Invitation to the Existing Shareholders to Subscribe to the Capital Increase. Palm Hills Developments S.A.E.

Transcription

1 THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO, THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN. Invitation to the Existing Shareholders to Subscribe to the Capital Increase of Palm Hills s SAE I. s General Data: Name of Issuing : Address of Head Office: Legal Form: Governing Law: Objective of the : Palm Hills s Smart Village, 6 October City, Giza Governorate. An Egyptian joint stock company subject to the provisions of the Investment Incentives and Guarantees Law No. 8 of Investment Incentives and Guarantees Law No. 8 of 1997 and its Executive Regulations and amendments thereof. Real estate investment in cities and new urban communities; reclaiming and cultivating desert land, provided that the land allocated is for the purpose of reclamation and cultivation and that modern irrigation methods are applied in farming; and no irrigation by sub-merging is applied. While taking into consideration the Prime Ministerial Decree No. 350 of 2007 and Presidential Decree No. 356 of 2008; and provided that the activity is practiced on the reclaimed and cultivated plot of desert land located after two kilometers outside the boundaries of Al Kata Area, East of the Cairo/Alexandria Desert Road Km 49. The shall obtain all necessary licenses to undertake its activity. Duration of the : 25 years commencing on 10/01/2005 and ending on 09/01/2030. Fiscal Year: The fiscal year commences in January every year and ends in December of the same year. Commercial Registration: 6801 on 10/01/2005. Stock Exchange Listing Status: Central Depository Status: Listed on the Egyptian Exchange (EGX) in April All of the s shares are deposited in Misr for Central Clearing, Depository and Registry (MCDR), except 589 shares that are not deposited in the central depository system. Members of the Board of Directors: Name Position on Board Entity Represented Yassin Ibrahim Lotfy Chairman and self Mansour Managing Director Expiry Date of Board Membership [PHD - English PSN (Final FRA Version ).docx]

2 Mohamed Al-Amin Ismael Lotfy Mansour Mohamed Ahmed Sultan Ahmed Aly Thabet Sayed Farghaly Yasser Soliman Hesham Al- Malawyany Hasan Mohamed Hasan Darwiesh Yousef Mohamed Medhat Yousef Al-Far Tarek Mohamed Medhat Abdelhady Abdelrahman Deputy Chairman Managing Director Managing Director for Financial Affairs Board Member with self self self self Until the Ordinary General Meeting is convened set to ratify the annual financial statements for the fiscal year ending 31/12/2018 expertise Board Member self Board Member with expertise Managing Director self self Auditors: Name Dr. Ahmed Shawki and Mr. Alaa Abdel-Azim Mansour Mostafa Shawki Office (Mazars) Mr. Ehab Morad Azer - Allied for Accounting and Auditing (Ernst & Young) Address 153 Mohamed Farid St., Downtown, Cairo Rama Bldg., Plot 10A, Ring Road, Al-Katamia, Cairo Legal Advisor for the offering of the Rights Issuance: Name Mr. Mohamed Abdel Fatah Attorney registered with the Court of Cassation Head of Capital Markets at Matouk Bassiouny Office Address 12 Mohamed Aly Ganah, Garden City, Cairo Shareholders holding over 5%, according to the Shareholders List issued by Misr for Central Clearing, Depository and Registry (MCDR) issued on 09/08/2018: Name Mansour & Maghrabi for Investment &, UPP CAPITAL INVESTMENT OWNER BY UNION PROPERTIES ONE PERSON CO LLC Number of present shares 955,001, % 406,222, % Ratio of present shares to the s share capital Capital: Authorized Issued Paid-up Currency of paid-up capital 10,000,000,000 4,617,899,452 4,617,899,452 Egyptian Pounds ( EGP ) [PHD - English PSN (Final FRA Version ).docx] 2

