1 CHAIRMAN S MESSAGE ABOUT US PERFORMANCE IN IMPORTANT INDICATORS MAJOR EVENTS... 15

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2 Annual Report 2017 Contents 1 CHAIRMAN S MESSAGE ABOUT US PERFORMANCE IN IMPORTANT INDICATORS MAJOR EVENTS MOST SIGNIFICANT PROJECTS IN MANAGEMENT ANALYSIS OF THE KEY DEVELOPMENTS IN COMPANY STRUCTURE OGRANIZATIONAL STRUCTURE COMPANY STRUCTURE BOARD OF DIRECTORS SUBSIDIARIES AND AFFILIATES IMPORTANT TIPS FOR INVESTORS INTERNAL DEVELOPMENT IT DEVELOPMENTS QUALITY APPLICATIONS GOVERNANCE APPLICATIONS INTERNAL CONTROL MEASURES: CORPORATE SOCIAL RESPONSIBILITY FINANCIAL STATEMENTS GLOSSARY

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4 Annual Report Chairman s Message Since Egypt launched its reform program and liberalized the Egyptian pound in November 2016 to address the growing economic imbalance that led to the rise in public debt, increase of the current account deficit, and decline in official reserves, the Egyptian government and international financial institutions bet on Egypt's ability to overcome the effects of the process of exchange rate liberalization and bring the economy back to the path of growth. Indeed, these challenges have faded away due to the positive indicators that the Egyptian economy was able to achieve by the end of the fiscal year 2016/2017, in the wake of the reforms carried out by the government in order to support the Egyptian economy, namely: Stabilize the exchange rate, where the foreign exchange market returned to its natural course, the foreign currency black market disappeared and the ceilings for deposit and cash withdrawal were cancelled. Reduce budget deficit; cut and reform of fuel subsidy and apply VAT. The year 2017 also witnessed the issuance and amendment of many of the long-awaited laws that aim to revive investment and the economy: o o o o o o o Investment law Value Added Tax Law Income Tax Law Amendment of some provisions of the Commercial Register Law Industrial Licensing Law Amendment of the provisions governing the stock exchange management The Law regulating the activities of the gas market Several innovative and constructive initiatives have also been launched to facilitate operations of small and large investors during In view of all the previous variables, EGYTRANS Group managed to continue earning and doubling profits for the second year in a row. The Company achieved in its independent budget total revenues during 2017 of EGP million against EGP million in 2016, with an increase of 71%. It also achieved a net profit of EGP 72.6 million during the year ending in December 2017, against EGP 42.9 million in 2016, with an increase of 69%. The activities of the projects got the lion s share of profits as the transportation, handling and storage of operations of Beni Suef station, the New Administrative Capital and South Helwan were completed. 4

5 Annual Report 2017 It also started the project of Al-Nasr Petrochemicals Complex in Al-Sokna in addition to a number of small projects. EGYTRANS share had shown a remarkable performance in 2017 compared to previous years, with a share price growth of about 95% between 2015 and The share reached the price ceiling during this period of EGP and the highest daily trading of 520,932 shares, achieving an average value of EGP 4,973,149. Subsidiaries ETAL succeeded in increasing its market share in 2017, which enhanced its superiority in the field of specialized transportation. It successfully completed the transfer of Siemens International turbines, generators and boilers of the new Beni Suef power plants and the projects of the new administrative capital, which represent giant national projects. Within a condensed timetable for implementing those stations, it also managed to complete the transportation of turbines, generators and equipment of the South Helwan power station according to the set timetable and managed to implement the transportation of the equipment of a number of switching and distribution power stations. ETAL also participated in the transportation of the equipment of Zohr field, which is one of the largest national projects in the field of oil through contracting with Schneider International to transported 32 shelter units from the Maria plant in the tenth of Ramadan city to the site of Zohr field. The operations were safely implemented according to the set schedule. Obstacles obstructing the route of the operations were surmounted through engineering solutions for all obstacles which confirmed ETAL's superiority in this field. In cooperation with ENPI Petroleum Consultancy Company, ETAL also transported the equipment of the expansion project of Anarbek Petroleum Company in Alexandria and provided engineering solutions for all the obstacles that obstructed the difficult route of the large parcels within the city of Alexandria. The project was implemented safely and on time. ETAL also transports the equipment of the Phosphate Fertilizer Complex in Ain Sokhna, which is one of the largest petrochemical projects currently being implemented. It is implemented with high efficiency and full commitment to the timings specified in the timetable. The project is still under implementation and will be completed in EGYTRANS Depot Solutions(EDS) has been able to complete the excellence march it has pursued since its inception in the field of providing the services of ISO tank. The company confirmed to all its customers during 2017 its qualification and merit of the distinguished status it achieved in this field through continuous development and constant training to reach effective and innovative solutions. This led the company to move forward and reach a new stage of development and gain the confidence of all its customers after making sure that our company has great potentials and ability to implement the best international standards recognized in this field. Some ISO tank owners have made accurate reviews of EDS and the result is outstanding. This contributed to the 5

6 Annual Report 2017 increase of the number of tanks of those companies including Newport and Stolt, international companies that have been dealing with us for a long time. We managed to achieve new figures during 2017 in terms of numbers of tanks that reached 3134, with an increase of 170 tanks compared to the year It is worth mentioning that the number of tanks that arrive to EDS annually or monthly represents 60% at least of the number of tanks within the Egyptian market during the same period. EDS has also started trials and experiments to add new activity, namely the provision of LPG container services, which transport compressed materials known as gas tanks. We have already been able to reach some service providers in this field and we have conducted many maintenance operations of this type of tanks and we will continue and outreach more. We can confidently say that EGYTRANS Depot Solutions is the leading company that has added a lot to the ISO tank services. It provided a great opportunity for oil and chemical plants and ISO tank owners to increase the volume of their work within the Egyptian market. The company is working on the development of the service to put EDS in the forefront. 6

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8 Annual Report About Us The Egyptian Transport and Commercial Services Company S.A.E. was established in December 1973 under Egypt s open door policy with regard to private enterprises. However, its transport activities and experience date back to 1939 as a continuation to GAMAL EL DIN LEHETA & CO. EGYTRANS was nationalized in 1964 when it was one of the biggest companies in EGYPT offering shipping agency, tourism agency and other transport services. The company was originally established as a limited liability company with a capital of EGP 10,000. It is now a corporation with capital of LE 56,064 million. Since its inception it has grown into a true leader in the transport field in Egypt with three hundred and fifty employees and eight branches in strategic locations close to the country's main ports, airports and transport centers. EGYTRANS provides various services in the field of integrated transport including the following: Sea Freight )Import/Export/Consolidation/Chartering/NVOCC/Stevedoring) Air Freight (Import/Export/Consolidation) Customs Clearance Warehousing Land Transport Specialized Transport Project Logistics Fairs & Exhibitions Distribution Packing Insurance Commercial Services The company provides additional services through affiliated companies such as Barwil EGYTRANS which was established in 1996 in association with WILH WILHEMSEN in Oslo, Norway., one of the world's largest international shipping agency networks, and Scan Arabia originally established as a shipping agency specializing in serving liner principals with unique requirements. Our Mission We make integrated transport easy, safe and cost-effective for business and people. Our Vision We will be the preferred partner for integrated global transport services and solutions in Egypt, offering the best value to customers, employees and shareholders. Our Values Integrity Professionalism Commitment to Customer Success Innovation Quality Teamwork Learning & Personal Growth Building partnerships Social Responsibility Occupational Health & Safety For further information, please visit our IR website: EGYTRANS Code of Ethics and Professional Conduct For further information, please visit our IR website: 8

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10 Annual Report Performance in Important Indicators First: Quality Percentage of Customers Complaints that were solved in customers satisfaction 0% 20% 40% 60% 80% 100% 120% % 85% 100% 100% 100% 100% 100% 100% 95% 92.50% Second: Human Resources 1. Percentage of Employees Turnover 0% 2% 4% 6% 8% 10% 12% 14% 16% % 5.6% 5.59% 6.85% 6.7% 7.08% 8% 8% 9.30% 11% 11% 13.8% 10

11 Annual Report Number of Employees who benefited from Training Courses Fourth: Financial Indicators The most important Financial indicators for the financial year ending in 31/12/2017 A- Financial Indicators 1) Turnover reached EGP compared to EGP for the previous year at an increase of EGP or 70.8%. 2) Gross profit reached EGP compared with EGP for the previous year at an increase of EGP or %. 3) Operating Profit reached EGP compared with EGP for the previous year at an increase of EGP or %. 4) EBITDA reached EGP compared with EGP for the previous year at an increase of EGP or %. 5) Net Profit/Loss reached EGP compared with a net profit EGP for the previous year at an increase of EGP or 69 %. 6) Earnings per Share reached EGP 1.86 compared with EGP 1.10 for the previous year. 11

12 Annual Report EGP 2016 EGP Difference % Turnover % Gross Profit % (EBITDA) % Net Profit/Loss (after tax deduction) % Earnings per share % Net Fixed Assets ( ) (2.1) % Cash in banks & funds % Equity % B- Financial Ratios for 2017 Return on Invested Capital Return on Equity Rate of Capital Turnover (time) Index Trading (time) The Proportion of gross Profit / revenues The Proportion of Profit before tax/total revenues % % % % % 19.9 % % 28.3 % Return on Invested Capital 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% % % 12

13 Annual Report 2017 Return on Equity 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% % % Capital Turnover (time) Index Trading (time)

14 Annual Report 2017 Gross Profit/ Revenues 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% % % Profit before tax / Total Revenues 26.00% 27.00% 28.00% 29.00% 30.00% 31.00% 32.00% 33.00% % % 14

