MM Group for Industry and International Trade (S.A.E ... · 48284113 94437879 : Net change in cash and cash equivalents during the year 51 340690 (60571 882) Cash and cash equivalents

MM Group for Industry and International Trade (S.A.E) Cairo- Egypt

--,--

Consolidated Financial Statements Year Ended 31 December 2019

With Auditor's Review Report

Auditors review 3-4

Consolidated statement of financial 5

Consolidated statement of income (Profit and loss) 6

Consolidated statement of comprehensive Income 7

Consolidated Statement of change in equity 8

Consolidated Statement of cash flows 9

Notes to the consolidated financial statements 10-25

Moore Egypt Pub lic Accountants & ConsultantsMOORE Egypt Head Office: 5 AI Ahram St. Heliopolis, Cairo, Egypt 11757 P.O Box 329 Heliopolis Down Town Office: 8(A) Ali EI Kassar St. Opera Square, Down Town Cairo, Egypt 111111 Alexandria Office: 196 Port Said St. Sporting Alexandria, Egypt 21321 wwwmoore-egyptcom

Auditor's Review Report

TO: THE Shareholder OF MM GROUP FOR INDUSTRY AND INTERNATIONAL TRADE 'Egyptian Joint Stock Company'

Report on the financial statements

We have audited the accompanying consolidated financial statements of MM Group for Industry and International Trade Company (SAE.), which comprise the consolidated financial position as of December 31, 2019, and the consolidated income statement, consolidated statement of comprehensive Income, consolidated statement of changes in equity and consolidated statement of cash flows for the financial year then ended, and a summary of the significant accounting policies and other explanatory notes.

Management's responsibility for the financial statements

These financial statements are the responsibility of company's management. Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Egyptian Accounting Standard and in the light of the prevailing Egyptian laws, management responsibility includes, designing, ' implementing and maintaining intemal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error ,management responsibility also includes selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.

Auditor's responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Egyptian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risk of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the financial statements.

Opinion

in our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of MM Group for Industry and International Trade Company (SAE.), as of December 31,2019 and its financial performance and its cash flows for the year ended in accordance with the Egyptian accounting Standard and the Egyptian laws and regulations relating to the preparation of these financial statements.

MOORE Egypt

Report on the legal requirements and other regulations

The company maintains proper books of account which include all that is required by law and by the statutes of the Company; the financial statements are in agreement there to. The inventory count was performed by the Company's management in accordance with the methods in practice.

The financial information included in the board of directors' report is prepared in accordance with Law No. 159 of 1981 and its executive regulations and is in agreement with the company's books of account.

Cairo, Egypt

February 26 , 2020

~ML Sherin Noureldin

R.A.A 6809 Egyptian Financial Supervisory Authority Register Number 88 Moore Egypt

Page 4 of 25

MM Group for Industry and International Trade (S.A.E) Consolidated financial statements for the year ended 31 December 2019

Translation from Arabic

Consolidated Statement of Financial Position Notes 31/12/2019 31/12/2018

Non-current assets EGP EGP

Fixed assets (4) 76496834 65011485

Investments property (5) 1 841 501 2298477

Projects under construction (6) 1 230624 402350

Investments in associates (7) 401048237 250739867

Investments available for sale (8) 133778

Deferred Tax 230413

Total non-current assets 480617 196 318816370

Current assets

Inventory

Receivables & notes receivables

Due from related parties

Advances to suppliers

Debtors & other debit balances

Investments at fair value through profit and loss

Cash on hand and at banks

(9)

(10)

(11-1)

(12)

(13)

(14)

1 101 305669 798722808

507408742 402024044

4279957 9392660

314570811 397056796

204781 102 101 619578

50211 472 89849390

149381 124 98040434

Total current assets 2331938877 1 896705710

Total assets 2812556073 2215522080

Equity

Issued and paid up capital (15) 383625000 306900000

Legal reserve 45215631 32294029

General reserve 64462273 64462273

Investments revaluation reserve (109950)

Retained earning 476806210 348764332

Profit for the year 459466852 271245686

Total equity of parent company 1429575966 1 023556370

Non-controlling interest 104206372 113730348

Total equity 1 533782338 1137286718

Non-current liabilities

Deferred tax liability 1 165858

Total Non-current liabilities 1 165858

Current liabilities

Provisions (16) 29516539 28955382

Credit Bank 280314215 178210205

Due to related parties (11-2) 116547206 201561 175

Customers Advance payment 187884850 155313675

Suppliers & notes payables (17) 535961 282 431 262030

Creditors & other credit balances (18) 48904115 54275302

Accrual income tax ( 19) 78479670 28657593

Total current liabilities 1 277 607 877 1 078235362

Total equity and liabilities 2812556073 2215522080

-The accompanying notes are an integral part of the consolidated financial statements. - Auditor's report attached

Chairman Financial Manager

Khaled Gamal Mohamed Mahmoud

~M~~~ o~~ Page 5 of 25



Consolidated statement of income (Profit and Loss) Notes 31/12/2019 31/12/2018

EGP EGP

Net sales (20) 9830061 523 7625721 789

Less

Cost of sales (21 ) (8903905974) (7104631 518)