3 Number of shares in current capital: Type of Issued Shares: Nominal Value per Share: Status of Profits: Tax Status: 2,308,949,726 Ordinary nominal shares EGP 2 / share (two Egyptian pounds per share) The increase shares have the right to receive dividends for the fiscal year ending December 31, 2018, in accordance with the decision of the general assembly to be adopted in this regard. First: Corporate Income Tax: - The enjoyed a tax exemption for ten years starting on the fiscal year following commencement of its activities on 14 March 2005 and ending on December 31, The regularly complies with preparation of the tax returns applicable to income tax for juristic persons in accordance with Law No. 91 of 2005 and its executive regulations, and delivers the tax returns within the legally prescribed dates and settles the due tax in accordance with the tax returns. - Years from incorporation on March 14, 2005 until December 31, 2009: The Tax Authority claimed from the a tax difference amounting to approx. EGP 49.4 million, and the appealed such claim for tax differences. The dispute settlement committee issued a decision to reduce the tax differences to become approx. EGP 32.6 million. The paid the amount, and the Tax Authority has reviewed the payment receipts. - It appears that the has prepared the documents required for the tax inspection for the years from 2007 to 2009, and the concerned Tax Authority has not concluded its inspection to date. - Years from 2010 until 2012: the concerned Tax Authority issued Form (19) with the estimated tax differences and the appealed within the specified legal timelines. The said years were referred to the internal committee, and it was agreed with the Tax Authority that the said years will be inspected, and currently in the process of issuing a decree to re-inspect the said years from a documentation standpoint. - Years from 2013 until 2017: The regularly prepared its tax returns in accordance with Law No. 91 of 2005 and its executive regulations, and delivered the tax returns within the legally prescribed dates and settled the tax in accordance with the tax returns. - It was verified that no tax forms or claims were received for the years between 2013 and Second: Salary and Wages Tax: - Years from incorporation of the in March 14, 2005 until December 31, 2009: examined and attached, and the tax was paid. [PHD - English PSN (Final FRA Version ).docx] 3

4 - Years from 2010 until 2017: it appears that the has paid the applicable tax in a consistent manner in accordance with Law No 91 of Third: Stamp Duty: - It appears that the complies with payment of the stamp duty tax on the requisite forms in accordance with Law No. 111 of 1980, as amended by Law No. 143 of Fourth: Withholding Tax: - It appears that the complies with applying Article 59 of Law No. 91 of 2005 and its executive regulations. Fifth: Value Added Tax (VAT): - It appears that the is not subject to VAT, as it is not subject to the VAT Law No. 67 of 2016 and its executive regulations. The status of litigation filed by and/or against the and its subsidiaries: Based on the certificate provided by the legal advisor of the, there are a number of ongoing ordinary disputes filed by and against Palm Hills s and its subsidiaries, as follows: Number of Ongoing Cases Type of Cases Total Value in EGP Civil 212,434, Labor 9,231, Tax 234, Criminal (checks) 2,923, Administrative 2,000,000 Total 135 Ongoing 225,025,317 In addition, there is a comprehensive statement prepared by the legal advisor of the specifying all lawsuits filed by or against the and its subsidiaries, which is available at the s premises for review. Net Shareholders Equity as per the most recent approved standalone financial statements as at 31/12/2017: Method for Distribution of the s Net Profits as per the Statutes: EGP 6,107,032,805 The s net profits are distributed annually after deducting all general expenses and other costs, as follows: 1. A sum amounting to 5% of the profits is deducted to form the legal reserve. This deduction ceases when the reserve reaches 50% of the s issued capital, and [PHD - English PSN (Final FRA Version ).docx] 4

