Professional Documents
Culture Documents
INSTITUTIONAL BUYERS (‘‘QIBs’’) AS DEFINED IN RULE 144A (‘‘RULE 144A’’) UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE ‘‘SECURITIES ACT’’) OR
(2) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S (‘‘REGULATION S’’)
UNDER THE SECURITIES ACT. THERE WILL BE NO PUBLIC OFFERING OF THE SECURITIES IN
THE UNITED STATES.
IMPORTANT: You must read the following before continuing. The following applies to the attached
offering memorandum (the ‘‘Offering Memorandum’’) following this page and you are therefore advised
to read the disclaimers set out in this electronic transmission carefully before reading, accessing or making
any other use of the Offering Memorandum. In accessing the Offering Memorandum, you agree to be
bound by the following terms and conditions, including any modifications to them from time to time, each
time you receive any information from Emaar Misr for Development S.A.E. (‘‘Emaar Misr’’ or the
‘‘Company’’), Emaar Properties PJSC (the ‘‘Principal Shareholder’’), EFG Hermes Promoting and
Underwriting and J.P. Morgan Securities plc (together, the ‘‘Joint Global Coordinators’’) and Emirates
Financial Services PSC and Emirates NBD Bank PJSC (together with the Joint Global Coordinators, the
‘‘Managers’’) as a result of such access. You acknowledge that this electronic transmission and the delivery
of the Offering Memorandum is confidential and intended for you only and you agree you will not forward,
reproduce or publish this electronic transmission and/or the Offering Memorandum in any manner
whatsoever to any other person.
THE SHARES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT, OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES, AND MAY NOT BE OFFERED OR SOLD, DIRECTLY
OR INDIRECTLY, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
COMPLIANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION OF THE UNITED STATES. IN CONNECTION WITH THE OFFERING, THE
SHARES WILL BE OFFERED AND SOLD ONLY (I) OUTSIDE THE UNITED STATES IN
‘‘OFFSHORE TRANSACTIONS’’ IN RELIANCE ON REGULATION S TO INSTITUTIONAL
INVESTORS IN A NUMBER OF COUNTRIES, INCLUDING EGYPT AND (II) IN THE UNITED
STATES ONLY TO QIBS IN RELIANCE ON RULE 144A OR ANOTHER EXEMPTION FROM, OR
IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT.
NOTHING IN THIS ELECTRONIC TRANSMISSION, INCLUDING THE ENCLOSED OFFERING
MEMORANDUM, CONSTITUTES AN OFFER OF SECURITIES FOR SALE IN ANY
JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.
THIS ELECTRONIC TRANSMISSION, THE ATTACHED ELECTRONIC DOCUMENT AND THE
OFFER, WHEN MADE, ARE ONLY ADDRESSED TO AND DIRECTED AT PERSONS IN
MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (‘‘EEA’’) WHO ARE ‘‘QUALIFIED
INVESTORS’’ WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE PROSPECTUS
DIRECTIVE (DIRECTIVE 2003/71/EC AND AMENDMENTS THERETO, INCLUDING
DIRECTIVE 2010/73/EU, TO THE EXTENT IMPLEMENTED IN THE MEMBER STATE OF THE
EUROPEAN ECONOMIC AREA) AND ANY IMPLEMENTING MEASURE IN EACH MEMBER
STATE OF THE EEA (THE ‘‘PROSPECTUS DIRECTIVE’’) (‘‘QUALIFIED INVESTORS’’).
THIS OFFERING MEMORANDUM IS FOR DISTRIBUTION ONLY TO PERSONS WHO: (I) ARE
OUTSIDE THE UNITED KINGDOM; OR (II) HAVE PROFESSIONAL EXPERIENCE IN
MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE
FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (AS
AMENDED, THE ‘‘FINANCIAL PROMOTION ORDER’’); OR (III) ARE PERSONS FALLING
WITHIN ARTICLE 49(2)(A) TO (D) (‘‘HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS ETC’’) OF THE FINANCIAL PROMOTION ORDER; OR (IV) PERSONS TO
WHOM AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY
(WITHIN THE MEANING OF SECTION 21 OF THE FSMA) IN CONNECTION WITH THE ISSUE
OR SALE OF ANY SECURITIES MAY OTHERWISE LAWFULLY BE COMMUNICATED OR
CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO
AS ‘‘RELEVANT PERSONS’’). THIS OFFERING MEMORANDUM IS DIRECTED ONLY AT
RELEVANT PERSONS AND MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO
ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH
THIS OFFERING MEMORANDUM RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS
AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.
Confirmation of your Representation: In order to be eligible to view the Offering Memorandum or make
an investment decision with respect to the securities described herein, you must be either (1) a QIB or
(2) subscribing for or purchasing the securities outside the United States in reliance on Regulation S. This
electronic transmission and the Offering Memorandum are being sent at your request and by accepting the
e-mail and accessing the Offering Memorandum, you shall be deemed to have represented to the
Company, the Principal Shareholder and the Managers that (i) you are a QIB, (ii) you are acting on behalf
of, or you are an institutional investor outside the United States (as defined in Regulation S under the
Securities Act); (iii) if you are in the UK, you are a relevant person; (iv) if you are in any member state of
the EEA other than the UK, you are a Qualified Investor; (v) the securities acquired by you in the offer
have not been acquired on a nondiscretionary basis on behalf of, nor have they been acquired with a view
to their offer or resale to, any person in circumstances which may give rise to an offer of any securities to
the public other than their offer or resale in any member state of the EEA which has implemented the
Prospectus Directive to Qualified Investors; and (vi) if you are outside the United States, United Kingdom
and EEA (and the electronic mail addresses that you provided and to which this document has been
delivered are not located in such jurisdictions) you are a person into whose possession this document may
lawfully be delivered in accordance with the laws of the jurisdiction in which you are located.
You are reminded that the Offering Memorandum has been delivered to you on the basis that you are a
person into whose possession the Offering Memorandum may be lawfully delivered in accordance with the
laws of the jurisdiction in which you are located and you may not nor are you authorised to deliver the
Offering Memorandum, electronically or otherwise, to any other person.
Restriction: Nothing in this electronic transmission constitutes, or may be used in connection with, an
offer of securities for sale to persons other than the specified categories of institutional buyers described
above and to whom it is directed and access has been limited so that it shall not constitute a general
solicitation. If you have gained access to this transmission contrary to the foregoing restrictions, you will be
unable to purchase any of the securities described therein.
None of the Managers nor any of their respective affiliates accepts any responsibility whatsoever for the
contents of this electronic transmission or the Offering Memorandum or for any other statement made or
purported to be made by it, or on its behalf, in connection with the Company, the Principal Shareholder or
the securities or the Offering referred to herein. The Managers and each of their affiliates disclaim all and
any liability whether arising in tort, contract or otherwise which they might have in respect of this
electronic transmission, the Offering Memorandum or any such statement. No representation or warranty,
express or implied, is made by any of the Managers or any of their respective affiliates as to the accuracy,
completeness or sufficiency of the information set out in this electronic transmission.
The Managers are acting exclusively for the Company and no one else in connection with the offer. They
will not regard any other person (whether or not a recipient of this document) as their client in relation to
the offer and will not be responsible to anyone other than the Company for providing the protections
afforded to their clients nor for giving advice in relation to the offer or any transaction or arrangement
referred to herein.
The Offering Memorandum has been sent to you in an electronic format. You are reminded that
documents transmitted via this medium may be altered or changed during the process of electronic
transmission and, consequently, none of the Managers, or any person who controls any of them, nor any
director, officer, employee nor agent of any of them or affiliate of any such person accepts any liability or
responsibility whatsoever in respect of any difference between the Offering Memorandum distributed to
you in electronic format and the hard copy version available to you on request from the Managers. The
Managers and their respective affiliates accordingly disclaim all and any liability whether arising in tort,
contract, or otherwise which they might otherwise have in respect of such document or any such statement.
No representation or warranty express or implied, is made by any of the Managers or any of their
respective affiliates as to the accuracy, completeness, reasonableness, verification or sufficiency of the
information set out in this Offering Memorandum.
If you receive the Offering Memorandum by e-mail, you should not reply by e-mail. Any reply to e-mail
communications, including those you generate by using the ‘‘reply’’ function on your e-mail software, will be
ignored or rejected. If you receive the Offering Memorandum in electronic format by e-mail, your use of
such Offering Memorandum in electronic format and such e-mail is at your own risk and it is your
responsibility to take precautions to ensure that each is free from viruses and other items of a destructive
nature.
OFFERING MEMORANDUM NOT FOR GENERAL DISTRIBUTION
IN THE UNITED STATES
1JUN201505294162
Investing in the Institutional Offering Shares involves risks. See ‘‘Risk Factors’’ beginning on page 14.
There is currently no market for the ordinary shares of the Company, including the New Shares. Application will be made for
listing and introduction of the New Shares to trading on the Egyptian Stock Exchange (the ‘‘EGX’’) under the symbol
‘‘EMFD.CA’’. The existing ordinary shares of the Company were listed on the EGX on 4 March 2015, but trading in the
ordinary shares, including the New Shares, is conditional on the satisfaction of certain conditions set out in the EGX Listing
Rules including, without limitation, completion of the Combined Offering. Trading in the ordinary shares of the Company,
including the New Shares, on the EGX is expected to commence on or around 2 July 2015, subject to receipt of regulatory
approvals. The Institutional Offering Shares and the Public Offering Shares will be offered at the Offer Price.
The Institutional Offering Shares are expected to be delivered on or around 2 July 2015, subject to receipt of regulatory
approvals. The Institutional Offering Shares will be delivered in accordance with the relevant transfer and settlement
procedures prescribed by the Capital Market Law and Misr for Central Clearing, Depository and Registry S.A.E. for the
settlement of shares. See ‘‘Plan of Distribution—Subscription, Prefunding, Settlement and Transfer of the Ordinary Shares’’.
Payment for the Institutional Offering Shares must be made in EGP no later than 25 June 2015.
In connection with the Combined Offering, EFG Hermes Promoting and Underwriting, as stabilisation manager (the
‘‘Stabilisation Manager’’), or any of its agents, may effect transactions in the ordinary shares of the Company on the EGX with
a view to supporting or maintaining the market price of the ordinary shares at a level higher than that which might have
otherwise prevailed in the open market. See ‘‘Stabilisation’’.
The Institutional Offering Shares have not been and will not be registered under the United States Securities Act of 1933, as
amended (the ‘‘Securities Act’’), or with any securities regulatory authority of any state or other jurisdiction of the United
States, and may not be offered or sold, directly or indirectly, in the United States, except pursuant to an exemption from, or in
a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable
securities laws of any state or other jurisdiction of the United States. The Institutional Offering Shares will be offered and sold
only (i) outside the United States in ‘‘offshore transactions’’ in reliance on Regulation S under the Securities Act
(‘‘Regulation S’’) to institutional investors in a number of countries, including Egypt and (ii) in the United States only to
‘‘qualified institutional buyers’’ (‘‘QIBs’’) as defined in Rule 144A under the Securities Act (‘‘Rule 144A’’), in reliance on
Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
Prospective purchasers that are QIBs are hereby notified that the sellers of the Institutional Offering Shares may be relying
on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A.
The Institutional Offering Shares are subject to transfer restrictions in certain jurisdictions. Prospective purchasers should
read the restrictions described under ‘‘Transfer Restrictions’’ and ‘‘Plan of Distribution—Selling Restrictions’’.
IMPORTANT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
NOTICE TO PROSPECTIVE INVESTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
STABILISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
ENFORCEMENT OF ARBITRAL DECISIONS AND CIVIL LIABILITIES . . . . . . . . . . . . . . vi
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
PRESENTATION OF FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
PRESENTATION OF OPERATING AND OTHER INFORMATION . . . . . . . . . . . . . . . . . . . ix
VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
IMPORTANT NOTE REGARDING THE TARGET RATES OF RETURN . . . . . . . . . . . . . . x
MARKET AND INDUSTRY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
ROUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
WEBSITES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DESCRIPTION OF THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SUMMARY HISTORICAL AND OTHER FINANCIAL INFORMATION . . . . . . . . . . . . . . . 12
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
DIVIDEND POLICY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
EXCHANGE RATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
CAPITALISATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SELECTED FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
OPERATING AND FINANCIAL REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
DESCRIPTION OF EMAAR MISR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
OWNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . 112
THE EGYPTIAN REAL ESTATE MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
SECURITIES MARKET INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
DESCRIPTION OF SHARE CAPITAL AND APPLICABLE EGYPTIAN LAW . . . . . . . . . . . 124
TRANSFER RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
INDEPENDENT AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
ANNEX A: VALUATION REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
i
IMPORTANT INFORMATION
Each prospective investor, by accepting delivery of this Offering Memorandum, agrees that this Offering
Memorandum is being furnished solely for the purpose of enabling a prospective investor to consider the
purchase of the Institutional Offering Shares. Any reproduction or distribution of this Offering
Memorandum, in whole or in part, any disclosure of its contents or use of any information herein for any
purpose other than considering an investment in the Institutional Offering Shares is prohibited, except to
the extent that such information is otherwise publicly available.
In this Offering Memorandum, the ‘‘Company’’ and ‘‘Emaar Misr’’ refer to Emaar Misr for
Development S.A.E., unless the context otherwise requires. ‘‘Emaar Properties’’ and ‘‘Principal
Shareholder’’ refers to Emaar Properties PJSC, the current parent company of Emaar Misr.
None of EFG Hermes Promoting and Underwriting, J.P. Morgan Securities plc, Emirates Financial
Services PSC and Emirates NBD Bank PJSC (together, the ‘‘Managers’’), any of their respective affiliates
or advisors makes any representation or warranty, express or implied, nor accepts any responsibility, as to
the accuracy or completeness of any of the information in this Offering Memorandum and accordingly
disclaim, to the fullest extent permitted by applicable law, any and all liability, whether arising in tort,
contract or otherwise that they may otherwise be found to have in respect of this Offering Memorandum.
This Offering Memorandum is not intended to provide the basis of any credit or other evaluation and
should not be considered as a recommendation by any of the Company, the Principal Shareholder or the
Managers that any recipient of this Offering Memorandum should purchase the Institutional Offering
Shares. Each potential purchaser of Institutional Offering Shares should determine for itself the relevance
of the information contained in this Offering Memorandum, and its purchase of Institutional Offering
Shares should be based upon such investigation, as it deems necessary.
Emirates Financial Services PSC is acting as a manager in connection with the Institutional Offering but
not as an underwriter. Emirates NBD Bank PJSC, an affiliate of Emirates Financial Services PSC, is acting
only as an underwriter in connection with the Institutional Offering and will have the obligation to
purchase Institutional Offering Shares for which Emirates Financial Services PSC fails to procure
purchasers. References to the Managers in this Offering Memorandum should be construed accordingly.
This Offering Memorandum does not constitute an offer to the public to purchase or otherwise acquire the
Institutional Offering Shares. In making an investment decision regarding the Institutional Offering
Shares, prospective investors must rely on their own examination of the Company and the terms of the
Institutional Offering, including the merits and risks involved and prospective investors should rely only on
the information contained in this Offering Memorandum. None of the Company, the Principal Shareholder
or the Managers has authorised any other person to provide prospective investors with different
information. If anyone provides prospective investors with different or inconsistent information,
prospective investors should not rely on it. Prospective investors should assume that the information
appearing in this Offering Memorandum is accurate only as of its date. The Company’s business, financial
condition, results of operations, prospects and the information set forth in this Offering Memorandum may
have changed since the date hereof.
This Offering Memorandum does not constitute an advertisement or an offer of securities in Egypt. It is
not intended to be and must not be distributed publicly and/or to, or for the benefit of, any person within
Egypt except as may be permitted by Egyptian law.
Apart from the responsibilities and liabilities, if any, which may be imposed on any of the Managers by any
applicable regulatory regime, none of the Managers accepts any responsibility whatsoever for the contents
of this Offering Memorandum or for any other statement made or purported to be made by it or any of
them or on its or their behalf in connection with the Company or the Institutional Offering Shares. Each of
the Managers accordingly disclaims, to the fullest extent permitted by applicable law, all and any liability
whether arising in tort or contract or otherwise (save as referred to above) which it might otherwise have in
respect of this Offering Memorandum or any such statement.
