PALM HILLS DEVELOPMENTS COMPANY S.A.E AND ITS … … · 2008-05-12 · Palm Hills for Development Company (S.A.E) was established according to the investment incentives and guarantees

PALM HILLS DEVELOPMENTS COMPANY S.A.E AND ITS SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD FROM 1 JANUARY 2008 TO 31 MARCH 2008

Translation of financial statements originally issued in Arabic

REVIEW REPORT To: The Board of Palm Hills Development Company (S.A.E.) We have reviewed the accompanying Consolidated Financial Statements of Palm Hills Development Company (S.A.E.) represented in the Consolidated Financial Position as of 31 March 2008, and the related Consolidated statements of income, changes in shareholders’ equity and cash flows for the period from first of January 2008 till 31 March 2008 , These Consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these Consolidated financial statements based on our review. We conducted our review in accordance with the Egyptian Standards on Auditing concerning the limited review. This standard requires that we plan and perform the review to obtain reasonable assurance about whether these Consolidated financial statements are free of material misstatement. A limited review includes implementation of the analytical procedures on the financial data and obtaining information from the Company’s management, accordingly, it is limited in scope compared with the audit procedures performed under the Egyptian Standards on Auditing for the purpose of expressing an opinion on these Consolidated financial statements, accordingly we do not express such an opinion. As per our review, we did not note any material adjustments that should be made to the Consolidated financial statements to conform with the Egyptian Accounting Standards issued in accordance with the ministerial decree 243 of 2006.

Cairo : 13 April 2008

Emad Hafez Rageb Alaa A. Azim Mansour Dr/ Ahmed Shawki

CMAR (42) CMAR (260) CMAR (5) R.A.A (3678) R.A.A (6811) R.A.A (4200)

Allied for Accounting & Auditing Mostafa Shawki Mostafa Shawki E & Y MAZARS MAZARS

Palm Hills Developments Company S.A.E and its Subsidiaries

CONSOLIDATED INCOME STATEMENT For the period ended 31 March 2008 Notes Mar. 31, 2008 Des. 31, 2008 EGP EGP Revenue (20/1-2) 337,283,490 533,424,817 Less Sales return 11,406,348 - Net sales 325,877,142 533,424,817 Less Cost of sales 65,714,487 139,898,222 Sales discount 1,136,156 614,059 259,026,499 392,912,536 Less Selling and distribution expenses 10,940,787 16,130,056 Discounted net present value 10,483,307 34,172,370 21,424,094 50,302,426 Gross profit 237,602,405 342,610,110 Less General and administrative expenses 23,279,396 55,161,814 Installments interest - 2,442,770 Non-recurring liabilities - 24,686,579 Depreciation 917,442 1,060,321 Financing expenses (16) 23,993,708 38,703,674 Provision 31,078,535 - 79,269,081 122,055,158 158,333,324 220,554,952 Add Amortization of discounted net present value 6,633,695 - Return from investment (20) - 3,084,420 Return from market securities (20) - 1,474,172 Credit interest 1,760,487 3,985,994 Gain on foreign exchange differences - 574,905 Other revenues 1,576,521 2,006,359 9,970,703 11,125,850 168,304,027 231,680,802 Less Deferred tax (17) - 53,266 Income tax - 28,987,107 Net profit before minority interests 168,304,027 202,640,429 Less Minority interests in the gain (loss) of subsidiaries 470,441 (1,296,631) Net profit after minority interests 167,833,586 203,937,060 Earnings per share (18&43) 20.98 43.20 The attached notes 1 to 33 form part of these consolidated financial statements.


CONSOLIDATED FINANCIAL POSITION At 31 March 2008 Note Mar. 31, 2008 Des. 31, 2008 EGP EGP Current Assets Projects under construction (22&10) 3,927,581,236 3,847,951,388 Advance payments for investments acquisition (23) 153,402,020 112,370,768 Suppliers - Advance Payments 81,580,703 7,650,608 Notes Receivable , net (24&13) 481,935,865 269,170,946 Customers - Debit Balances (25) 31,758,015 21,350,702 Prepayments and other debit balances (26) 71,886,853 70,731,374 Due from affiliated companies (27A) 6,635,578 4,203,354 Cash on hand and at banks (28&21) 331,684,907 388,636,617 Total current assets 5,086,465,177 4,722,065,757 Current liabilities Banking Credit Balances (29) 729,031,002 581,826,278 Banks overdraft (30) 86,139,221 88,667,831 Customers - Prepayments (31) 1,336,033,132 955,005,792 Deferred Revenue 135,311,426 81,333,592 Current Portion of Land Purchase Liabilities (15) 521,241,139 435,809,028 Creditors – Long Term Investments (32) 44,256,896 74,689,023 Short term loans (33) 1,104,000 685,712 Shareholders’ Credit Balances (34) 54,382,085 54,382,085 Income Tax 28,987,107 28,987,107 Creditors – Fixed Assets Purchase (35) 1,518,750 1,518,750 Due to affiliated companies (27B) 7,101,702 6,998,530 Notes payable (36) 261,725,676 262,662,720 Suppliers 11,283,659 447,284 Accrued expenses and other credit balances (37) 322,274,918 167,893,538 Tax Provision for the Period 31,078,535 - Total current liabilities 3,571,469,248 2,740,907,270 Working Capital 1,514,995,929 1,981,158,487 Long Term Assets Investment in Associates (7B&9D) 245,000 245,000 Notes Receivable , net (24&13) 1,002,933,121 616,448,828 Projects under construction (38&12) 413,489,803 407,253,980 Fixed asset , net (39&11) 37,770,285 30,642,690 Total Long Term assets 1,454,438,209 1,054,590,498 Total investment 2,969,434,138 3,035,748,985 Financed as follows: Shareholders’ equity Paid-up capital (41) 800,000,000 800,000,000 Legal reserve (42) 11,886,523 462,687 Retained earnings 237,434,441 42,682,319 Profit for the period 167,833,586 203,937,060 Pre-operating Expenses (40) (16,292,509) (15,863,424) Total Shareholders’ equity 1,200,862,041 1,031,218,642 Minority Interest 98,046,558 98,096,891 Total Shareholders’ equity after Minority Interest 1,298,908,599 1,129,315,533 Long term liabilities Land Purchase Liabilities (15) 1,560,876,476 1,790,645,074 Creditors – Fixed Assets Purchase (35) 4,050,000 4,050,000 Notes Payable (36) 102,413,749 108,006,781 Deferred Tax (17) 53,266 53,266 Long Term Loans (33) 3,132,048 3,678,331 Total Long Term liabilities 1,670,525,539 1,906,433,452 Total Financing Investments 2,969,434,138 3,035,748,985

Chief of Financial & Administrative Sector Chairman Mohamed Fahmy Yassin Mansour

The attached notes 1 to 33 form part of these consolidated financial statements. Limited review report attached.