Gross profit 926155549 521 090271

Less

Sales & distribution expenses (22) (275818 949) (169696 951)

General & administrative expenses (23) (18067632) (8149401)

Depreciation of administrative assets (2574476) (489262)

Impairment of inventory (3261 750) (1 028446)

Impairment of receivables & notes receivables (4379183) (788034)

Total expenses (304101 990) (180 152 094)

Net operating profit 622053559 340938177

Add 1(Less)

Gain from subsidiaries and associated companies (7) 30748502 22774517

Takaful contribution for health insurance (21 452994) (11 391 779)

Income from investment property 7310875 6459538

Depreciation of investment property (456976) (470025)

(Loss)/Gain from investments at fair value through profit and loss 3464643 (5081541)

Capital Gain 144881

Gain/(Ioss) From sale of Investments available for sale (53341 ) 42010

Finance expenses (34895 123) (15 591 566)

Credit interest 13189872 7349051

Provisions (561 157) (805382)

Provisions no longer required (16) 9970574

Foreign currency exchange gain 1(loss) (5169942) (3971 963).

Net profit for the period before taxes 614322799 350221 611

Add 1(Less)

Income tax ( 19) (137335383) (75105093)

Deferred tax (1396271) 410275

Net profit for the period after taxes 475591145 275526793

Distributed on follows:

Owners of the parent company 459466852 271 245686

Non-controlling interest 16124293 4281 107

475591 145 275526793

Earnings Per Share (EGP/Share) (24) 0.60

-The accompanying notes are an integral part of the consolidated financial statements.



't2J1 c./L",,-~ ~~~

Page 6 of 25

0.45



Consolidated statement of comprehensive Income 31/1212019 31/12/2018

EGP EGP

Net profit for the period after taxes 475591 145 275526793

Addl (less)

Other comprehensive Income

Investments available for sale (net change at fair value) 109 950 96 055

Total other comprehensive Income 475701 095 275622848

Disturbed as follows:

Owners of the parent company 459 576802 271 341 741

Non-controlling interest 16 124293 4281 107

Total other comprehensive Income 475 701 095 275 622 848

- The accompanying notes are an integral part of the consolidated financial statements.



~Me-.L<A-~ o;:f~

Page 7 of 25



Consolidated Statement of Change in Equity

Eguit:l of the ~arent com~an:l Non-Investments Totalcontrolling

31/12/2018 Paid-up General revaluation Retained Profit of the Total Equityinterest

Capital Legal Reserve Reserve reserve earning period 1:lear EGP EGP EGP EGP EGP EGP EGP EGP EGP

Balance as of January 1, 2018 245520000 18708840 64462273 (206005) 146916926 339347924 814749958 (36) 814749922

Additional paid in capital 61380000 (61 380000)

Transfer to legal reserve 13585189 (13585189)

Transferred to retained earning 339347924 (339347924)

Adjustments on retained earnings (6898092) (6898092) (6898092)

Control of subsidiaries adjustments 125358 125358 109449277 109574635

Dividends (55762595) (55762595) (55762595)

Comerehensive Income for the }lear 96055 271245686 271 341 741 4281 107 275622848

Balance as of 31 December 2018 306900000 32294029 64462273 (09950) 348764332 271245686 1023556370 113730348 1 137286718

31112/2019

Balance as of January 1, 2019 306900000 32294029 64462273 (109950) 348764332 271245686 1023556370 113730348 1 137286718

Additional paid in capital 76725000 (76725000)

Transfer to legal reserve 12921 602 (12921 602)

Transferred to retained earning 271245686 (271 245 686)

Dividends (51 974921) (51 974921) (1 845976) (53820897)

Retained earnings adjustment (2483678) (2483678) (2483678)

Control of subsidiaries adjustments 901 393 901393 (23802293) (22900900)

Comerehensive Income for the }lear 109950 459466852 459576802 16124293 475701095

Balance as of 31 December 2019 383625000 45215631 64462273 476806210 459466852 1429575966 104206372 1533782338

- The accompanying notes are an integral part of the Consolidated financial statements.


Khaled Gamal Mohamed Mahmoud osama ~~_

~~ = O~"1 - cr . Page 8 of 25



Consolidated Statement of Cash Flows Notes 31/12/2019 31/12/2018

EGP EGP Cash flows from operating activities

Net profit before income tax 614322799 350221 611

Adjustments to reconcile net profit to cash flows

From operating activities

Fixed assets depreciation (4) 11 346867 9955387

Investment Property depreciation (5) 456976 470025

Gain from Investments in associated companies (7) ( 30 748 502) (22774517)

Retained earnings adjustments ( 2 483 678) (6898092)

Provisions no longer required (17) (9970574)

Provision (16) 561 157 805382

Impairment of inventory 3261 750 1 028446 Impairment of receivables 4379183 788034 Gains/(Ioss) from investments at fair value through profit and loss (13) ( 3464643) 5081 541

Profit from selling of available for sale Investments 53341 (42010)

Finance expenses 34895123 15591 566

Capital Gain ( 144881) Credit interest ( 13 189872) (7263419)

Net operating income 619245620 336993380

Change in inventory (8) ( 305 306 646) (13 581 710)