5 deduction is resumed when the reserve falls below this percentage. 2. Employees are entitled a share of the distributable profits in cash, which shall not be less than 10% of the distributed profits, provided that the distributed amount does not exceed the amount equivalent to the total annual salaries of employees. 3. The remaining profits are distributed among the shareholders or carried forward based on the recommendation of the board of directors, or used to form an extraordinary reserve or money for extraordinary use. 4. The general assembly has the right to distribute all or part of the profits shown in the periodic financial statements of the, provided that the auditor s report is attached thereto. Insurance over the s Assets: Insured Asset Insurance Amount Expiry Type Club EGP 106,377,200 24/7/2019 Damage insurance Club EGP 66,712,900 6/8/2018 (renewal in Damage insurance process) Club Annex EGP 24,501,400 6/8/2018 (renewal in Damage insurance process) Commercial shops EGP 83,000,000 31/12/2018 Damage insurance Content of the Smart Village building EGP 6,000,000 31/12/2018 Damage insurance Golf extension warehouse EGP 100,000 4/2/2019 Damage insurance 40 Lebanon building + EGP 9,000,000 4/2/2019 Damage insurance content of building Sales office (Fifth EGP 8,000,000 4/2/2019 Damage insurance Settlement and Heliopolis) Sales office (Zamalek) EGP 2,000,000 4/2/2019 Damage insurance Kattameya project EGP 300,000,000 31/8/2018 Contractor insurance Golf Views project EGP 383,006,049 31/8/2018 Contractor insurance Golf extension project EGP 160,979,763 31/8/2018 Contractor insurance Golf Views project EGP 94,140,672 31/8/2018 Contractor insurance Commercial complex No EGP 21,021,213 10/1/2019 Contractor insurance (8) 45 vehicles EGP 8,801,350 31/12/2018 Owned vehicles 16 vehicles EGP 2,700,000 31/12/2018 Trucks Mortgages and liens on the s assets: (a) Mortgages: - There are no commercial mortgages perfected on the s assets, in accordance with the commercial register of the. [PHD - English PSN (Final FRA Version ).docx] 5

6 - The s loans are secured by certain cash flows from several projects of the. (b) Liens: - The has entered into financial leasing agreements in relation to certain assets owned by the with a number of companies operating in such field. The said transactions were recorded as a guarantee (power of attorney to sell) in return for recording the liabilities arising from such financial transactions as a financing activity (accounts payable) in accordance with the nature of the transactions, since the conditions required for recording such contracts as financial leasing were not concluded and such assets are deemed additional guarantees. - The value of the leasing agreements entered into has reached EGP million, as follows: Asset Classification Value of Leasing in EGP million Botanica project Real estate investment Palm Hills club (6 th October City) Fixed assets Mall (8) 6 th of October City Shops at Street 88 6 th of October City Projects under construction Real estate investment Total The guarantees set out in the preceding provision cover part of the cost of such assets, and are not in the full value of the asset. Loans: The loans balance as at December 31, 2017 amounted to EGP billion, in accordance with the following: Bank Type of financing Financing limit in EGP Date contract of Payment term in years Reason for financing Balance at 31/12/2017 Arab African Medium term 2.4 billion 8 September Financing s projects billion [PHD - English PSN (Final FRA Version ).docx] 6

7 International Bank syndicated loan National Bank Egypt of Medium term syndicated loan 852 million 27 January Finance the s project in 6 th of October City with an area of 190 feddan million Arab Bank Bank overdraft 300 million 27 February 2016 renewed annually financing million The obtained the above loans based on guarantees on certain cash flows from several projects of the. Business Risks: (a) Interest Risk: The interest risk comprises of the potential change in the interest rates and its impact on the current and future financial obligations, which includes interest and commissions on bank debts (overdraft), which may have a negative impact on the business results. The utilizes long-term financing sources without interest, comprising of the balance of down payments made by clients, in addition to adopting a policy for managing its available funds to reduce the risk of change in the interest rates. (b) Credit Risk: The credit risk comprises of the inability of clients to pay their outstanding dues. This risk appears to be limited given that the deals with clients having good net worth, in addition to the fact that the does not deliver the contracted units prior to deposit by the client of negotiable bank instruments against the unpaid installments at the time of delivery. Significant Accounting Policies Applied: Relations with Related Parties: The financial statements were prepared in accordance with Egyptian Accounting Standards in light of Egyptian laws and regulations in force and the related laws and historical cost, and the financial statements are presented in Egyptian pounds. Related parties are those having direct or indirect relations with the, its subsidiaries or affiliates, or companies having a common interest, in addition to relations between the and key members of its top management or employees having significant impact, directly or indirectly, on making decisions. A related party transaction is any transaction, operation, or exchange of resources, services and obligations, arising between the and such parties, which must be concluded on the same basis as transactions with unrelated parties. A. Transactions with related parties: [PHD - English PSN (Final FRA Version ).docx] 7