Consolidated Statement of Cash Flows For the period ended 31 March 2008 Mar. 31, 2008 Des. 31, 2008 EGP EGP Net profit after minority interests 167,833,586 203,937,060 The portion of minority interests in net profit 470,441 (1,296,631) 168,304,027 202,640,429 Adjustment to reconcile net profit to net cash provided by operating activities Retained earning settlement 40,000 (1,547,709) Income tax - 28,987,107 Deferred tax - 53,266 Discounted net present value of land - 2,442,770 Discounted net present value of notes receivables 38,276,570 20,521,507 Amortization of the discounted net present value of land acquisition liability 10,483,307 34,172,370 Tax Provision for the period 31,078,535 - Depreciation 1,567,692 2,219,464 Amortization of discounted net present value (6,633,695) - Credit interest (1,760,487) (3,985,994) Debit interest 23,992,800 38,703,174 Operating profit before changes in working capital 265,348,749 324,206,384 Cash flows from operating activities (Increase) in work in progress (69,673,171) (1,285,871,612) (Increase) in suppliers - advanced payment (73,930,095) (6,927,409) (Increase) in notes receivables (672,736,625) (881,590,651) (Increase) in debit balances - accounts receivables (10,407,313) (14,903,658) (Increase) in debtors and other debit balances (1,237,149) (59,122,281) (Increase) in advance payments for investments acquisition (41,031,252) (112,370,768) (Decrease) in creditors - land acquisition (161,138,249) (7,300,144) (increase) decrease in due from affiliated companies (2,432,224) 46,461,933 (Decrease) increase in notes payable (6,530,076) 369,137,110 (Decrease) increase in current portion of land purchase liability - 5,568,750 (Increase) in pre-operating expenses (1,387,834) (11,557,154) Increase in pre-operating revenue 1,371,994 1,311,186 Increase in advances from customers 421,533,759 746,498,461 Increase in shareholders –current balances - 54,382,085 Increase in deferred revenue 55,306,954 39,664,967 (Decrease) increase in long term investments (30,432,127) 40,293,023 Increase in creditors and other credit balances 154,381,380 120,662,219 Increase (decrease) in due to affiliated companies 103,172 (568,799) Increase (decrease) in suppliers 10,836,374 (4,130,578) Net cash flows (used in) operating activities (162,053,733) (636,156,936) Cash Flows from Investing Activities Proceeds from investment in long term market securities - 137,804,395 Purchase of fixed assets (8,695,287) (25,007,904) Paid in project under construction (8,600,166) (450,592,662) Collected credit interest 1,842,157 3,904,324 Net cash flows (used in) investing activities (15,453,296) (333,891,847) Cash Flows from Financing Activities Collected from bank credit balances 155,062,575 581,826,278 (Decrease) increase bank overdraft (10,386,461) 88,667,831 Proceeds from term loans (127,995) (302,112) Collected for capital - 675,875,000 Paid for capital increase - 34,791,500 Proceeds from debit interest (23,992,800) (38,703,174) Net cash flows provided from financing activities 120,555,319 1,342,155,323 Net changes during the period (56,951,710) (372,106,540) Cash at beginning of the period 388,636,617 16,530,077 Cash at the end of the period 331,684,907 388,636,617 The attached notes 1 to 33 form part of these consolidated financial statemen


Consolidated Statement Of Changes In Shareholders’ Equity For the period ended 31 March 2008

Capital Statutory reserve

Retained earnings

Net pre operating expenses

Profits

for the period

Total

Begging Balance - - - - - - Paid in Capital 121,500,000 - - - - 121,500,000 Profits of the period - - - - 1,983,192 1,983,192 Balance as of 28 Feb. 2006 121,500,000 1,983,192 123,483,192 Transferred to statutory reserve - 99,160 - - (99,160) - Transferred to retained earnings - - 1,884,032 - (1,884,032) - Paid under capital increase 185,500,000 - - - - 185,500,000 Profit of the period - - - - 7,270,533 7,270,533 Balance as of 28 Feb. 2007 307,000,000 99,160 1,884,032 - 7,270,533 316,253,725 Paid under capital increase 493,000,000 - - - - 493,000,000 Transferred to statutory reserve - 363,527 - - (363,527) - Transferred to retained earnings - - 6,907,006 - (6,907,006) - Prior years’ adjustments-retained earnings - - 34,085,448 - - 34,085,448 Pre_operating expenses - - - (15,863,424) - (15,863,424) Portion of accumulated losses from affilates - - (194,167) - - (194,167) Net profits of the period - - - - 203,937,060 203,937,060 Balance as of 31 Dec. 2007 800,000,000 462,687 42,682,319 (15,863,424) 203,937,060 1,031,218,642 Transferred to statutory reserve - 11,423,836 - - (11,423,836) - Transferred to retained earnings - - 192,513,224 - (192,513,224) - Prior years’ adjustments-retained earnings - - 2,238,898 - - 2,238,898 Pre_operating Expenses - - - (429,085) - (429,085) Net profits of the period - - - - 167,833,586 167,833,586 Balance as of 31 Mar. 2008 800,000,000 11,886,523 237,434,441 (16,292,509) 167,833,586 1,200,862,041


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 1. BACKGROUND

Palm Hills for Development Company (S.A.E) was established according to the investment incentives and guarantees Law No. (8) of 1997 and law No. 159 for the year 1981 and their executive regulations, taking into consideration the statutes of Law No. 95 for the year 1992 and its executive regulations.

2. COMPANY'S PURPOSE

The company was established to invest in real estate and properties in New Cities and New Urban Communities including building, constructing, possession and use of agglomerations, resorts, villas and tourist villages, sale or lease as well as all the services, facilities, leasing and construction of integrated projects and managing the entertainment activities associated with the company activity. All such activities are subject to the approval of the appropriate authorities.

3. THE COMPANY'S LOCATION The company headquarter is in 6th October City Giza Governorate and its branch is at 11 El Nakhil Street - Mohandessein.