Change in Receivables and notes receivables (9) ( 109763881) 80535167

Change in due from related parties (10-1) 5112703 34585869

Change in Advance to suppliers 82485985 (83890557)

Change in Debtors and other debit balances (11 ) ( 103 161 524) (6568907)

Change in Suppliers and Notes payable (16) 104699252 (241 044018)

Change in Due to related parties (10-2) (85013969) (94033966)

Change in Advance accounts Receivables 32571 175 71568213

Change in Creditors and other credit balances (17) ( 5 371187) 7686376

Cash flows provided by operating activities 235497528 92249847

Paid Income Tax

Used in provisions

Paid Debit Interest

Net Cash flow (used in) operating activities

Cash flows from investment activities

(18) ( 85 840 160)

( 537 965)

( 34895123)

114224280

(134350631 )

(543799)

(15 591 566)

(58236149)

(Payments) for purchase of fixed assets

(Payments) for associated company

(Payments) for investment in subsidiaries( net after cash balance)

Prooceed from sale non-current assets available for sale

(4)

(7)

(23515609)

( 119559868)

( 22 900900)

(20441 555)

(191 262300)

(55 521 522)

21246940

Proceeds from credit interest 11516726 7263419

Proceeds from Financial Investments Available for sale 190387 560374

Change in Investments at fair value through profit and loss 43102561 141381032

Net cash flows (used in)/provided by investment activities (111166703) (96773612)

Cash flows from financing activities

Change in bank over draft 102104010 151480998

Dividends ( 53 820 897) (57043119)

Net cash flows (used in)/provided by financing activities 48284113 94437879

Net change in cash and cash equivalents during the year 51 340690 (60571 882)

Cash and cash equivalents at the beginning of the year 98040434 158612316

Cash and cash equivalents at the end of the year (13) 149381 124 98040434

The accompanying notes are an integral part of the consolidated financial statements.


Khaled Gamal Mohamed Mahmoud osama~~_

~})AJ-e-~ O~-t- - ~

Page 9 of 25

MM Group for Industry and International

Notes to the consolidated financial statements

1. About The company

A. Company's background

MM Group for Industry and International Trade (SAE) is established under the Law No.159 of 1981 and its executive regulations and considering the provisions of law No. 95 of 1 and its executive regulations and has been registered in the commercial under No.609, 10 of Ramadan city on 3, 1996.

Based on a Extraordinary general assembly held on April 5, 2016 the decree of the authority for investment and free zones no. 638/2 year 2016, which decided to split the company into:

• MM Group company for the industry and international (S.A.E) (The Splitter) • MTI company for real estate investment, (SAE) (The Splitted)

And use the date of the split of the company at book value on the Company's financial statements at December 31, 2015 as a basis to assess the assets and liabilities of the company for the purpose of split, and it was ronidarorl in the comercial reaister on december 29 2016.

- According to the extraordinary as of January 6th 2017 that agree to make an Initial public offering of 30%of the shares of MM for industry and international trade company in the Egyptian stock market on april 11 , 2017.

B. Company's Purpose

loaders, heavy and light means (b) installation and through sDecialized

service centres; (c) trading of cars, agricultural tractors, and related equipment, loaders, all means of transportation, including required spare parts, maintenance and other related activities.

equipping, nron,;;,rinn which is ovnr.riori the company.

producing the required supplies to serve the purposes.

all and products authorized for in accordance to the Law

utilizing Egyptian commercial in electronic devices related to remote and providing Advance technical and technological of telecommunication devices and mobile phones, and the maintenance and repair there of through service centres.

the sale and of real estate properties, land and movable assets to serve the purposes (except for areas mentioned in the Ministerial Decree No. 12 of Law No. 94 of 2005, as well as the Sinai Peninsula, Halayeb and Shalateen which a prior approval from GAFI's chairman).

assembling and manufacturing air conditioners and mobile phones in one of the new industrial areas.

exporting all and products authorized for export, in accordance to the Law.

Selling all goods and mentioned as a of the ""rnn",n,,' purpose including agricultural loaders, fork lift, and loader.

Sale of mobile lines and mobile recharge cards.

Sale of electrical and non-electrical household appliances.

The Company may have an interest in or with companies or others that similar activities and which may further the achievement of its objectives in Egypt or abroad. The Company may also merge with,

or acquire such entities, accord ina to the provisions of the Law and its Executive

10 of 25

1. About The company (continued)

C. Company's location

- The main residance and location is in the 10th of Ramadan The Head Quarter of the company is in 18 EI Obour - Buildings Salem, Cairo.

D. Company's Duration

- The duration is twenty-five from the date of registration in the commercial the fiscal year for the company begins on the is! of and ends on December of each year.

E. of the financial statements

- The consolidated financial statements of the Company for the ended 31 December 2019 were authorized for issuance in accordance with a decree of the board of directors on February 26. 2020

2. Basis for preparation of financial statements

A. Basis of consolidation

-The consolidated financial statements are by the financial statements of the Holding Company and its subsidiaries through collecting similar items of assets, liabilities, revenues and expenses.

-The investment cost borne by the company in its subsidiaries was eliminated with the holding company's share in the equity of each subsidiary

Unrealized intercompany transactions are eliminated.