15 Annual Report Major Events January - Under the auspices of HE. Prime Minister, Amwal Al-Ghad magazine held its annual summit on 30 January 2017 for the best 100 companies in the Egyptian market and the 50 most influential women in business foundations for 2016, with the participation of 6 ministers and 700 executive leaderships from major foundations and companies operating in the Egyptian market and some public figures. The Magazine aimed to highlight the mounting development and volume of corporate contributions to Egypt s GDP, especially with the diverse sectoral distribution of business activities. Minister of Trade and Industry, Eng. Tarek Kabeel, honored the companies, on behalf of HE Prime Minister, Eng. Sherif Ismail, in the presence of an array of ministers. EGYTRANS was awarded a prize as one of the best 100 companies in the Egyptian market; and Eng. Abir Leheta was awarded a prize as one of the 50 most influential women in business foundations for February: - Appointment of Mr Hisham Mahmoud Youssef, Human Resources Director An overview: Date and Place of Birth: 80/08/1976, Cairo. Qualifications: International MBA (2015) Human Resources Diploma from the AUC (2003). B.Sc., Faculty of Commerce, English Section, Accounting Division, Helwan University. Previous Experience: Experience in the field of human resources management for more than 17 years in industrial, commercial, hotel, and consulting firms. He occupied the post of head of human resources sector in several companies. 15

16 Annual Report 2017 March: - The Ordinary General Assembly Meeting was held on Tuesday, 28th March 2017 at 2:30 PM at Fairmont Heliopolis Hotel, Pearl Ballroom. Following are the GA resolutions: 1. Approval of the BOD s report on the Company s activities and financial position on 31/12/ Approval of both auditors reports on the financial statements for the fiscal year ending on 31/12/2016 as well as the company s response and comments on the reports. 3. Approval of the memorandum on formation of provision for doubtful loans. 4. Approval of the financial statements for the fiscal year ending on 31/12/ Approval of dividend distribution for the fiscal year ending on 31/ Release of the Chairman and Board members from their liabilities for the fiscal year ending on 31/12/ Approval of renewal of the membership of the Board of directors according to the same composition for three years. 8. Approval of attendance and transport allowances and remuneration for the Chairman, Board members and members of the sub-committees for Appointment of Mostafa Shawki & Co.as auditors for the Company and determination of their fees for the fiscal year ending on 31/12/2017. The fees for Central Auditing Organization were set for the fiscal year ending on 31/12/ Approval of the Board s recommendation to support the capital reserve to cover the investment plans of the Company. 11. The Board was authorized to donate during 2017 an amount of EGP in addition to an amount of EGP for corporate social responsibility. 12. Approval of all compensatory contracts, other contracts, and transactions with related parties during 2016; authorizing the Board to conclude all compensatory contracts, contracts, and transactions with related parties during All items on the agenda were addressed and the Ordinary General Assembly Meeting ended at 4:30 PM. 16

17 Annual Report Compensatory contracts are contracts that results in a free administrative obligation among the contracting parties to mutually fulfill their counter- obligations to own a property, get benefits or services, or acquire a material right against a price. Article (99) of Law no.159/1981 concerning joint-stock companies has stipulated the following: (Any founder of the company, during the five years subsequent to its foundation, or any Board member may not, at any time, become a party in any of the compensatory contracts submitted the Board for approval, unless the General Assembly approves this action a priori; any contract concluded in violation of the provisions of this article shall be considered null and void). Item (8) of Article (217) of the Executive Regulation of Law no.159/1981 stipulates that the Ordinary General Assembly ( shall authorize in advance the founders and Board members to conclude compensatory contracts with the Company, provided that this authorization shall be for each contract separately). According to the provisions of this Article, the Ordinary General Assembly had decided in its session held on 28 th March 2017 adoption of all the compensatory and other contracts, and transactions with related parties in 2017; and authorized the Board of directors to conclude compensatory and other contracts, and transactions with related parties during Compensatory contracts and transactions with related parties were concluded as follows: (1) Compensatory contracts with sister companies Company Name Contract value Barwil EGYTRANS for Shipping Agencies $ 50, (2) Compensatory contracts with subsidiaries Company Name Contract value Egyptian Transportation and Logistics Company (ETAL) EGP 1,641,154 EGYPTRANS Depot Solutions $ 40, April: - EGYTRANS participates for the first time with a pavilion in Break Bulk 2017 held during the period from April in Antwerp City, Belgium. Break Bulk is considered the largest fair internationally in the area of project logistics and handling of public goods. The Fair annually hosts 7600 visitors and participants and more than 4000 exhibitors from major goods providers, navigation lines, shipping and logistics companies, equipment manufacturers, and specialists in the logistics of project and atypical goods. The participation of EGYTRANS captured the attention of visitors and all companies in the same business, especially with the substantial turnover in 2016 where EGYTRANS had the lion s share. The Company had interviews with current and target agents and suppliers. 17

18 Annual Report The Chairman attended the Industrial and Commercial Investment Conference of the Belt and Road Countries entitled Egypt, the gateway to the Silk Road at Marriott Hotel during the period from 1-2 April The Conference underlined that Egypt aims, through its accession to the Belt and Road Initiative, to strengthen the commercial and investment presence of its trade partners in the different priority sectors in the Egyptian economy under the related projects in these sectors. Egypt further aims through this initiative to contribute to giving momentum to regional integration through free trade agreements between Egypt and African countries and communities; exploit the geographical and economic diversity; become a source of power and occupy a unique position among regional and international communities and blocs. - The Human Resources Department developed a training plan, during 2017, consistent with the Company s strategy. The goal is to fully utilize customers satisfaction. To attain this end, we contracted with Global Terminology, one of the best companies that provide this type of programs. The overall satisfaction rate exceeded 85% in terms of the program and its content. o Professionalism in dealing with the customers: May: Mrs. Rania Farouk, Acting Corporate Governance and Sustainability Manger, attended on Wednesday, 17 th May 2017 the proceedings of the seventh workshop in a series of workshops on SMEs Governance organized in cooperation with IFC, member of the World Bank Group. The workshop aims to provide SMEs and family businesses with information and optimal tools to apply corporate governance, with a great impact on the efficiency and sustainability of these companies. A great number of family businesses and SMEs attended the workshop, which was reflected in the useful discussions on the topic of the workshop, practical cases, and case studies discussed with the trainers. 18

19 Annual Report Eng. Abir Leheta, Chairman & CEO, and Mr. Sherif Helmy, Treasury Department Director and Investors Relations Manager attended CI Capital MENA Investor Conference, held in Sheraton Gouna, in the period from May The purpose was to respond to the request of foreign investors to meet EGYTRANS representatives to invest in its shares through the investment funds. June: 1. The employees profits for 2016 were disbursed. 2. Communication with the employees is one of the main criteria that influence and facilitate the course of business. During the past year, the Human Resources Department introduced a new event to strengthen this principle through a group iftar to all employees. The employees were divided according to the regions. Employees at Damietta, Port Said, Alexandria, and Margham branches were invited to Hilton Alexandria Hotel on Friday, 9 th June. Employees from the Airport, Suez, and Mohanedessin branches were invited to Kempinski Nile Hotel on Friday, 16 th June. 19

20 Annual Report EGYTRANS was invited to the annual iftar of UN Global Compact Network Egypt chaired by Mr. Mohammed El-Fouly, CEO, at Semiramis Intercontinental Hotel, Cairo. An array of international organizations, such as UNDP, the regional office of UN Woman, and other programs attended the iftar. Several companies and foundations, members of UN Global Compact in Egypt attended as well. Mrs. Rania Farouk, Acting Corporate Governance and Sustainability Manager, attended on behalf of the Company. The theme of iftar this year was Business management amid peace. July: EGYTRANS issued its 8 th UN Global Compact Communication on Progress Report in July It is noteworthy that EGYTRANS joined UN Global Compact on 25 th August The UN Global Compact is a framework that allows the committed commercial institutions to align their operations and strategies with ten internationally recognized principles in the areas of human rights, labor, environment, and fighting corruption. The Compact is the largest international initiative to create a corporate sense of citizenship; where thousands of people from more than 100 countries from the whole world participate. To have access to the report, please visit the investors relations website under the following link: 20

21 Annual Report 2017 August: Organizing events to honor the retirees: For the first time, the Human Resources Department organizes events to honor the retirees. Throughout the past year, 6 employees were honored as they reached the retirement age and this was in the presence of Human Resources Director as an essential member in this ceremony. Eng. Abir Leheta Chairman & CEO, Mr. Khaled Hussien, the branch manager and some colleagues attended some of these events. September: Eng. Abir Leheta Chairman & CEO and Mr. Sherif Helmy, Treasury Department Director and Investors Relations Manager, attended Arqam Capital Conference at Four Seasons Dubai during the period from September The purpose was to respond to the request of foreign investors to meet the representatives of EGYTRANS to invest in its shares through the investment funds. October: EGYTRANS provided all the supplies for South Helwan Power Plant from MHI supplier. The company transported all supplies and stored inside the company s yard in Adabiya Port in addition to the unloading of ships in Adabiya and Alexandria ports. 21

22 Annual Report 2017 November: - In view of the policy adopted within the company, namely rehabilitation and development of employees to rely on them to occupy senior positions in the company and limit reliance on foreign labor, as much as possible, the company worked on the development of its promising cadres, each in his /her field of work. The company contracted with American Chamber of Commerce to train 12 employees from different departments. The training material was agreed upon to realize the best utmost benefit within the least possible time. The overall satisfaction of the employees about the program exceeded 85%, which is a satisfactory percentage as the first phase of this project. Phase II is still in the pipeline. The target attendees are the higher occupational level. o Development of supervisory and leadership skills: - Eng. Mohammed Hamdeen, Systems and Network Administrator/ Team Leader at EGYTRANS, obtained, under the sponsorship of EGYTRANS, a certificate in development of administrative and leadership skills after attending Developing Leadership Skills Course at Career Development Center, affiliated to American Chamber of Commerce in Egypt. 22