4. COMMERCIAL REGISTER The company is registered in the Commercial Register under No. (6801) at January 10, 2005.

5. THE FISCAL YEAR The company's fiscal year begins on March 1st, and ends on February 28th, from each year. The extraordinary general assembly meeting decided on September 19th, 2007 to amend the articles of association so that the fiscal year starts on January 1st and ends on December 31st from each year as an exception the prior fiscal year started on March 1st, 2007 and ended on December 31st, 2007

6. STOCK EXCHANGE REGISTRATION The company is listed in the unofficial schedule No. (2) in the Cairo and Alexandria Stock Exchange at December 27, 2006.

7. THE COMPANY'S CURRENT ACTIVITY

The company started its main activities in urban development projects in both the new urban communities and touristic destination that has distinct character, through:

a. Residential Areas

Establish and implement residential, entertaining and servicing resorts through the company and its affiliates where the lands area possessed reached: (1160.28) feddan at 6th of October City, (285.64) feddan at Cairo City, (1759.8) feddan at Eropean Country Farms, (3419.2) feddan at Sedy Abdelrahman –Alameen- Mars Matrouh City, (1190.48) feddan at Hurghada City, (3.2) feddan at Alexandria City.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008

b. Affiliated companies investments

The company invests directly in affiliated companies having the same activities in other urban communities as follows:

Ownership Percentage

⎯ New Cairo for Real Estate Developments Co. 74% ⎯ Royal Gardens for Real Estate Investments Co. 51% ⎯ Coldwell Bankers – Palm Hills for Real Estate Investments Co. 49% ⎯ The Middle East for Touristic Investment & Development Co. 58.75% ⎯ Nile Palm Al Naeem for Real Estate Development Co. 50% ⎯ Rakeen Egypt for Real Estate Investment Co. 97% ⎯ Palm Hills Middle East for Real Estate Investment Co. 99.95% ⎯ The Middle East for Real Estate & Touristic Investment Co. 87.50% ⎯ Saudi Urban Development Co. 51% ⎯ Gamsha for Touristic Development Co. 59%

8. COMPLIANCE STATEMENTS Through the current fiscal period which started January 1st, 2008 and ended March 31st, 2008, the Group companies applied the Egyptian Accounting Standards issued by the ministerial decision no 243 for year 2006, following the same accounting standards previously applied when preparing the financial statements as of December 31st, 2007. 9. SIGNIFICANT ACCOUNTING POLICIES

a. Financial Position Preparation

The preparation of the financial position is the responsibility of the company’s management. The accounting policies applied and used to prepare the position are in compliance with the Egyptian Accounting Standards, as applicable, otherwise, according to the International financial and reporting Accounting Standards which weren’t mentioned in Egyptian Accounting Standards issued by resolution No. 243 for the year 2006. The related Egyptian accounting standards were applied when preparing the financial position as of March 31st, 2008 (appendix no1) excluding the Egyptian financial standards which are not related.



b. Basis of consolidation

Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are de-consolidated from the date that control ceases. The consolidated financial statements comprise the financial statements of Palm Hills for Development Company (S.A.E) and its subsidiaries as at 31 December each year. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full. The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. When the Group acquires a group of assets or net assets that does not constitute a business, it allocates the cost of the group of net assets between the individual identifiable assets and liabilities in the group of net assets based on their relative fair values at the acquisition date. Minority interests represent the portion of profit or loss and net assets not held by the Group and are presented separately in the income statement and within equity in the consolidated balance sheet, separately from parent shareholders’ equity. Acquisitions of minority interests are accounted for using the parent entity extension method, whereby, the difference between the consideration and the book value of the share of the net assets acquired is recognised as goodwill.

c. Investment in subsidiaries

The company’s investments in subsidiaries in which the company owns a significant percentage of common stocks and can control it through financial and managerial influence according to percentage of ownership and voting rights are accounted for under cost method – cost of acquisition- income statement to reflect the decrease of other than temporary cost. These investments to be eliminated when preparing consolidated financial statements.

d. Investment in associates

The company’s investments in associates are accounted for under the equity method of accounting. These are entities over which the company exercises significant influence and which are neither subsidiaries nor joint ventures. Investments in associates are carried in the balance sheet at cost, plus post-acquisition changes in the company’s share of net assets of the associate, less any impairment in value. The income statement reflects the Company’s share of the results of its associates.

Unrealised profits and losses resulting from transactions between the Company and its associate are eliminated to the extent of the Company’s interest in the associate.



e. Intangible Assts

The intangible assets are the asset that have no monetary nature or specific material existence and acquired through legal contractual rights with third parties. The possession of these assets will generate a measurable future benefits in the form of the future monetary flows. These assets are recoded at direct contractual value at the acquisition date and re-measured at the reporting date at their acquisition cost after deducting accumulated amortization and accumulated losses due to impairment, if any, which is the fair value of such assets at that date

f. Accounting Estimates

The preparation of the financial statements according to the Egyptian Accounting Standards requires, in some cases, a reliance on assumptions and estimates developed by the management deems appropriate, including the development and application of accounting policies to reflect the economic substance and the nature of the transactions related to the main activity of the company (current activity revenues, the estimated cost to complete of the project, the impairment of assets, usufructuary right, property investments). Accordingly, these estimates and assumptions are assessed based on best data and information available to the management which may directly affect the revenue and the costs associated with those estimates, the values of the assets and related obligations. However, such estimations and assumption applied for the current period may differ compared to the actual facts in the following periods .That mentioned differential is acceptable without misleading the presentation of financial statements concerning financial position and the results of company's operations and its cash flows.

g. Change in Accounting Policies

Represented in the change in the basis and practices that the entity applies when preparing the financial position, by changing from an accepted accounting policy to another accepted accounting policy. In accordance with the Egyptian Accounting Standards. When the voluntary application of the new policy have a positive effect on the transactions and the processes of the group companies and its effects on the financial position and the results of the group companies. The effects of the changes in policies are treated retrospectively and included in the retained earnings in the statement of equity.

h. Foreign Currencies Transactions

• Functional and Representation Currencies

Transactions in the group companies’ records are recorded by the functional currency which is the Egyptian Pound, transactions in foreign currencies during the period are translated into Egyptian Pound using the prevailing exchange rates. • Transactions and Balances

Monetary assets and liabilities denominated in foreign currencies are translated using the foreign currency exchange rates prevailing as at that date. The re-valuation results recorded in the income statement.

i. Held to Maturity Investment

Held to maturity investment represents investment of treasury bills and Central Bank of Egypt notes. These investments recorded at cost - acquisition cost - which represents its fair at the acquisition date and are re-measured at the reporting date at its amortized cost that represents fair value at that date. The difference between acquisition cost or fair value and its redemption value is charged to the income statement.



j. Property Investments

The property investments represent investment in Real Estate that held or acquired to resale for capital appreciation resulting from the positive change in the fair value to earn or rental or both, and not for sale in the ordinary course of main business. These investments are initially recognized and recorded at the acquisition date or exchange. At the reporting date those investments are re-measured at their fair value taking into consideration the active market conditions for those Real Estates. The change in fair value of such investment is included in the income statement.