8 Party Type Nature of transaction Palm Hills Middle East for Real Estate Investment Royal Gardens Real Estate Investment Middle East for Real Estate and Touristic Gouda for Commercial Services Rakeen Egypt for Real Estate Investment Saudi for Urban Nile Palm Al Naeem El Etehadeya for Real Estate Investment East Cairo for Real Estate Palm October for Hotels New Cairo for Real Estate Al Naeem for Hotels and Tourist Villages Gamsha Tourist United Engineering for Engineering and Contracting Mansour & Maghrabi for Investment &, Palm Gamsha for Hotels Palm North Coast for Hotels Palm for Real Estate Value of transaction in EGP Subsidiary Financing 1,841,532,585 Subsidiary Financing 20,286,493 Subsidiary Financing 89,852,365 Subsidiary Financing 53,838,167 Subsidiary Financing 516,576,423 Subsidiary Financing 59,442,381 Subsidiary Financing 169,860 Subsidiary Financing 86,364,145 Affiliate Financing 3,974,642,971 Subsidiary Financing 241,371 Subsidiary Financing 149,361,961 Subsidiary Financing 337,851 Subsidiary Financing 199,253 Subsidiary Financing 26,308,121 Main Shareholder Financing 282,300,518 Subsidiary Financing 86,585 Subsidiary Financing 86,585 Subsidiary Financing 88,141,726 [PHD - English PSN (Final FRA Version ).docx] 8

9 Palm for Investment and Real Estate Palm Hills Real Estate Palm Hills for Touristic and Real Estate Palm Hills for Touristic Investment Palm Hills Resort Palm Hills for Hotels Palm Alexandria for Real Estate Investment Esten College Palm El Alamein Real Estate Palm Club Management Palm Hills for Education Subsidiary Financing 737,645,608 Subsidiary Financing 10,213,227 Subsidiary Financing 89,916,383 Subsidiary Financing 994,650 Subsidiary Financing 31,460 Subsidiary Financing 79,370 Subsidiary Financing 511,206 Subsidiary Financing 274,571 Subsidiary Financing 24,594,753 Subsidiary Financing 162,187,779 Subsidiary Financing 7,860,244 B. Balances resulting from transactions with related parties: Party Palm Hills Middle East for Real Estate Investment Royal Gardens Real Estate Investment Middle East for Real Estate and Touristic Gouda for Commercial Services Rakeen Egypt for Real Estate Investment Saudi for Urban Item in Financial Statements current (payable) current (payable) Nile Palm Al Naeem current (payable) December 31, 2017 in EGP 1,215,330, ,729 (149,057,655) (54,164,780) 235,845, ,994,003 (44,636,227) [PHD - English PSN (Final FRA Version ).docx] 9

10 El Etehadeya East Cairo Palm October for Hotels New Cairo Al Naeem for Hotels and Tourist Villages current (payable) Gamsha Tourist United Engineering for Engineering and Contracting Mansour & Maghrabi Palm Gamsha Palm North Coast for Hotels Palm for Real Estate Palm for Investment and Real Estate Palm Hills Real Estate Palm Hills for Touristic and Real Estate Palm Hills for Touristic Investment Palm Hills Resort Palm Hills for Hotels Palm Hills for Education Baltan Saudi Coldwell Banker Palm Hills Palm for Urban Palm Club Management Palm Alexandria for Real Estate Investment Esten College current (payable) current (payable) current (payable) 182,461, ,952,312 11,304,588 18,194,354 (127,390,624) 68,718,945 (11,249,000) 45,411,298 2,550 (642) 21,309,180 13,343,514 87,103 25,701,656 63,476, , ,305,574 3,544, ,320 20,480 31,047,431 (23,313,811) 11, ,571 [PHD - English PSN (Final FRA Version ).docx] 10