- Non-controllable interest in net equity and in net profit of subsidiaries controlled by the parent company are included in the equity in the consolidated financial statements under an independent clause "non-controlling interests" and are calculated as eaual to their share in the carrying value of the net assets of the subsidiary.

-The acquisition cost was distributed as follows- :

- The fair value of assets and liabilities owned at the date of dLljUI>:>'lI and within the limits of the share of the company that was on that date.

- The additional acquisition cost over the share of the company's share in the of the subsidiary is as goodwill.

Scope of consolidated financial statements

The consolidated financial statements include the companies in which the company contributes more than 50% of its and it has control over it and with less than 50% contribution. The company has the to control the company's decisions. The following are the companies listed in the consolidated financial statements:

Investment

Percentage

MM Group for Export & Import 99%

Qanawat for trading and distribution company 70.48%

B. Commitment to accounting standards and laws:

These financial statements were prepared in accordance with 1"r'I"ntl",n Accounting Standards and prevailing

laws and regulations.

C. Disclosure and oresentatlon currency

The financial statements are presented in Egyptian Pound which is the Company's functional currency.

11 of 25


Translation from Arabic 2. Basis for preparation of financial statements (continued)

D. Use of estimates and judgments

The preparation of the consolidated financial statements are in-accordance with the Egyptian Accounting Standards

requiring management to make estimates and assumptions that affect assets and liabilities, revenues and expenses

during the financial period.

Actual result:;> may differ from these estimates. The estimates and assumptions are reviewed on-going basis and

recognizing the effects of the modification of the accounting estimates in the period in which estimates are revised.

The assumptions and estimates are mainly used in the application of accounting policies with significant impact on

balances included in the financial statements and which are disclosed under the following notes: Fixed assets

Investment Property

Financial instruments

Provisions

3. Significant accounting policies

The Company applies the following accounting policies consistently and it is consistent with that applied in all the financial years disclosed in these consolidated financial statements.

3-1 Foreign currencies translation

Transactions in foreign currencies are initially recorded using the exchange rate prevailing on the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies are retranslated using the exchange rates prevailing at the balance sheet date, All differences are recognized in the statement of income.

Nonmonetary items that are measured at historical cost in foreign currencies are translated using the exchange rates prevailing at the date of the initial recognition.

3-2 Fixed assets and its deprecation

a. The first recognition and initial measurement

Fixed assets are stated at the historical cost after deducting accumulated depreciation and accumulated impairment losses.

b. Subsequent Cost

Such cost includes the cost of replacing part of the fixed assets when that cost is incurred, if the recognition criteria are met, Likewise, when major improvements are performed, its cost is recognized in the carrying amount of the fixed assets as a replacement if the recognition criteria are satisfied, all other repair and maintenance costs are recognized in the statement of profit or loss as incurred.

c. Depreciation

Depreciation is determined based on the fixed assets less salvage value as residual value at the end of estimated useful life The Salvage value of asset is the net amount currently expected to be obtained as a result of Disposal, if it is in the expected condition at the end of its useful life. The depreciation amount is carried on the income statement according to the straight-line method by the useful life estimated to each kind of fixed assets except land that not depreciated, the depreciation of fixed assets are depreciated according to the following rates:

Asset Depreciation

Rate

Building, facilities and decoration 5%

Computers 50%

Other assets 25%

Page 12 of 25

MM Group for Industry and International Trade (S.A.

3.c:.innifir!:3 accounting policies (continued)

3-3 Investment property

The Investment are the real estate values that have been obtained for the purpose of resale or for rent, or and are not for sale within the normal activity of the company. The initial record of these investments are done

using the cost method the acquisition cost or at the date of to be re-measured by removing the impairment of those investments at the end of the financial period, taking into account the active market conditions of these properties with the change included in the recoverable amount of the acquisition cost of these investments in the income statement. In the event of a rise in its recoverable amount it is added to the same item and within the limits

ml'tv",j'7<,rl on the income statement's financial and do not include any of these real estate investments and held either only for the purpose of the subseauent act in the near future or for or resale within the normal activity of the company.

The real estate investments are recorded at historical cost net of accumulated depreciation and impairment, if any, and are using straiaht line method and accordinq to estimated useful life of each asset in accordance with the following:

Asset Useful Life

(Commercial renovation, and decoration) 20 years

3-4 Projects under construction

The cost of the purchase, construction, and installation of fixed assets are recorded under this item until those assets are ready for use, after which, those amounts are transferred to fixed assets.

3-5 Investments in associates

An associate is an entity over which the Group has influence that is not control or controL Significant influence exists where the Company holds voting of 20% to 50% in an

Acquisitions of Associates are accounted for using the purchase method; goodwill arising on acquisition of an c"""U\..IClU::;. if any, is not but is rather included within the amount of the investment. Investments in associates are accounted for in the consolidated statements using the equity method.

to the equity an investment in an associate is initially recognized in the statement of financial position at cost and is subsequently adjusted to the share in profit or loss. and other chanqes in the net assets, of the associate.

3-6 Investments available for sale

These assets are initially measured at fair value any directly attributable transaction costs. Subsequent to initial they are measured at fair value and therein, other than impairment losses and foreign currency

differences on debt instruments, are recognized in other comprehensive Income and accumulated in the fair value reserve. When these assets are the accumulated or losses in is reclassified as profit or losses if the Company cannot define at fair it can be at cost less impairment.