Those real estate investments do not include investments of any real estate or property acquired and retained solely for the purpose of subsequent conduct in the near future or for development or resale within the normal course of business of the company.

10. WORK IN PROGRESS The work in progress represents direct & indirect cost of the land allocated for the group companies to exercise its activity and the company's main business. Also, includes the cost of construction, costs of utilities and infrastructure and other indirect cost related to units under construction but did not meet the predetermined percentage of completion to be included in income statement

11. FIXED ASSETS AND DEPRECIATION: Fixed assets can be evidence in group Book Company by historical cost - the cost of acquisitions - to be depreciation to be pursuing a policy of straight line according to the productive age ( assumption ) estimated useful life of each asset from the date of the actual operation ( use asset) According to the following equations : Asset Premium rate depreciation Buildings 5% Tools & Equipment Generators and electrical equipment 25% Imaging and packaging machines 25% Measuring equipment 25% Furniture and Fixtures Computers 50% Software 20% Office equipment 25% Furniture and fixtures 25% Timber and Shaddadat 25% Transport and movement 25%


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 12. DEVELOPMENT PROPERTIES Properties acquired, constructed or in the course of construction for sale are classified as development properties. Development Properties are stated at cost plus attributable profit/loss less progress billings. The cost of development properties includes the cost of land and other related expenditure, which are capitalised as and when activities that are necessary to get the properties ready for sale are in progress. Net realisable value represents the estimated selling price less costs to be incurred in selling the property. 13. NOTES RECEIVABLE Note receivable are recognized initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. 14. PROVISIONS Provisions for legal claims are recognized when the group has a present legal or constructive obligations as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. 15. LAND PURCHASE LIABILITY Land purchase liability is recognized initially at the fair value. Land purchase liability is subsequently stated at amortized cost using the effective interest method. When a liability is incurred for the purchase of land, the stated interest rate is presumed to be fair unless no interest rate is stated or the stated interest rate is unreasonable. When the interest rate on the liability is not stated or the stated interest rate is unreasonable, the liability is to be recorded at the fair market value of the land received or at an amount that reasonably approximates the market value of the liability, whichever is more clearly determinable. If the fair value of the land or liability is not determinable, the present value of the liability is determined using the imputed interest rate. This rate is then be used to establish the present value of the liability by discounting all future payments on the liability at this rate. Difference between present and face value of the liability, is recorded as a discount and amortized to interest expense using the effective interest method. 16. BORROWINGS Borrowings are recognized initially at the fair value, net of transaction cost incurred. Borrowings are subsequently stated at amortized cost, any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. 17. INCOME AND DEFERRED TAXES Taxation is provided in accordance with Egyptian fiscal regulations. Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on laws that have been enacted at the balance sheet date. Deferred income tax assets are recognised for all deductible temporary differences and carry-forward of unused tax assets and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax assets and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. 18. EARNINGS PER SHARE Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 19. COST TO COMPLETE THE PROJECTS

The Group estimates the cost to complete the projects in order to determine the cost attributable to revenue being recognized. These estimates include the cost of providing infrastructure activities, potential claims by sub contractors and the cost of meeting other contractual obligations to the customers.

20. REVENUE RECOGNITION

• Revenue from selling the units:

1. Villas & Town Houses

Revenue from the main activity is recognized as contracts revenue in the consolidated income statement according to total revenues recognized and presented in total contractual value of units sold as mentioned per the signed and approved selling contracts. Where by the inclusion of the contractual value of the land contracted to implement the units in full. In addition, to the construction revenue if the percentage of completion exceeded 50% of the total estimated cost of each phase. Bearing in mind the revenues from additional works according to its actual cost for each process separately

2. The completed units for sale

Revenue from the completed units for sale is recognized in income statement upon actual or implicit delivery of these units.

• Gain (loss) from investment securities

The net effect of the sale of investment securities is recognized as gain / loss in income statement and calculated as the difference between the acquisition cost or adjusted book value to fair value and the selling price according to the broker’s invoice.

• Real Estate Revenue

Revenue from Real Estate investments is recognized when the process of selling is completed, and ownership is transferred –preliminary- to the buyer. These revenues are recorded as sales gain being the difference between the investments cost or the modified cost according to the latest fair value and the selling price.

• Revenue from selling investment

Revenue from investing in Osoul Funds Investment are recognized in the income statement and calculated as the difference between the acquisition cost and the selling price at the date of the financial statements.

21. CASH AND CASH EQUIVALENT

For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash in hand, bank balances, and short-term deposits with an original maturity of three months or less, net of outstanding bank overdrafts.


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 22. WORK IN PROGRESS

Work in progress represents the value and the direct and indirect cost of the lands allocated to the company to practice its usual and main activities after exclusion the cost of the lands upon which the units will be built according to the approved selling contract. Work in progress, also includes also construction cost, infrastructure cost and all indirect costs related to the construction of the units to be built according to the approved contract but the percentage of completion of the work performed, till the reporting date, does not meet the ratio to be included as activity cost indicated per note (8--i). The balance of work in progress amounted to March 31, 2008 at LE 3,927,581,236 as follows:

Excluded which recorded in income statement at

Total cost till March 31, 2008

February 28, 2006

February 28, 2007

December 31, 2007

March 31, 2008

Excluded which recorded in

retained profit on December 31,

2007

Excluded which record in retained

earning on March 31, 2008

Balances as of March 31, 2008

Land acquisition cost 3,910,715,589 -- 37,938,124 122,673,622 62,439,626 (4,175,793) (2,207,915) 3,694,047,925 Indirect acquisition cost (direct) 237,678,972 -- -- 16,134,618 3,274,861 4,141,340 -- 214,128,153 Other indirect cost 20,495,140 -- -- 1,089,982 -- -- -- 19,405,158 Total phases cost 4,168,889,701 -- 37,938,124 139,898,222 65,714,487 (34,453) (2,207,915) 3,927,581,236 Purchased unit cost 23,847,557 23,847,557 -- -- -- -- -- -- Balance as at March 31, 2008 4,192,737,258 23,847,557 37,938,124 139,898,222 65,714,487 (34,453) (2,207,915) 3,927,581,236