The Company accepts responsibility for the information contained in this Offering Memorandum, and
having taken all reasonable care to ensure that such is the case, the information in this Offering
Memorandum is, to the best of the Company’s knowledge, in accordance with the facts and contains no
material omission.
In this Offering Memorandum, the Company has included its own estimates, assessments, adjustments and
judgments in preparing some market information, which has not been verified by an independent third-
ii
party. Market information included herein is, therefore, unless otherwise attributed to a third-party source,
to a certain degree subjective. While the Company believes that its own estimates, assessments,
adjustments and judgments are reasonable and that the market information prepared by it approximately
reflects the industry and the markets in which it operate, there is no assurance that its own estimates,
assumptions, assessments, adjustments and judgments are the most appropriate for making determinations
relating to market information or that market information prepared by other sources will not differ
materially from the market information included herein.
Prospective investors should not consider any information in this Offering Memorandum to be investment,
legal or tax advice. Prospective investors should consult their own counsel, accountant and other advisors
for legal, tax, business, financial and related advice regarding investing in the Institutional Offering Shares.
In making an investment decision, you must rely on your own examination, analysis and enquiry of the
Company and the terms of the Institutional Offering, including all of the merits and risks involved. None of
the Company, the Principal Shareholder or the Managers makes any representation to any offeree or
purchaser of the Institutional Offering Shares regarding the legality of an investment in the Institutional
Offering Shares by such offeree or purchaser under appropriate investment or similar laws.
Each of the Managers is acting exclusively for the Company and no one else in connection with the
Institutional Offering. None of the Managers will be responsible to any other person (whether or not a
recipient of this Offering Memorandum) for providing the protections afforded to their respective clients
nor for providing advice in relation to the Institutional Offering or any transaction or arrangement
referred to herein.
In connection with the Institutional Offering, the Managers and any of their respective affiliates acting as
an investor for its or their own account or accounts may subscribe for or purchase, as the case may be,
Institutional Offering Shares and, in that capacity, may retain, purchase, sell, offer to sell or otherwise deal
for its or their own account or accounts in such Institutional Offering Shares, any other securities of the
Company or other related investments in connection with the Institutional Offering or otherwise.
Accordingly, references in this Offering Memorandum to the Institutional Offering Shares being issued,
offered, subscribed or otherwise dealt with should be read as including any issue or offer to, or subscription
or dealing by, the Managers and any of their respective affiliates acting as an investor for its or their own
account or accounts. The Managers do not intend to disclose the extent of any such investment or
transactions otherwise than in accordance with any legal or regulatory obligation to do so.
The Company may withdraw the Institutional Offering at any time before the issuance of the Institutional
Offering Shares and the Company, the Principal Shareholder and the Managers reserve the right to reject
any offer to purchase the Institutional Offering Shares, in whole or in part, and to sell to any prospective
investor less than the full amount of the Institutional Offering Shares sought by such investor.
The Offering Memorandum does not constitute or form part of an offer to sell, or a solicitation of an offer
to buy, any security other than the Institutional Offering Shares offered in the Institutional Offering. The
distribution of this Offering Memorandum and the offer and sale of the Institutional Offering Shares may
be restricted by law in certain jurisdictions. Persons into whose possession this Offering Memorandum
comes are required to inform themselves about, and observe any such restrictions. See ‘‘Transfer
Restrictions’’ and ‘‘Plan of Distribution—Selling Restrictions’’ elsewhere in this Offering Memorandum.
None of the Company, the Principal Shareholder or the Managers accepts any legal responsibility for any
violation by any person, whether or not a prospective investor, of any such restrictions. Prospective
investors must comply with all applicable laws and regulations in force in any jurisdiction in which they
purchase, offer or sell the Institutional Offering Shares or possess or distribute this Offering Memorandum
and prospective investors must obtain any consent, approval or permission required for their purchase,
offer or sale of the Institutional Offering Shares under the laws and regulations in force in any jurisdiction
to which they are subject or in which they make such purchases, offers or sales. None of the Company, the
Principal Shareholder or the Managers is making an offer to sell the Institutional Offering Shares or a
solicitation of an offer to buy any of the Institutional Offering Shares to any person in any jurisdiction
except where such an offer or solicitation is permitted.
No action has been or will be taken in any jurisdiction, other than the Egyptian Public Offering pursuant to
the Public Subscription Notice, that would permit a public offering of the Institutional Offering Shares
offered in the Institutional Offering, or possession or distribution of this Offering Memorandum or any
other offering material in any country or jurisdiction where action for that purpose is required.
Accordingly, neither the Institutional Offering Shares may be offered or sold, directly or indirectly, and
neither this Offering Memorandum nor any other offering material or advertisement in connection with
iii
the Institutional Offering Shares may be distributed or published in or from any country or jurisdiction
except under circumstances that will result in compliance with any and all applicable rules and regulations
of any such country or jurisdiction. Persons into whose possession this Offering Memorandum comes
should inform themselves about and observe any restrictions on the distribution of this Offering
Memorandum and the offer, subscription and sale of the Institutional Offering Shares offered in the
Institutional Offering, including those set forth under ‘‘Transfer Restrictions’’ and ‘‘Plan of Distribution—
Selling Restrictions’’. Any failure to comply with these restrictions may constitute a violation of the
securities laws of any such jurisdiction. This Offering Memorandum does not constitute an offer to
subscribe for or buy any of the Institutional Offering Shares offered in the Institutional Offering to any
person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction.
iv
Directive), and includes any relevant implementing measure in the Member State, and the expression 2010
PD Amending Directive means Directive 2010/73/EU.
The Managers may rely on the truth and accuracy of the foregoing representations, acknowledgements and
agreements and will not be responsible for any loss occasioned by such reliance. For the purposes of this
provision, the expression an ‘‘offer of shares to the public’’ in relation to any Institutional Offering Shares
in any Member State means the communication in any form and by any means of sufficient information on
the terms of the offer and the Institutional Offering Shares to be offered so as to enable an investor to
decide to purchase or subscribe the Institutional Offering Shares, as the same may be varied in that
Member State by any measure implementing the Prospectus Directive in that Member State.
v
Other Countries
The Institutional Offering Shares are subject to transfer restrictions in certain other jurisdictions.
Prospective purchasers should read the restrictions described under ‘‘Plan of Distribution—Selling
Restrictions’’ and ‘‘Transfer Restrictions’’.
STABILISATION
In connection with the Combined Offering, the Stabilisation Manager, or any of its agents, may effect
transactions in all outstanding ordinary shares of the Company, including the New Shares, with a nominal
value of EGP 1 each (the ‘‘Ordinary Shares’’) on the EGX with a view to supporting or maintaining the
market price of the Ordinary Shares at a level higher than that which might have otherwise prevailed in the
open market. However, there is no assurance that the Stabilisation Manager (or persons acting on its
behalf) will undertake any stabilisation action. Any stabilising action may begin on or after the date of the
commencement of trading of Ordinary Shares on the EGX, and if begun, may end at any time, but must
end no later than 30 calendar days after that date (the ‘‘Stabilisation Period’’). The Company will finance
an amount equal to 15% of the gross proceeds of the Combined Offering (the ‘‘Stabilisation Fund’’) and
make such funds available to the Stabilisation Manager prior to commencement of trading. Starting on the
commencement of trading, the Stabilisation Manager will place an open purchase order at the Offer Price,
which will remain open until the end of the Stabilisation Period. At the end of the Stabilisation Period this
open purchase order will be matched with open sale orders and executed on the EGX. If the purchase
order submitted by the Stabilisation Manager exceeds the amount deposited in the Stabilisation Fund, such
purchase orders will be executed on a pro rata basis up to the amount of the Stabilisation Fund and all
Ordinary Shares purchased will be placed in the Stabilisation Fund. The Stabilisation Manager will remit
to the Company, at the end of the Stabilisation Period, any proceeds of the Combined Offering then
remaining in the Stabilisation Fund and any remaining Ordinary Shares purchased during the Stabilisation
Period using the Stabilisation Fund. The Stabilisation Manager will disclose the stabilisation transactions to
the EGX at the end of the Stabilisation Period.
AVAILABLE INFORMATION
The Company has agreed that, so long as any of the Institutional Offering Shares are ‘‘restricted
securities’’ within the meaning of Rule 144(a)(3) under the Securities Act, in order to permit holders of
Institutional Offering Shares to effect resales under Rule 144A, it will, during any period in which it is
neither subject to Section 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended (the
‘‘Exchange Act’’), nor exempt from reporting pursuant to Rule 12g3-2(b) thereunder, furnish, upon written
request, to any holder of Institutional Offering Shares, or any prospective purchaser designated by such
holder or beneficial owner upon the request of such holder, beneficial owner or prospective purchaser, the
information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto).
vi
Kingdom upon the Company or such persons or to enforce against any of them judgments obtained in the
United States or the United Kingdom courts predicated upon the civil liability provisions of the securities
laws of the United States and the United Kingdom, respectively.
Enforcement of foreign judgments in Egypt is subject to the following conditions:
• the foreign courts rendering the relevant judgment offer reciprocal treatment to judgments obtained
in the courts of Egypt. If such reciprocal treatment is not offered by the court where judgment is
obtained, new proceedings should be initiated before the Egyptian courts which will re-examine the
merits of the case in the same manner as that adopted by such courts;
• the courts of Egypt are not exclusively competent to hear the dispute which constitutes the object of
the foreign judgment while the foreign courts are shown to have been competent to hear the dispute
in accordance with their own respective laws;
• the parties to the dispute were duly notified and properly represented in the proceedings;
• the foreign judgment is final and conclusive in accordance with the relevant law; and
• the foreign judgment does not conflict with a prior Egyptian judgment in the same case and is not
contrary to public order or morality in Egypt.
Judgments of courts of the United States or the United Kingdom may not be enforceable in Egypt because
there are no bilateral treaties between Egypt and the United States or the United Kingdom on the
enforcement of judgments and the courts of the United States and the United Kingdom may be deemed
not to offer reciprocal treatment to judgments obtained in the courts of Egypt. The rights of investors as
shareholders will be affected by the laws of Egypt and investors may have difficulty effecting service of
process on the Company or enforcing judgments obtained outside Egypt.
FORWARD-LOOKING STATEMENTS
This Offering Memorandum contains certain forward-looking statements with respect to the Company’s
planned projects and results, including, without limitation, with respect to levels of expected investments
and costs (including breakdowns of expected costs by type or project over the lifetime of a project), target
dates for start and end of construction, start of operation, launch, opening and completion, expected
features and amenities and specific development plan targets (including target gross leasable area (GLA)
and target gross floor area (GFA) sizes, target numbers of hotel keys and serviced apartments, target or
indicative splits of GFA/GLA area by type, target numbers of units launched, sold or delivered, target
average periods to complete, target average unit sizes, rent assumptions, implied yields on construction
and target tenant mixes). A forward-looking statement is any statement that does not relate to historical
facts and events, and can be identified by the use of such words and phrases as ‘‘according to estimates’’,
‘‘aims’’, ‘‘anticipates’’, ‘‘assumes’’, ‘‘believes’’, ‘‘continue’’, ‘‘could’’, ‘‘estimates’’, ‘‘expects’’, ‘‘intends’’, ‘‘is of
the opinion’’, ‘‘may’’, ‘‘plans’’, ‘‘potential’’, ‘‘predicts’’, ‘‘projects’’, ‘‘should’’, ‘‘targets’’, ‘‘to the knowledge
of’’, ‘‘will’’, ‘‘would’’ or, in each case their negatives or other similar expressions, which are intended to
identify a statement as forward-looking. This applies, in particular, to statements containing information
on future financial results, plans, or expectations regarding the Company’s business and management, the
Company’s future growth or profitability and general economic and regulatory conditions and other
matters affecting the Company.
Forward-looking statements reflect the Company management’s (‘‘Management’’) current views of future
events, are based on Management’s assumptions and involve known and unknown risks, uncertainties and
other factors that may cause the Company’s actual results, performance or achievements to be materially
different from any future results, performance or achievements expressed or implied by these forward-
looking statements. The occurrence or non-occurrence of an assumption could cause the Company’s actual
financial condition and results of operations to differ materially from, or fail to meet expectations
expressed or implied by, such forward-looking statements. The Company’s business is subject to a number
of risks and uncertainties that could also cause a forward-looking statement, estimate or prediction to
become inaccurate. These risks, uncertainties and other factors include, but are not limited to:
• political, economic and social risks and other risks typically associated with emerging markets;
• terrorist events and civil disorder;
• the developing Egyptian legal system and new legislation;
vii
• the impact of foreign exchange controls;
• real estate industry risks;
• development, planning and construction risks;
• inability to conclude projects due to delays or cost overruns;
• challenges in obtaining, retaining and enforcing title to land in Egypt;
• construction-related laws, regulations, standards and licences;
• the impact of competition;
• delays or defaults in customer and client payments;
• future rental revenues, implementation of business strategy and appeal to potential tenants;
• hotel and resort-related risks;
• reliance on third parties to design, complete and manage projects;
• recognition and sustainability of future cash flows and revenue;
• dependence on Board of Directors, senior management team and certain key employees;
• the effect on internal control systems of rapid growth and expansion;
• inability to locate or acquire land suitable for development;
• the subjective and uncertain nature of property valuation;
• adequacy of insurance coverage;
• sufficiency of local infrastructure and utilities;
• environmental regulation, expenditure and liabilities;
• legal proceedings;
• reliance on related party transactions;
• potential conflicts of interest of the Principal Shareholder;
• ability to secure funding;
• other factors discussed in more detail under ‘‘Risk Factors’’; and
• factors that are not known to Management or are not considered by Management to be material at
this time.
The list above and the other factors described under ‘‘Risk Factors’’ are not exhaustive and there are other
factors that may cause actual results to differ materially from the forward-looking statements contained in
this Offering Memorandum. Moreover, new risk factors emerge from time to time and it is not possible to
predict all such risk factors. It is difficult to assess the impact of all risk factors on the Company’s business
or the extent to which any factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements. Given these risks and uncertainties, you should
not place undue reliance on forward-looking statements as a prediction of actual results.
Accordingly, prospective investors should not rely on the forward-looking statements in this Offering
Memorandum and investors are strongly advised to read the following sections of this Offering
Memorandum: ‘‘Summary’’, ‘‘Risk Factors’’, ‘‘Use of Proceeds’’, ‘‘Operating and Financial Review’’,
‘‘Description of Emaar Misr’’ and ‘‘The Egyptian Real Estate Market’’. These sections include more detailed
descriptions of factors that might have an impact on the Company’s business, financial condition and the
industry in which the Company operates. None of the Company, its Management or the Managers gives
any assurance or accepts any liability regarding the future accuracy of the opinions set forth herein or as to
the actual occurrence of any predicted developments. None of the Company or the Managers assumes, and
each of the Company and the Managers expressly disclaims, any obligation, except as required by law and
the EGX Listing Rules to update any forward-looking statements or to conform these forward-looking
statements to the Company’s actual results.
viii
PRESENTATION OF FINANCIAL INFORMATION
Financial information
The Company has included in this Offering Memorandum:
• audited financial statements as of and for the financial years ended 31 December 2014, 2013 and 2012
prepared in accordance with International Financial Reporting Standards, as issued by the
International Accounting Standards Board (‘‘IFRS’’) (the ‘‘Annual Financial Statements’’); and
• unaudited interim condensed financial statements as of and for the three months ended 31 March
2015 prepared in accordance with International Accounting Standard No. 34 ‘‘Interim Financial
Reporting’’ (the ‘‘Interim Financial Statements’’ and, together with the Annual Financial Statements,
the ‘‘Financial Statements’’).
The Annual Financial Statements were audited by Allied for Accounting & Auditing (‘‘EY’’), independent
auditors in accordance with International Standards on Auditing, as stated in their audit report included
elsewhere in this Offering Memorandum. The Interim Financial Statements were reviewed by EY in
accordance with the International Standard on Review Engagements 2410, ‘‘Review of Interim Financial
Information Performed by an Independent Auditor of the Entity’’ as stated in their report included elsewhere
in this Offering Memorandum. EY has neither audited nor reviewed any financial information as of and
for the three months ended 31 March 2014 included in this Offering Memorandum.
The Company also prepares statutory annual audited financial statements under Egyptian Accounting
Standards.