3-7 Investments at fair value through and loss

This category includes financial assets held for A financial instrument is classified as an instrument held for trading if it is primarily for the purpose of the sale in the short term or if it a part of a portfolio of specific financial instruments that are managed t""",th<:>r

and there is evidence of recent actual transactions that resulted in short-term profit takinq. instrument.

Page 13 of 25

MM Group for Industry and International Trade (S.A.E) Consolidated financial statements for the y'ear ended 31 December 2019

Translation from Arabic · 3. Significant accounting policies (continued)

3-8 Inventory

A. Agricultural tractors, Pipes, Telecommunications

The inventory is stated at the lower of cost or net realizable value. The cost of inventory is based on "first-in firstout" principal.

B. Automotive

Inventory is evaluated and the sold units are priced at the actual cost till the end of the sales transaction where a cost center for each unit is made.

C. Consumer Electronics

The raw material inventories are stated at the lower of the cost or net realizable value. The cost of raw material is based on the "weighted average method".

3-9 Revenue

• Sales revenue

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume discounts. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, and in the presence of sufficient expectation for the flow of economic benefits with the sales transaction and when the company doesn't have the right for continuous managerial control over the goods when the buyer receives them, and in case of exportation the risks and rewards of the ownership of the sold goods are transferred according to the freight conditions where revenues are usually recognized when the goods are exportation.

• Credit interest

Credit interest revenues are recognized on the basis of time ratio taking into consideration the rate of return on the original value.

3-10 Impairment in value of assets

1) Financial assets

A financial asset is considered to be impaired if evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis, all impairment losses are recognized in income statement. Impairment losses are reversed in the income statement when there is evidence recover of the impairment losses.

2) Non-financial assets

The Company's non-financial assets, other than, Assets arising from construction contracts and inventories are reviewed to determine whether there is any indication of impairment, if any such indication exists then the asset's recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognized in the income statement. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less its selling costs. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Page 14 of 25

3. Significant accounting (continued)

3-11 Provisions

A provision is when the Company has legal or constructive obligation as a result of events, and it is probable that an outflow of economic benefits will be to settle these obligations with the ability to make reliable estimate for these obligations. Provisions are reviewed at the date of preparing the financial statements and adiusted when necessary to show its best estimate.

3-12 Taxes

A. Income Tax

Income tax is a tax on the Company's profit and is calculated according to the relevant laws, and instructions that are currently being implemented in this while using the prevailing income tax at the date of DreDarinq the balance sheet. The tax on income should be reflected in the income statement.

B, Deferred taxes

Deferred tax occurs to reflect the existence of some temporary differences due to the difference in time frames when the current value of assets and liabilities are recognized between the taxation principles and accounting principles that are adhered to when preparing the financial statements. The deferred tax is determined according to the prevailing method used to settle the value of assets and liabilities. It should be taken into account that the deferred tax maybe considered an asset of the company if there is a possibility that it may be used to reduce the accrued tax profits of the company for future and the amount of the deferred tax considered as an asset of the company is reduced the amount may not be off-set aaainst future taxes.

3-13 Receivables, notes receivable, debtors and other debit balance and advances to suppliers

note recelvanle debtors and other debit balance and advances to suppliers are recorded by face value net of impairment

3-14 Related Parties Transactions

Transactions with related are recorded in the same way as in normal course of business accordinq to the conditions staled by Ihe company's management and on the same basis as transactions with others.

3-15 Leaal reserve

to the company's articles of association, the company shall transfer 5% of the net profit 10 the legal reserves account in the shareholders' equity up to when the legal reserve balance is equal to 50% of the company's paid up capital, in the event the said reserve falls below 50%, transfer is resumed.

3-16 Benefits

The company is regularly paying its share in the social insurance funds according to the Social Insurance Act No. 79 of in 1975 as amended, and is recognized as wage and expense in the income statement according to the accrual basis

3-17 The Contingent Liabilities and Commitments

Contingent liabilities and commitments of which the company is of as well as out off-balance sheet do not represent actual assets or liabilities at the date of financial statements.

3-18 Dividends

Dividends are "r1ni7Ari as an in the which the declarations of distributions are made.

15 of 25

p for Industry and International Trade (S.A.

3. Significant accounting (continued)

3·19 Cash Flow Statement

The cash flow statement is according to the indirect method.

3·20 Cash and cash equivalent

For Purpose of and time

the cash flow statement Cash and cash less than three month

include cash on hand and at banks,

3·21

The comparative are reclassified when necessary to comply with current figures.

3·22 Earnings per share

per share is calculated by dividing the company's profits by the number of shares of the company by the average of the number of shares the year

3·23 Capital management

The Board of Director's is to maintain a capital base to maintain investors, creditors and market confidence and to sustain future development of the business.

The board of directors aims to make a balance between the ",rMf"<=>,,,

interest rates which can be attained with the high rates of borrowings and the benefits & received through maintain a capital structure.