Cost of acquisition lands represent as follows:

Area feddan Acquisition

land cost Goodwill allocation Total cost

Net percent value Net cost

Contracting land cost

Available for contracting cost

6th of October City 898.9 1,950,472,366 219,848,402 2,170,320,768 201,439,004 1,968,881,764 64,780,269 1,904,101,495 New Cairo City lands 285.6 303,335,796 74,243,965 377,579,761 81,348,222 296,231,539 90,191,790 206,039,749 European Country side farm land 1,759.8 222,427,079 -- 222,427,079 -- 222,427,079 -- 222,427,079 Sidi Abdel Rahman lands – Matrouh Governorate 3,401.11 661,181,885 437,329,533 1,098,511,418 81,999,254 1,016,512,164 61,695,605 954,816,559 1,190.48 30,580,065 187,750,358 218,330,423 -- 218,330,423 -- 218,330,423 Alexandria land 3.20 188,332,620 -- 188,332,620 -- 188,332,620 -- 188,332,620 Balance as at March 31, 2008 7,539.09 3,356,329,811 919,172,258 4,275,502,069 364,786,480 3,910,715,589 216,667,664 3,694,047,925


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 23. PAID-UP FOR INVESTMENT

Paid-up for investment acquisition balance as of March 31, 2008 amounting to LE 153,402,020 represents the following:

Type of dealing

March 31, 2008 December 31, 2007

Camsha for Touristic Development Possession 4,010,000 4,010,000 Gouda for Commercial Services Possession 97,440,000 97,440,000 El Naiem for Hotels and Touristic Village Possession 51,952,020 10,920,768 Balance as at March 31, 2008 153,402,020 112,370,768

The amount which paid to purchase investment recorded in paid up for investment acquisition item according to agreement and selling contract between the company and shareholders company which mention above till ownership transfer to the company to prepare the consolidated financial position these amount which directly paid excluded from these company’s capital.

24. NOTES RECEIVABLE

Notes receivable represents collected checks operating from customers related to sales contract value for contracted units to be built. Notes receivable balances as at March 31, 2008 after net present value amounted to LE 1,484,868,986 and classified according to maturity as follows:

Notes receivables Balance as at March. At Banks On hand 31, 2008 Amount due till 31/3/2009 397,738,357 111,323,339 509,061,696 --------------------------- ------------------------ ----------------------------- Total short term notes receivable 397,738,357 111,323,339 509,061,696 Less: net present value -- -- 27,125,831 --------------------------- -------------------------- ----------------------------- Short term notes receivable 481,935,865 ----------------------------- Due from 1/4/2009 till 31/3/2010 361,496,338 58,859,695 420,356,033 Due from 1/4/2010 till 31/3//2011 315,776,230 64,914,812 380,691,042 Due from 1/4/2011 till 31/3/2012 284,675,815 53,986,317 338,662,132 Due from 1/4/2012 till 31/3/2013 47,853,568 2,386,612 50,240,180 Due from 1/4/2013 till 31/3/2014 16,852,940 708,388 17,561,328 Due from 1/4/2014 till 31/3/2015 3,420,255 -- 3,420,255 --------------------------- ------------------------ ----------------------------- Total long term notes receivables 1,030,075,146 180,855,824 1,210,930,970 Less: net present value -- -- 207,997,849 --------------------------- ------------------------ ----------------------------- Long term notes receivables 1,002,933,121 ----------------------------- Balance as at March 31, 2008 1,484,868,986 =================


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 25. CUSTOMERS – NOTES BALANCES

Customers – debit balances as of March 31, 2008 amounted to LE 31,758,015, this accrual balance represent in difference between contractual value for some contractual units and advanced payment and installment which paid for these units, without paid by notes receivable or any other credit instruments for accrual installme4nts, represent as follows:

March 31, 2008 December 31, 2007Cascade Palm clients "first phase" 455,282 620,750 Bamboo – second phase – apartment 652,510 822,103 Golden Africa – third phase 3,326,781 4,046,970 El Katamia – villas & town house 7,451,928 12,122,381 El Golf 88,220 -- --------------------------- ----------------------------- Total of Palm Hills for Development client 11,974,721 17,612,204 --------------------------- ----------------------------- Sea front 12,805,510 1,545,625 Lagoon view -- 767,992 Town H. Golf 73,627 230,000 Town H. Golf 707,787 1,838 Shallallat clients 119,968 -- Garden view 3,165,252 -- Golf view 1,259,761 -- --------------------------- ----------------------------- Total of Palm Hills Middle East for Real Estate Investments client 18,131,905 2,545,455 New Cairo clients 1,651,389 1,193,043 --------------------------- ----------------------------- Balances as of March 31, 2008 31,758,015 21,350,702 ================ ================

26. DEBTORS AND OTHER DEBIT BALANCES

Debtors and other debit balances as of March 31, 2008 amounted to LE 71,886,853 represent the following:

March 31, 2008 December 31, 2007 Shareholders – debit balances 21,056,340 46,066,698 New Urbanization Authority -- 6,000 Accrual credit interest -- 81,670 Deferred allowance discount 741,764 741,764 Retention with others 894,536 894,536 Prepaid expenses 7,822,474 1,447,897 Other debit balances 40,232,341 13,559,423 Custody 804,491 37,511 Other debit balances 334,907 7,895,875 ------------------------- ----------------------------- Balances as of March 31, 2008 71,886,853 70,731,374 =============== ===============


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 27. AFFILIATED COMPANIES

a. Due from affiliated company – debit balance

Due from affiliated company -- debit balances -- as of MARCH 31, 2008 amounted to LE 6,635,578 represent the following:

March 31, 2008 December 31, 2007

El Etihadia for Real Estate Investments 3,974,897 3,404,699Goda for Commercial -- 798,325Coldwell bankers 10,330 330El Naiem for Hotels 2,649,851 --El Naiem for Real Estate 500 -- -------------------------------- --------------------------------Balance as of March 31, 2008 6,635,578 4,203,354 =================== ===================

b. Affiliated companies – credit balance

Due to affiliated company -- credit balance as of March 31, 2008 amounted to LE 7,101,702 represents the following:

March 31, 2008 December 31, 2007 Goda for Commercial 121,435 --El Etihadia for Real Estate Investments -- 18,263Plaza Company Touristic Projects 6,980,267 6,980,267 ---------------------------- ------------------------------Balance as of March 31, 2008 7,101,702 6,998,530 ================= =================

28. CASH ON HAND AND AT BANKS

Cash on hand and at banks balance as of March 31, 2008 amounted to LE 331,684,907 represents the following:

March 31, 2008 December 31, 2007 Current account – local currency 146,166,818 168,340,694Current account – foreign currency 832,047 84,976Deposits – local currency 184,391,666 220,181,439Deposits – foreign currency 254,320 --Cash on hand 40,056 29,508 -------------------------------- --------------------------------Balance as of March 31, 2008 331,684,907 388,636,617 =================== ===================


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 29. CREDIT BANKS

Credit banks balances as of March 31, 2008 amounted to LE 729,031,002 represents the following:

These loan and banks facilities obtained according to personal guarantee in favor of Palm Hills Development.

