Issued & paid up capital290 353--290 353 Legal reserve

8 640 704--8 640 704 Other reserves25 288 332-919 771 24 368 561 Translation reserve

Negative good well(262 802 552)-(720 125)(262 082 427)Carried forward losses(461 952 542)-(5 531 066)(456 421 476)Net profit / (loss) for the period / year

2 468 341 905-(5 331 420)2 473 673 325Equity attributable to the equity holders of the company

868 439 151-(342 479)868 781 630Non controlling interest

3 336 781 057-(5 673 898)3 342 454 955Total equity Long term liabilities

1 183 903 157 --1 183 903 157-(3 834 155)-3 834 155Operating lease payable

62 074 784-62 074 784Deferred Tax

1 245 977 941(3 834 155)-1 249 812 096Total long term liabilities4 582 758 998(3 834 155)(5 673 898)4 592 267 051Total equity & long term liabilities

* The balance of carried forward losses, non-controlling interest as at December 31, 2012 as well as the net loss for the year ended December 31, 2012 were changed due to some adjustments related to our subsidiaries.

This page has intentionally been left blank

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

creating value - asec cement cement... · 4 asec cement annual report 2013 asec cement annual...

Documents