23 Annual Report 2017 December: - El-Araby Group organized its 4 th Conference for Foreign and Local Suppliers in Hurghada on 9 and 10 December with the presence of General Ahmed Abdullah, Red Sea Governor, and Eng. Ahmed Abdel Razk, Chairman of Industrial Development Authority (IDA), with purpose to encourage investment, attract new investors, enhance partnerships, and discuss economic transformations and challenges. Eng. Mohammed El-Araby, CEO of El- Araby Group, and more than 270 foreign investors of different nationalities from the following countries (Egypt, Japan, Italy, China, Korea, Jordan, Malaysia, Turkey, Singapore, Taiwan and Thailand) attended the conference. During the conference, Al- Araby Group honored the best suppliers. EGYTRANS was awarded the prize of the best logistics partner for Eng. Medhat El-Araby, Chief Supply Chain Officer Sector and the Managing Director of El-Araby for Visual Products, delivered the prize. - Eng. Mohammed Hamdeen, Systems and Network Administrator/Team Leader at EGYTRANS, attended Cairo ICT Conference, which is considered the annual forum for IT companies in Egypt. He attended the conference on 6 th December. 23

24 Annual Report Most Significant Projects in EGYTRANS implements Gamesa Wind Station for New and Renewable Energy: Egyptian Transport and Commercial Services Company (EGYTRANS), S.A.E., handled several tasks, namely, transport, discharge, and storage in its warehouses, and the re-transport related to the wind farms in Gabal El-Zeit according to the contractual agreement signed in November The company pursued work in this project until March These works amount to nearly 40,000 ton nylon. 2. Kima Aswan Project Egyptian Transport and Commercial Services Company (EGYTRANS), S.A.E., handled the customs clearance, discharge, and transport tasks for the first phase of Kima Aswan (The Egyptian Chemical Industries Company) Project according to the contractual agreement signed in July The company pursued work in this project until June These works amount to about 20,000 ton nylon. 24

25 Annual Report Power plants in the New Administrative Capital and Beni Suef Egyptian Transport and Commercial Services Company (EGYTRANS), S.A.E., handled several tasks, namely, transport, discharge, and storage in its warehouses, and the re-transport related to the power plants of the new administrative capital and Beni Suef according to the contractual agreement signed in April The company pursued work in this project until January These works are estimated at about 500,000 ton nylon. 4. Nasr Company for Intermediate Chemicals (NCIC) Project Egyptian Transport and Commercial Services Company (EGYTRANS), S.A.E., handled several tasks, namely, transport, discharge, and storage in its warehouses, and the re-transport related to NCIC for Sulfuric Acid according to the contractual agreement signed in the second half of The company pursued work in this project until August These works are estimated at about 80,000 ton nylon. 5. Electric transformers project in Gulf of Suez Egyptian Transport and Commercial Services Company (EGYTRANS), S.A.E., handled several tasks, namely, transport, discharge, and storage in its warehouses, and the re-transport related to Electric Transformers project in Gulf of Suez according to the contractual agreement signed in the second half of The company pursued work in this project until August These works are estimated at about 15,000 ton nylon. 25

26 Annual Report Management analysis of the key developments in 2017 I. Analysis of the key achievements of Human Resources Department in 2017 Organizational Structure No amendments or adjustments in the organizational structure in Hiring and Appointment Turnover of employees Company EGYTRANS ETAL EDS Total appointments Total resignations Total workforce Turnover 5.6% 7.3% 8% Appointments at the administrative level: o Appointment of Mr. Hisham Mahmoud Human Resources Director. Training Training Data: o Total training cost ( EGP 83,959) o Training hours ( 5192 hours) o No. of training programs ( 16 programs) o No. of trainees ( 48 trainees) Key training programs: o Role of investor relations officer o Board Member Skill Development o Institutional risk management and crisis management o Leadership and Supervisory Skills Development o Professionalism in dealing with the customer Personnel and Benefits Disbursement of 2017 bonuses and announcement of promotions. Disbursement of 2016 profits to all staff. Settlement of the balance of accumulated vacations from 2003 to A plan had been set to exhaust the 2017 balance of vacation days during the first quarter of 2018; and to issue instructions to exhaust the vacation balance and not to be carried forward. Renew the contract of MetLife Egypt that provides (life insurance) service. Renew the contract of GlobeMed that provide healthcare benefits to the staff. 26

27 Annual Report 2017 II. Analysis of the Commercial Sector: The economic decisions taken by the government late 2016, such as exchange rate liberalization, floating of Egyptian pound, implementation of VAT Law, and interest rate increase, had a substantial impact on 2017; in addition to the legal amendments on the Investment Law, Customs, and investors registry. Indicators varied between positive and negative. Imports declined by 10%, and the value of foreign trade declined as well, whereas the deficit in Trade Balance decreased, the non-oil exports increased by 15%, the cash reserve reached safe levels, and hard currency was provided to satisfy the needs of the private and business sectors. For the second year in a row, EGYTRANS managed to maximize and reap profits that exceeded the realized profits in 2016 by 140% with gross profit of EGP 99,293,478 in 2017 against EGP 41,281,168 in 2016 as the company managed to maintain its market share through the project activity to exceed 60% as well as the growth of its typical activities despite the decrease in the volume of world trade and traded goods. Total Gross Profits 99,293,478 41,281,168 43,400,000 Actual 2016 Actual 2017 Target 2017 Projects: The project activity had the lion s share of profits where the total gross profits amounted to EGP 69,505,435, i.e. 70% of the total gross profits of 2017, for the second year in a row. This was the outcome of completion of a package of projects contracted in 2016, mainly, the power 27

28 Annual Report 2017 plants in Beni Suef and the new administrative capital, Gabel El-Zait, and south Helwan, in addition to the petrochemicals complex in Sokhna, and several small projects. Operations (branches): Though the projects had the lion s share of profits, yet the operations and sales witnessed a remarkable growth during 2017 where the total profits amounted to EGP 29,788,043 against EGP 20,034,646 in 2016 with an increase of 49%. This is attributed to retention of customers and inclusion of new customers across all services. BZ Units Share Branches 30% Projects 70% 28

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31 Annual Report Company structure Overview of the economy and the stock market The international economic reports praised the recovery of the Egyptian economy during 2017, and confirmed the success of the economic reform program, which the Egyptian government started on 3 November 2016, describing it as the most important reform in the history of the Egyptian economy. Several reports issued by the World Bank during the last month lauded the economic reform measures taken by Egypt, the latest of which was the World Bank's commendation of the Egyptian economic reform program, stressing that it is on the right track and that economic reform measures vehemently brought Egypt back to the global investment map. It referred to the huge financial investments pumped into the Egyptian economy during the past period, which significantly supports future growth rates. This was confirmed by the government's actions at this time to implement the economic reform program which aims to address the exchange rate regime, rationalize imports, increase the volume of exports, and restructure the subsidy system provided for both supply commodities and fuel. A report issued by the Oxford International Economic Group revealed that many international companies announced their plans to expand their activities in Egypt and to use as a regional manufacturing hub against the backdrop of implementing the reform program. The report pointed out that this optimism about the future of the Egyptian economy stems from developments and updates of the economic and investment environment. These developments helped make the best use of the traditional competitive advantages of the Egyptian economy represented in the large size of the market, availability of skilled labor, the low cost, and the strategic location of Egypt and its impact on trading in the stock markets of Cairo and Alexandria during the year The stock market has become the true mirror of the national economy. Concerted efforts were exerted to manage the company in a way that enables it to achieve its objectives during the past year. This led to a rise in the share price, which started this year at EGP 5.13 and reached its highest price of LE per share; this effect shall be demonstrated in the report to be presented later on. Share Performance: The shares move toward a bullish trend in the short, medium and long terms. Technical indicators such as relative strength index and stochastic oscillator show that the shares are performing well. The shares managed to achieve resistance level of EGP 14 and to surpass it to target EGP It is worth mentioning that through this bullish trend they are projected to reach EGP 17. As for technical indicators, we note the beginning of a positive reversal on both the RSI and the ownership indicator with the increase of the volume and value of trading. This shall appear in the subsequent reports. Explanation and analysis - : The share closed at EGP12.65 on 31/12/2017, analyzed as follows: Stop- loss point: EGP

32 Annual Report 2017 Price floor: EGP 4.01 Price ceiling: EGP While the Egyptian Stock Exchange closed at the following levels on 31/12/ : EGX 30 closed at points. EGX 70 at points. EGX 100 at points. The evolution of the shares in the following chart shows the price of the share and the average monthly price as follows: Shares Report Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. Closing Price

33 Annual Report 2017 The value of trading during the year was about EGP distributed monthly according to the following statement: 300, , , , , , Trading Value circulation value While the volume of trading during the year was 127,107,417 shares as follows - : 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Trading Volume Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec. 33

34 Annual Report 2017 Share Report Highest Price Lowest Price Trading Volume Trading Value Closing Price 0.00 Historical share performance on December 31, 2017 Item Change Change % Ceiling Floor Average trading volume Average transactions The first week of the year Month Last quarter Year Free trade percentage Item Shares Percent Free trade shares % Other shares % 34

35 Annual Report 2017 Percentage of Free Trading 43% 57% Free Float Shares Other Shares Structure of shareholders in 2017 National Investment Bank Investors Mohammad Ashraf Omar Omar Motafa Sayed Eisa Mostafa Egyptian National Bank Abeer Wael Seddiq Lehata Heba Wael Seddiq Lehata Amany Wael Seddiq Lehata Tarek Amin Malash Mohammad Kamel PENSION RESERVE INVESTMENT MANAGEMENT BOARD LINCOM INVESTMENTS PL0A POLUNIN DISCOVERY FUNDS FRONTIER MARKETS FUND Gamal Abdel Kader Abdel Basir Investors TOTAL Balance Percentage

36 Annual Report 2017 Shareholder Structure in 2017 NATIONAL INVESTMENT BANK MOHAMED ASHRAF OMAR OMAR MOSTAFA SAYED ISSA MOSTAFA 28% 25% NATIONAL BANK OF EGYPT ABIR WAEL SIDDIQ LEHETA HEBA WAEL SIDDIQ LEHETA AMANY WAEL SIDDIQ LEHETA 1% 1% 2% 3% 15% TARIQ AMIN MALASH MOHAMED KAMEL PENSION RESERVE INVESTMENT MANAGEMENT BOARD 3% LINCOM INVESTMENTS 3% 4% 4% 5% 6% PL0A POLUNIN DISCOVERY FUNDS FRONTIER MARKETS FUND GAMAL ABDEL QADER ABD ELBASIR INVESTORS 36