30. OVERDRAFT BANK Overdraft bank balance as of March 31, 2008 amounted to LE 86,139,221 represent as follows:

Credit facilities was grant according to personal guarantee in favor of Palm Hills for Development except LE 1,771,439 relate to Palm Hills Middle East for Real Estate Investment and LE 7,857,851 related to retain Egypt for Real Estate Investment.

March 31, 2008 December 31, 2007 International Commercial Bank – Local CurrencyDebit current account – short term starting from May 15, 2007 and ending May 14, 2008 with ratio 3,75% plus price and commission valued at 901.5

547,260,000 400,000,000

Egyptian Bank for Export Development – Local Currency * Contract loan – middle term – 13 months, 11.15% monthly interest, the company obtain this loan according to personal guarantee contract

181,771,002 181,826,278

-------------------------------- ------------------------------Balances as of March 31, 2008 729,031,002 581,826,278 =================== ==================

March 31, 2008 December 31, 2007 HSBC Bank – local currency 1,771,439 825,660Barclays International Bank – local currency -- 2,140,686International Commercial Bank 7,857,851 --Banque Miser – local currency 76,509,931 85,701,485 -------------------------------- ------------------------------Balances as of March 31, 2008 86,139,221 88,667,831 =================== ==================


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 31. CUSTOMERS – ADVANCED PAYMENTS

Customers – advanced payments balance as of March 31, 2008 amounted to LE 1,336,033,132 as the following:

Reserve payment March 31, 2008

Construction work client March 31, 2008 March 31, 2008 December 31, 2007

Cascade Palm clients -- first phase 12,090,940 4,293,225 16,384,165 16,384,166

Bamboo Clients -- second phase -- 79,241864 79,241,864 79,241,864 Golden Arica Clients -- third phase 7,643,785 81,355,509 88,999,294 87,243,702 El Katamia Clients 29,769,902 277,129,671 306,899,573 243,060,730 El Golf client 210,967,788 76,894,537 287,862,325 241,183,009 El Golf land clients 35,355,124 -- 35,355,124 -- --------------------------- --------------------------- --------------------------- --------------------------Total of Palm Hills Development clients 295,827,539 518,914,806 814,742,345 667,113,471 Total of Palm Hills Development for Real Estate Investment 92,681,818 173,862,525 266,544,343 166,936,491 Royal Gardens for Real Estate Investment 218,851,407 -- 218,851,407 123,968,703 Rakean Egypt for Real Estate Investment 35,841,843 -- 35,841,843 14,575,100 New Cairo for Real Estate Development Clients 6,425,533 168,957,183 175,382,716 115,782,523 --------------------------- --------------------------- --------------------------- --------------------------Balance as of March 31, 2008 649,628,140 861,734,514 1,511,362,654 1,088,376,288 ================ ================ Net present value (175,329,522) (133,370,496) --------------------------- --------------------------Customers advance payment balance after net present value 1,336,033,132 955,005,792 ================ ===============

32. INVESTMENT -- CREDITORS

Creditors – investment -- balance as of March 31, 2008 amounted to LE 44,256,896 represent the following:

March 31, 2008 December 31, 2007Saudi Company for Urbanization Development 44,256,896 74,689,023 --------------------------- ---------------------------------Balance as of March 31, 2008 44,256,896 74,689,023 ================ ===================


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 33. LOANS

The Arab Societe General Bank loan as of March 31, 2008 amounted to LE 4,236,048 short term loan amounted to LE 1,1004,000 also long term loan amounted to LE 3,132,048 is granted to finance purchasing three floors of Diar Plaza Building as the principle loan (without interests) amounted to LE 4,800,000. The whole loan amount used on December 24, 2006 and the interests reached to LE 2,912,375 at the due date. The loan term of seven years installed on Twenty--eight quarterly installments with compound interests.

34. SHAREHOLDERS – CREDIT BALANCE Shareholders credit balance as of March 31, 2008 amounted to LE 44,256,896 represent the following:

March 31, 2008 December 31, 2007 Shareholders of Palm Hills for Development 52,750,623 52,750,623 Yassin Lotfy Mansur 815,731 815,731 Mohamed Ashraf Abo El Ahab 815,731 815,731 ---------------------------

----------------- ---------------------------------

----------- Balance as of March 31, 2008 54,382,085 54,382,085 ================

=== ===================

35. FIXED ASSETS – CREDITORS

Fixed assets creditors balance as of March 31, 2008 amounted to LE 5,568,750 represent the following:

March 31, 2008 December 31, 2007 Fixed assets creditors – short term 1,518,750 1,518,750 Fixed assets – creditors – long term 4,050,000 4,050,000 --------------------------- -------------------------------Balance as of March 31, 2008 5,568,750 5,568,750 ================ ==================

36. NOTES PAYABLE

Notes payable balance as of March 31, 2008 amounted to LE 364,139,425 represent the following:

March 31, 2008 December 31, 2007Notes payable – short term 261,725,676 262,662,720Notes payable – long term 102,413,749 108,006,781 --------------------------- -------------------------------Balance as of March 31, 2008 364,139,425 370,669,501 ================ ==================


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 37. CREDITORS AND OTHER CREDIT BALANCE

Creditors and other credit balance as of March 31, 2008 amounted to LE 322,274,918 represent the following:

March 31, 2008 December 31, 2007Shareholders current account 35,356,040 35,356,040Prepaid revenue (Palm Hills Club) 2,427,193 2,326,479Subscription Palm Hills Club 31,644,085 25,949,523Owners Union 85,121,392 52,658,273Tax Authority – withholding tax 1,564,925 698,632Quotation amendments 150,401 160,839Social insurance authority 2,457,213 1,784,080Other credit balances 17,014,408 9,888,592Suspense account credit balances ** 145,874,976 38,176,283Suspense account clients -- 419,977The Arabia Co. for Legal Consulting -- 4,320Insurance 664,285 470,500 --------------------------- -------------------------------Balance as of March 31, 2008 322,274,918 167,893,538 ================ ==================

* Owners union balance represents the collected amounts and notes receivables received from customers

to finance the maintenance, security, guarding and other expenses related to the Palm Hills compound management with a correspondence balance recorded in the notes receivable item.