11 Disclosures by Juristic Persons: Palm El Alamein 22,594,753 Real Estate Shareholders loans (46,292,990) balances current (payable) 1. Mansour & Maghrabi for Investment &,, is owned 60.48% by Mr. Yassin Ibrahim Lotfy Mansour. 2. UPP CAPITAL INVESTMENT OWNER BY UNION PROPERTIES ONE PERSON CO LLC, is owned 100% by UNION PROPERTIES PJSC, which is listed on the Dubai Financial Market stock exchange. Disclosures by Subsidiaries: A. Investments in Subsidiaries and Affiliates: First: Direct investments in subsidiaries and affiliates, as follows: Name of Shareholding Percentage Palm Hills Middle East for Real 99.99% Estate Investment Gouda for Commercial Services % New Cairo for Real Estate % Rakeen Egypt for Real Estate % Investment Palm for Real Estate 99.4% Palm for Investment and Real Estate 99.4% Palm Hills for Touristic and Real 99.4% Estate Palm Hills for Touristic Investment 99.4% Palm for Touristic Resorts 99.4% Palm for Urban 99.4% Palm Hills Real Estate 99.2% Palm for Clubs 99.2% Palm Alexandria 99.2% United Engineering for 98.88% Engineering and Contracting Palm Hills for Hotels 98% New East Cairo for Real 89% Estate (Capsi) Palm Hills for Education 71.04% Macor for Securities Investment 60% Al Naeem for Hotels and Tourist 60% Villages Gamsha Tourist 59% [PHD - English PSN (Final FRA Version ).docx] 11

12 Royal Gardens Real Estate 51% Investment Nile Palm Al Naeem for Real Estate 51% Saudi for Urban 51% Coldwell Banker Palm Hills for Real 49% Estate Investment El Alamein Real Estate 39.99% Palm October for Hotels 00.24% Second: Indirect Investments: Related Party Contracts Name of Shareholding Percentage Palm North Coast for Hotels % Middle East for Real Estate and 87.50% Touristic Palm Gamsha for Hotels 96.04% New East Cairo for Real % Estate (Capsi) Esten College for Education 71% The Ordinary General Meeting (OGM) of the dated 26/2/2017 approved the related party contracts between Palm Hills s and Royal Insurance in relation to insurance policies for the s vehicles and projects, as well as all types of insurance policies. II. Subscription Data: 1. Basis for the capital increase resolution: 2. Amount of the capital increase: According to the resolution of the Extraordinary General Meeting (EGM) convened on 6/9/2018, which approved the capital increase and amendment of Articles 6 and 7 of the Articles of Association of the pursuant to the outcome of subscription. Increase of the authorized capital from EGP 6,000,000,000 to EGP 10,000,000,000, and increase of the issued capital from EGP 4,617,899,452 to EGP 6,157,199,270, by way of a capital increase in cash amounting to EGP 1,539,299,818 through issuance of 769,649,909 shares, in a rights issue made available for subscription by the existing shareholders pro rata their shareholding in the s capital. The increase shall be at the nominal value of the share amounting to EGP 2 per share, in addition to the issuance expenses at an amount of three piasters constituting 1.5% of the share s nominal value, provided that trading of the right shall be separate from the original share. 3. Right to subscription: According to the resolution of the Extraordinary General Meeting (EGM) convened on 6/9/2018, the existing shareholders of Palm [PHD - English PSN (Final FRA Version ).docx] 12