37 Annual Report 2017 Disclosures during 2017 Disclosure Date Summary of Board of Directors Decisions 11 / 1/2017 Disclosure Form of the Board of Directors and Shareholders' Structure pursuant to Article (18) of the stock listing rules, until 31/12/ /1/2017 Summary of Board of Directors Decisions 19/1/2017 Statement of Customers Shares 26 / 1/2017 A statement of the amendment of the Company's executives 9/2/2017 A statement regarding the Company's investments 26/2/2017 Summary of Board of Directors Decisions 26/2/2017 Summary of Board of Directors Decisions 8/3/2017 The results of the non - consolidated business (form 40) for the fiscal year ending on 31/12/ /3/2017 Invitation for convention of the Ordinary General Assembly 12/3/2017 Summary of decisions of the Board meeting 12/3/2017 The results of the consolidated financial statements for the year ending on 31/12/2016 The memorandum of approval for the distribution of profits for the fiscal year ending on 31/12/2016 The report of the Central Auditing Organization for the fiscal year ending on 31/12/ /3/ /3/ /3/2017 Statement of amendment of one of the representatives of the Board members 23/3/2017 The company's response to the report of the Central Auditing Organization on the financial statements ending on 31/12/ /3/2017 Summary of Ordinary General Assembly Decisions 29/3/2017 Minutes of the ordinary general assembly meeting (undocumented) 4/4/

38 Annual Report 2017 Disclosure Disclosure Form of the Board of Directors and Shareholders' Structure in implementation of Article (18) of the stock listing rules for the First Quarter of 2017 Date 4/4/2017 Disclosure Form of undisclosed substantial events 19/4/2017 Minutes of the Ordinary General Assembly Meeting (documented) 26/4/2017 Summary of the Board of Directors Decisions 7/5/2017 Summary of the Board of Directors Decisions 14/5/2017 Indicators of independent and unaudited turnover of the company 16/5/2017 Announcement of dividend distribution 16/5/2017 Consolidated turnover indicators 24/5/2017 Consolidated turnover for 3 months 30/5/2017 Central Auditing Organization Report on Financial Statements 30/5/2017 A statement from the company regarding the results for the period ending on 31/3/2017 in Arabic and English 8/6/2017 A statement of the latest developments in the company 21/6/2017 Disclosure Form of the Board of Directors and Shareholders' Structure in implementation of Article (18) of the stock listing rules for the Second Quarter 10/7/2017 Amendments in the composition of the Board members 24/7/2017 Results of Independent and unaudited turnover for 6 months 7/8/2017 Results of Independent and audited turnover for 6 months 15/8/2017 Summary of the Board meeting decisions 15/8/2017 Board of Directors Report for the Second Quarter of /8/2017 Summary of the Board decisions 23/8/2017 Decision of the Listing Committee 24/8/

39 Annual Report 2017 Disclosure Central Auditing Organization Report on Independent Financial Statements for the Second Quarter Date 27/8/2017 Consolidated turnover for 6 months 29/8/2017 Central Auditing Organization Report 30/8/2017 Disclosure report of the Board of Directors and Shareholders' Structure in implementation of Article (18) of the stock listing rules for the third quarter 10/10/2017 A statement of the customers shares 16/10/2017 A disclosure report on undisclosed substantial events 24/10/2017 Independent unaudited turnover for 9 months 2/11/2017 A statement of customers shares 7/11/2017 Amendment in composition of Board members 13/11/2017 A form for investor relations officer 13/11/2017 Summary of Board decisions 16/11/2017 Unconsolidated turnover and the report of the Board of Directors for the third quarter 16/11/2017 Amendments in the composition of the Board of Directors 19/11/2017 Decision of the Listing Committee 23/11/2017 A statement of the company regarding the results of the unaudited consolidated financial statements for the third quarter 26/11/2017 Report of the Central Auditing Organization 27/11/2017 Correction of the independent financial statements for the third quarter 27/11/2017 Response of the company to the report of the Central Auditing Organization 28/11/2017 Consolidated turnover for the last quarter 3/12/2017 The decision of the Listing Committee 14/12/2017 Summary of Board decisions 31/12/

40 Annual Report Board of Directors Board Composition Members and Composition of the Board of Directors At the beginning of 2017, the Board of directors was formed comprising 9 members (one executive, 4 non-executive members and 4 experienced independent members) as follows: 4. Eng. Abir Wael Leheta Chairman & CEO (Executive Member) 5. Mr. Ahmed Ismail Board Member (non-executive member - representative of the National Investment Bank) 6. Ms. Awatif Sultan - Board Member (non-executive member - representative of the National Investment Bank) 7. Eng.Abdel Rahman Al-Khana - Board Member (non-executive member shareholder) 8. Dr. Heba Wael Leheta - Board Member (non-executive member shareholder) 9. Mr. Hassan Ahmed Atta- Board Member (experienced independent member) 10. Dr. Amr Qais Al-Rai Mohamed Attia- Board Member (experienced independent member) 11. Dr. Mohga Abdel Rahman Badran - Board Member (experienced independent member) 12. Mr. Alfred Asil - Board member (experienced independent member) Then, the National Investment Bank delegated Mr. Mohammad Niazy Mohammed Maabed to represent it in the board of directors in succession of Ms Awatif Sultan in April The rest of the composition of the board of directors remained as is without any change as follows: 1. Eng. Abir Wael Leheta Chairman & CEO. 2. Mr. Hassan Ahmed Atta- Experienced independent member. 3. Dr. Mohga Abdel Rahman Badran Experienced independent member 4. Dr. Amr Qais Al-Rai Attia- Experienced independent member. 5. Mr. Alfred Asil Anis Rizk Experienced independent member. 6. Dr. Heba Wael Leheta - Non-executive member. 7. Mr. Mohamed Niazy Mohammed Maabed - Non-executive member, representative of the National Investment Bank. 8. Mr. Ahmed Abdel Ghani Ismail - Non-executive member,representative of the National Investment Bank. 9. Eng.Abdel Rahman Al-Khana - Board Member (non-executive member shareholder) Eng. Abdel Rahman Al-Khana later resigned from the board of directors on 20 July 2017 for personal reasons; there were no other changes in the structure of the board of directors. The Board approved his resignation in its 9 th session on 14 August Thus the Board comprised 8 members as follows: 1. Eng. Abir Wael Leheta Chairman & CEO. 2. Mr. Hassan Ahmad Atta- Experienced independent member. 3. Dr. Mohga Abdel Rahman Badran Experienced independent. 4. Dr. Amr Qais Al-Rai Attia- Experienced independent member. 5. Mr. Alfred Asil Anis Rizk Experienced independent member. 6. Dr. Heba Wael Leheta - non-executive member. 7. Mohamed Niazy Mohamed Maabad - Non-executive member, representative of the National Investment Bank. 8. Mr. Ahmed Abdel Ghani Ismail - Non-executive member, representative of the National Investment Bank. 40

41 Annual Report 2017 The Board unanimously decided at its 11th session for 2017 on 14 November 2017 to approve the inclusion of Eng. Mohamed Ashraf Omar into the Board of Directors (a non-executive member and a shareholder) as of this date. The Board was to be as follows: 1. Eng. Abir Wael Leheta Chairman & CEO. 2. Mr. Hassan Ahmed Atta- Experienced independent member. 3. Dr. Mohga Abdel Rahman Badran Experienced independent member. 4. Dr. Amr Qais Al-Rai Attia- Experienced independent member. 5. Mr. Alfred Asil Anis Rizk Experienced independent member. 6. Dr. Heba Wael Leheta - non-executive member. 7. Mr. Mohamed Niazy Mohammed Maabad - Non-executive member, representative of the National Investment Bank. 8. Mr. Ahmed Abdel Ghani Ismail - Non-executive member, representative of the National Investment Bank. 9. Mr. Mohamed Ashraf Omar - non-executive member. On December 31, 2017, Mr. Alfred Asil resigned from the Board and the Board composition became as follows: 1. Eng. Abir Wael Leheta Chairman & CEO. 2. Mr. Hassan Ahmed Atta- Experienced independent member. 3. Dr. Mohga Abdel Rahman Badran Experienced independent member. 4. Dr. Amr Qais Al-Rai Attia- Experienced independent member. 5. Dr. Heba Wael Leheta - non-executive member. 6. Mr. Mohamed Niazy Mohammed Maabed - Non-executive member, representative of the National Investment Bank. 7. Mr. Ahmed Abdel Ghani Ismail - Non-executive Member and Representative of the National Investment Bank. 8. Mr. Mohamed Ashraf Omar - non-executive member. To view the detailed CVs of the Board members please refer to our investors' relations website 41

42 Annual Report 2017 Eng. Abir Wael Leheta Chairman & CEO Dr. Amr Qais Al-Rai Attia- Independent member Dr. Mohga Abdel Rahman Badran - Independent member Dr. Heba Wael Leheta - non-executive member (shareholder) Mr. Mohamed Niazy Mohammed Maabed - Non-executive member representing the National Investment Bank Mr. Hassan Ahmed Atta- Independent member Mr. Ahmed Ismail - Non-Executive Member representing the NIB Mr. Mohamed Ashraf Omar - non-executive member (Shareholder) Mr. Alfred Asil Anis Rizk - Independent member 42

43 Annual Report Board meetings during 2017 No DATE Venue TIME 1 8/1/2017 Emerald Hall at the Fairmont hotel in Heliopolis 2 19/1/2017 Mohandiseen branch 4 pm % OF ATTENDEES NOTES 4 pm 9 out of 9 9 out of /2/ /3/2017 By (meeting by circulation) By (meeting by circulation 5 pm 5 pm 9 out of 9 9 out of 9 5 9/3/2017 Mohandiseen branch 5 pm 6 out of /4/2017 Mohandiseen branch 5 pm 8 out of 9 Eng. Abdel Rahman Al- Khana Mr. Mohammad Niazy 7 6/5/2017 By (meeting by circulation) 10 am 9 out of /5/ /8/2017 Headquarters at Port Said Headquarters at Port Said 2:30 pm 3 pm 8 out of 9 7 out of 8 Eng. Abdel rahman Al khana Mr. Alfred Asil 10 22/8/2017 By (meeting by circulation) 5 pm 8 out of /11/2017 Headquarters at Port Said 3 pm 7 out of 8 Dr. Heba Leheta 12 28/2/2017 Headquarters at Port Said 3 pm 9 out of 9 43