3·24 Fair value of financial instruments

The financial instruments is in the company's financial assets and liabilities and the financial assets include the account notes receivables and other debt balances and cash on hand and at bank also the financial liabilities include customers Advance payments, contractors, accounts and notes pavable and other credit balances.

to the basis of evaluation followed in assets and liabilities which is the disclosure footnotes of the financial statements, fair of the financial instruments significantly from its book value at the date of the preparation of the financial statements.

3-25 Financial instruments and risk management related

The company's financial instruments are balances of bank accounts, cash on hand and at banks, Receivables & Notes Receivables, Debtors & other debit balances, suppliers, creditors and other credit balances. The following are the most significant risks related to the financial instruments and the procedures taken by the company to minimize the effect of such risks:

1) Credit risk

This risk is represented in the of clients to pay their this risk is considered limited as the clients have a solid credit

2) Liquidity risk

The liquidity risk is charectarized by factors that impact the repayment of part or all of the company's commitments. According to the policy the suitable policies are taken to decrease the level of risk to a minimum.

3) Interest rate risk

Interest rate risk is in the in value of financial instrument due to the fluctuation of the market interest rates. This risk is considered based on the company's dependance on financina needed for

currency risk

The currency risk is the fluctuation of currency rates since that affect the receivables and payables balance in currency also asset and liability evaluation in foreign currency. Also as it is indicated in note } the assets and liabilities in currency are evaluated usina the official rate in the date of financial statements.

16 of 25

4}

2019

4- Fixed Assets

December 31. 2019 land

and

constructions

equipment

and Devices Vehicles

Furniture

and office

devices computers

Elevator's and air

conditioners Decorations

Leasehold

Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP EGP

Cost in Jan 1,2019 19056400 16164432 19990201 17999951 16618296 15231 754 6981775 21715506 2686711 136447026

Additions during the year 4199271 3 113606 2343213 2613573 356085 5128404 5133013 22887165

of the year (66382) (185100) (251 48;;

Balance in December 31 19058400 16164 432 24123090 20928457 18961509 17845327 7337860 26843910 159082709

Accumulated depreciation in Jan 1, 2019 15025254 14984697 11 538361 9800855 11929210 5088152 2092551 71435541

835019of the year 808222 1 834457 1998124 2130664 1 936401 526441 1277539 11346867

of the year (65899) (130634) (196533)

Accumulated 15833476 16753255 13405851 11 931 519 13865611 5614593 3370090 1811480 82585875

December 31

Net book value in December 31.2019* 19058400 330956 7369835 7522606 7029990 3979716 1 723267 23473 820 6008244 76496834

* This is of 3 134 979 l.E. which is the book value of assets that are still in use

30/9/2019 EGP

And Device 48133 Vehicles 1 748836 Furniture and office device 14913

1 323097

3134979

170f25

and International c-1"<:>rOrY'l,:>nTC for year 31 201 9

4- Fixed Assets

Furniture

Buildings and equipment and office Elevator's and air Leasehold December 31, 2018 Land constructions and Devices Vehicles devices computers conditioners Decorations improvements Total

EGP EGP EGP EGP EGP EGP EGP EGP EGP EGP

Cost in January 1, 2018 7286 000 16164 432 16767949 12049654 13584 066 9398428 6459131 15731 057 97440717

Additions of conlrol on subsidiaries 44070 3394700 1 337783 2970671 205551 1794399 9747174

Additions during the year •• 11772400 3178182 2555597 1696447 2868664 522644 5778898 892312 29265144

Disposals (6009) (6009)

Balance in December 31 ,2018 19058400 16164432 19990201 17999951 16618296 15231754 6981775 21715506 2686711 136447026

Accumulated depreciation in January 1,2018 14217 032 13226420 7895451 7062552 8006674 4456943 1 006118

Additions of control on subsidiaries •• 26718 1418431 499582 1 762385 76031 623718 4406865

Depreciation of the year 808222 1 731 559 2224479 2238721 2165247 631209 1 010402 352743 11162582

Accumulated depreciation of disposals (5 (5096)

976461Accumulated depreciation in December 31,2018 15025254 14984697 11 538361 9800855 11 929210 5088152 2092551

1 710250 Net book value in December 31,2018* 19058400 1139178 5005504 6461590 6817441 3 302 544 1893623 19622955

* This is ~~';Mrl of 2 839 012 L.E. which is the book value of fully deDreciated assets that are still in use

31112/2018

And Device 47060

VehiCles 1 748836 Furniture and office device 13258

1 029858 2839012

The investment was reclassified in the subsidiaries of 2,51 66 shares of the investments in Qanawat for and distribution company, so that increase in the share from 37.5% to 62.67%, and so controllinq the financial

18 of 25

55871190

71435541

65011485

MM Group for Industry and International Trade (S.A.