** Under adjustment balance represent in payment from (Bamboo phase 2) clients as reserved which

related to Goda for Commercial Services, the company collected from client for its benefits. 38. PROJECTS IN PROGRESS

Projects in progress balance as of March 31, 2008 amounted to LE 413,489,803 which represent in land cost and construction work for services and entertainment area at Palm Hills as follows:

March 31, 2008 December 31, 2007Lands 340,883,827 343,248,170Net present value (66,148,470) (66,148,470) --------------------------- -------------------------------Net adjustment cost for lands 274,735,357 277,099,700El Golf ground and hotel construction in 6th of October City 26,612,014 26,612,014Construction and infrastructure for North Coast Hotel 691,230 691,230Palm Hills Club 102,055,202 93,455,036Palm Hills shops 9,396,000 9,396,000 --------------------------- -------------------------------Balance as of March 31, 2008 413,489,803 407,253,980 ================ ==================


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 39. FIXED ASSETS

Fixed assets balance as of March 31, 2008 amounted to LE 41,893,016 represent the following:

Cost as of 31/3/2008

Accumulated depreciation at

31/3/2008Net cost as at

31/3/2008 Net cost as at

31/12/2007Buildings 15,150,000 627,869 14,522,131 14,711,506Furniture 2,566,845 388,607 2,178,238 2,029,525Vehicles 5,062,551 1,050,419 4,012,132 4,328,541Tools and equipment 12,577,498 1,059,988 11,517,510 5,962,819Computers 2,634,335 633,085 2,001,250 1,068,470Air conditions 5,300 2,098 3,202 3,533Caravans 421,950 30,801 391,149 340,257and enhancements 2,733,713 283,941 2,449,772 1,939,307Computer programs 740,824 45,923 694,901 258,732 -------------------------- --------------------------- ------------------------- --------------------------Balance as of March 31, 2008 41,893,016 4,122,731 37,770,285 30,642,690 =============== ================ ============== ===============

40. THE NET OF PREOPENING EXPENSES

The net of preopening expenses balance as of March 31, 2008 amounted to LE 16,292,509 represent as follows:

March 31, 2008 December 31, 2007Tips 7,332,571 7,332,571Present value interest 12,882,736 11,949,281Selling commission 6,865,556 5,779,712Depreciation 13,663 8,062Security expenses 17,600 4,400Establishment expenses 137,281 119,281Professional services fees 379,621 309,654Registering fees 1,830 1,830Stamp duty 357 357Travelling expenses 150 150Allowance discount 150,794 --Bank charges 18,747 5,010Sundries 65,983 34,712 ---------------------------- ---------------------------Total 27,866,889 25,545,020Less: Preopening revenue 2,683,180 1,311,186 ---------------------------- --------------------------- 25,183,709 24,233,834Less: monitory share 8,891,200 8,370,410 ---------------------------- ---------------------------Balance as of March 31, 2008 16,292,509 15,863,424 ================ ================


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS At 31 March 2008 41. CAPITAL

The company has an authorized capital of LE 1,500,000,000 and the issued capital is LE 800,000,000, divided on 400,000,000 shares with a par value of LE 2 each and they are all nominal cash. The capital movement from establishment date as follows:

LE

121,500,000 The issued capital at establishment divided on 1,215,000 shares with par value of LE 100

===================

307,000,000

The issued capital after increase with an amount of LE 185,500,000 according to extraordinary general assembly in its session convened on December 20, 2006 divided into 3,070,000 shares with a par value of LE 100

===================

400,000,000

The issued capital after increase with an amount of LE 93,000,000 according to the Board meeting convened on May 13,2007 divided on 4,000,000shares with a par value of LE 100

===================

600,000,000

The issued capital after increase with an amount of LE 200,000,000 according to the board meeting convened on July 15,2007 divided into 6,000,000 shares with a par value of LE 100

===================

800,000,000

The issued capital after increase with an amount of LE 200,000,000 according to the board meeting convened on November 6, 2007 divided into 8,000,000 shares with a par value of LE 100.

===================

42. LEGAL RESERVE

Legal reserve balance as of March 31, 2008 amounted to LE 11,886,523 represent as follows:

March 31, 2008 December 31, 2007Opening balance 462,687 99,160Support during the period 11,423,836 363,527 ------------------------------ ------------------------------Balance as of March 31, 2008 11,886,523 462,687 ================= =================

43. EARNING PER SHARE

The earnings per share as of March 31, 2008 amounted to LE 20.98 are calculated as follows:

March 31, 2008 December 31, 2007Net profit for the year 167,833,586 203,937,060 Divided by: Number of shares 8,000,000 4,721,000 Earning per share 20.98 43.2

For the purpose of calculating the earning per share before any distributions to employee or members of the board of directors, the weighted average of numbers of shares is calculated by adding the average number of existing shares during the quarter.



44. RELATED PARTY TRANSACTIONS The related party transactions represent the major transaction conducted between the company and its shareholders (whether natural person or a legal person) or transactions or deals with the shareholders of the company or any of the affiliated or subsidiary companies, as follows: a. Transactions with related parties

Related party Relation Nature of dealing Dealing amount El Naiem for Hotels and Touristic Villages Affiliated Finance 2,649,851 Gawda Affiliated Finance (121,435) Middle East for Real Estate and Touristic Investment Affiliated Finance 49,509 El Etihadia for Real Estate Investment Affiliated Finance 3,973,490 Rakin Egypt for Real Estate Investment Subsidiary Finance 7,043,065 New Cairo for Real Estate Development Subsidiary Finance 14,661 Middle East for Investment and Touristic Development Subsidiary Finance 4,983,863 Gamsha for Touristic Development Subsidiary Finance 17,450,792 Coldwill Bankers – Palm Hills for Real Estate and Touristic Investment Subsidiary Finance 10,330 Middle East for Real Estate and Touristic Investment Subsidiary Finance 62,643,492 Royal Gardens for Real Estate Subsidiary Finance 268,544 Saudi for Urbanization Development Subsidiary Finance 9,416,072 El Naiem for Real Estate Investments Subsidiary Finance 500 ----------------------------------------- ----------------------------------------- ----------------------------------------



b. Transactions with related parties

45. TAX POSITION The company enjoys a ten year tax holiday starting one year after the official operation on March 2006 and ending on MARCH 28, 2016.