44 Annual Report The financial entitlements of the CEO and members of Board and the chairpersons and members of the committees affiliated to the Board of Directors during 2017 Entitlements including rewards and attendance and transport allowances of the Board members and members of the committees during the period from 1/1/2017 till 31/12/2017 Name Status Rewards Attendance allowance Transport allowance Total Dr. Heba Leheta Non-executive board member and shareholder Mr. Alfred Asil Anis Rizk Independent Board Member Eng. Abir Wael Leheta CEO and Managing Director (incumbent ) Dr. Amr Qais El-Rai Experienced independent Board Member Mr. Hassan Atta Independent Board Member Dr. Mohga Abdel Rahman Badran Independent Board Member Eng. Abdel Rahman Mohammed Saleh Al - Khana Ms. Awatif Abdul Latif Sultan Mr. Ahmed Ismail Mr. Mohammed Nayazi Mr. Hussein Ahmed Abdel Fattah Eng. Mohamed Ashraf Omar Independent Board Member and shareholder Non-executive Member Directors and representative of the National Investment Bank Non-executive Member Directors and representative of the National Investment Bank Non-executive Member and representative of the National Investment Bank Non-executive Member of the Board of Directors and representative of the National Investment Bank Non-executive Board Member and shareholder Total 1,500,000 26, ,

45 Annual Report Board Committees 2-1- Audit and Corporate Governance Committee Composition and Functions Following is the composition of the Audit and Corporate Governance Committee during 2017: Mr. Hassan Atta- Independent Board Member - Chairman. Mr. Ahmed Ismail - Non-Executive Board Member - Member (NIB representative). Dr. Amr Qais - Independent Board Member - Member. Mr. Mohamed Niazy - Non-Executive Board Member Member (NIB representative). - The Committee held 14 meetings during The Audit and Corporate Governance Committee has always observed the agenda of the events of EGYTRANS, which included the issuance of disclosure reports on the most important activities and recommendations issued by the Committee on a quarterly basis and the most important responses received from the Board of Directors, which are sent to the Disclosure Department of the Stock Exchange. - The Audit and Corporate Governance Committee, in coordination with the Board of Directors, follows up the recommendations issued by the Board of Directors in the form of instructions given to the executive departments, and through a periodic follow-up report submitted to the Committee at its meeting, and measures taken to effectuate the recommendations of the committee and the instructions of the Board. - The Audit and Corporate Governance Committee receives and discusses quarterly audit reports developed by both the Quality Assurance and Risk Management Department and Internal Audit Department, where each conducts audits and prepares reports. The audits of the first department focus on implementation and the latter focuses on the procedure and the completion of documents. 45

46 Annual Report 2017 Non-members of the Committee who attended the meetings during the year together with the External Auditor: Chairman & CEO. General Manager of the company. Accounts Manager. Planning and Financial Analysis & Treasury Manager. Internal Audit Manager. Secretary of the Committee during 2017: Mrs. Rania Farouk Bastawissi, Secretary of the Committee and Acting Corporate Governance and Sustainability Manager. Table of Audit and Governance Committee Meetings during 2017: No. of meeting DATE VENUE TIME % OF ATTENDANCE Absent members 1 Meeting No. 1 23/02/2017 EGYTRANS branch, Mohandiseen 12:30 pm 2 out of 3 Dr. Amr Qais Al-Rai 2 Meeting No. 2 07/03/2017 EGYTRANS branch, Mohandiseen 10:30 am 2 out of 3 Dr. Amr Qais Al-Rai 3 Meeting No. 3 09/03/2017 EGYTRANS branch, Mohandiseen 9:00 am 2 out of 3 Dr. Amr Qais Al-Rai 4 Meeting No. 4 13/03/2017 EGYTRANS branch, Mohandiseen 2:30 pm 2 out of 3 Dr. Amr Qais Al-Rai 5 Meeting No. 5 EGYTRANS branch, 30/04/2017 Mohandiseen 10:30 am 3 out of 3 6 Meeting No. EGYTRANS branch, 10/05/2017 Mohandiseen 9:00 am 3 out of 3 7 Meeting No. 7 EGYTRANS branch, 23/08/2017 Mohandiseen 5:00 pm 4 out of 4 8 Meeting No. EGYTRANS branch, 29/05/2017 Mohandiseen 5:00 pm 3 out of 4 Dr. Amr Qais Al-Rai 9 Meeting No. 9 EGYTRANS branch, 27/07/2017 Mohandiseen 10:30 am 3 out of 4 Dr. Amr Qais Al-Rai 10 Meeting No. 9 EGYTRANS branch, 06/08/2017 Mohandiseen 10:30 am 4 out of 4 11 Meeting No. 9 EGYTRANS branch, 28/08/2017 Mohandiseen 10:30 am 4 out of 4 12 Meeting No. 9 EGYTRANS branch, 01/11/2017 Mohandiseen 10:30 am 4 out of 4 13 Meeting No. 9 EGYTRANS branch, 23/11/2017 Mohandiseen 10:30 am 4 out of 4 14 Meeting No. 9 EGYTRANS branch, 29/11/2017 Mohandiseen 10:30 am 3 out of 4 Dr. Amr Qais Al-Rai For more information about the CVs of the Chairman and members, as well as the Committee charter, please visit the website of the company, ir.egytrans.com 46

47 Annual Report Nomination & Compensation Committee Composition and Functions: The Nomination & Compensation Committee was established in 2017 as follows: Dr. Mohga Badran - Independent Board Member Chairperson of the Committee Dr. Amr Qais Al-Rai Attia - Independent Board Member - Member Dr. Heba Leheta - Independent Board Member - Member Ms. Awatif Sultan resigned from the committee on the basis of her resignation from the Board of Directors in March The Committee held just one meeting during The Committee is interested in the semi-annual review of report of the Human Resources Department on the turnover rates of employees (resignations and appointments) at the company level. - The Committee discussed the latest developments, achievements and next steps according to the plan of the Human Resources Department as it follows up the implementation of the said plan. - The Committee presented the recruitment and selection policy of the company, after discussing it with the Director of Human Resources Department and amending some items, to the Board of Directors that adopted it. 47

48 Annual Report 2017 Table of the meetings of the Nomination & Compensation Committee during 2017 No of meeting DATE VENUE TIME ATTENDANCE(%) ABSENT MEMBERS 1 24/10/2016 EGYTRANS branch, Mohandiseen 10:30 am 3 out of 3 -- For more information about the CVs of the Chairman and members as well as the Committee charter, please visit the website of the company ir.egytrans.com 3- Investment Committee Composition and Functions: The composition of the Investment Committee in 2017 was as follows: 1. Eng. Abir Leheta - Head of the Committee Chairman & CEO (Executive). 2. Mr. Alfred Asil - Member of the Committee and Board Member (experienced independent member). 3. Mr. Ahmed Ismail - Member of the Committee and Board Member (non-executive - representative of the National Investment Bank). 4. Mr. Abdel Rahman Al-Khana - Member of the Committee and Board Member (nonexecutive - shareholder). Secretary of the Committee: Ms. Rania Farouk Bastawissi, Acting Corporate Governance and Sustainability Manager. 48

49 Annual Report 2017 Table of Committee meetings during 2017 During 2017, the Committee held one meeting as follows: 1. The first meeting was held on 22/02/2017. No of DATE VENUE TIME meeting ATTENDANCE (%) ABSENT MEMBERS 1 22/02/2017 EGYTRANS branch, Mohandiseen 12:30 pm 4 out of 4 During 2017, the Committee discussed the following: The project of railway transportation. Updating the study on the assessment of the price of shares of EGYTRANS. For more information about the CV of the Chairman and Committee members, as well as the Committee charter, please visit the Investor Relations website at Secretaries 1- Secretary of the Board of Directors, Audit and Corporate Governance Committee, Investment Committee, General Assembly, Board of Directors and General Assemblies of Subsidiaries Name: Rania Farouk Bastawissi Youssef. Position: Acting Corporate Governance and Sustainability Manager; Corporate Social Responsibility Officer; Secretary of the Board of Directors, Audit and Corporate Governance Committee, Investment Committee, General Assembly and Secretary of ETAL Board of Directors (a subsidiary) For more information about CV, please refer to our investors relations website 2- Secretary of the Nomination & Compensation Committee Name: Nagwa Mohammed Current Position: Chairman s Office Manager and Secretary of the Nomination & Compensation Committee. For more information about CV, please refer to our investor relations website 49