13 Hills s S.A.E and holders and purchasers of the shares until end of the trading session on October 14, 2018, shall have the right to subscribe at the ratio of 33.3% of the shares owned by each shareholder in the issued capital prior to the capital increase. They shall also have the right to sell the subscription right in full or in part separately from the original share. The fractions of the subscription rights and increase shares shall be rounded in favor of the minority shareholders in an ascending order until there are no further fractions remaining. 4. Conditions of payment The value of the subscription amounting to EGP 2.03 (two Egyptian pounds and three piasters) per share shall be paid in full (which comprises of EGP 2 as nominal value + EGP 0.03 as issuance expenses per share). As for the separate subscription right, the opening trading price for trading of the subscription right shall be determined in the first trading session according to the applicable rules, which will be announced on the Egyptian Exchange (EGX) screens, as well as any price change thereto. 5. Date of subscription The subscription period shall commence on October 17, 2018 and end on November 15, The subscription period may be closed in the case where the subscription amount is covered in full. 6. Recipient of subscription Subscription shall be received by the Arab African International Bank and its following branches: Branch Address Heliopolis branch El Merghany branch El Hegaz branch Aswan branch Mohandessin branch El Maadi branch 24 Cleopatra St. 140 El Merghany St. 33 El Hegaz St. in front of Maryland 1 Abtal El Tahrir St. 48 Geziret El Arab St. Road 9, Maadi Palace Building 6 th of October branch Fourth Industrial Zone, 2/3, Banks Sector Damietta branch El Horeya Road branch El Golf branch Beginning of Damietta Road, Ras El Bar, Corniche El Nil, Zaher Intersection, El Sanateya 73 El Horeya Road, Alexandria 13 El Nozha St. [PHD - English PSN (Final FRA Version ).docx] 13

14 Shooting Club branch Tanta branch Cairo branch Kasr Al Ainy branch Nasr City branch Alexandria branch 12 Nadi El Seid St. 95 El Geish St., Tanta 44 Abdel Khalek Tharwat St. 8 Ibrahim Naguib St., Garden City 33 Abo Dawood Al Zahry St. 47 Albert the First St., Smouha 10 th of Ramadan branch Third Industrial Zone City Center Mansoura branch Port Said branch 199(b) El Gomhoreya St., Kasr Al Nile Tower rd of July St., Eastern District, Port Said Smart Village Building B15, Smart Village Cairo Alexandria Desert Road K24 7. Trading of the subscription right The shareholders of the have the right to trade the subscription right separately from the original share during the period starting on October 17, 2018 (opening date of subscription) until November 12, 2018 (three days prior to the closing date of subscription), provided that the shall obtain the prior approval of Misr for Central Clearing, Depository and Registry (MCDR) for registration of the subscription right and apply for registration of the trading of the subscription right at the Egyptian Exchange (EGX), at least five business days prior to the date specified for opening the subscription window, in accordance with the securities listing and delisting rules of the Egyptian Exchange (EGX) and its executive regulations. 8. Required documents A copy of the National Identification Card for natural persons or the commercial register for juristic persons. In addition to the document evidencing the ownership of the shares on the date indicated in the announcement (statement of account issued by the custodian showing the balance of shares owned or subscription rights on the date indicated in the announcement). 9. In the event subscription is not covered In the event subscription is not covered in the first subscription round, the subscription window will be opened for another round for the remaining shares not subscribed to, which shall be available to the existing shareholders that have not sold their subscription right and the purchasers of the subscription right, without limitation to the subscription percentages. In the event of oversubscription in the remaining shares, the allocation shall be prorated based on the number of shares requested and number of [PHD - English PSN (Final FRA Version ).docx] 14