Currency
This Offering Memorandum contains translations of certain Egyptian pound amounts into U.S. dollars at
specified rates solely for the convenience of the reader. These translations should not be construed as
representations that the Egyptian pound amounts actually represent such equivalent U.S. dollar amounts
or could be or could have been converted into U.S. dollars at the rate indicated as of the dates mentioned
herein or at all. Unless otherwise indicated, such U.S. dollar amounts have been translated from Egyptian
pounds at an exchange rate of EGP 7.634 = US$ 1.00, being the exchange rate in effect as of 31 March
2015 of the Central Bank of Egypt, as quoted by Bloomberg. The Federal Reserve Bank of New York does
not certify for customs purposes a noon buying rate for cable transfers in Egyptian pounds. See ‘‘Exchange
Rate Information’’.
In this Offering Memorandum:
• ‘‘Egyptian pound’’, ‘‘Egyptian pounds’’ or ‘‘EGP’’ refers to the lawful currency of Egypt;
• ‘‘U.S. dollar’’, ‘‘U.S. dollars’’ or ‘‘US$’’ refers to the lawful currency of the United States of America;
• ‘‘Euro’’, ‘‘Euros’’ or ‘‘A’’ refers to the single currency of the participating Member States in the Third
Stage of the European Economic and Monetary Union of the Treaty Establishing the European
Community, as amended from time to time; and
• ‘‘AED’’ refers to the lawful currency of the United Arab Emirates.
ix
This backlog is calculated from contracts for sales of residential units that have been executed. However,
actual and future sales volumes and related revenue may not be consistent with the values reflected in the
backlog. Customers may cancel or default on executed contracts for sales of residential units, or request or
cancel upgrades relating to such residential sales, altering the revenue ultimately realised compared to the
backlog figures for such units. The backlog values included in this Offering Memorandum have not been
subject to an auditor review, do not purport to represent actual realised or future revenues and should not
be considered in isolation. Investors should not place undue reliance on the backlog values included in this
Offering Memorandum.
VALUATION REPORT
DTZ Qatar LLC (‘‘DTZ’’), an independent property appraiser, valued Emaar Misr’s property interests as
of 31 December 2014. See Annex A titled ‘‘Valuation Report’’ in this Offering Memorandum. The
valuations have been prepared in accordance with the appropriate sections of the Royal Institution of
Chartered Surveyors (‘‘RICS’’) professional standards, RICS Global Valuation Practice Statements,
and RICS Global Valuation Practice Guidance—Applications contained within the RICS Valuation—
Professional Standards 2014 Red Book. Based on such valuation, the aggregate market value of Emaar
Misr’s property interests as of 31 December 2014 was EGP 23,398,340,000 (assuming expropriation of a
portion of land related to Cairo Gate) and EGP 23,428,020,000 (assuming no expropriation of the portion
of land related to Cairo Gate). In conducting the valuation, DTZ relied on the information provided by
Emaar Misr in relation to title of the properties and assumed, among other things, that the properties will
be developed and completed in accordance with the development plan.
The valuation of properties, in particular development properties, is inherently subjective and any
valuation is subject to uncertainty. Moreover, any property valuation is made on the basis of material
assumptions which, by their nature, are subjective and uncertain, may materially differ from actual results
and have not been confirmed or investigated by any third-party. These assumptions include Emaar Misr’s
ability to register title to the land, the suitability and condition of the structure and services, the absence of
deleterious materials or adverse environmental matters on the land, the proper floor area measurements
of land not measured by DTZ, the absence of outstanding statutory notices related to construction, use or
occupation, the ability of tenants to meet their lease obligations and their compliance with the lease
agreements and accuracy of the information provided by Emaar Misr, among other things. The valuation
does not include allowances or provisions for plant and machinery, goodwill, legal claims and
refurbishment of properties. Potential investors should decide for themselves whether or not Emaar Misr’s
valuation is reasonable and should read the ‘‘Valuation Report’’ attached in Annex A.
The Company can provide no assurance that any of its properties could have been or could be sold at their
respective market values set forth in the valuation report, whether or not equivalent to the values set forth
in the valuation report, will not decline significantly over time due to various factors, including changing
macro- and microeconomic conditions and other factors set forth under ‘‘Risk Factors’’. The Company can
give no assurance that a valuation at a more recent date would not produce a lower or higher value.
Investors are advised that the appraised value of Emaar Misr’s property interest should not be taken as
their actual realisable value or a forecast of their realisable value. See ‘‘Risk Factors—Risks Relating to
Emaar Misr’s Business and Industry—Property valuation is inherently subjective and uncertain’’.
x
None of the Managers or any of their respective affiliates, advisers, officers, directors or representatives,
nor the Company or EY, compiled, examined or performed any procedures with respect to the target
return nor have they expressed any opinion or any other form of assurance on the target return or its
achievability, and such parties assume no responsibility for, and disclaim any association with, the target
return.
ROUNDING
Some financial information, operating information and other data in this Offering Memorandum have
been rounded. As a result of this rounding, figures shown as totals in this Offering Memorandum may vary
slightly from the exact arithmetic aggregation of the figures that precede them. In addition, certain
percentages presented in this Offering Memorandum reflect calculations based upon the underlying
information prior to rounding and, accordingly, may not conform exactly to the percentages that would be
derived if the relevant calculations were based upon the rounded numbers.
WEBSITES
The contents of the Company’s and Principal Shareholder’s websites (including any materials that are
hyper-linked therefrom) do not form a part of this Offering Memorandum.
xi
CERTAIN DEFINITIONS
In this Offering Memorandum, the following terms have the following meanings:
‘‘Annual Financial Statements’’ means the Company’s audited financial statements as of and for the
financial years ended 31 December 2014, 2013 and 2012, prepared in accordance with IFRS.
‘‘Board of Directors’’ means Emaar Misr’s board of directors.
‘‘Capital Market Law’’ means Egyptian Capital Market Law No. 95 of 1992 and its Executive Regulations.
‘‘CBE’’ means the Central Bank of Egypt.
‘‘CAPMAS’’ means Egypt’s Central Agency for Public Mobilisation and Statistics.
‘‘Closing Date’’ means 2 July 2015.
‘‘Combined Offering’’ means the Institutional Offering and the Egyptian Public Offering collectively.
‘‘Company’’ means Emaar Misr.
‘‘Construction Law’’ means Construction Law No. 119 of 2008.
‘‘DTZ’’ means DTZ Qatar LLC.
‘‘EGOTH’’ means the Egyptian General Company for Tourism and Hotel.
‘‘EFG Hermes’’ means EFG Hermes Promoting and Underwriting.
‘‘EFSA’’ means the Egyptian Financial Supervisory Authority.
‘‘EGX’’ means the Egyptian Stock Exchange.
‘‘EGX Listing Rules’’ means the rules issued by EFSA Decree No. 11 dated 22 January 2014, as amended by
EFSA Decree No. 170 dated 21 December 2014 and its executive procedures issued by the EGX.
‘‘Egypt’’ means the Arab Republic of Egypt.
‘‘EGYPTERA’’ means the Egyptian Electric Utility and Consumer Protection Regulatory Agency.
‘‘Egyptian Companies Law’’ means the Egyptian Companies Law No. 159 of 1981 and its Executive
Regulations.
‘‘Egyptian Investment Law’’ means the Egyptian Investment Guarantees and Incentives Law No. 8 of 1997
and its Executive Regulations.
‘‘Egyptian Public Offering’’ means the domestic public offering of the Public Offering Shares in Egypt in
accordance with the Public Subscription Notice.
‘‘Emaar Group’’ means Emaar Properties PJSC, together with all of its consolidated subsidiaries.
‘‘Emaar Misr’’ means Emaar Misr for Development S.A.E.
‘‘Emaar Properties’’ means Emaar Properties PJSC.
‘‘Exchange Act’’ means the U.S. Securities Exchange Act of 1934, as amended.
‘‘Extraordinary Shareholders Meeting’’ means an extraordinary shareholders meeting of the Company.
‘‘Financial Statements’’ means the Annual Financial Statements and the Interim Financial Statements.
‘‘GAFI’’ means the General Authority for Investment and Free Zones.
‘‘Gross domestic product’’ or ‘‘GDP’’ means the measure of the total value of final products and services
produced in a country in a specific year. ‘‘Real GDP’’ measures the total value of final production in
constant prices of a particular year, thus allowing historical GDP comparisons that exclude the effect of
inflation. In this Offering Memorandum, GDP figures are real GDP figures based on the CBE and
Economist Intelligence Unit’s estimates.
‘‘Gross Floor Area’’ or ‘‘GFA’’ means the area of a building measured to the external face of the perimeter
walls at each floor level, including terraces and roof terraces.
‘‘Gross Leasable Area’’ or ‘‘GLA’’ means the gross surface area available for leasing.
xii
‘‘Gulf Cooperation Council’’ means the regional political and economic union between Bahrain, Kuwait,
Oman, Qatar, Saudi Arabia and the United Arab Emirates.
‘‘HOTAC’’ means the Holding Company For Tourism, Hotels & Cinema.
‘‘IFRS’’ means International Financial Reporting Standards, as issued by the International Accounting
Standards Board.
‘‘Institutional Offering’’ means the offering of Institutional Offering Shares to which this Offering
Memorandum relates, consisting of an offering (i) outside the United States in ‘‘offshore transactions’’ in
reliance on Regulation S to institutional investors in a number of countries, including Egypt and (ii) in the
United States only to QIBs in reliance on Rule 144A or another exemption from, or a in transaction not
subject to, the registration requirements of the Securities Act.
‘‘Institutional Offering Shares’’ means 510,000,000 new Ordinary Shares, with a nominal value of EGP 1
each, offered by the Company in the Institutional Offering
‘‘Interim Financial Statements’’ means the Company’s unaudited interim condensed financial statements as
of and for the three months ended 31 March 2015 prepared in accordance with International Accounting
Standard No. 34 ‘‘Interim Financial Reporting’’.
‘‘Joint Global Coordinators’’ means EFG Hermes and J.P. Morgan.
‘‘J.P. Morgan’’ means J.P. Morgan Securities plc.
‘‘Lead Manager’’ means Emirates Financial Services PSC.
‘‘Management’’ means the members of management of Emaar Misr.
‘‘Managers’’ means the Joint Global Coordinators, Emirates Financial Services PSC and Emirates NBD
Bank PJSC. Emirates Financial Services PSC is acting as a manager in connection with the Institutional
Offering but not as an underwriter. Emirates NBD Bank PJSC, an affiliate of Emirates Financial Services
PSC, is acting only as an underwriter in connection with the Institutional Offering and will have the
obligation to purchase Institutional Offering Shares for which Emirates Financial Services PSC fails to
procure purchasers. References to the Managers in this Offering Memorandum should be construed
accordingly.
‘‘MCDR’’ means Misr for Central Clearing, Depository and Registry S.A.E.
‘‘MENA’’ means Middle East and North Africa.
‘‘Net sales’’ means sales of units, including modifications, and net of discounts, cancellations, terminations,
upgrades and downgrades.
‘‘New Shares’’ means the Institutional Offering Shares and the Public Offering Shares.
‘‘NUCA’’ means the Egyptian New Urban Communities Authority.
‘‘Offer Price’’ means EGP 3.80 per New Share.
‘‘Ordinary Shareholders Meeting’’ means an ordinary shareholders meeting of the Company.
‘‘Ordinary Shares’’ means all outstanding ordinary shares of the Company, including the New Shares, with a
nominal value of EGP 1 each.
‘‘Principal Shareholder’’ means Emaar Properties PJSC.
‘‘Project Marassi’’ means the master-planned real estate development that Emaar Misr is developing in the
North Coast on the Mediterranean Sea. See ‘‘Description of Emaar Misr—Projects under Development—
Project Marassi’’.
‘‘Project Mivida’’ means the master-planned real estate development that Emaar Misr is developing in New
Cairo City in East Cairo. See ‘‘Description of Emaar Misr—Projects under Development—Project Mivida’’.
‘‘Project Uptown Cairo’’ means the master-planned real estate development that Emaar Misr is developing
in Mokattam in Central Cairo. See ‘‘Description of Emaar Misr—Projects under Development—Project
Uptown Cairo’’.
‘‘Public Offering Shares’’ means up to 90,000,000 new Ordinary Shares, with a nominal value of EGP 1 each,
offered by the Company in the Egyptian Public Offering.
xiii
‘‘Public Subscription Notice’’ means the public subscription notice approved by the Egyptian Financial
Supervisory Authority on 31 May 2015 and issued in connection with the Egyptian Public Offering.
‘‘Regulation S’’ means Regulation S under the Securities Act.
‘‘Regulation S Shares’’ means the Institutional Offering Shares offered to institutional investors in the
Institutional Offering outside the United States in reliance upon Regulation S.
‘‘Rule 144A’’ means Rule 144A under the Securities Act.
‘‘Rule 144A Shares’’ means the Institutional Offering Shares offered in the Institutional Offering to QIBs in
the United States in reliance upon Rule 144A or another exemption from, or in a transaction not subject
to, the registration requirements of the Securities Act.
‘‘Securities Act’’ means the U.S. Securities Act of 1933, as amended.
‘‘State’’ means the government of Egypt.
‘‘Turner’’ means Turner Construction International and its affiliates.
‘‘Underwriting Agreement’’ means the underwriting agreement relating to the Institutional Offering dated
17 June 2015 among the Managers and the Company.
xiv
SUMMARY
This summary should be read as an introduction to this Offering Memorandum only. Any decision to invest in
Institutional Offering Shares should be based on a consideration of this Offering Memorandum as a whole.
Overview
Emaar Misr is a leading real estate developer in Egypt focusing on premium-quality master-planned
lifestyle communities in prime locations that are anchored by landmark developments.
Emaar Misr has a strong portfolio of developments distributed among three projects under development
and a plot of undeveloped land in prime locations in East, West and Central Cairo as well as the North
Coast:
• Project Uptown Cairo is a 4.5 million square metre project under development designed to be a
mixed-use development in Central Cairo situated at the highest point in the city, built 200 metres
above sea level with easy accessibility from East, West and Central Cairo. Project Uptown Cairo has
the potential to become a new iconic city centre in Cairo. The project has been designed by world-
class architects and designers and is expected to be the first gated, integrated community project in
Central Cairo offering a wide range of amenities, including world-class shopping centres, a business
park, hotels, a spa, an 18-hole golf course and club house. Project Uptown Cairo will be home to
Emaar Misr’s flagship development, Emaar Square, a world-class shopping, residential, leisure and
entertainment complex comprising an open-air retail mall and office space designed to attract global
brands and leading local and international companies, a five star and a five-plus-star hotel, including
the first ‘‘The Address’’ branded hotel in Cairo and a state-of-the-art entertainment and leisure
centre.
• Project Marassi is a 6.5 million square metre project under development that is expected to become a
year-round resort situated in a prime location in one of the most attractive stretches of the North
Coast with easy accessibility from local and international airports. Project Marassi is designed to
feature a fully-integrated resort community, retail space, twelve anchor hotels, including three
boutique hotels, an 18-hole golf course with a golf academy and clubhouse and a 250 slip yacht
international marina inspired by the French Riviera which, due to its unique location and features, is
difficult to replicate in the region and is therefore expected to transform the area into a premier
international tourist destination. The Marassi Marina is designed to be integrated with customs and
immigration approvals for ease of access and benefits from a unique location and unmatched climate
along one of the most beautiful coastlines in the Mediterranean.
• Project Mivida is a 3.7 million square metre project under development designed to be a fully-
integrated ecologically friendly and energy-efficient community with lush landscapes in a strategic
location in New Cairo City. It is strategically located on New Cairo’s main road and is in close
proximity to the American University in Cairo and Cairo International Airport. Designed by world-
class architects and designers, Project Mivida is expected to be a fully-fledged family-oriented, leisure
and work destination featuring a range of amenities, including a business park, educational, sports and
leisure facilities and a 33-acre central park. Project Mivida will feature Mivida Downtown, a boulevard
shopping area featuring international and local brands strategically located in the centre of New Cairo
City. Mivida Downtown was designed to comprise wide pedestrian streets, water features, full
spectrum dining and easy accessibility to the town centre with multiple access points combining to
provide an unrivalled experience to visitors.
• Cairo Gate is a plot of land of approximately 0.6 million square metres in 6th of October City with
frontage of the Cairo—Alexandria Desert highway, an area with limited land offerings, which makes
Cairo Gate a strong value proposition.
As of 31 March 2015, the cumulative number of residential units sold for future delivery and the number of
residential units delivered amounted to 4,676 and 1,850 (including serviced apartments), respectively.
