May 10, 2018

Headed by Dr. Moustafa Madbouli, the General Assembly of the AC Approved the Financial Statments and the Closing Accounts for 2016/2017 and the Draft Budget for 2018/2019

The General Assembly of the Arab Contractors Company, headed by Dr. Moustafa Madbouli - Minister of Housing, Utilities and Urban Development, approved the financial statements of the AC on 30/6/2017, the supplementary notes and the final accounts for the fiscal year 2016/2017. The second session of the General Assembly also approved the increase of the issued and paid up share capital of the AC. The third meeting approved the company's planning budget for the financial year 2018/2019. During his address to the General Assembly, Dr. Moustafa Madbouli - Minister of Housing, Utilities and Urban Development said: "We are in the process of presenting the financial results of the company. I would like to briefly mention the most important economic variables that have affected the company's activities inside Egypt and abroad during this year. First, to take a package of economic reform measures in Egypt during 2016/2017, which was the most important (liberalization of foreign exchange rates against the Egyptian pound, which led to a rise in the prices of basic raw materials "Iron - Cement - Pipes - Petromin – auxiliary materials - services and medical expenditures”, in addition to the issuance of the value added tax law no. 67 of 2016, the increase in energy prices after the reduction of the subsidy ratio, the sovereign wage increases and associated social insurance); these measures led to an increase in the prices of goods and services and the government tried to mitigate the negative effects of these variables. Law No. 84 of 2017 on compensation in construction and supplying contracts was issued to compensate contracting companies for the effects of the increase in cost arising from the economic reform measures. For the fiscal year mentioned in accordance with the tables annexed to the law and included in the revenues, and began work on the adoption from the awarding authorities. Second, the continued commitment of the government to an ambitious program to provide the needs of Egyptian citizens with adequate housing, roads, bridges, water and sanitation projects,… etc. was reflected in the continued growth of national projects and a growth in investment spending on these projects. Investment spending in Egypt during the fiscal year 2016/2017 is about 57.6%, mainly due to the increase in investments implemented by the government in the fields of infrastructure and housing. Investment expenditure on roads and bridges projects, construction and development of hospitals and schools has reached 34 billion EGP, and investment spending in residential buildings amounted to 21.8 billion EGP, non-residential buildings  was about 16.6 billion EGP. Third, the company was affected by several regional variables in the foreign countries in which it operates. In the Arab and African region, which is the main market for the company's activity abroad. This decline led to a slow payment of the dues of the companies operating in addition to postponement of new projects. "The company has achieved a number of positive results. The most important of these is the growth in the value of executed works at a rate of 13.68% compared to the previous year, where the executed works reached a value of 20,192 EGP, gross profit is 632 million EGP and net profit is 532 million EGP, an increase in total equity of the company as at 30 June 2017 amounted to 8.433 billion EGP compared to 6.405 billion EGP in the previous year, In addition to achieving a return rate of 6.3% during the previous fiscal year - a return on investment in companies that contribute to the company in their capital abroad of 248 million EGP - the total contracts value available to the company in 30.6.2017 amounted to 45.166 billion EGP, of which 9.893 billion EGP for the branches abroad represent 21.9% of the volume of contracts. Dr. Moustafa Madbouli stressed that evaluating the role of the Arab Contractors Company is not limited to evaluating its financial results only, but extends to evaluating its ability to implement the projects entrusted to it on time and according to the required quality, which leads to providing the needs of Egyptian citizens from infrastructure projects (roads, tunnels, ports- bridges – water – wastewater – power plant – hospitals – housing projects) and the company participation in the implementation of what is required to manage the crises that the Egyptian government may face at any phase. Finally, I would like to stress that the government is very keen on the AC success and to overcome all the obstacles and challenges in its path towards the growth in order to achieve the proper management of the assets of the government as a wholly owned by the government, as considered one of its most influential important tool and arm in implementing the most important national projects throughout the successive economic and social development plans of the government. Eng. Mohsen Salah - Chairman of the Arab Contractors Company, said that during the fiscal year 2016/2017, the company achieved outstanding results. The target plan was achieved and approved by the General Assembly. The company achieved revenues of 20.192 billion EGP and a growth rate of 13.68 %; the results showed a net profit of 532 million EGP (2.6% of the target plan). The target surplus was achieved by 152%. These results reflect the good performance of the company in its projects, which reinforces its position and leading role in the Egyptian Contracting Sector. This is clear in the company participation in most of the national projects (New Alamein – the New Administrative Capital – Rod El Farg Axis – Suez Canal Tunnels – Cairo Metro – etc…)