50 Annual Report Subsidiaries and affiliates 1. Barwil Egytrans Barwil EGYTRANS for Shipping Agencies is an Egyptian joint stock company within Wilhelmsen Ship Services (WSS) Group, which owns Barwil Agencies AS, which represents the legal entity of the company in Egypt in conjunction with the Egyptian Transport and Commercial Services Company (EGYTRANS). It is considered one of the leading ship agents worldwide. due to the following : Barwil EGYTRANS for Marine Agencies is an Egyptian joint stock company registered and licensed as an agent for ships since 1998 when foreign companies were allowed to enter the Egyptian market of shipping agencies. The Company's management fully operates inside Egypt and is responsible for all activities conducted in Egypt. The company employs approximately 118 employees distributed across various branches in Alexandria (Head Office) Port Said, Suez, Damietta and Cairo where it deals with about 2000 vessels a year. Under the guidance of its General Administration and through the local operations team, characterized by high performance and vast experience, the Company achieved a high quality performance in its history as an agent for the Suez Canal Transit Agency, public goods, containers and cruise ships in Port Call Agency and Liner Logistics as well as Marine Service Provision for all types of ships. The Swedish / Norwegian Wallenius Wilhelmsen Line chose the port of Alexandria as one of the most important ports in North Africa from which direct services would be introduced to European ports through its vessels. The navigation line also provides the opportunity to serve all Egyptian exports and imports transported through Ro-Ro ( Rollon/Roll-out) ships. The main ports served by the line are the ports of Alexandria, in addition to the ports of Turkey, Izmir and Greece. The ships of this line travel from the Far East in general (Japan, China and Korea) to the ports of Aqaba and Alexandria with a capacity of two ships per month. There is a tendency to increase the number of ships during the next period through the increase of the volume of Egyptian exports and imports. The line focuses on the goods that are transported by the Ro -Ro ships, the most important of which are cars and heavy goods such as factory equipment. The Wilhelminsen line is the first in the world to provide the Ro-Ro service in terms of capacity, number of ships and quality of service, as it provides freight transport services, as goods are shipped and unloaded by the Ro-Ro ships through the shipment of 8,000 cars or the equivalent quantities of goods. In addition, the line ships large goods such as factory equipment. EGYTRANS owns a 30% equity stake in Barwil EGYTRANS for Shipping Agencies. Address: 9 Hussain Hassab and Bani El Abbasi Street, Daher Tower (2), off Sultan Hussain St., Alexandria Egypt For Agency Services: Suez Canal Transit Agency, Port Call Agency Phone: (+ 20 3) / Fax: (+ 20 3) /

51 Annual Report Scan Arabia Shipping Agencies SAE It is also a joint venture with WILH WILHEMSEN International that serves the exquisite demand of regular liners and provides a full range of services for shipping agency services in all Egyptian ports. EGYTRANS owns a 30% equity stake in Scan Arabia. Address: 9 Hussein Hassab Street and Bani Al-Abbasi Street, Daher Tower (2), off Sultan Hussein Street, Alexandria Egypt Phone: (+20 3) Fax: (+20 3) Egyptian Transportation and Logistics Company SAE (ETAL) It is a company specialized in the transportation of shipments with nontraditional specifications. EGYTRANS owns 99% of its shares. ETAL has a distinctive fleet with super-efficient equipment and fixtures, which makes it capable of completing the transport of any shipment whatever its specifications are. The Company has a highly experienced and efficient team that plays an integrated role starting from studies of roads and access to the best solutions for handling and transport of shipments with non-traditional specifications. In collaboration with local and international experts, the Company efficiently strengthens the bridges constructed over waterways in order to withstand the transport of shipments with weights exceeding 450 tons, in addition to strengthening and reinforcing the bridges over roads. EGYTRANS increased the issued and paid-up capital of ETAL during 2015 from EGP 53.5 million to EGP 61.0 million in early December 2015, which contributed to settlement of the current account of shareholders between the two companies and provided a working capital for ETAL Company, while the authorized capital is kept at 250 million Egyptian Pounds. Part of this raise was earmarked to the introduction of the activity of installation by lifting systems, from Enerpac Company, which is an international company specialized in the production of lifting systems. This activity will enter service during the second half of 2016, a matter that shall allow lifting, dismantling and installation of atypical packages up to a load of 450 tons at heights ranging from zero to 25 meters. This new system is provided with a Rotation Unit that provides for rotation of parcels at any level from zero to 25 meters high when there is a need to change the direction of the entry of parcels on the bases. Those specifications will enable the Company to work on the activities related to handling generators and turbines of different types of power plants. The fleet was also equipped by a 2 8X Superflex sweepers from the Choral Company to work in the transportation of generators of wind power plants in Gabel El-Zeit. CEO: Mrs Abeer Wael Lehata Managing Director: Mr Khaled Hussein Executive Director: Eng. Omar El-Nagar Address: 11 Dr. Kamel Morsi Street, El-Shatby, Alexandria, 21519, Egypt. Phone: (+20 3) (14 lines) Fax: (+20 3)

52 Annual Report EGYTRANS Depot Solutions (EDS) EGYTRANS Depot Solutions, since its inception in June 2009, has a mounting turnover that provides a positive indication of the accuracy of the relevant economic and technical studies. It is considered an integrated service station, specialized in cleaning, repair and storage of ISO-Tank containers for transport of liquid shipments and tank trucks. It is a shareholding company in accordance with Law No. 159 of the year 1981 and its Executive Regulations. CEO: Eng. Abeer Wael Lehata Executive Director: Mr. Abdel Rahman Gamil Head Office: 11 Kamel Morsi St., El Shatby, Alexandria. Company branch: Kilo 25 Alexandria / Cairo Desert Road in front of Akhbar Al Youm stores - Zawyet Abdelkader area - Alexandria. Phone: (+20 3) Fax: (+20 3) EGYTRANS BARGE LINK(EBL) EGYTRANS BARG LINK was established in May 2009 as an Egyptian joint-stock company in accordance to the provisions of Law No. 159 of the year 1981 on Joint-Stock Companies. The company transports goods through the Nile River using the river sandals, or maritime transport within the Egyptian territorial waters or land transport for all types of goods. Based on the decision of the main investor, the paid-up capital of the company was reduced from EGP 2.5 million to EGP 250,000; measures related to capital reduction were taken. In view of the lack of well-defined practical solutions for the obstacles encountered by the company in exercising its activities, the board of directors of the main investor decided on 15/08/2015 to refer the issue to the general assembly to consider liquidation of the company. An extraordinary general meeting of the company was held and the company was placed under liquidation. 6- EGYTRANS River Ports Co. EGYTRANS River Ports is one of the main subsidiaries of the EGYTRANS investments in the field of river transportation of goods through the Nile River in Egypt. The Company was established in May 2009 as an Egyptian joint- stock company in accordance with the provisions of the Law No. 159 of 1981 on Joint-Stock Companies. The Company aims to undertake the activities of management, operation, utilization and development of river ports, berths and container terminals as well as provide all services associated with the loading, unloading and storage of all types of goods, along with the transportation and maintenance of containers. Based on the decision of the main investor, the paid-up capital was reduced from EGP 2.5 million to EGP 250,000; measures related to capital reduction were taken. In view of the lack of welldefined practical solutions for the obstacles encountered by the company in exercising its activities, the board of directors of the main investor decided on 15/08/2015 to refer the issue to the general assembly of the main investor to consider the liquidation of the said company. An extraordinary general assembly meeting of the company was held and the company was placed under liquidation. 52

53 Annual Report

54 Annual Report Important Tips for investors 5.1. Internal development i. Introduction Egyptian Transport and Commercial Services Company (EGYTRANS) constantly seeks to develop and improve its internal management system to attain top performance and maintain and promote its competitive edge as the pioneering company in the provision of integrated transport services and solutions. To realize this goal, the company management constantly seeks to: Strengthen the role of strategic management to encompass the whole company. Launch and monitor the development initiatives required to realize the company s strategies. Develop a risk management system that may impact the implementation of the said strategies. Develop the systems needed to realize sustainability and develop the corporate social responsibility. Motivate the employees to be creative and participate in the development efforts through reception and assessment of their proposals, and eventually rewarding them. ii. Strategic Management EGYTRANS has developed a long-term vision and adopted active and systemic steps to translate this vision into a tangible reality. To attain this end, every employee within the company has to be cognizant of this vision and these strategies and even participate in their implementation. To realize this goal, the company has chosen to apply balanced scoreboard system to measure performance and strategic management. The company managed through the balanced scoreboard to set measurable and ambitious objectives in four areas as follows: Financial domain Clients Internal operations Staff education and capacity building. The company had also developed specific and planned initiatives to realize these objectives. We developed a system for data collection about all new measurements regularly incorporated in the balanced scorecard. We completed the process of building a successive series of balanced scorecards at departmental level, linking the objectives of every branch and department with the overall objectives of the company so all would work as one team. The company also continued to promote awareness and give momentum to all employees at all levels. We sustain our efforts to integrate the value of strategic management based on balanced scorecard system in all aspects of the corporate culture. iii. Development Initiatives The company management leads development initiatives through the following: Identify chances of improvement, seek the best practices, and take part in selection of the most appropriate according to the company s needs and strategies. Participate in planning for change and lead the implementation process. Select external consultants and coordinate the consultative projects. Closely communicate with the directors of different departments and work as one team to help them develop work procedures and systems; communicate with the employees in these departments through implementation of the best practices. 54

55 Annual Report 2017 Launch new initiatives to reach the required level to hand the management over to the responsible party. - During 2017, we managed through selection and staffing to realize the company s strategy through the following: Clients Staff education and capacity building Depend on some of the promising cadres of the incumbent staff to occupy the vacancies in the company s structure, be it at the administrative or executive levels, instead of depending on external labor. We, thereupon, realize several benefits. For example: 1. Encourage the distinctive highly ambitious staff and feed their aspiration to be promoted to higher positions as well as motivate and create a positive impact on the staff and secure a high-level occupational security. 2. Generate high expectations due to the success of internal human resources in their new work given the available information on the staff. This further increases the investment rate in the incumbent human resources. 3. The employees are cognizant of the company s culture and policies, the surrounding environment, and the method of work, contributing to expedite and facilitate realization of the new post objectives. 4. Enhance the occupational career policy. - We provided training as follows: Clients Training was planned based on two main axes in alignment Staff education with the company s strategy based on 4 main axes and capacity (balanced scoreboard). building 1. Clients domain (implementation of training programs to promote the efficiency of the staff dealing with clients so as to increase clients satisfaction). 2. Staff education and capacity building (implementation of training programs to promote the administrative and supervisory efficiency of the staff. Other initiatives: Financial domain Internaloperations Financial domain Internal operations Financial domain Internal operations Embarking on an initiative to reduce the percent of support labor in favor of producing labor. In 2017, we attained 5%. 100% of the new appointees passed the probation period. This is an excellent indicator of the proper selection process. Develop internal operations (updating the regulations, policies and some work procedures. For example: appointment and hiring policy transfer policy). During 2018, we seek to work on the same strategy and attain higher rates and more inclusive scope. 55