Emaar Misr’s net sales for the three months ended 31 March 2015 were EGP 2.0 billion compared to
EGP 1.0 billion for the three months ended 31 March 2014. Emaar Misr’s net sales for 2014 amounted to
EGP 7.1 billion, an increase of 71% compared to EGP 4.2 billion in 2013, which in turn was an increase of
27% compared to EGP 3.3 billion in 2012. Emaar Misr’s total revenue amounted to EGP 751.5 million for
the three months ended 31 March 2015, EGP 2.6 billion for the year ended 31 December 2014,
EGP 1.2 billion for the year ended 31 December 2013 and EGP 0.8 billion for the year ended 31 December
2012.
1
In a market sample comparing Emaar Misr to certain listed Egyptian real estate developers, Emaar Misr’s
share of total new net sales in Egypt increased from 10% in 2010 to 36% in 2014, which represents an
EGP 6.0 billion increase in Emaar Misr’s total new net sales in a market sample that grew by
EGP 8.7 billion. Emaar Misr’s increase in sales during that period was partially the result of the brand’s
strength and Management’s confidence in continuing to invest, construct and deliver residential units
despite the unprecedented market conditions.
Competitive Strengths
Emaar Misr believes it differentiates itself from its competition through the strength of the internationally
recognised Emaar brand, its strategically located land bank acquired at attractive rates, its offer of fully
integrated lifestyle communities of premium quality standards, its strong expertise across asset classes
leveraging Emaar Properties’ proven expertise and capabilities, and its retention of revenue generating
commercial assets.
2
unmet demand for high-quality retail space. Management’s development plans encompass a target of
more than 250,000 square metres of retail GLA.
• Attractive prospects for office space. Although Management believes that office space has historically
been undersupplied in Egypt, economic growth in the country is expected to support long-term tenant
demand. According to Jones Lang LaSalle, Cairo’s office stock GLA in the fourth quarter of 2014 was
0.9 million square metres which is lower than in most other countries in the MENA region. The
market for office space has historically been concentrated in downtown Cairo with no recognised
central business district. Furthermore, the lack of office supply has led to the transformation of
previously residential properties into office space. Management believes that Emaar Misr is well
positioned to capture growth opportunities in this sector due to the strategic location of its projects in
and around Cairo where companies continue to search for new land plots to develop adjacent to
major transportation hubs. Management’s development plans encompass a target of more than
150,000 square metres of office GLA.
• Growing hospitality segment. Leveraging on the expected increase in demand for premium quality
hotels, secondary homes and growth of the internal and external tourism industry, Management’s
development plans include a target of 15 hotels, comprising approximately 4,000 hotel room keys and
serviced and branded apartments, most of which are expected to be part of Project Marassi located on
the North Coast. Emaar Misr intends to increase its investments in this segment where Management
believes there are significant growth opportunities.
Business model focused on integrated master plans supported by robust project development processes
Emaar Misr’s business model is to develop premium-quality master-planned lifestyle communities in prime
locations that are anchored by landmark developments. Management believes that Emaar Misr’s product
offering is differentiated by the quality and design of its projects combined with the flexibility under its
master plans to modify its projects, including the mix of properties, on an on-going basis in order to adapt
to prevailing and changing market trends and customers’ preferences.
• Rare offer of a dynamic portfolio of premium-quality move-in ready residential properties. Emaar Misr
offers premium-quality, fully-finished and move-in ready residential units (including apartments, twin
houses, town houses and villas) that cater to differing needs and various consumer price levels.
Management believes that this is a rare offer in the Egyptian real estate market currently dominated
by semi-finished residential properties.
• Anchored by landmark developments. Each project is designed to be anchored by a landmark
development comprising a wide range of amenities, such as golf courses, golf club houses, community
centres, central parks, sports and leisure centres, schools and medical centres, thereby creating
self-contained, fully-integrated master-planned lifestyle communities.
• Combined with robust project development processes across all stages of a project life cycle. Emaar Misr
relies on a well-proven and efficient development process from the initial stages of opportunity
identification to the delivery and completion of a project that is underpinned by an internal
operational structure designed to emphasise accountability and quality control. Throughout the
master planning phase, Emaar Misr focuses on delivering premium quality products consistent with
the Emaar brand name. As part of this process, Emaar Misr centralises the design and tender phases
with the aim of creating economies of scale that improve value across all of its projects. Emaar Misr
coordinates the launch of residential units with retail and office space, gradually increasing the supply
of residential properties to allow for the appreciation of home values and residential areas through
heightened visibility and availability of amenities. Following the delivery of residential units, Emaar
Misr retains control of the community and facility management function in order to manage the
customer experience and preserve the community environment.
3
will be home to Emaar Misr’s flagship development, Emaar Square, a world-class shopping,
residential, leisure and entertainment complex comprising an open-air retail mall and office space
designed to attract global brands and leading local and international companies, a five star and a
five-plus-star hotel, including the first ‘‘The Address’’ branded hotel in Cairo and a state-of-the-art
entertainment and leisure centre. See ‘‘Description of Emaar Misr—Projects under Development—
Project Uptown Cairo’’.
• Project Marassi is designed to feature a fully-integrated, exclusive resort community, retail space,
twelve anchor hotels, including three boutique hotels, an 18-hole golf course with a golf academy and
clubhouse and a 250 slip yacht international Marina inspired by the French Riviera which, due to its
unique location and features, is difficult to replicate in the region and is therefore expected to
transform the area into a premier international tourist destination. The Marassi Marina is designed to
be integrated with customs and immigration approvals for ease of access and benefits from a unique
location and unmatched climate along one of the most beautiful coastlines in the Mediterranean. See
‘‘Description of Emaar Misr—Projects under Development—Project Marassi’’.
• Project Mivida is designed as a community development with environmentally friendly components
and green landscapes and amenities that are planned to cover more than 80% of the project’s land.
Project Mivida is designed to feature Mivida Downtown, a boulevard shopping area featuring
international and local brands strategically located in the centre of New Cairo City. Mivida Downtown
is designed to comprise wide pedestrian streets, water features, full spectrum dining and easy
accessibility to the town centre with multiple access points combining to provide an unrivalled
experience to visitors. See ‘‘Description of Emaar Misr—Projects under Development—Project Mivida’’.
Retain most commercial assets to optimise future revenue streams and cash flows
Emaar Misr’s business model is to continue to build a portfolio of residential properties for sale while
growing its presence in the premium retail, hospitality and office segments through ownership of
investment properties that are leased to tenants. Premium quality retail and hospitality properties are
planned across all projects while office properties are planned for Project Uptown Cairo and Project
Mivida. As of the date of this Offering Memorandum, Emaar Misr has launched its first shopping mall
(MPorium in Project Marassi) and has sold serviced and branded apartments in Project Marassi.
Emaar Misr’s business model is designed to allow it to capture growth opportunities in different market
segments and, by retaining control over its commercial properties, to enable it to manage the mix of
occupants and retailers to better reflect consumer preferences and adapt to changes in the market.
Management believes that this strategy will improve the breadth and stability of Emaar Misr’s revenue
streams and cash flow in the medium term by including sustainable rental income, therefore allowing
Emaar Misr to achieve a more diversified revenue profile over the medium to long term.
4
Emaar Misr’s total revenue amounted to EGP 751.5 million for the three months ended 31 March 2015,
EGP 2.6 billion for the year ended 31 December 2014, EGP 1.2 billion for the year ended 31 December
2013 and EGP 0.8 billion for the year ended 31 December 2012. Gross margin was 30.0% for the three
months ended 31 March 2015 and 29.8%, 34.5% and 28.1% for the years ended 31 December 2014, 2013
and 2012, respectively.
Emaar Misr’s cash flow management supports residential development funding in an efficient manner. It is
based on an off-plan sales model that is designed to provide Emaar Misr with cash inflow prior to the
commencement of construction combined with a coordinated phasing strategy aimed at timing the launch
and completion of its residential properties with the roll-out of retail, office and hospitality properties and
other amenities. As part of this business model, Emaar Misr develops infrastructure as an initial step in
development, including site grading, roads and utility networks, and combines it with the launch of certain
amenities at an early stage, which are designed to have a positive impact on the demand for and value of
the residential properties over time. For example, the beach club in Project Marassi and the golf clubhouse
in Project Uptown Cairo were completed prior to the delivery of the first residential units, allowing
prospective buyers to experience the quality of those amenities. Management believes that this approach
had a positive impact on the demand for residential units in those projects.
5
Strategy
Emaar Misr’s vision is to become Egypt’s premier lifestyle community provider, through developing world-
class projects to fulfil the aspirations of its customer base. Emaar Misr’s aim is to continue to maintain a
strong market position while increasing revenue and profitability. Emaar Misr intends to pursue the
following business and growth strategies.
Maximising value from its property portfolio through dynamic phasing of launches
Emaar Misr intends to continue to implement a coordinated phasing strategy aimed at timing the launch
and completion of its residential properties with the roll-out of retail, office and hospitality properties and
other amenities, thereby allowing for a faster creation of thriving, fully integrated and self-contained
lifestyle communities. As part of this strategy, Emaar Misr intends to continue to sell fully-finished,
move-in ready residential properties in small units comprising completed villages and parcels within its
projects which are expected to act as a catalyst for incremental leasing demand through increased property
foot traffic in the projects. Furthermore, Emaar Misr plans to continue to launch certain amenities at an
early stage with the aim of having a positive impact on the demand for and value of the residential
properties over time while also building sales momentum. Management believes that the phasing strategy
will provide Emaar Misr with the flexibility needed to respond efficiently to changes in the Egyptian real
estate market and changing consumer preferences by allowing Emaar Misr to tailor its products.
6
The commitment to deliver premium quality properties is supported through rigorous internal quality
management standards and procedures that Emaar Misr applies at each stage of project execution,
including managing communities and facilities after construction of properties is completed.
Company Information
Emaar Misr is a joint stock company incorporated under the laws of the Arab Republic of Egypt with a
registered office at Cairo, Mokattam 11571, Egypt. The telephone number is: +20 2 25032000.
7
DESCRIPTION OF THE OFFERING
Company . . . . . . . . . . . . . . . . . . . . . Emaar Misr for Development S.A.E.
Egyptian Public Offering . . . . . . . . . The Egyptian Public Offering consists of a domestic offering by
the Company of up to 90,000,000 Public Offering Shares to the
public in Egypt, subject to the Capital Market Law its Executive
Regulations as amended, the provisions of the EGX Listing
Rules and the regulations of the EFSA. THE EGYPTIAN
PUBLIC OFFERING IS EXPECTED TO BE OPEN FROM
16 JUNE 2015 TO 25 JUNE 2015 AND IS BEING MADE
PURSUANT TO THE PUBLIC SUBSCRIPTION NOTICE.
EGYPTIAN INVESTORS SHOULD REFER TO AND WILL
BE PURCHASING PUBLIC OFFERING SHARES SOLELY
IN RELIANCE ON THE PUBLIC SUBSCRIPTION NOTICE
AND MAY NOT RELY ON THIS OFFERING
MEMORANDUM.
Re-allocation of New Shares . . . . . . . The Company, in consultation with the Managers, may
re-allocate New Shares from either the Institutional Offering to
the Egyptian Public Offering or from the Egyptian Public
Offering to the Institutional Offering depending on the level of
subscription for each tranche. Any re-allocation of New Shares
from the Institutional Offering to the Egyptian Public Offering
will take place at least three business days prior to the closing of
the Egyptian Public Offering which is scheduled for 25 June
2015. Any re-allocation from the Egyptian Public Offering to the
Institutional Offering will take place on the day following the
closing of the Egyptian Public Offering which is scheduled for
25 June 2015.
8
Offering . . . . . . . . . . . . . . . . . . . . 4,619,338,000 (assuming all Public Offering Shares are offered
and sold in the Egyptian Public Offering).
Use of Proceeds . . . . . . . . . . . . . . . . The Company intends to use the net proceeds from the
Combined Offering to partially fund existing and future
developments of its projects and selectively expand its land bank.
See ‘‘Use of Proceeds’’.
Managers . . . . . . . . . . . . . . . . . . . . . EFG Hermes and J.P. Morgan have been appointed Joint Global
Coordinators and Joint Bookrunners for the Institutional
Offering. Emirates Financial Services PSC has been appointed
Lead Manager for the Institutional Offering. Emirates Financial
Services PSC is acting as a manager in connection with the
Institutional Offering but not as an underwriter. Emirates NBD
Bank PJSC, an affiliate of Emirates Financial Services PSC, is
acting only as an underwriter in connection with the Institutional
Offering and will have the obligation to purchase Institutional
Offering Shares for which Emirates Financial Services PSC fails
to procure purchasers. References to the Managers in this
Offering Memorandum should be construed accordingly.
Capital Increase and Share Split . . . . On 11 May 2015, the Extraordinary Shareholders Meeting
approved the increase of the Company’s authorised capital from
EGP 4,500,000,000 to EGP 10,000,000,000. The process of
finalising the capital increase and reflecting it on the Company’s
commercial register will be completed before the closing of the
public subscription period in the Egyptian Public Offering which
is scheduled to occur on 25 June 2015. The split of the Ordinary
Shares in issue prior to the Combined Offering and the change
of the par value of the Ordinary Shares from EGP 10 to EGP 1
were approved by an Extraordinary General Meeting of the
Company held on 31 March 2015, the EFSA on 4 May 2015 and
GAFI on 5 May 2015. The issuance of the New Shares is subject
to EFSA’s and GAFI’s approval which is expected to be obtained
prior to the Closing Date. See ‘‘Description of Share Capital and
Applicable Egyptian Law’’.
Listing and Trading . . . . . . . . . . . . . Application will be made to list the New Shares on the EGX
under the symbol ‘‘EMFD.CA’’. The existing ordinary shares of
the Company were listed on the EGX on 4 March 2015, but
trading in the ordinary shares, including the New Shares, is
conditional on the satisfaction of certain conditions set out in
the EGX Listing Rules including, without limitation, completion
of the Combined Offering. In accordance with the regulations of
the EGX Listing Rules, the Ordinary Shares will be quoted on
the EGX in single units. Trading in the Ordinary Shares,
including the New Shares, on the EGX is expected to commence
on or around 2 July 2015, subject to receipt of regulatory
approvals. See ‘‘Plan of Distribution—Subscription, Prefunding,
Settlement and Transfer of the Ordinary Shares’’.
9
the founders of the Company), (ii) 5% of the Company’s total
outstanding shares is free float (as defined in the EGX Listing
Rules) having a market value of not less than EGP 10 million,
and (iii) the New Shares are being subscribed for by a minimum
of 300 investors.
Lock-up Arrangements . . . . . . . . . . . Emaar Misr has agreed that, without the prior written consent of
the Joint Global Coordinators, it and its officers and directors
will not issue, offer, pledge, sell, contract to sell or otherwise
dispose of any Ordinary Shares (including treasury shares) or
securities convertible into Ordinary Shares for a period of
180 days from the date of the Underwriting Agreement, subject
to certain exceptions.
10
available to the Stabilisation Manager prior to commencement
of trading. Starting on the commencement of trading, the
Stabilisation Manager will place an open purchase order at the
Offer Price, which will remain open until the end of the
Stabilisation Period. At the end of the Stabilisation Period this
open purchase order will be matched with open sale orders and
executed on the EGX. If the purchase order submitted by the
Stabilisation Manager exceeds the amount deposited in the
Stabilisation Fund, such purchase orders will be executed on a
pro rata basis up to the amount of the Stabilisation Fund and all
Ordinary Shares purchased will be placed in the Stabilisation
Fund. The Stabilisation Manager will remit to the Company, at
the end of the Stabilisation Period, any proceeds of the
Combined Offering then remaining in the Stabilisation Fund
and any remaining Ordinary Shares purchased during the
Stabilisation Period using the Stabilisation Fund. The
Stabilisation Manager will disclose the stabilisation transactions
to the EGX at the end of the Stabilisation Period.
ISIN . . . . . . . . . . . . . . . . . . . . . . . . EGS673Y1C015.