5- Investment property

EI Mohandeseen EIObour

Showroom Showroom Total

9400499Cost in January 1, 2019 9400498

6- Projects under construction

10111 of Ramadan Buildings

456976 456976

31112/2019 31/12/2018

EGP EGP

828344 158001

1230624 402350

7- Investments in associates

Mediterranean industrial company

Modern technology services company

Ebtekar for financial investment company

BPE Capital limited company'

Application &

Development company

Investment Percentage

49.60%

35%

49.90%

43.10%

0.0002%

31112/2019

EGP

2404966

9660922

374980783

14000000

1566

Additions during the

year

EGP

119558318

1 550

Gains 1(loss) for the year

EGP

251049

865141

29632296

16

31/12/2018

EGP

2 153917

8795781

225790169

14000000

401048237 119559868 30748502 250739867

.. The company did not start its activity and has not yet issued financial statement

8- Investments available for sale

31/12/2019 31/12/2018

EGP EGP

Global Telecom 90028

for Tourism Resorts 43750

19 of 25

MM Group for Industry and International Trade

9 Inventory

for sale

Parts

Goods in transit

31/12/2019

EGP

792446222

31769677

293 119714

31/12/2018

EGP

410535766

28510353

372 982 848

1117

Impairment of inventory (16029944)

1101 305669

i0-Receivables & Notes Receivables

31/12/2019 31/12/2018

EGP EGP

Accounts Receivables 419497147 348560042

Notes Receivable 78083893 62913791

Notes receivable under collection 27397718 3741044

524978758 415214877

(Less)

Impairment of receivables & notes receivables (17570 (13190

507408742 402024044

11· Rei ated Parties Transactions

1) Due from related parties

Mediterranean industrial company

Modern technology services company

Sky Telecom

31/12/2019

EGP

1 095907

3184050

31/12/2018

EGP

7920420

1464050

4279957 9392660

Due to related

31/12/2019 31/12/2018

EGP EGP

MTI for Real Estate Investment 101 570701 108192955

Shareholders' credit balances 4 976 505 55993217

Sky for ownership and management 16875000

Four I for investments 3450000

Alaa EI-Din Hasouna Mahmoud Sabaa 3600003

Ahmed Hussein Abd EI Megeed Omar 3450000

BPE Caoitallimited company 10000000 10000000

20of25

8190

12-Debtors and other debit balances

Staff loan

Withholding tax

Vodafone company

Tax Authority VAT

UeDDSllS with others

Custom

expenses

Other debit balances

31/12/2019

EGP 5131484

61 353121

29243876

51550762

3371 765

1437033

20963293

31757043

31/12/2018

EGP 5136376

31772907

11 320635

20274743

2160733

6315462

7192121

17473876

(Less)

Impairment in debtors and other debit balances 275) (27

204781 102 101619578

13 Investments at fair value through profit and loss

Investments in portfolios managed by others

31/12/2019

EGP

50211 472

31/12/2018

EGP 89849390

50211472 89849390

14 Cash on hand and at banks

Current Account

Time

Cash on Hand

31/12/2019

EGP

138701 435

453928

."'" ............. ..."

31112/2018

EGP

88115973

515462

.... .....................

149381124 98040434

15- Issued and Capital

- The authorized capital of the company was determined to be 100 000 000 LE and the issued was determined on the date of establishment to be 21 000000 distributed over 210000 shares at a par value of 100 LE and a paid-up capital of 5 250 000 LE and has been registered in the commercial register on January 3, 1996.

According to the decision of the extraordinary general held on April 30 the amount of the authorized capital was increased from 100 000 000 LE to 150 000 000 LE and the issued and fully up-capital amounted to 36 900 000 L.E distributed over 369 000 shares at a par value of 100 LE. per share and has been reaistered in the commercial reqister on August 14, 1997.

- According to the decision of the extraordinary assembly held on July 10, 2003, the par value of the share was split from 100 LE. per share to 10 LE. per share, resulting in a up capital of 36 900 000 distributed on 3 690 000 shares at a par value of L.E. 10 per share.

- According to the decision of the board of directors held on May 18, 2006, the issued and paid up capital was increased from 36 900 000 L.E. to L.E 60 000 000 distributed over 6 000 000 shares at a par value of 10 L. E. per share and has been reaistered in the commercial reqister no. 555 on May 29,2006.

21 of.25

15-lssued and paid-up (continued)

to the decision of the board of directors meeting held on March 3, 2007, the issued and paid up capital was increase from 60 000 000 L.E. to 90 000 000 L.E distributed over 9000000 shares at a par value of 10 L.E. per share and has been in the commercial register no. 531 on

22,2007

According to the decision of the board of directors meeting held on December 10, the issued and paid up capital was increased from 90 000 000 L.E. to 120 000 000 L.E distributed over 12 000 000 shares at a par value of 10 L.E. per share and has been in the commercial register no. 1767 on December 23,2007.

According to the decision of the board of directors held on December 13, 2008, the issued and paid up was increased from 150000000 L.E. to 500 000000 L.E and has been reoistered in the commercial register no. 627 on April 21,2008.

The company then increased its issued and from 120000 000 L.E. to 180000000 L.E and has been reaistered in the commercial

According to the decision of the board of directors meeting held on May 12 2010, the issued and paid up capital was increased from 180 000 000 L.E. to 198000 000 L.E million distributed over 19 800 000 shares with a par value of L.E.10 per share and has been registered in the commercial register no. 1167 on May 25.2010

to the decision of the held on September 272014 the issued and paid up was increased from 198 000 bOO L.E. to 264 000 000 L.E deducted from the general reserve amounted to 66 000 000 LE which was distributed over 26400000 shares with a par value of 10 L.E. per share and has been in the commercial on March 16,2015.