15 remaining shares available, and the fractions shall be rounded in favor of the minority shareholders. The bank shall reimburse overpaid amounts received for the subscription to the remaining shares within one (1) week from the date of closing the subscription, to be collected from the bank receiving the subscription to be announced at such time. 10. Plan of the for using the funds: 1. Develop the Badya project in West Cairo with an area of 3,000 feddan: In September 2017, Palm Hills s signed the definitive co-development agreement with the New Urban Communities Authority with the objective of a joint development with revenue sharing, for a fully-fledged residential project spreading over 3,000 feddan in West Cairo. The project is considered a fully integrated residential city that includes apartments, as well as standalone units, complemented with a wide range of facilities and commercial, educational and entertainment services. The launched the reservations and sales for the residential units in the first phase of the project in Q2 2018, and the project achieved unparalleled success in terms of sales and new reservations. The seeks to commence development of the project s infrastructure in terms of internal utilities, building works, and main developing components. Required funding: EGP 989,299, Develop the commercial area in Palm Hills New Cairo project, East Cairo spreading over 100 feddan: Palm Hills seeks to increase its investments in the commercial sector by adding new commercial projects to its current list of projects in East Cairo, through a development on an area of around 100 feddan in the Palm Hills New Cairo project. It is expected that the project will include a mall, international schools, offices, administrate buildings and a social club. Required funding: EGP 150,000, Develop a commercial/residential project in West Cairo spreading over 205 feddan: Palm Hills s seeks to increase its land bank by entering new projects and co-developments on a revenue sharing basis, as currently adopted by the state. This includes bidding for a prime land plot in Sheikh Zayed City overlooking the 26 th of July Corridor, with a total area of 205 feddan. The plot of land was awarded to Palm Hills, and is currently awaiting for issuance of the final allocation letter and signing the definitive co-development agreement. It is worth noting that in September 2017, the New Urban Communicates Authority announced a bid for several plots of land in the new urban communities, including the plot of land mentioned above. Palm Hills had entered the bid for purchase of [PHD - English PSN (Final FRA Version ).docx] 15

16 this plot through Palm Hills El Alamein for Real Estate (one of its subsidiaries and owned by 40%). In the event the bid is not awarded to the or the fails to reach a final agreement on the revenue sharing contract, the funds will be allocated in a savings deposit until an alternative investment opportunity is available, or to cover the s cash liquidity needs resulting from existing projects. Required funding: EGP 250,000, Develop the Crown project in West Cairo spreading over 190 feddan: The entered into a contract with the Ministry of Housing and Urban Communities in January 2017 regarding the acquisition of a land plot spreading over 190 feddan in the Eastern Extension Area in 6 th of October City. In May 2017, the launched the project and sales, achieving new sales amounting to EGP 907 million until June 30, Required funding: EGP 150,000, Expected return from this utilization: - Develop the infrastructure for the Badya project, in terms of internal utilities, building works, and main developing components that will assist the in achieving new sales and reservations for the remaining phases. - Expand the s commercial sector by adding new commercial projects to its current list, and secure a consistent and recurring source of revenue, expected to represent 25% of the net profits in Increase the s land bank by entering new codevelopment projects and revenue sharing arrangements, as currently implemented by the state. Significant financial indices according to the financial statements for the last three years pursuant to the most recent financial position as of: Significant Statement 31/12/ /12/ /12/2015 financial indices Liquidity ratio Current assets/ Current liabilities Equity structure Total Equity/ 39.25% 47.26% 52.46% Total assets Equity structure Total liabilities/ 60.75% 52.74% 47.54% Total assets Profitability ratio Gross Profit / 4.43% 4.22% 7.37% Total assets Profitability ratio Net profit / Total assets 1.56% 2.36% 6.01% [PHD - English PSN (Final FRA Version ).docx] 16