11
SUMMARY HISTORICAL AND OTHER FINANCIAL INFORMATION
The following selected financial information as of and for the three months ended 31 March 2015 and 2014
has been extracted from the Interim Financial Statements, and the financial information as of and for the
financial years ended 31 December 2014, 2013 and 2012 has been extracted from the Annual Financial
Statements. The selected financial information is qualified by, and should be read in conjunction with, the
section entitled ‘‘Operating and Financial Review’’ and the Financial Statements, including the notes
thereto, appearing elsewhere in this Offering Memorandum. This financial information is historical and
not necessarily indicative of results to be expected in any future period. In addition, the Company’s results
for the three months ended 31 March 2015 are not necessarily indicative of results to be expected for the
full year.
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
12
Summary Statement of Financial Position
As of 31 March As of 31 December
2015 2014 2013 2012
EGP US$(1) EGP US$(1) EGP EGP
ASSETS
Non-current assets . . . . . . . . . . . 762,974,761 99,944,297 767,296,094 100,510,361 651,358,196 535,709,173
Current assets . . . . . . . . . . . . . . 12,728,040,181 1,667,283,230 12,326,966,819 1,614,745,457 10,791,342,932 9,559,201,268
TOTAL ASSETS . . . . . . . . . . . . 13,491,014,942 1,767,227,527 13,094,262,913 1,715,255,818 11,442,701,128 10,094,910,441
EQUITY AND LIABILITIES
Equity
Share capital . . . . . . . . . . . . . . . 4,019,338,000 526,504,847 878,338,000 115,056,065 878,338,000 699,269,000
Amounts paid under capital
increase . . . . . . . . . . . . . . . . . — — 3,141,000,000 411,448,782 119,544,000 179,069,000
Legal reserve . . . . . . . . . . . . . . . 21,145,120 2,769,861 247,803 32,460 196,491 196,491
Retained earnings/(accumulated
losses) . . . . . . . . . . . . . . . . . . 160,485,144 21,022,419 19,955,708 2,614,057 (404,040,902) (413,507,739)
TOTAL EQUITY . . . . . . . . . . . . 4,200,968,264 550,297,127 4,039,541,511 529,151,364 594,037,589 465,026,752
Liabilities
Interest-bearing loans and
borrowings . . . . . . . . . . . . . . . — — 475,020 62,224 171,290,093 231,977,713
Land purchase liabilities . . . . . . . . 525,812,458 68,877,713 635,340,594 83,225,124 574,511,035 360,745,187
Provision for employees’
end-of-service benefits . . . . . . . 12,837,160 1,681,577 8,852,688 1,159,640 6,768,775 7,409,228
Non-current liabilities . . . . . . . . . 538,649,618 70,559,290 644,668,302 84,446,987 752,569,903 600,132,128
Current liabilities . . . . . . . . . . . . 8,751,397,060 1,146,371,111 8,410,053,100 1,101,657,467 10,096,093,636 9,029,751,561
TOTAL LIABILITIES . . . . . . . . . 9,290,046,678 1,216,930,401 9,054,721,402 1,186,104,454 10,848,663,539 9,629,883,689
TOTAL LIABILITIES AND
EQUITY . . . . . . . . . . . . . . . . 13,491,014,942 1,767,227,527 13,094,262,913 1,715,255,818 11,442,701,128 10,094,910,441
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
13
RISK FACTORS
An investment in the Company involves a high degree of risk. Potential investors should carefully consider the
risks described below, together with the information contained in this Offering Memorandum, before deciding to
purchase Institutional Offering Shares. Emaar Misr’s business, financial condition, results of operations and
prospects, and the actual outcomes of matters as to which forward-looking statements are made in this Offering
Memorandum, could be adversely affected by any of the risks described below individually or collectively. In
such case, the trading price of the Ordinary Shares could decline and purchasers of Institutional Offering Shares
could lose all or part of their investment.
The risks and uncertainties that Management currently believes are material are described below. However, these
risks and uncertainties may not be the only ones faced by Emaar Misr. Additional risks and uncertainties,
including those currently unknown to Management, or that Management currently deems immaterial, could
have an adverse effect on Emaar Misr’s business, financial condition, results of operations and prospects.
The risks and uncertainties presented below are subject to contingencies which may or may not occur. The order
in which the risk and uncertainties are presented below does not reflect order of importance, likelihood of
occurrence or materiality. Prospective investors should carefully review the entire Offering Memorandum and
should form their own views before making any investment decision.
14
These factors could cause fluctuations in the value of real estate assets, rental income or operating
expenses, causing a negative effect on the operating returns derived from, and the value of, real estate
investments. Any adverse change in one or more of these general factors or in any of the factors described
in further detail below could have a material adverse effect on Emaar Misr’s business, financial condition,
results of operations and prospects.
Emaar Misr’s real estate assets and projects are subject to additional development, planning and construction risks.
Real estate development, construction and acquisition activities are subject to additional risks, many of
which are beyond Emaar Misr’s control, including delay, ability to complete projects within the required
timeframe and financial loss, and which could adversely affect the economic performance and value of
Emaar Misr’s real estate assets. These risks are due to, among others:
• Failure to generate a sufficient level of pre-sales to finance project construction and costs overruns
that exceed original estimates due to increased costs of materials, labour, other construction inputs
and other factors. Such cost increases could make the completion of a project uneconomical as Emaar
Misr may not be able to increase sales prices of units or rental rates for pre-sold or pre-let units to
mitigate increases in construction costs.
• Inability to timely complete construction, sales or leasing of a property, particularly given the relative
size and complexity of the projects. Such inability may result in the breach or termination of the
Company’s existing preliminary sales contracts with the Egyptian government, the termination of
Emaar Misr’s ownership rights in respect of the land or claims for damages.
• Inability to adapt project phases to cater to changes in market tastes and preferences.
• Risks relating to project delays due to defaults by customers on post-dated cheques delivered at the
time of unit purchases in the event that Emaar Misr is not then able to vacate the units (if already
delivered) and re-sell such units and Emaar Misr’s credit facilities are unavailable or insufficient to
cover any shortfall in funding of project costs.
• Risks relating to construction activity at properties, including shortages of materials and other
construction inputs (including, among others, cement, steel, energy and other utilities), the imposition
of liens on materials, defects in materials or poor workmanship of third-party contractors.
• Potential title or other defects in acquired land plots, including latent defects that may not be revealed
until many years after a property is developed and legal proceedings relating thereto.
• Potential delays in obtaining, or failure to obtain, all necessary land use, environmental, building,
occupancy and other required governmental permits and authorisations, including investment
contracts with local and regional authorities.
• Fluctuation in occupancy rates and rents at newly completed properties due to a number of factors,
including market and economic conditions.
• Potential liabilities and proceedings relating to acquired land, properties or entities owning properties
for which a company may have limited recourse.
• Limited availability of energy and other utilities, adequate transportation and utility infrastructure.
• Obligations relating to the preservation and protection of the environment and the historic and
cultural heritage of Egypt.
• Bankruptcy or insolvency of contractors, suppliers and other counterparties.
• Failure to sell or lease properties within budgeted limits, reducing the profitability of a project.
• Potential liabilities and proceedings relating to materials used, warranties and guarantees given for the
quality of construction work performed subsequent to the date on which the project was transferred to
the customer.
Any adverse change in one or more of these factors could have a material adverse effect on Emaar Misr’s
reputation, business, financial condition, results of operations and prospects.
15
Developers, including Emaar Misr, face legal complexities and uncertainties in obtaining, retaining and enforcing
title to land in Egypt.
Emaar Misr has historically acquired the majority of its land from the Egyptian government and State-
owned enterprises.
Land acquisition from the government typically includes an initial grace period followed by regular interim
payments until the full purchase price has been paid. Pending payment of the full purchase price, the land
is allocated to a developer by the Egyptian government pursuant to a land allocation decree and
preliminary sales contract. Under the preliminary sales contract, the developer agrees to develop the land
in accordance with a development plan, certain project specifications and other conditions specified under
the preliminary sales contract and land allocation decree. The Egyptian government only transfers title to
the land when the developer has completed development in accordance with the foregoing.
A failure by Emaar Misr to comply with the development conditions or other terms of the land allocation
decree and preliminary sales contract could result in the Egyptian government or State-owned companies
reducing the size of the land allocated to Emaar Misr or rescinding the preliminary sales contract. Emaar
Misr, as is the case with other real estate developers in Egypt, is often subject to additional obligations in
the form of administrative fees or development requirements that are imposed arbitrarily by the State or
relevant regulatory authorities beyond those contractual obligations initially stipulated in the preliminary
sales contract or allocation decree, which could result in higher than expected costs for any particular
project.
The process to register title in Egypt is bureaucratic, lengthy and complicated and normally faces
administrative challenges and conflicting governmental decrees or orders that may result in delaying or
suspending the registration of title process. These challenges usually increase with large scale development
projects due to the size of the land. Moreover, due to the complexity of recording historical changes to the
legal status of land in the relevant Egyptian land registries, data in these registries is commonly not
updated upon the purchase or sale of land. Although registration of title in Egypt is not presently required
in order to transfer personal rights or possession rights, it is essential to confer title to land in order to be
enforceable vis-à-vis third parties. As a result of inconsistencies and inaccuracies in the land registration
system, transferring title to either Emaar Misr or the purchasers of residential units in its developments
may be delayed or suspended.
A number of recent court judgments have been passed ordering the State to reverse privatisation
transactions and, in some cases, agreements entered into between the State and private companies or
administrative decisions issued by the State. This resulted in certain cases of renegotiation by the State of
the relevant contracts or administrative decision. However, a new law was passed in 2014 regulating the
right of third parties to challenge contracts signed between the State or State-owned entities and private
persons or entities. This new law restricts the right of third parties to challenge such contracts before the
courts unless corruption has been established by a criminal court judgment. This law has been challenged
as unconstitutional on the basis that it restricts the right to sue. If the Egyptian supreme court upholds the
constitutionality of this law, the risk of reversing privatisation transactions will be reduced. However, if the
Egyptian supreme court finds this law to be unconstitutional, there is no guarantee that the courts will not
accept claims seeking to reverse such privatisation transactions or that the State will not as a result seek to
renegotiate the related contracts.
As of the date of this Offering Memorandum, Emaar Misr is in the process of registering title to the land
on which Project Uptown and Project Marassi are located. Management will seek to register title for
Project Mivida once the last land instalments have been fully paid and will seek to register title for the land
on which Cairo Gate is planned once it has resolved change of ownership approvals, change of object fees
and registration fees with Egyptian authorities. For more information, see ‘‘Material Contracts—Land and
Property Contracts’’ and ‘‘Description of Emaar Misr—Legal Proceedings’’.
These legal complexities and uncertainties regarding the right of Emaar Misr to obtain title to the land
underlying its projects could have a material adverse effect on Emaar Misr’s business, financial condition,
results of operations and prospects.
Construction operations and properties are subject to extensive laws, regulations, standards and licences.
Emaar Misr’s construction operations and properties are subject to regulation by various governmental
entities and agencies in connection with obtaining and renewing various licences, permits, approvals and
authorisations as well as with on-going compliance with existing, amended and new laws, regulations and
16
standards relating to fire and safety requirements, building codes, environmental regulations, land use
restrictions, social housing and property taxes and to certain conditions in place under various land
allocation decrees and preliminary sale contracts. Because of the complexities involved in procuring and
maintaining numerous licences and permits, there can be no assurance that Emaar Misr will at all times be
in compliance with all of the requirements imposed on its properties.
The planning and approval process for new real estate development projects involves uncertainty. For any
project being developed in Egypt, the architectural and detailed project design must be approved by
several administrative bodies within the appropriate government agency. In addition, each project must
receive administrative approvals from various governmental agencies, including the fire, health and safety,
environmental protection and sanitary departments, as well as technical approvals from various utility
providers, including electricity, gas and sewage services. Construction without a valid construction permit is
a violation of law and, currently, the Egyptian government is taking steps to enhance monitoring in this
field. The Egyptian government often attaches, and may in the future attach additional, conditions and
requirements to the award of sales contracts or to the sale and transfer of land or may enact new or amend
existing laws and regulations, which may affect Emaar Misr’s properties. For example, virtually all
developers, including Emaar Misr, advertise projects located on land purchased from the Egyptian New
Urban Communities Authority (‘‘NUCA’’) prior to completion of construction of such projects, which may
not comply with the terms of NUCA decrees allocating such land.
A failure to comply with applicable laws and regulations or to obtain and maintain requisite approvals,
certifications, permits and licences, whether intentional or unintentional, could lead to significant
governmental fines, penalties, injunctions, formal decrees or orders and adverse private damages awards,
and negative publicity. In addition, any adverse publicity resulting from any such non-compliance,
particularly as regards the safety of the leisure and entertainment venues located in Emaar Misr’s
properties, could have a material adverse effect on its business, financial condition, results of operations
and prospects.
Emaar Misr operates in a highly competitive environment and competition may intensify in the local market.
The real estate industry and the retail real estate market in Egypt are highly competitive. Emaar Misr faces
intense competition from other developers and operators of residential, retail, commercial and hospitality
properties in Egypt, many of whom own properties similar to and located near Emaar Misr’s properties. In
addition, Emaar Misr’s projects may face increased competition due to the movement of tenants to new
satellite cities, such as Egypt’s planned new Capital City, where Emaar Misr may not be as successful as
other developers in acquiring attractive locations on favourable terms or at all. Some of Emaar Misr’s
competitors are well capitalised and have significant financial, marketing and other resources that may be
greater than Emaar Misr’s. Some also have larger land banks and a longer track record, as Emaar Misr is a
relatively new entrant into Egypt and is the only non-domestic developer among the major real estate
developers in Egypt.
Competition among property developers and retail operators may result in increased costs for the
acquisition of land for development, increased costs for raw materials, shortages of skilled contractors,
oversupply of properties and/or saturation of certain market segments, reduced rental rates for commercial
use or discounted stay rates for hospitality accommodations, decrease in property prices, a slowdown in the
rate at which new property developments will be approved and/or reviewed by the relevant government
authorities and an increase in administrative costs for hiring or retaining qualified personnel, any of which
may adversely affect Emaar Misr’s business, financial condition, results of operations and prospects.
Furthermore, property developers or retail operators that are better capitalised than Emaar Misr may be
more competitive in acquiring land through the auction process. Emaar Misr may lose existing or potential
customers and tenants and may be pressured to reduce sales prices or stay and rental rates or to offer other
incentives, including rent abatements, early termination rights, below-market renewal, additional amenities
and expanded hospitality services. New entrants into the Egyptian real estate development market or the
retail market, including non-Egyptian entrants, may be successful in acquiring prime real estate and may
vigorously compete with Emaar Misr in developing properties in Egypt. If Emaar Misr fails to respond to
changes in market conditions as promptly and effectively as its competitors, any of these factors could have
a material adverse effect on Emaar Misr’s business, financial condition, results of operations and
prospects.
17
Emaar Misr’s future rental revenues will depend upon its ability to successfully implement its business strategy to
find tenants for its investment properties.
Historically, Emaar Misr’s business activity has been focused on real estate development in Egypt and its
revenues have been almost entirely derived from the sale of residential properties developed by it. As part
of its strategy, going forward Emaar Misr intends to diversify its revenue streams through the retention of
investment properties. These will primarily consist of retail properties as well as office and hospitality
properties and will largely be located in Emaar Misr’s landmark developments in its fully-integrated
master-planned lifestyle communities. The total GLA of retail properties across all projects is expected to
be more than 250,000 square metres. The total GLA of office properties across all projects is expected to
be more than 150,000 square metres. The total number of hotels across all projects is expected to be 15
with approximately 4,000 hotel room keys (including serviced and branded apartments).
Emaar Misr’s ability to successfully implement this strategy is subject to a variety of factors, many of which
are beyond its control. Emaar Misr’s business strategy is based on certain assumptions, including an
anticipated increase in demand for high-quality retail and office space in Cairo reflecting an improving
economic environment and greater corporate confidence. If the assumptions regarding these trends prove
to be incorrect or the overall Egyptian economy worsens or does not recover in the future, Emaar Misr
may not successfully implement this strategy and may fail to collect anticipated rental and operating
revenues from those investment properties. For example, there can be no assurance that Emaar Misr will
be able to find suitable tenants, including anchor tenants and major retail groups, under the terms and
conditions it seeks, that it will be able to maintain satisfactory relationships with its tenants or that it will be
able to secure adequate occupancy rates at its properties on favourable terms or at all. Furthermore,
Emaar Misr’s results of operations and cash flows will be dependent on the tenants’ liquidity and financial
condition and their ability to meet financial obligations under their leases. The ability of the tenants to
operate their businesses and fulfil their obligations under the leases will depend, in part, upon the overall
profitability of their operations, which could be adversely impacted by a number of factors, many of which
will be beyond their control, including:
• A downturn in global, national or regional, political, social and economic conditions which may
generally affect consumer behaviour or tenants’ ability to pay rental rates.