According to the decision of the extraordinary general assembly held on June 18 the issued and paid up capital was increased from 264 000 000 L.E. to 396000 000 L.E deducted from the general reserve using a total of 132 000 000 L.E. which was ultimately distributed over 39 600 000 shares at a par value of 10 L.E. per share and has been reQistered in the commercial reQister on October 25,2015.

According to the decision of the held on 42016, the company split the par value of from 10 LE. per share to 1 LE. per share distributed over 369 000 000 shares at a par value of 1 L.E. per and increase the authorized capital form 500 000 000 LE. to 1 000000000 L.E and has been registered in the commercial reQister on June 9,2016.

According to the decision of the extraordinary assembly held on 24 October 2016, the valuation report was approved for issuance to GAFI in order to split the company into two ConSOlidated MM for Industry and International Trade (splitting) and MTI for Real Estate Investment (splitter) with an issued capital of 245 520 000 LE distributed over 396 000 000 shares at a par value of .62 LE and has been reaistered in the commercial register on December 29, 2016.

According to the decision of the assembly held on May 24,2018 the issued and paid up capital was increased from 245 520 000 LE. to 306 900 000 L.E from the Retained using a 61 380 000 L.E. which was ultimately distributed across 495 000 000 shares at a par value of 0.62 L.E. per share and has been registered in the commercial register on July 10, 2018.

At'f,t'lrrlinn to the decision of the extraordinary general held on April 15, 2019 the issued and up was increased from 306 900 000 LE. to 383 625000 L.E from the Retained earnings

using a 76 725 000 LE. which was ultimately distributed across 618 750 000 shares at a par value of 0.62 L.E. per share and has been in the commercial register on May 22,2019.

22 of 25

MM Group for Industry and International Trade

18-Creditors and other credit balances

Tax authority

Ministry of Health - Takaful contribution for health insurance

Accrued

Creditor of fixed assets purchased

Other credit balances

31/12/2019

EGP

7856629

21452994

1 494061

7772400

10328031

31/12/2018

EGP

28829097

11 391 779

1 645155

7772400

4636871

48904115 54275302

for the

Income tax expense

for tax authority

Accrued revenue on advanced pavments to tax authority

Tax in advance

31/12/2019

EGP 28657593

137335383

(28 657 593)

(1673

'v' 182567\

31/12/2018

EGP 73143008

89865216

(73143008)

(61 207

20- Net sales

31112/2019 31/12/2018 EGP EGP

Consumer and electronics activity 6991415434 5361 549051

Telecommunication 1400140841 1440328626

Automotive 1 401 914373 777452550

Tractors and 36590875 46391 562

9830061 523 7625721 789

23 of 25

I

and I nternational Trade (S.A.

21- Cost of Sales

31/12/2019 31/12/2018

EGP EGP

6439352790 5037764092Consumer electronics activity

•Telecommunication activity

22-Sales & distributions

Salaries and

Sales commission expenses

31/12/2019

EGP

118405549

20864299

1070741

31/12/2018

EGP

74693462

15393218

2885979

of fixed assets

Other Expenses

7180542

128297818

7924169

68800123

23· General & Administrative

31/12/2019 31/12/2018

EGP EGP Salaries and wages 9018043 3849318

Professional Fees 92399 137912

Transportation Fees 1934504 510720

Other !=vnpn"'t>'" 7 022 686 3651 451

24-Earninas per share

31/12/2019 31112/2018

EGP EGP

Net profit for the period 459466852 271245686 Less:

Employee profit share 43649351 25868340 Board of director profit share

374086275 221343506

Weighted average of shares 618750000 495000 000

0.60 0.45

• According to of the Board of Directors for the purpose to Calculate eamings per share

24 of 25


Translation from Arabic 25- Contingent Liabilities

The letters of guarantee issued at the company's request by commercial banks in Egypt in favor of third parties as of 31 December 2019

December 31, 2019

EGP USD Euro

25000

AI Ahli Bank Of Kuwait 7500000 21000 Ahli United Bank 10500000 Attijariwafa Bank 19536900

169154820 21000 25000

QNB ALAHLI 131 617920

26- Tax Status

The company is subjected to law No. 159 for year 1981 and its executive regulations the tax status of the company is as follows;

1. Corporate Tax

- Corporate tax was inspected and settled till 31 December 2016

- The Company submits tax returns regularly in accordance with the legal cut-off dates.

2. VAT tax

- VAT tax has been inspected and settled up to 2015.The Company submits tax fillings regularly in accordance with the legal cut-off dates.

3. Stamp Tax

Stamp duty tax has been inspected and settled up to 31 July 2006 and no inspection has been made up to 2010. An estimated value was declared as per form (19). and was appealed to by the company with no set date for discussion by the internal committee of the tax authority.

4. Withholding tax

Withholding tax was paid up to 31 December 2019, was inspected till 31 December 2017

5. Payroll Tax

- Payroll Tax was inspected and settled for the years 2005 through 2012 -The Company submits monthly reconciliations in accordance with the legal cut-off dates.



~tLtc.L,-~ o~~

Page 25 of25

Documents

MM Group for Industry and International Trade (S.A.E ... · 48284113 94437879 : Net change in cash and cash equivalents during the year 51 340690 (60571 882) Cash and cash equivalents