17 Profitability ratio Net profit / Total Equity 3.98% 5.00% 11.46% Investor Relations Officer: Address: Mamdouh Abdel Wahab; Radwa Aboul Naga Smart Village, Abou Rawash, 6 th of October City Telephone: Fax: Significant disclosure concerning purchasers of the subscription right: The investors who purchased the subscription right separately from the original share shall take note of the following: 1. The period for purchase and sale of the subscription right commences on October 17, 2018 and ends on November 12, 2018, after which the subscription right will be delisted from the Egyptian Exchange and no trading thereon shall be effected. 2. The holder of the right is entitled to subscribe to the capital increase from October 17, 2018 until November 15, The right to subscribe to the capital increase shares against the number of the rights purchased thereby during the subscription period commences on October 17, 2018 and ends on November 15, In the event subscription to the increase is not covered in the first round, the subscription window will be opened again for the shares not subscribed in, and the existing shareholders that have not sold their subscription right and purchasers of the subscription right shall have the right to subscribe in the second round without limitation to their shareholding percentage. An announcement to this effect will be made after approval of the Egyptian Financial Regulatory Authority (FRA). 5. The right to trade the subscription right, either by sale or by purchase on the Egyptian Exchange, is effective during the period from October 17, 2018 until the end of the trading session on November 12, 2018, as long as no subscription was made to the capital increase shares corresponding to the number of the rights purchased thereby. 6. In the event of exercising the subscription right, the subscriber is not entitled to trade all or a part of the shares subject of the capital increase upon depositing the subscription value. 7. In the event of continuing to hold the right without subscription during the two subscription rounds referred to above (i.e. first and second subscription rounds), the right shall have no value, and shall have no legal or financial effect vis-à-vis the issuing company. In the event where the last subscription day is an official holiday, the last subscription day shall be the following first business day. Managing Director for Financial Affairs Aly Thabet Sayed Farghaly Disclaimer The information contained herein is restricted and is not for publication, distribution or release, directly or indirectly, in or into, the United States of America, Canada, Australia or Japan. [PHD - English PSN (Final FRA Version ).docx] 17

18 This document does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. The capital increase and the distribution of this document and other information in connection with the capital increase in certain jurisdictions may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. The price and value of, and income from, the securities issued in the capital increase may go down as well as up. Persons needing advice should consult a professional adviser. The capital increase is not being made in or into the United States of America or to any U.S. person (as defined in Regulation S under the United States Securities Act of 1933, as amended (the "Securities Act")). These materials are not an offer for sale of any securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from the registration requirements of Securities Act. The has not registered, and does not intend to register, any portion of the capital increase in the United States, and does not intend to conduct a public offering of any securities in the United States. No person has been authorized to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorized by the. In addition, no agent or representative of the accepts any responsibility whatsoever for the contents of this document and no representation or warranty express or implied, is made by any agent or representative as to the information set out in this document. Neither the content of the 's website (or any other website, including but not limited to the websites of the 's subsidiaries, joint ventures or restricted affiliates) nor the content of any website accessible from hyperlinks on the 's website (or any other website, including but not limited to the websites of the 's subsidiaries, joint ventures or restricted affiliates) is incorporated into, or forms part of, this announcement. This document contains forward-looking statements, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or including the words "targets," "believes," "expects," "aims," "intends," "may," "anticipates," "would," "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the 's control that could cause the 's actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the 's present and future business strategies and the environment in which it will operate in the future. These forwardlooking statements speak only as at the date of this document. The expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any of such statements are based. This communication is only directed at (i) persons who are outside the United Kingdom; (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); and (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The securities referred to herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this communication or any of its contents. [PHD - English PSN (Final FRA Version ).docx] 18

19 Any offer of securities to the public that may be deemed to be made pursuant to this communication in any EEA Member State that has implemented Directive 2003/71/EC (as amended and together with any applicable implementing measures in any Member State, the "Prospectus Directive") is only addressed to qualified investors in that Member State within the meaning of the Prospectus Directive. This document is an advertisement and not a prospectus for the purposes of the applicable measures implementing the Prospectus Directive and as such does not constitute an offer to sell or the solicitation of an offer to purchase securities. [PHD - English PSN (Final FRA Version ).docx] 19