• A change in the purchasing habits of consumers in the region surrounding a development or from
tourists visiting the region.
• A shift to a preference for online shopping.
• A change in market conditions such as an oversupply of retail or commercial space, including
available space for sublease or construction.
• An increase in competition from other properties.
• A change in laws, regulations or controls affecting rental rates, prices of goods, interest rates and fuel
or energy consumption.
In order to retain tenants and attract new tenants, Emaar Misr may also be required to offer rent
concessions, lease incentives and other terms in its lease contracts that make such leases less favourable. In
addition, anchor tenants and large retail groups often have significant bargaining power when negotiating
rent and other lease terms. Emaar Misr may not be successful in maintaining or increasing occupancy rates
or successfully negotiating favourable terms and conditions in its leases. In addition, Emaar Misr may incur
costs in enforcing rights under the lease of a defaulting tenant, including eviction and re-leasing costs.
Furthermore, if the tenants decide not to renew their leases upon expiration, Emaar Misr may not be able
to re-let their space on terms as favourable as those contained in the previous lease, if at all. If tenants do
not renew their leases, Emaar Misr may need to expend significant time and money in attracting
replacement tenants. Any of the foregoing factors may reduce Emaar Misr’s cash flow and have a material
adverse effect on Emaar Misr’s business, financial condition, results of operations and prospects.
The hotel and resort industries are subject to certain general risks.
Emaar Misr plans to build 15 hotels with approximately 4,000 room keys across its projects and a resort in
Project Marassi, all of which will be owned by Emaar Misr and operated by hotel operators. As of the date
of this Offering Memorandum, Emaar Misr operates only one hotel with 130 keys and 14 villas in Project
Marassi. A number of factors, many of which are common to the hotel and resort industries and are
18
beyond Emaar Misr’s control, could adversely affect the economic performance and value of Emaar Misr’s
hotels in the future. Such factors include, among others:
• Dependence on levels of business, commercial and leisure travellers and tourism in Egypt.
• Dependence on group and meeting/conference business.
• The impact of acts of war or increased tensions between certain countries, increased terrorism threats,
terrorist events, impediments to means of transportation (including airline strikes, road closures and
border closures), extreme weather conditions, natural disasters, outbreaks of diseases and health
concerns, rising fuel costs or other factors that may affect travel patterns and reduce the number of
business and leisure travellers;
• Adverse effects of international market conditions, which may diminish the demand for first class and
luxury leisure travel or the need for business travel, as well as national, regional and local political,
economic and market conditions where Emaar Misr’s hotels and resorts operate and where its
customers live;
• Increases in operating costs due to inflation, labour costs, utility costs (including energy costs),
increased taxes and insurance costs, as well as unanticipated costs such as acts of nature and their
consequences and other factors that may not be offset by increased room rates;
• Seasonality, in that hotels and resorts located in Egypt may operate at reduced levels of revenue
during varying seasons;
• Changes in interest rates and in the availability, cost and terms of debt financing;
• Changes in governmental laws and regulations (including trade restrictions), fiscal policies and zoning
ordinances and the related costs of compliance; and
• Risks relating to project delays due to defaults by customers on post-dated cheques delivered at the
time of serviced apartment purchases in the event that Emaar Misr is not then able to vacate the units
(if already delivered) and re-sell such serviced apartments and Emaar Misr’s credit facilities are
unavailable or insufficient to cover any shortfall in funding of project costs.
These factors could have a material adverse effect on Emaar Misr’s business, results of operations,
financial conditions and prospects.
Emaar Misr has relied in the past, and will continue to rely, on third parties to design, complete and manage its
projects.
Emaar Misr relies on third parties, including designers, planners, consultants, managers and contractors, at
all stages of the project development life cycle. In particular, Emaar Misr does not maintain an in-house
construction team and relies on third-party contractors to undertake all construction works. In addition,
Emaar Misr intends to outsource some services relating to the retail, commercial and hospitality properties
to third-party contractors, including housekeeping, general building maintenance, pest control, lift and
elevator maintenance, fire and smoke detection, curtain system and fire-fighting management, and security
service and waste management.
The third-party contractors providing these services must be appropriately skilled and knowledgeable to
provide a high-quality service and may require licences or permits to carry out these services. In particular,
a failure of building contractors to construct development projects on schedule or a failure of suppliers to
deliver defect-free construction materials could delay completion of projects or negatively affect the
quality of those projects. If Emaar Misr’s relationship with a contractor deteriorates, or if a contractor
becomes insolvent or is otherwise unable to satisfy its contractual obligations, Emaar Misr would have to
appoint new contractors. There can be no assurance that a successor contractor could be found with the
requisite skills, knowledge, approvals, licences, resources and willingness to perform the services for a
commercially reasonable fee or at all. If this occurs, Emaar Misr’s business, results of operations, financial
conditions and prospects could be materially adversely affected.
19
Emaar Misr’s future cash flows and revenue will be influenced by the schedule of launches, pre-sale, sale and
delivery of residential properties which may fluctuate over time.
Historically, substantially all of Emaar Misr’s revenue has been derived from the sale and delivery of
residential properties. The properties are developed in multiple phases over several years and the sale of
properties typically starts a few years ahead of the delivery date and is not concurrent with the completion
of construction works. See ‘‘Description of Emaar Misr—Project Life Cycle—Sales and Leasing Terms and
Financing Arrangements’’. Although the delivery of residential units at all three projects under development
has already started, the expected construction completion dates are 2021 for Project Mivida, 2024 for
Project Marassi and 2026 for Project Uptown Cairo. As a result, Emaar Misr’s future cash flows and
revenue will be influenced by the schedule of launches, pre-sale, sale and delivery of Emaar Misr’s
residential properties. However, actual sales and revenue may vary due to various factors, including the
political, social and economic conditions, general market conditions, competition, the level of acceptance
of the properties by the customers, the timing of pre-sales and sales and Emaar Misr’s revenue recognition
policies.
According to Emaar Misr’s revenue recognition policy, revenue from sales of residential properties is
recognised at the time of delivery of the property to the purchaser. Since pre-sales of residential properties
are not concurrent with the completion of construction works, Emaar Misr’s revenue and GFA sales may
not be recognised in the same period. Consequently, Emaar Misr’s financial results of operations for a
given period may be neither indicative of the actual demand for its properties nor the total sales it achieved
during such period.
Emaar Misr is dependent upon its Board of Directors, senior management team and certain key employees.
Emaar Misr’s business model and the execution of its business strategy is dependent upon the efforts,
skills, reputation and business contacts of the members of its Board of Directors, senior management team
and other key employees, the information and deal flow they and others generate during the normal course
of their activities and the synergies among the diverse fields of expertise and knowledge held by its
professionals. These individuals are not obligated to remain employed with Emaar Misr. The loss of the
services of any of the senior executives or key employees could delay or prevent Emaar Misr from
executing its business strategy. In addition, Emaar Misr does not maintain key employee life insurance
policies on its key employees. As a result, Emaar Misr may not be able to cover the financial loss it may
incur in losing the services of any members of the Board of Directors or senior management. Furthermore,
the Managing Director also serves as the chief executive officer of Emaar Saudi Arabia and Emaar Syria,
as discussed in ‘‘Certain Relationships and Related Party Transactions—Cross Charges’’, and may face
conflicting demands on his time as Emaar Misr’s business grows.
Emaar Misr’s future business will also depend, in part, on its ability to retain, hire, motivate and develop
key personnel with relevant technical and industry expertise. Experienced technical, marketing and support
personnel in the real estate development industry are in high demand and competition for their talent is
intense. To attract and retain key personnel, Emaar Misr must ensure that all members of its staff are
sufficiently compensated, trained and integrated into its business. If Emaar Misr is unsuccessful in its
recruiting efforts or if it is unable to train, integrate or retain new and existing key personnel, it may be
unable to operate at current levels or grow its business. The loss of any of these key personnel may
materially adversely affect Emaar Misr’s business, financial condition, results of operations and prospects.
20
Rapid growth and expansion may strain Emaar Misr’s managerial, financial and operational control systems.
The rapid development and establishment of Emaar Misr’s projects may raise unanticipated operational or
control risks going forward. Emaar Misr has experienced substantial growth since 2005 and Management
believes that its business will continue to grow at a relatively rapid rate for the foreseeable future.
As of the date of this Offering Memorandum, Emaar Misr has three projects under development in
addition to a parcel of undeveloped land at Cairo Gate. The projects are developed in multiple phases over
several years and the sale of properties typically starts a few years ahead of the delivery date and is not
concurrent with the completion of construction works. The expected construction completion dates are
2021 for Project Mivida, 2024 for Project Marassi and 2026 for Project Uptown Cairo. See ‘‘Description of
Emaar Misr—Description of Projects’’. As a result, Emaar Misr will have to react and adapt to potentially
changing market demands as well as to potential changes in the Egyptian political, social and economic
climate during the periods over which these projects are developed. Succesful management of the growth
necessary to effectively execute these projects will require, among other things:
• development of financial and management controls and information technology systems and their
implementation in newly established or acquired assets;
• development of best practices and policies;
• development of logistical operations and supply chain management; and
• strong marketing activities.
Moreover, Emaar Misr has historically operated as a privately owned company. The operating complexities
of its business and the responsibilities of its Management have increased. As Emaar Misr expands its
operations and seeks additional growth opportunities, its internal controls will need to be adapted to allow
Emaar Misr to respond to the growing demands of its business. Although Emaar Misr currently has an
internal structure designed to deal with the complexities of its business and operations, it will need to
continue improving its financial controls and procedures to keep pace with its growth, to maintain robust
coordination between its business segments and personnel, and, as growth dictates, to hire additional
qualified personnel. Effective internal controls are necessary for Emaar Misr to produce reliable financial
reports and are important to help prevent fraud. As a result, if Emaar Misr fails to achieve and maintain
effective internal controls over financial reporting as its business grows, it could result in the loss of
investor confidence in the reliability of its financial statements.
Should Emaar Misr be unable to successfully manage the impact of rapid growth on its managerial,
financial and operational resources and control systems, this could have a material adverse effect on its
business, financial condition, results of operations and prospects.
Emaar Misr may be unable to locate and acquire land suitable for development at attractive prices and upon
favourable terms and conditions.
Emaar Misr’s future growth and profitability to date have been attributable, in part, to its ability to locate
and acquire land in attractive locations, at attractive prices and on favourable terms and conditions, and
the success of Emaar Misr’s business strategy and future profitability depends upon its continued ability to
do so. In the past, Emaar Misr has been able to acquire land suitable for different types of developments
and asset classes, including residential, retail, commercial and hospitality properties. Currently, Emaar
Misr has three large scale projects in development and one parcel of undeveloped land which Management
believes are located in desirable locations where sizeable areas of land for development are scarce.
However, there can be no assurance that in the future Emaar Misr will be able to continue to acquire land
in the sizes or locations suitable for development, at attractive prices or on favourable terms and
conditions. Any inability to identify and acquire sufficient sites for Emaar Misr’s land bank at commercially
acceptable prices, terms and conditions could have a material adverse effect on its business, financial
condition, results of operations and prospects.
21
DTZ, an independent real estate appraiser, has valued certain of Emaar Misr’s properties and projects
using certain methodologies and assumptions. While Emaar Misr believes that the methodologies and
assumptions used by DTZ are reasonable and that there has been no material change to the aggregate
market value of its properties, the assumptions used may not be accurate. Accordingly, valuations based on
inaccurate assumptions may negatively affect the valuation of Emaar Misr’s properties. Moreover, the use
of different methodologies and assumptions would likely produce different valuation results. The valuation
report of DTZ included in this Offering Memorandum estimates the market value of Emaar Misr’s
projects as of 31 December 2014. However, since market movements after the date of any such valuations
and over the longer term may cause significant fluctuations in the value of the real estate, there can be no
assurance that a valuation report dated any other date would not produce different valuation results.
Details of the valuation methodologies used and the assumptions made by DTZ are described in Annex A
titled ‘‘Valuation Report’’ in this Offering Memorandum. Valuation methodologies and assumptions used,
which may result in valuations different from the market value of Emaar Misr’s properties, include (but are
not limited to) assumptions regarding the discount rates, market selling prices per square metre, exit
multiples, development timetable and phasing for each project, land, infrastructure and construction costs,
selling prices and cost escalation, rental prices and inflation thereof, costs of borrowing and taxation,
alongside assumptions on the condition of the properties, environmental matters, planning, title deeds and
other information. Therefore, the market values ascribed to the properties should not be taken as an
indication of the proceeds that Emaar Misr could achieve following the sale of any of its properties. To the
extent that valuations of Emaar Misr’s properties do not accurately reflect their market value, due to the
factors listed above and/or any other factors, this may have a material adverse effect on Emaar Misr’s
business, financial condition, results of operations and prospects.
There can be no assurance that any targets, including Emaar Misr’s target levered project investment rates of
return, will be achieved.
Emaar Misr’s target levered project investment rates of return set out in this Offering Memorandum are
targets only (and for the avoidance of doubt are not profit forecasts). The target levered project investment
rates of return are intended primarily as a basis for recommending investments to the Board of Directors.
These targets reflect subjective judgments in many respects and thus are susceptible to multiple
interpretations and periodic revisions based on actual experience and business, economic, regulatory,
financial and other developments. There can be no assurance that such targets will be met or that Emaar
Misr will achieve or successfully implement its investment strategy. The actual results achieved by Emaar
Misr and its investments may vary from these targets, and these variations may be material and are subject
to risks and uncertainties described elsewhere in this Offering Memorandum.
Prospective investors should note that Emaar Misr’s target levered project investment rates of return are
target returns for Emaar Misr’s investments and not for Emaar Misr itself or for any investment in the
Institutional Offering Shares. Prospective investors should not place undue reliance on such target rates in
deciding whether to invest in the Institutional Offering Shares.
Emaar Misr’s insurance coverage may be inadequate to cover all potential losses it could suffer.
All of Emaar Misr’s current operations are conducted, and its assets are located, in Egypt, and accordingly
may be subject to higher political, social, economic and market risks when compared to similar operations
in countries in the European Union, the United States and other parts of the world. See ‘‘—Risks Relating
to Egypt and the MENA Region’’. While Emaar Misr maintains comprehensive coverage for general
liability, property, business interruption and other risks with respect to its properties and while its policies
offer features and limits which Management considers customary, no assurance can be given that coverage
will be available at reasonable rates.
Moreover, various types of catastrophic losses, like earthquakes, hurricanes, floods, nationalisations or
certain types of terrorism, may not be insurable or may not be economically insurable. Even when
insurable, these policies may have high deductibles, high premiums or may be deemed to fall outside of
coverage. In the event of a substantial loss, Emaar Misr’s insurance coverage may not be sufficient to cover
the full current market value or replacement cost of its lost investment. Should an uninsured loss or a loss
in excess of insured limits occur, Emaar Misr could lose all or a portion of the capital it has invested in one
of its projects as well as some anticipated future revenues. In that event, contractual obligations relating to
the project may remain. Inflation, changes in building codes and ordinances, environmental considerations
and other factors might also prevent Emaar Misr from using insurance proceeds to replace or renovate a
property after it has been damaged or destroyed.
22
Emaar Misr may also face an insurance provider which challenges Management’s belief that a certain
claim is covered by an insurance policy. Under these circumstances, the insurance proceeds may be
inadequate to restore the former economic position on the damaged or destroyed property, which could
have a material adverse effect on Emaar Misr. Accordingly, any of these factors may have a material
adverse effect on Emaar Misr’s business, financial condition, results of operations and prospects.
Insufficient local infrastructure and utilities may result in delays in the completion of projects.
The timely construction, completion and sustained viability of Emaar Misr’s projects is dependent upon
and may be adversely impacted by insufficient levels of local infrastructure and utilities. Along with
increased development and growth of the Egyptian real estate market and overall economy, the existing
infrastructure and utilities may experience excessive demand. The establishment of new communities and
commercial projects, such as those in development by Emaar Misr, may require the expansion of water,
electricity and sanitation networks into new geographic areas. Similarly, the construction of new
developments requires road and transportation networks with sufficient capacity to handle the transit of
construction inputs. If the existing infrastructure and utilities are inadequate or non-existent, this may
result in delays in the completion of a project or may result in a completed project not achieving its
expected potential.