Eng. Mohsen Salah said that the company is keen to implement the project with a very small profit margin, believing in operating under the prevailing economic conditions in the country, which casts a shadow on the low levels of profitability of the activity and the company continued this year to strengthen its regional existence through the progress of the appropriate international projects in order to gain new business opportunities, knowing that the business indicators in these countries reflecting the intensification of competition from international companies that started to work in these markets, but the company overcame this by developing its executive performance, and increase the execution quality. The AC honored by the excellency award  from the American Concrete Institute in 2017 for using the latest technology and the highest quality techniques in the building and construction of Jaber Al Ahmed Al Sabah Hospital in Kuwait, the largest hospital in the Middle East and the sixth in the world. "Despite these challenges, the company achieved another year of growth and profitability as the company continued its operational performance to meet the challenges through sustained and ambitious work to maintain the name and reputation of itself at the national and international level. The company began to take advantage of the market value of one of its financial assets. It was agreed basically with both the National Bank of Egypt and Banque Misr to buy a 4% share in Al Mustaqbal for Urban Development as the Arab Contractors Company is shareholder in it, with the company retaining the right to repurchase in whole or divided into phases within two years from the date of purchase and at the same price that the banks will buy these shares, in addition to the benefits to be agreed upon, the sale is expected to reach 2.533 billion EGP. The sale proceeds will be used to repay the bank's outstanding balances, consolidate the working capital of the company and inject new investments into fixed assets. Eng. Mohsen reviewed the most important results achieved during the fiscal year 2016/2017, as follows: the total turnover amounted to 20.192 billion EGP compared to 17.762 billion in the previous year, an increase of 13.68%. The turnover abroad reached 4.798 billion EGP compared to 4.247 billion EGP last year with an increase of 551 million EGP (13% over the previous year). The net profit amounted to 532 million EGP compared to a net profit of 201 million EGP during 2015/2016, along with an increase in equity (public shareholding of the company) from 6.405 billion EGP in 30/6/2016 to 8.433 billion EGP on 30/6/2017, and increase the company's share capital from the profits realized by the company. In addition to the company's payment during the fiscal year of the following cash commitments (5.43 billion EGP is the subcontractors overdue - 4.99 billion EGP is the suppliers' payments - 3.44 billion EGP net salaries for the employees - 412 million EGP commissions and bank expenses - 346 million EGP Social insurance installments - 172 million EGP payments for the sales tax - 152 million EGP for the medical treatment payments - 100 million EGP in payments to the Taxation Authority). The AC’s Board of Directors approved a bonus for the employees.  Eng. Mohsen during his talk about the company’s future vision said: "I would like to point out that the company's slogan is to sustain its achievements and to be one of the leading companies in the contracting sector by being committed to the time schedules and quality standards while maintaining the safety and occupational health of the employees in these projects, with the vision of sustainable development of its market share in the construction sector, it aims to continue growth in the turnover. The company has decided to continue the trend in several axes to achieve this, the most important of which is (maximizing the company's competitive capabilities - maximizing the utilization of the company's physical, human resources and equipment - achieving professional security and psychological and financial stability of the employees - continuing to raise the efficiency of the employees of the company through the diversification of training programs that are consistent with the requirements of the company work – linking between the investment spending on productive assets with the actual needs of projects inside Egypt and abroad - reducing the bank debt, thus reducing the financing expenses incurred by the company). Eng. Mohsen Salah - Chairman of the AC thanked the Board Members and all the employees of the Arab Contractors Company who are exhorting their best efforts to implement the various projects to raise their country, serve their people and ascension of their company's name.