46. FINANCIAL INSTRUMENTS AND ITS FAIR VALUE a. Financial Instruments

The financial instruments are the financial assets and liabilities which have monetary nature in company. The financial assets include cash balances, bank current accounts, notes receivables, cheques under collection and debtors & other debit balances. The financial liabilities include banks accounts overdraft, advanced payment – customer and creditors & other credit balances.

Related party Nature of dealing Dealing amount El Naiem for Hotels and Touristic Villages Affiliated company – current

account -- debit 2,649,851 Gawda Affiliated company – current

account -- credit (121,435) Middle East for Real Estate and Touristic Investment Affiliated company – current

account -- debit 49,509 El Etihadia for Real Estate Investment Affiliated company – current

account -- debit 3,973,490 Rakin Egypt for Real Estate Investment Affiliated company – current

account -- debit 7,043,065 New Cairo for Real Estate Development Affiliated company – current

account -- debit 14,661 Middle East for Investment and Touristic Development Affiliated company – current

account -- debit 4,983,863 Gamsha for Touristic Development Affiliated company – current

account -- debit 17,450,792 Coldwill Bankers – Palm Hills for Real Estate and Touristic Investment

Affiliated company – current account -- debit 10,330

Middle East for Real Estate and Touristic Investment Affiliated company – current

account -- debit 62,643,492 Royal Gardens for Real Estate Affiliated company – current

account -- debit 268,544 Saudi for Urbanization Development Affiliated company – current

account -- debit 9,416,072 El Naiem for Real Estate Investments Affiliated company – current

account -- debit 500 ----------------------------------------- ---------------------------



b. Fair Value of Financial Instruments

The net book value for the financial instruments (banks balances, current accounts, debtors and other debit balances, credit banks and creditors & other credit balances) represent appropriate estimation to its fair value (market value) at the financial statements date.

47. MANAGEMENT RISKS OF FINANCIAL INSTRUMENTS

a. Interest Risk

Interest risk is represented in probable change in interest rates and its effect on current and future financial liabilities that include interest and credit banks balances' (bank overdraft) commission, which may an opposite and negative effect on operation results. The company uses long term finance source, without interest which represent customer advanced balance, (discounting notes receivable). Also, the company adopted a finance policy to reduce the risk of changing interest prices.

b. Credit Risk

Credit risk represents customers' ability to pay or to fulfill their financial obligation toward the company. This risk considered very rare because the company is dealing with customers having appropriate and strong financial position.

48. CAPITAL EXPENDITURES

The contingent liabilities on the date of preparing the financial position represents the company's subscription in Royal Gardens for Real Estate Investment's capital S.A.E. because the company subscribed in 153,000 shares the company paid half value of this share and the company's liabilities amounted to LE 7,650,000 in case of calling for installment which doesn’t due yet and LE 17,625,000 which represents 75% of company's shares in Middle East for Investment and Touristic Development as the company paid 25% from the company's shares.


PALM HILLS FOR DEVELOPMENT (S.A.E)

ATTACHMENTS OF THE FINANCIAL POSITION

Fixed assets and Depreciation (1) Land Bank Analysis and Creditors – Land Acquisition (2)


Attachment No. (1)

PALM HILLS FOR DEVELOPMENT

(S.A.E) FIXED ASSETS AS OF MARCH 31, 2008

Cost as of 1/1/2008

Additions during the

year Cost as of 31/3/2008

Accumulated Depreciation as

of 1/1/2008

Depreciation for the year

Accumulated

Depreciation as of

31/3/2008

Net Book Value as of 31/3/2008


Building 15,150,000 --- 15,150,000 438,494 189,375 627,869 14,522,131 14,711,506

Machinery & equipment 6,493,041 6,084,457 12,577,498 530,222 529,766 1,059,988 11,517510 5,962,819

Vehicles 5,062,551 --- 5,062,551 734,010 316,409 1,050,419 4,012,132 4,328,541

Computers 1,496,413 1,137,922 2,634,335 427,943 205,142 633,085 2,001,250 1,068,470

Improvement& Fixtures 2,084,426 649,287 2,733,713 145,119 138,822 283,941 2,449,772 1,939,307

Air Conditioning 5,300 --- 5,300 1,767 331 2,098 3,202 3,533

Caravans 349,230 72,720 421,950 8,973 21,828 30,801 391,149 340,257

Soft Ware Computer 286,599 454,225 740,824 27,867 18,056 45,923 694,901 258,732

Furniture 2,270,169 296,676 2,566,845 240,644 147,963 388,607 2,178,238 2,029,525

33,197,729 8,695,287 41,893,016 2,555,039 1,567,692 4,122,731 37,770,285 30,642,690


Attachment No. (2)

PALM HILLS FOR DEVELOPMENT (S.A.E)

FIXED ASSETS AS OF MARCH 31, 2008

Cost as of 1/1/2008

Additions during the

year Cost as of 31/3/2008

Accumulated Depreciation

as of 1/1/2008

Depreciation for the year

Accumulated Depreciation

as of 31/3/2008



Palm Hills For Development 22,090,959 5,956,243 28,047,202 2,175,917 1,282,173 3,458,090 24,589,112 19,915,042

New Cairo For Real Estate Development 622,201 6,322 628,523 133,866 40,122 173,988 454,535 488,335

Royal Gardens For Real Estate Investment 498,382 382,697 881,079 8,062 35,673 43,735 837,344 490,320

Middle East For Investments & Touristic Development

--- --- --- --- --- --- --- ---

Nile Palm El Naiem For Real Estate Investments --- --- --- --- --- --- --- ---

Rakin Egypt For Real Estate Investment --- --- --- --- --- --- --- ---

Palm Hills Middle East For Real Estate Investment

9,982,265 484,852 10,467,117 233,272 188,923 422,195 10,044,922 9,748,993

Gamsha For Touristic Development --- --- --- --- --- --- --- ---

El Soadia For Urbanization Development 3,922 1,865,173 1,869,095 3,922 20,801 24,723 1,844,372 ---

El Naiem For Hotels &Touristic Villages --- --- --- --- --- --- --- --- 33,197,729 8,695,287 41,893,016 2,555,039 1,567,692 4,122,731 37,770,285 30,642,690




6

Documents

PALM HILLS DEVELOPMENTS COMPANY S.A.E AND ITS … … · 2008-05-12 · Palm Hills for Development Company (S.A.E) was established according to the investment incentives and guarantees