While Emaar Misr develops and constructs local infrastructure and utilities in its projects, the existing
public infrastructure to which it connects is beyond Emaar Misr’s control. Consequently, no assurance can
be given that improvements to or the establishment of infrastructure in and around Emaar Misr’s projects
will occur prior to completion of the projects, that any such improvement will be sufficient to support the
completed projects or that the infrastructure will be maintained to an appropriate standard. If the required
utilities and infrastructure are not developed or improved, Emaar Misr’s ability to develop and the
commercial viability of its completed projects could be negatively impacted, which may have a material
adverse effect on Emaar Misr’s business, financial condition, results of operations and prospects.
Emaar Misr is part of the Emaar Group and has in the past engaged in, and will continue to rely on, related party
transactions with members of the Emaar Group.
Emaar Misr has entered into and may continue to enter into transactions with certain members and
affiliates of the Emaar Group, including the Emaar Hospitality Group, the Emaar Retail Group, the
Emaar Malls Group, Emaar Saudi Arabia, Emaar Syria and Turner among others. Some of these
transactions are important for Emaar Misr’s development plans and business strategy, in particular the
development of Emaar Misr’s retail, commercial and hospitality segments.
Transactions entered into with related parties have in the past been entered into on an arm’s-length basis
pursuant to market terms. However, there can be no assurance that Emaar Misr will be able to enter into
transactions on market terms with its related parties in the future, particularly in circumstances where no
unrelated third parties are able to offer comparable services. In the event such related party transactions
shift excessive benefits to Emaar Misr’s related parties, the transactions Emaar Misr enters into could have
a material adverse effect on its business, financial conditions, results of operations and prospects. For
further details relating to Emaar Misr’s transactions with certain members and affiliates of the Emaar
Group, see ‘‘Certain Relationships and Related Party Transactions’’.
The Principal Shareholder may take actions that are not in line with, or may conflict with, its public shareholders’
best interests.
Emaar Misr is currently a wholly-owned subsidiary of the Principal Shareholder. Upon completion of the
Combined Offering and assuming all Public Offering Shares are offered and sold in the Egyptian Public
Offering, the Principal Shareholder will hold 87.01% of Emaar Misr’s Ordinary Shares and voting rights,
giving it the ability to designate a majority of the members of the Board of Directors and, as such, the
ability to control Emaar Misr’s business direction and strategy. For further details relating to Emaar Misr’s
transactions with certain affiliates and members of the Principal Shareholder and the Emaar Group prior
to and after the Combined Offering, see ‘‘Certain Relationships and Related Party Transactions’’. The
interests of the Principal Shareholder may differ from Emaar Misr’s interests or those of other
shareholders of Emaar Misr. For example, the Principal Shareholder may pursue transactions that, in its
judgment, could enhance its equity investment, even though the transaction may involve risks to the other
shareholders. Moreover, the Principal Shareholder and Emaar Misr may compete in the real estate
market. There can be no assurance that the interests of the Principal Shareholder will coincide with the
23
interests of the other shareholders or that the Principal Shareholder will act in a manner that is in Emaar
Misr’s best interests.
Emaar Misr is subject to extensive environmental regulation, which creates uncertainty regarding future
environmental expenditures and liabilities.
Environmental laws and regulations in Egypt have evolved over time and are continuing to evolve. An
owner or occupier of Egyptian real estate must investigate and clean up hazardous or toxic substances or
petroleum products released at or affecting such real estate. Even if more than one person may have been
responsible for the contamination of the land, each person covered by the environmental laws may be held
jointly and severally responsible for all of the clean-up costs incurred. In addition, third parties or the
owners of neighbouring properties may sue the owner or occupier of a site for damages and costs resulting
from environmental contamination emanating from that site. As Emaar Misr’s real estate business grows
and expands and, as Egyptian environmental laws continue to evolve, Emaar Misr may face increased risks
relating to environmental contamination and protection in the future.
Under Egyptian law, environmental liabilities that occurred while land was owned by the State, that is,
prior to the execution of a preliminary sales contract, remain the responsibility of the State. However,
there can be no assurance that the law will not change or that it will prove possible to delineate and
allocate responsibility for environmental contamination to the periods before and after the dates of land
allocation contracts. If Emaar Misr were to be found liable for any environmental contamination that
occurred prior to the land being allocated to it, the allocation of responsibility for such contamination may
be costly and time-consuming and, accordingly, Emaar Misr’s business, financial condition, results of
operations and prospects could be adversely affected.
Emaar Misr and certain of its executives and directors are and may continue to be party to civil and criminal legal
proceedings, the outcome of which is uncertain.
Emaar Misr and certain of its executives and directors are currently party to a number of legal and
arbitration proceedings in the ordinary course of business, including in relation to the title to land. In
addition, pursuant to Egyptian law, criminal proceedings may be initiated directly by an individual plaintiff
(without any prosecutorial investigation) in connection with certain types of misdemeanours for which the
law permits settlement or conciliation pursuant to the Egyptian Code of Criminal Procedures. Emaar
Misr’s Chairman and Managing Director, as legal representatives of Emaar Misr, have been and may
continue to be subject to such criminal proceedings. For a description of such proceedings, see ‘‘Description
of Emaar Misr—Legal Proceedings’’. In the future, Emaar Misr and certain of its executives and directors
may become involved in litigation or other proceedings.
Court proceedings and judicial decisions in Egypt are not always predictable. If any proceedings are
resolved adversely against Emaar Misr or such executives or directors, such litigation or proceedings may
significantly harm Emaar Misr’s future results of operations or financial condition due to the imposition of
penalties or other damages which may not be covered by insurance, and may result in criminal convictions
of certain of its executives, which would have a material adverse impact on Emaar Misr’s reputation,
results of operations and ability to execute its business plan.
Emaar Misr requires significant capital investments in connection with its current development projects and may be
required to make further capital investments in the future; there is no guarantee that Emaar Misr will be able to
secure such funding at favourable terms or at all.
Emaar Misr’s strategy contemplates significant capital investments in a relatively short period of time and
it expects to make significant capital investments in the near future in its existing projects. Emaar Misr
intends to use the net proceeds from the Combined Offering, together with its existing cash resources,
principally to further the development of the non-residential areas of its projects under development,
including primarily Emaar Square in Project Uptown Cairo, the marina and hotels in Project Marassi and
the downtown area in Project Mivida (comprising both retail and office space). Emaar Misr also intends to
use a part of the net proceeds from the Combined Offering to fund pre-launch expenditures and costs in
relation to the development of Cairo Gate as well as selectively growing its land bank through the potential
acquisition of select land plots that meet the investment criteria of Emaar Misr. See ‘‘Use of Proceeds’’ and
‘‘Description of Emaar Misr—Description of Projects’’.
In the future, while Emaar Misr expects to be in a position to finance its capital investment requirements
from operating cash flows and existing or new debt facilities, it may consider other means of financing its
24
future plans, such as by further accessing the capital markets or incurring additional debt. However, there
can be no guarantee that Emaar Misr will be able to generate sufficient cash flows to fund capital
investments for existing and future development projects. In addition, Emaar Misr may also face
difficulties in obtaining debt financing, refinancing existing debt or raising capital from the capital markets
due to reasons beyond its control, such as general political, social and economic conditions or due to
covenants under existing or future financing agreements. Should Emaar Misr be able to obtain and use a
higher amount of debt financing for future developments than it has historically required, the risks
normally associated with debt financing, such as fluctuations in interest rates and increased interest
expense, may affect Emaar Misr’s business, financial condition, results of operations and prospects.
Emaar Misr’s failure to generate sufficient cash flows or to obtain the capital required to finance
investments in, or other liquidity requirements of, its existing development projects or its future growth
plans could have an adverse effect on its business, financial condition, results of operations and prospects.
25
Egypt faces significant economic challenges.
The significant political instability and subsequent transition beginning in January 2011 and, to a lesser
extent, the recent global economic crisis, have had material negative consequences for the Egyptian
economy. Egypt’s real GDP growth has slowed from 5.1% in 2009-2010 to 1.8% in 2010-2011, 2.2% in
2011-2012, 2.1% in 2012-2013 and 2.2% in 2013-2014 (source: Economist Intelligence Unit, February
2015). Total net foreign direct investment has decreased by 69% from the fiscal year ending in June 2008 to
the fiscal year ending in June 2013, with a significant part of that decline occurring since 2011. Inflation, as
measured by the Egyptian consumer price index, decreased from 11.8% in 2009 to 9.5% in 2013, inflation
was expected to reach 10.1% in 2014 (source: Economist Intelligence Unit, February 2015). Moreover, the
Egyptian economy is subject to the risk of increasing inflation due to the devaluation of the Egyptian
pound and any recovery in GDP growth rates as the economic reforms begin to be implemented. Although
price stability is at the centre of the Central Bank of Egypt’s monetary policy, there can be no assurance
that the Central Bank of Egypt will be able to achieve or maintain price stability and thus control inflation.
Egypt’s budget deficit has increased from 6.9% of GDP in 2009 to 10.8% of GDP in 2012 and 13.7% of
GDP in 2013, but subsequently declined slightly to reach 12.8% of GDP in 2014. Egyptian public debt has
also increased from 72.5% of GDP in 2009 to 89.3% of GDP in 2014 (source: Central Bank of Egypt). The
stabilisation and slight decrease in the budget deficit has resulted in large part due to lower energy
subsidies and substantial grants and other budgetary support from Gulf Cooperation Council member
states.
Net international reserves of the Central Bank of Egypt decreased by 52.3% since 30 June 2009 to
$14.9 billion as of 30 June 2013. In the absence of robust tourism revenue, Egypt’s net international
reserves have been heavily supported by supplies of energy on concessionary terms and new deposits with
the CBE, in each case, by Gulf Cooperation Council member states. In January 2014, the Egyptian
Minister for Tourism announced that Egypt’s revenue from tourism increased by 124.7% from June 2014
to September 2014 compared to the same period in 2013 and by 102.8% from October 2014 to December
2014 compared to the same period in 2013 (source: Ministry of Tourism).
There can be no assurance that Egypt will not continue to experience further economic difficulties or that
it will be able to adequately address these difficulties and stabilise or improve the macroeconomic
environment. In particular, any failure to address Egypt’s fiscal and current account deficits may lead to an
unsustainable macroeconomic environment and precipitate a fiscal or balance of payments crisis. There
can be no assurance that Egypt will continue to benefit from fiscal or foreign exchange support from the
member states of the Gulf Cooperation Council. Any reduction or cessation of such support could lead to
a significant deterioration of the macroeconomic environment. Any deterioration of such conditions may
have a material adverse effect on Emaar Misr’s business, financial condition, results of operations and
prospects.
Egypt has experienced and continues to experience terrorist events and occasional civil disorder.
Egypt has experienced and continues to experience terrorist attacks and occasional civil disorder. Terrorist
attacks have largely targeted security and military personnel, tourists, religious minorities, local offices of
foreign companies and political figures across the country. The terrorist campaign in Sinai by an affiliate of
the Islamic State has been particularly deadly since 2011 and has claimed the lives of hundreds of
Egyptians, including security and military personnel, as well disrupted exports of natural gas by pipelines.
Similarly, Libya has experienced severe political instability and the country has descended into civil war
with lawlessness allowing another affiliate of the Islamic State to establish a base, with serious implications
for Egypt, including violence against Egyptians in Libya and cross-border military strikes by the Egyptian
armed forces. More recently, cities in Egypt’s Nile valley and delta (including Cairo) have witnessed
incidents involving improvised explosive devices, although material and human losses from these incidents
have, to date, been largely limited. There can be no assurance that extremists or terrorist groups in the
region will not escalate or continue these violent activities in Egypt, or expand their operations to include
more targets.
Since 2011, Egypt has also witnessed periods of civil disorder such as demonstrations, protests and sit-ins.
Recent examples include demonstrations by banned political groups, football-related violence and sit-ins
by opposition parties. Many of these events have resulted in violence and, in many cases, loss of life. Any
continuation or escalation of these events may discourage tourists from visiting Egypt and deter
investments in Egypt, which would lead to a deterioration of the macroeconomic climate, a further strain
on net international reserves and, in turn, a worsening of the political and social environment. The effects
26
of any such terrorist activities and security concerns could have a material adverse effect on Emaar Misr’s
business, financial condition, results of operations and prospects as well as investor confidence in investing
in Egypt.
The Egyptian legal system and new legislation can create an uncertain environment for investment and business
activity.
The Egyptian legal system is still developing the framework to support a market economy. As a result, this
creates uncertainties, which may not exist in countries with more developed market economies, with
respect to the legal and business decisions that real estate companies make. The evolution of Egypt’s legal
system, particularly with respect to tax laws during the current transitional period, may adversely affect
relevant market developments resulting in certain cases of ambiguities, inconsistencies or anomalies in the
law, its implementation and judicial practice. Enforcement of contractual rights through the courts may
also face difficulties and delays. The foregoing may have an adverse effect on Emaar Misr’s ability to
protect certain contractual rights, or to defend itself against certain claims by others, including challenges
by regulatory and governmental authorities in relation to its compliance with applicable laws and
regulations and could have a material adverse effect on its business, financial condition, results of
operations and prospects.
Official statistics and market data published in Egypt may not be complete or reliable.
Although a number of ministries, agencies and entities of the Egyptian government, including the Egyptian
Ministry of Economic Development, the Central Agency for Public Mobilisation and Statistics and the
Central Bank of Egypt, produce statistics on Egypt and other data on its economy, there can be no
assurance that such information is as accurate or reliable as that compiled in more developed countries.
Management has not independently verified such official statistics or other data, and any discussion of
matters relating to Egypt in this Offering Memorandum is therefore subject to uncertainty due to
questions regarding the completeness and/or reliability of such information. Moreover, the real estate
market in Egypt is characterised by a limited amount of publicly available data and independent research
compared to, for example, Western Europe. As a result, it may be difficult to assess the market value of
real estate assets in Egypt and to analyse market trends and conditions over time or at all. This restricts the
ability to forecast market prices, property-related costs and property values.
Emerging markets, such as Egypt, are generally subject to greater risks than more developed markets.
Investing in securities involving emerging market countries generally involves a higher degree of risk than
investments in securities of issuers from more developed countries. These higher risks include, but are not
limited to, rapid and significant changes in the political, social and economic environment, changes in
government policy, arbitrary actions of governmental authorities adversely affecting business and trade,
corruption, changes in the relations between countries, lack of consistent law enforcement, higher volatility
in the financial markets, limited liquidity, high rates of inflation, currency fluctuation and country default.
In Egypt, some of these risks have been exacerbated by the events and the challenges that Egypt has faced
over the past few years. Moreover, international investors’ reactions to events occurring in one emerging
market country or region may sometimes demonstrate a ‘‘contagion’’ effect, in which an entire region or
class of investment is disfavoured by such investors. If such a ‘‘contagion’’ effect occurs, Egypt could be
adversely affected by negative developments in other countries in the region. Any of the above risks could
27
have a material adverse effect on Emaar Misr’s business, financial condition, results of operations and
prospects.
Disclosure obligations, financial controls and corporate governance requirements and protections for minority
shareholders or investors in publicly traded companies in Egypt may be less extensive than those of jurisdictions
with more established securities markets.
There is generally less information available about Emaar Misr and other Egyptian companies than is
regularly available for listed companies in the United States, the United Kingdom or certain other
jurisdictions, particularly those with more established securities markets. Regulations concerning reporting
requirements and auditing standards for Egyptian companies may not afford the same degree of investor
protection as is available in the United States or European markets.
In recent years, the corporate governance and accounting, financial and other disclosure standards
applicable to Egyptian companies and publicly listed companies in particular, have been subject to
significant amendments including most recently, the amendment and restatement of the EGX Listing
Rules as of 1 February 2014. The corporate affairs of Emaar Misr are governed by the Egyptian
Companies Law, the Egyptian Investment Law, the Capital Market Law, the EGX Listing Rules, the
statutes of Emaar Misr and other laws governing companies incorporated in Egypt. The rights of
shareholders of Emaar Misr and the responsibilities of members of the Board of Directors under Egyptian
law are different in certain respects from those applicable to corporations organised in the United States,
the United Kingdom and other jurisdictions. In particular, Egyptian law significantly limits the
circumstances under which shareholders of an Egyptian company may bring shareholder derivative actions.