56 Annual Report IT Developments The Systems and Networks Division at the Information Technology Department designed and implemented several significant projects that aim to increase the efficiency of operation processes, reduce cost, attain the highest return on investment, and create a technologically advanced work environment. Following are some key projects: I. Systems: - Achieve high accessibility rate of information technology services, reduce the periods of interruption, and carry out maintenance. Tasks and ongoing accomplishments during the year: - Design and execute Phase I of system development (Microsoft Exchange) for the latest efficient edition at a higher speed and with better cost effective configuration without interruption of service. - Design and implement a megaproject of the communication systems of Cisco International in the company, that led to: o Develop the system to the latest edition with the highest efficiency, more capacity and higher speed. o Renew the warranty of all the components of this system through Cisco Company and negotiate to reach the least possible cost. o o Make the system accessible outside the premises of the Company. Higher accessibility due to the installation of 2 servers; each is designed to operate in case the other server breaks down. - Expand the use of virtual machines and VMWARE virtualization technology. We have already provided the resources to buy 2 servers, saving more than LE 250, Secure the best Security system transferring the security system to the international Forecpoint CLOUD technology which increases the level of protection and accessibility, and develops the system to the highest possible extent: o This project had been implemented, through accurate planning, without any interruption. A precedent in this field. o The target was realized through participation in the best technical design and through financial negotiations. This helped save primarily more than EGP 400,000 and EGP 100,000 annually. - Design and apply a data protection system for project management and planning for the o o o o viability of their data. The system enjoys the following characteristics: The system was developed without any additional cost using the free Open Source Technology. The system enables engineers to have back-up versions of their principal files on the server. The system was designed with high storage capacity to absorb megaproject files. The system can be used as a tool for data sharing among engineers of the same project. - Design and apply the first documents archiving system in the Accounts Department to link the paper documents with Oracle system after scanning them. EBS Attachments Project: o o The system was developed without any additional cost using the free Open Source Technology and virtual machines, saving more than EGP 100,000 initially and EGP 40,000 annually. The system was replicated in the different branches where more than 40 employees at the Accounts Department were trained to use it. 56

57 Annual Report Ongoing maintenance of Oracle systems and databases, securing further protection, promoting efficiency, and providing quick response to the users. - Update OwnCloud Server to the latest edition to promote its efficiency and keep abreast with its development (a free in-house application that helps save annually more that EGP 250,000 compared with its counterparts from Google and Microsoft companies). - Complement the detailed study of the systems that increase accessibility and reduce interruption of service (disaster recovery) for all IT services with focus on CLOUD Technology and communicate with its suppliers. - Expand the scope of research on simulation of Microsoft Windows applications and operation system on free Open Source systems to cope with the related development at the least possible cost. II. Networks: - Design and execute Phase I of web security project transferring the security system to the international Forecpoint CLOUD technology which increases the level of protection and accessibility, and develops the system to the highest possible extent: o This phase was executed without any interruption in Alexandria, Suez and Damietta branches. o o The target was achieved saving more than EGP 100,000 annually. The system provides for extension of the web security to laptops outside the premises of the Company. - Restructure the power network in Port Said Branch (server and network) through a new design that provides optimal consumption and higher security with more accessibility of services even during main power outage. - Improve the connectivity line speed at Port Said Branch reducing the volume of unnecessary data, which helped procure a server at a cost of EGP 50, Restructure the power network in Cairo Airport Branch (server, network and some users) through a new design that provides optimal consumption and higher security with more accessibility of services even during main power outage. - Increase web security at the Airport Branch through the replacement of the old server with a new Firewall generation without any additional cost as the server was re-used. This saved EGP 50, Restructure the power network in EDS (server, network and some users) through a new design that provides optimal consumption and higher security with more accessibility of services even during main power outage. - Double the internet speed (ADSL) of Alexandria and Mohandessin branches, with a modest increase after negotiations with Orange Company, to align with the increase in the size of users and to realize better efficiency in the use of IT services. - Assist in the technical design of surveillance cameras in Mohandessin Branch and enter into the information network for better surveillance of the HQ. Software Development and Oracle Applications: - Design and prepare several reports on the two systems (EBS & OTM). This shall facilitate the work of the staff in accounts and operations departments (ongoing during the year). - Issue some top management reports through OTM system which helps monitor the course of work (ongoing during the first quarter of the year). - Work on the improvement project of OTM and EBS systems to realize a higher return on investment in both projects (ongoing during the year). - Introduce amendments on EBS system in consistency with the requirements of the financial controller (ongoing during the first quarter of the year). - Operationalize the free zones as a separate company on the EBS system. - Apply the VAT law on both systems. - Amend payroll taxes on EBS system according to the amendments of tax laws. 57

58 Annual Report Quality Applications EGYTRANS Quality Assurance Department performs its functions in accordance with international standards of all acquired certificates, namely: a. ISO 9001/2008 Certificate(quality) 1. ISO 9001/2000 specification was issued on 12/15/2000; we managed to acquire this specification. It was upgraded to be 9001/2008, which was issued on 15/1/ Adoption of Quality Management System is a strategic corporate decision. The design and implementation of this system is influenced by the different needs and objectives of the services the company provides. 3. The internal departments (quality assurance department) and the external bodies (TÜV, the awarding body) apply the international specification system to assess the company's ability to meet customer needs as well as regulatory and corporate requirements. 4. This system meets customer needs. 5. Upon using the Quality Management System (ISO 9001/2008), the following issues have to be underlined: Understanding and meeting the requirements. Evaluating the operations on a value-added basis. Obtaining the results and effectiveness of operations. Continuous improvement of operations based on objective policies. Certificates were renewed until 14/09/2018; renewal shall be according to the new edition of ISO 9001: b. ISO 14001/2004 Certificate (environment) 1. ISO was issued on 01/09/1996 ; we managed to acquire this specification. The specification was then modified in 2004, and we made the necessary adjustments to obtain ISO 14001/2004 certificate, according to the new international specification. 2. This specification preserves the internal and external environment (working environment), and the environmental impact resulting from its activities and services. It ensures compliance with the following: Continuous improvement to prevent pollution. Compliance with laws, technical regulations and any other requirements governing the company. Secure a documented certificate and availability to all employees. Make it available to the public. 3. The internal departments (quality assurance department) and the external bodies (TÜV, the awarding agency) apply the international specification system. 4. The certificate had been renewed until 14/09/2018; renewal shall be according to the new edition of ISO 14001/

59 Annual Report 2017 c. OHSAS 18001/2007 Certificate (Occupational Health and Safety) EGYTRANS obtained OHSAS 18001/2007 Certificate on 15/01/ OHSAS Certificate relates to occupational health and health, and applies to: Safety of individuals Safety of equipment Safety of establishments and facilities 2. This certificate and specification shall apply to all activities of the company, which shall have direct and tangible impact on occupational health and safety. It shall also apply to all company sites, visitors, contractors, subcontractors, customers and employees. 3. This system applies to the working environment security against physical, mechanical and chemical, natural, health and training risks. 4. Protection from all these risks shall have a positive impact on execution of work, whether for the client or for the company. The protective measures against these risks shall save time, effort and production costs for both the company and employees. 5. The certificate had been renewed until 14/09/2018. d. Integrated Certificate (IMS) We obtained this certificate after the following certificates: ISO 9001/2008 ISO 14001/2004 OHSAS 18001/2007 Integrating them in one homogeneous procedure manual with the three certificates. EGYTRANS is the first company in its field around the world to obtain this certificate through the awarding agency in Germany. It is valid until 14/09/2018; renewal shall be according to the new editions of ISO 9001: 2015 and 14001: e. ISO 10002/2004 Certificate (customer complaints and satisfaction) EGYTRANS is the only company worlwide that obtained this certificate until now. The purpose of applying this specification 10002/2004 is to: Improve the degree of customer satisfaction. Share and ensure senior management commitment. Record the customer needs and expectations. Establish and apply a clear and easy-to-use method, characterized by efficiency and transparency in processing customer complaints. Conduct continuous analysis and assessment of customer complaints for the purpose of improving the quality of service. Conduct continuous internal auditing for customer complaint processing. Review the efficiency and effectiveness of customer complaint processing by the Company s Administration. 59

60 Annual Report 2017 f. TUV International certificate, which states that EGYTRANS is the first company in its field around the world to obtain the triple certificates ISO 9001, 14001, and 18001, and the first worldwide to obtain ISO The duration of each certificate is 3 years. Department of Quality Assurance conducts an internal review 3 times a year. The Technical Supervision Authority (TÜV), which awards the certificate, conducts annual review to ensure the application of the system. External and comprehensive review is conducted every 3 years to renew the certificate. Subsidiaries 1. ETAL Quality Department in EGYTRANS provided technical support to ETAL Co. (Egyptian Company for Technical Transportation Works) in order to qualify for the integrated certificate: ISO ISO OHSAS ETAL obtained the certificate on 01/04/2011, renewed the certificates on 21/11/2014, and it is valid until 20/11/2017. We are currently working on renewal of the certificates according to the new edition. 2. EDS Quality Department in EGYTRANS provided technical support to EDS Company (Egytrans Depot Solutions) in order to qualify for the integrated certificate: ISO ISO OHSAS

61 Annual Report 2017 EDS Company obtained the certificate on 26/08/2011; renewed the certificates on 17/09/2015. These certificates are valid until 16/09/2018. Renewal shall be according to the new edition. 61

62 Annual Report Corporate Governance Applications Introduction 2016 was one of the fruitful years in the application of corporate governance principles. The World Bank -International Finance Corporation (IFC) reviewed in April 2016 the application of all corporate governance principles and submitted a report with the recommendations to the top management to develop the governance application and consequently corporate performance. The Management introduced a sustainability department and integrated in the corporate governance department to become Corporate Governance and Sustainability Department as of June This department reports directly to the CEO and the managing director. Achievements 1. Review and assessment of corporate governance applications through WB-IFC in April Appointment of an acting corporate governance and sustainability manager. 3. Appointment an internal audit manager. 4. Adjustment and disclosure of the new organizational structure. 5. Development of an annual action plan on governance for Development of an annual action plan on sustainability for Re-formation of the board of directors and appointment of Eng.Heba Wael Leheta(non executive member from the shareholders) and Mr.Alfred Aseel (an experienced independent board member) as members on the board. 8. Re-formation of the Investment Committee as follows: a. Eng. Abir Leheta, Chairperson (executive member) b. Eng. Abdel Rahman El-Khana, member (non-executive) c. Mr. Ahmed Ismail, member(non-executive) d. Mr.Alfred Asil, member(an experienced independent member) 9. Re-formation of Entitlements and Nominations Committee as follows: a. Dr. Mohga Badran, chairperson b. Dr.Eng. Heba Wael Leheta, member (non-executive) c. Ms. Awatef Sultan, member (non-executive) d. Dr. Amr Qais El-Ray, member (an experienced independent member). 10. Re-formation of Audit and Governance Committee as follows: a. Mr. Hassan Atta, chairman ( an experienced independent member) b. Dr.Amr Qais El-Ray, member (an experienced independent member) c. Mr.Ahmed Ismail, member(non-executive) 11. Board of directors performance assessment for Disclosure of the core events on time. 62

63 Annual Report Review and update all corporate governance policies to ensure their effectiveness as well as validation of the proper implementation of all relevant measures according to the best practices. Future steps for implementation in 2017 Develop the first sustainability report Raise awareness about governance and sustainability across the different branches. Develop a policy on rights. Develop a whistleblowing policy. Develop an equal opportunity and non-discrimination policy. Develop an environmental policy. Develop a dividend policy. Comply or Explain Principle EGYTRANS is committed to implement all the governance standards outlined in the third edition of the Guide to Corporate Governance Regulations and Standards in Egypt issued by the Egyptian Institute of Directors at the Egyptian Financial Supervisory Authority, on 26 July 2016 with the exception of certain standards that the company could not apply for the following reasons: Sr.No Standard Explanation 1 Chapter one: the general framework of corporate governance 1/8 Definitions Independent board member: a non-executive member at the Board and he is not a shareholder. He is an experienced member appointed at the Board. His relationship to the company is confined to his post in the board of directors. He does not represent the owners; he does not have substantial transactions with the company; he does not have a salary, commission, or fees except for what is paid in return for his membership in the board of directors. He does not have any interests in the company and he is not a first or second degree relative of any shareholder or any board members or its executives. He should not be a senior official The Company complies with the standards of governance in the process of the selection of independent members in its board of directors. Accordingly, the Company has developed a concept of independence for its members on the company's website. However, the Company believes that the purpose of appointing an independent board member is to ensure that the Board includes members who are capable of expressing the best views and perform effectively in favor of EGYTRANS without having any interests, whether material or moral. Based on this principle and logic, the Company believes that the experience gained by the independent board member during his membership in the board of directors should not be discarded but must be exploited for the benefit of the Company and used in making effective decisions, given the highly technical work of the Company that requires expertise and technical skills which are acquired over time. Accordingly, the Company believes that the independent board members who have been over 63

64 Annual Report 2017 or advisor or auditor at the company for the three years preceding his appointment as a board member. The duration of his membership as an independent member should not exceed 6 successive years or he will be non-independent member. 2 2/2: Axis II: Board of Directors 2/2/1 Composition of the Board of Directors It is not recommended to combine between the positions of Chairman and Managing Director. If this is not possible, the underlying reasons shall be disclosed in the Company's annual report and on the website. In this case, and in accordance with international best practices, an independent vice chairman is appointed to chair the meetings that discuss the performance of the executive management. six years in the Board should be retained to benefit from the experience they acquired during their membership and benefit as well from their support, advice and constructive opinions. 1. The Board of Directors of the Company believes that it is in the interest of the Company at present to maintain the current composition of management of the company especially because Eng. Abeer Lehata has joined EGYTRANS since She has held several senior management positions in the Company and gained extensive experience in the company's field of work. She has been also active as an Executive Board member since This does not prevent us from seriously considering and planning to implement this rule in the future. 2. The administrative structure of the Company has been amended; the post of general manager had been introduced. The general manager will be responsible for managing the work of the company and shall directly oversee the various business units and their support services departments. 3. The Company has implemented the rules and standards of governance since 2006 and since then the Company has taken great steps in this direction and has already applied the policy of succession of authority to create competencies and administrative cadres in the company. 4. In line with the principles of governance and in accordance with local and international best practices, several measures have been taken to ensure that sound management of the company as follows: Three experienced members were added to the Board of Directors. Board members have been selected with different backgrounds and professional experience to ensure the diversity of expertise and balance required for the effective performance of the Board. The Audit and Governance Committee, the Entitlements and Nomination Committee and the Investment Committee had been formed 64

65 Annual Report /2 Axis IV: The regulatory environment 4/2/6 Auditor The auditor shall not be appointed as a natural person for more than five years. He shall not be reappointed before the lapse of three years after his term of office ends. It is preferred in large companies to appoint two auditors. and they report to the Board of Directors. The Audit and Governance Committee is chaired by an independent Board member to ensure independent and transparent performance. The Entitlements and Nominations Committee is chaired by an independent Board member to ensure independent and transparent performance. The Board of Directors annually assesses its performance and the performance of the Chairman and Managing Director with full transparency. Due to introduction of changes in the financial management of the company; the retirement of the head of the financial sector in 2016; and the appointment of a new financial manager on 1/1/2018, the Company decided not to change the auditor as well. This will be taken into account next year. 65

66 Annual Report Internal Control Measures: Internal audit processes were conducted during 2017 according to the internationally recognized internal audit standards and governance rules. This included audit and scrutiny of several operational and financial cycles to ensure the effectiveness and efficiency of internal control systems, and ability to reduce and maintain potential risks within the acceptable limits. Through implementation of the regulatory programs and evaluation of the internal control systems, the following was demonstrated: The Company operates in an effective regulatory environment with the exception of the observations in the quarterly internal audit reports as the Management supports internal adjustment principles. The board of directors, and the Audit and Governance Committee are all governed by corporate governance principles. Internal control at the Company, inclusive of Internal Audit Department, fulfills its function through reasonable emphasis on the following: o o o o Credible and reliable financial and operational information; Efficient implementation of all operations and realization of corporate goals; Protection of the corporate assets; Observance of regulations, laws, and contracts. A good organizational structure that defines powers and responsibilities, prevents overlap of TORs, and provides accountability and liability principles. The structure has been updated. Accordingly, the practical guide of competent authorities and financial regulation were updated to align with the changes during the year. An effective series of regulations and procedures that distinguish between the tasks and duties of different functions. The Internal Audit Department secures that the regulatory cycles of every department are adequate and work efficiently to realize the goals of every department. An efficient communication system that secures flow of information and data within the organizational structure to ensure attainment of goals. The auditing and inspection process during 2017 resulted in the following: Validation of the results of financial and operational operations according to the sample under scrutiny; a matter that verifies the accuracy of data incorporated in the financial reports. Adequate protection of all corporate assets, property and resources through application of accounting systems, rules and principles; observance of the effective control measures adopted within the Company, including a full insurance coverage of all fixed assets and 66

67 Annual Report 2017 active resources; regular maintenance programs; adoption of sound accounting treatment; and formation of the required provisions. Ongoing development and improvement of the Collection Department through effective elements and collection plans and programs; and constant administrative and regulatory follow-up given the significance and materiality of this department. A supervisor was appointed at the Customers Accounts and Collection Department. Extreme concern with the operation costs and expenses where the disbursement regulations are reviewed, updated and monitored, and any related deviations are checked. Validation of a sample of accounts payable and receivable, formation of the required financial provisions, and adoption of the necessary settlement measures of some balances to secure that financial positions are well-defined and transparent. Validation of the soundness of a sample of monetary operations, settlement notes, bank transfers and related control measures. It was noted, through review of regulatory cycles across the year, that policies were absent in certain departments where they only relied on the procedure manual. Accordingly, we recommended the need to develop policies in consistency with the objectives and general policy of the top management. Currently, policies are underway for these departments. 67

68 Annual Report Corporate Social Responsibility In 2017, EGYTRANS implemented several initiatives within its social responsibility as follows: 1. UN Global Compact EGYTRANS focused its activities within its social responsibility on four main areas, namely, human rights, labor standards, environment, and fighting corruption according to the standards of UN Global Compact that EGYTRANS joined in August The UN Global Compact is a framework that allows the committed commercial institutions to align their operations and strategies with ten internationally recognized principles in the areas of human rights, labor, environment, and fighting corruption. The Compact is the largest international initiative to create a corporate sense of citizenship; where thousands of people from more than 100 countries from the whole world participate. The UN Global Compact is of a voluntary nature and aims to replicate its ten principles in the activities of the commercial institutions worldwide. The company prepared its 8th UN Global Compact Communication on Progress Report in July 2017 and was posted on its website that relates to investor relations under the following link: 2. Safe disposal of the damaged paper of the company in cooperation with Resala Association for Charity: In view of the corporate social responsibility and the desire to conserve the environment and participate in community development, the company had started as of November 2013 to implement a social environmental project in collaboration with Resala Association. The company collects all the paper to be destroyed, namely, sheets, envelopes, files, documents, and other, and finally disposes of in big sacks provided by Resala. The representative of Resala Association receives the sacks against in-kind donation receipt. Resala recycles the paper, preserving environmental safety. This project serves three main objectives: 1. Preserve environmental safety and cleanliness according to the instructions of Occupational Safety and Health Committee. 2. Contribute in charity work of benefit to the community where the company operates. 3. Remanufacture and use damaged paper. 68

69 Annual Report 2017 In 2017, the company provided several batches of damaged paper as follows: Month January February March April May June July August September October November December Total no. of sacks No. of sacks It is noteworthy that this project was suggested by one of the female employees. The company usually receives the suggestions of employees and implements what s appropriate. This is a corporate initiative meant to encourage employees to participate by opinion which serves the interest of work and employees. 69

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