Regulations governing the Egyptian securities market are not as extensive as those in the United States,
the United Kingdom and major securities markets in other jurisdictions. In addition, although Egyptian
law imposes restrictions and penalties on insider trading and share price manipulation, the Egyptian
securities market is not as highly regulated or supervised as more established securities markets such as
those in the United States and certain Western European countries. Moreover, many provisions of Egypt’s
securities laws have not yet received judicial or regulatory interpretation or review and are therefore less
developed than comparable provisions of laws of certain other countries. For a description of certain
matters relating to ownership of Ordinary Shares, see ‘‘Description of Share Capital and Applicable Egyptian
Law’’ below.
28
EGP 215.2 billion as of 31 December 2014, EGP 155.5 billion as of 31 December 2013 and EGP
117.9 billion as of 31 December 2012, respectively.
The market value of the Ordinary Shares may also be subject to significant fluctuation, which may not
necessarily be related to the Company’s financial performance. The relatively small size and low liquidity
of the EGX in general and the limited public market for the shares in particular may impair the ability of
holders of the Institutional Offering Shares to sell them in the amount and at the price and time the holder
may wish to do so, and may increase the volatility of the price of the Ordinary Shares. Please see ‘‘Securities
Market Information—Egyptian Securities Market’’.
Although the EGX has a book-entry system for trading dematerialised shares, settlement procedures in
Egypt remain less developed and reliable than those in more established securities markets. Accordingly,
while the official settlement period for trades effected on the EGX is up to two business days, settlement
delays and administrative problems do occur.
Sales of substantial numbers of the Ordinary Shares in the public markets following the Combined Offering could
have an adverse effect on the market for, and the prices of, the Ordinary Shares.
Emaar Misr and the Principal Shareholder, which, after completion of the Combined Offering and
assuming all Public Offering Shares are offered and sold in the Egyptian Public Offering, will own 87.01%
of the Ordinary Shares, have agreed that, without the prior written consent of the Managers, they will not
issue (in respect of the Company), offer, pledge, sell, contract to sell or otherwise dispose of any Ordinary
Shares or securities convertible into Ordinary Shares for a period of 180 days from the date of the
Underwriting Agreement, subject to certain exceptions. In accordance with the EGX Listing Rules, the
Principal Shareholder is also subject to a lock-up requirement which requires it to maintain at least 51%
(as measured prior to the Combined Offering) of its Ordinary Shares in Emaar Misr for a period of two
years following the commencement of trading of the Ordinary Shares on the EGX. See ‘‘Plan of
Distribution—Lock-up Arrangements’’.
Despite these lock-up restrictions on the Principal Shareholder and Emaar Misr, sales of substantial
numbers of Ordinary Shares in the public market following the Combined Offering by the Principal
Shareholder or Emaar Misr, or the perception that such sales may occur, could have a material adverse
effect on the market for and the prices of the Ordinary Shares.
Emaar Misr may not pay dividends to its shareholders or declare dividends in the future.
Publicly listed companies in Egypt are required to distribute dividends in accordance with the law, their
constitutional documents and the dividend policies adopted by their shareholders. Subject to mandatory
legal requirements relating to legal reserves and employee profit sharing, publicly listed companies may, in
their discretion, distribute dividends to their shareholders out of retained earnings or realised profits in the
form of cash and/or bonus shares, or retain the realised profits. Emaar Misr has not distributed any
dividends in the past and there can be no assurance that holders of the Ordinary Shares will receive
dividends in the future. Emaar Misr’s ability to pay dividends is contingent on achieving adequate profits,
levels of retained earnings and the timing and amount of any future dividend payments will depend on its
existing and future financial condition, results of operations, liquidity needs, any restrictions on payment of
dividends in its financing agreements and other matters that Emaar Misr may consider relevant from time
to time, including, without limitation, capital expenditures, financial performance and equity market
conditions. After the Combined Offering, the Principal Shareholder will control the outcome of any
shareholder vote regarding dividends. For further details about Emaar Misr’s dividend policy, see
‘‘Dividend Policy’’. Even if Emaar Misr generates significant profits, it may not pay dividends if the Board
of Directors believes that shareholder value may be increased more effectively by using the profit for other
purposes, for example through re-investment or in acquisitions.
29
Shareholders may have limited recourse against Emaar Misr’s assets and its Board of Directors and members of
management.
Emaar Misr’s presence outside the United States and the United Kingdom may limit the legal recourse of
shareholders against Emaar Misr and its Board of Directors and executive officers. Emaar Misr is
incorporated under the laws of Egypt and all of the members of its Board of Directors and executive
officers reside in the United Arab Emirates or Egypt. All of Emaar Misr’s assets and a substantial portion
of the assets of the members of the Board of Directors and executive officers are located outside the
United States and the United Kingdom, principally in Egypt and the United Arab Emirates. As a result,
investors may not be able to serve process within the United States and the United Kingdom on Emaar
Misr, members of its Board of Directors and executive officers or to enforce United States and United
Kingdom court judgments obtained against Emaar Misr, Board of Directors and executive officers in
jurisdictions outside the United States and the United Kingdom. See ‘‘Enforcement of Arbitral Decisions
and Civil Liabilities’’.
Shareholders in the United States may be unable to participate in future rights offerings.
If Emaar Misr were to grant rights to participate in future equity offerings to its shareholders, U.S. holders
may not be entitled to exercise these rights unless the rights and related securities are registered under the
Securities Act or an exemption from the registration requirements of the Securities Act is available. Emaar
Misr intends to evaluate, at the time of any rights offering, the costs and potential liabilities associated with
registering the rights and related securities or qualifying for an exemption under the Securities Act as well
as the indirect benefits to it of enabling its U.S. holders to exercise such rights, and any other factors that
Emaar Misr considers appropriate at the time, prior to making a decision whether to register such rights or
qualify for an exemption. No assurance can be given that Emaar Misr will choose to register any such rights
and related securities or that an exemption from the registration requirements of the Securities Act will be
available to enable such U.S. holders to exercise such rights or, if available, that it will utilise any such
exemption. For a description of pre-emptive rights relating to Emaar Misr’s share capital, see ‘‘Description
of Share Capital and Applicable Egyptian Law’’.
The issue of additional Ordinary Shares may dilute all other shareholdings.
Future issuances of Ordinary Shares or other securities may dilute the holdings of shareholders and could
materially and adversely affect the price of the Ordinary Shares. Emaar Misr may issue additional equity or
securities convertible into the Ordinary Shares through directed offerings without pre-emptive rights for
existing holders in connection with future acquisitions, any share incentive or share option plan or
otherwise. Any such additional offering could reduce the proportionate ownership and voting interests of
holders of Ordinary Shares as well as the earnings per share.
Emaar Misr may be classified as a passive foreign investment company (‘‘PFIC’’), which could result in adverse
U.S. federal income tax consequences to U.S. Holders of the Ordinary Shares.
The Company does not believe that it was classified as a PFIC for U.S. federal income tax purposes for its
most recent taxable year ending 31 December 2014, and based on the nature of the Company’s business,
the projected composition of the Company’s income and the projected composition and estimated fair
market values of the Company’s assets, the Company does not expect to be a PFIC for U.S. federal income
tax purposes for the foreseeable future. However, the determination of whether the Company is a PFIC is
made annually, after the close of the relevant taxable year. Therefore, it is possible that the Company
could be classified as a PFIC for the 2015 taxable year or in future years due to changes in the nature of the
Company’s business, composition of its assets or income, as well as changes in its market capitalisation. If
the Company were a PFIC for any taxable year during which a U.S. Holder (as defined in ‘‘Taxation—
Certain United States Federal Income Tax Considerations’’) holds Ordinary Shares, certain adverse U.S.
federal income tax consequences could apply to such U.S. Holder. See ‘‘Taxation—Certain United States
Federal Income Tax Considerations—Passive Foreign Investment Company Considerations’’.
30
USE OF PROCEEDS
The net proceeds from the sale of the New Shares in the Combined Offering (assuming all Public Offering
Shares are offered and sold in the Egyptian Public Offering) are expected to amount to approximately
EGP 2,180,000,000 (US$285.6 million), after deducting underwriting commissions, discretionary fees and
expected expenses of approximately EGP 100,000,000 (US$13.1 million) attributed to the Combined
Offering, and assuming no Ordinary Shares are purchased during the Stabilisation Period using the
Stabilisation Fund. All expenses of the Combined Offering will be borne by the Company.
The Company intends to use the net proceeds from the Combined Offering to partially fund existing and
future developments of its projects and selectively expand its land bank. This includes primarily the
following:
• Approximately 70% of the net proceeds raised in the Combined Offering are planned to be used to
fund in part the near-term investment and capital expenditure in relation to the non-residential
components of the Company’s projects under development (including primarily Emaar Square in
Project Uptown Cairo, in addition to Mivida Downtown in Project Mivida and the marina and hotels
in Project Marassi);
• Approximately 15% of the net proceeds are planned to be used to fund the pre-launch expenditures
and costs in relation to the development of Cairo Gate; and
• Approximately 15% of the net proceeds raised in the Combined Offering are planned to be used to
grow the Company’s land bank, through potential acquisitions of select land plots, with a focus solely
on opportunities that are expected to achieve a target levered investment rate of return of 16% and an
achievable minimum gross margin of 25%.
To the extent that the net proceeds are not applied to the above purposes fully or partially, the Company
intends to deposit such amounts into short-term deposits and may re-allocate that funding to other existing
projects or new projects, and will make any related required disclosure.
31
DIVIDEND POLICY
Dividend Policy
The Company may pay dividends only as permitted by law and subject to consideration of its investment
requirements, financial condition, including its level of indebtedness and liquidity requirements, and its
results of operations. See ‘‘—Payment of Dividends and Legal Reserve’’. The Board of Directors expects to
maintain a flexible dividend policy with a view to balance between growth opportunities and availability of
funds for dividend distribution. The Board of Directors currently expects that in the next few years,
reinvestment of cash surpluses in the business might be considered to have a better impact on long-term
shareholder value than their distribution as dividends.
There can be no assurance that any dividends will be paid in the future or as to the level of any such
dividends. Because the year ended 31 December 2013 was the first year in which Emaar Misr made a
profit, there is no meaningful information available to show the Company’s historical dividend policy. The
declaration, amount and payment of dividends is determined, subject to the limitations set forth above, by
an absolute majority vote of the shareholders represented at an ordinary general meeting (‘‘Ordinary
General Meeting’’) of the Company, generally, but not necessarily, on the recommendation of the Board of
Directors. Future dividends will depend on the Company’s results of operations, financial position,
dividends received from its subsidiaries and affiliates, cash requirements, legal reserve and minimum
capital requirements, future prospects and other factors deemed relevant by the Board of Directors and
the shareholders. Currently, the Company does not plan to pay dividends in the near-term but may
consider adopting a dividend policy in the future that would aim to provide investors with a dividend
without compromising the Company’s growth strategy. After the Combined Offering, the Principal
Shareholder will control the outcome of any shareholder vote regarding dividends. See ‘‘Risk Factors—
Risks Relating to Emaar Misr’s Business and Industry—The Principal Shareholder may take actions that are
not in line with, or may conflict with, its public shareholders’ best interests’’.
32
• In all cases, the shareholders may decide at an Ordinary General Meeting to distribute all or part
of the profits disclosed by the periodic financial statements prepared by the Company to be
accompanied by a report from the Company’s auditor.
Payment of dividends is made to the shareholder, based on the shareholders’ ledger or a statement of
account from a registered bookkeeper, if the Ordinary Shares are deposited with the MCDR.
The Statutes provide that dividends are paid annually based on the generated net profits according to the
Company’s financial statements. Subject to the Ordinary General Meeting approval and Egyptian law
requirements, the Company must convene an Ordinary General Meeting no later than three months after
the end of the fiscal year to review the audited financial statements and determine dividends, if any, to be
distributed. Dividends declared by resolution of the shareholders at an Ordinary General Meeting must be
distributed within one month from the date of the Ordinary General Meeting. Dividends are payable to
the shareholders of record whose names are recorded in the shareholders’ ledger, or the MCDR records if
the Company’s Ordinary Shares are deposited with the MCDR.
In kind (bonus shares) dividends paid with respect to the shares are not currently subject to Egyptian
income or withholding taxes under the new amendments of the Egyptian income tax law that was issued in
June 2014. See ‘‘Taxation—Certain Egyptian Tax Considerations’’. The Company does not assume
responsibility for any withholding taxes on dividends.
33
EXCHANGE RATE INFORMATION
The Egyptian pound, the official currency of Egypt, is the functional currency of the Company. As of the
date of this Offering Memorandum, all of the Company’s assets and operations are located in Egypt. The
table below sets forth for the periods and dates indicated certain information concerning the exchange rate
for the Egyptian pound against the U.S. dollar. All references to ‘‘Exchange Rate’’ mean the actual market
rate from the Central Bank of Egypt (the ‘‘CBE’’), as quoted by Bloomberg, for any given day of the year
during which banks were open for business in Egypt.
34
CAPITALISATION
The following table sets forth the bank balances and cash, the current and non-current portions of certain
long-term debt, shareholders’ equity and capitalisation of the Company (i) as of 31 March 2015 and (ii) on
an as adjusted basis to give effect to the sale of 600,000,000 New Shares in the Combined Offering
(assuming all Public Offering Shares are sold in the Egyptian Public Offering) at the Offer Price after
deducting underwriting commissions, discretionary fees and expected expenses relating to the Combined
Offering in the amount of EGP 100,000,000. As of 31 March 2015, the Company paid EGP 3,929,027 of
the total expected expenses relating to the Combined Offering. The ‘‘As Adjusted’’ column below assumes
that no Ordinary Shares are purchased during the Stabilisation Period using the Stabilisation Fund and,
accordingly, no Ordinary Shares are remitted to the Company at the end of the Stabilisation Period. This
table should be read in conjunction with ‘‘Selected Financial Information’’, ‘‘Operating and Financial
Review’’, ‘‘Stabilisation’’, ‘‘Use of Proceeds’’ and the Financial Statements, including the notes thereto,
included elsewhere in this Offering Memorandum.
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the Exchange Rate in effect as of 31 March 2015)
for convenience.
There has been no material change in the Company’s capitalisation and indebtedness since 31 March 2015
other than as reflected in the ‘‘As Adjusted’’ column above and as disclosed in this Offering Memorandum.
35
SELECTED FINANCIAL INFORMATION
The following selected financial information as of and for the three months ended 31 March 2015 and 2014
has been extracted from the Interim Financial Statements, and the financial information as of and for the
years ended 31 December 2014, 2013 and 2012 has been extracted from the Annual Financial Statements.
The selected financial information is qualified by, and should be read in conjunction with, the section
entitled ‘‘Operating and Financial Review’’ and the Financial Statements, including the notes thereto,
appearing elsewhere in this Offering Memorandum. This financial information is historical and not
necessarily indicative of results to be expected in any future period. In addition, the Company’s results for
the three months ended 31 March 2015 are not necessarily indicative of results to be expected for the full
year.
Notes:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the Exchange Rate in effect as of 31 March 2015) for
convenience.
36
Summary Statement of Financial Position
As of 31 March As of 31 December
2015 2014 2013 2012
EGP US$(1) EGP US$(1) EGP EGP
ASSETS
Non-current assets . . . . . . . . . . . . . . . . 762,974,761 99,944,297 767,296,094 100,510,361 651,358,196 535,709,173
Current assets . . . . . . . . . . . . . . . . . . 12,728,040,181 1,667,283,230 12,326,966,819 1,614,745,457 10,791,342,932 9,559,201,268
TOTAL ASSETS . . . . . . . . . . . . . . . . . 13,491,014,942 1,767,227,527 13,094,262,913 1,715,255,818 11,442,701,128 10,094,910,441
EQUITY AND LIABILITIES
Equity
Share capital . . . . . . . . . . . . . . . . . . . 4,019,338,000 526,504,847 878,338,000 115,056,065 878,338,000 699,269,000
Amounts paid under capital increase . . . . . — — 3,141,000,000 411,448,782 119,544,000 179,069,000
Legal reserve . . . . . . . . . . . . . . . . . . . 21,145,120 2,769,861 247,803 32,460 196,491 196,491
Retained earnings/(accumulated losses) . . . 160,485,144 21,022,419 19,955,708 2,614,057 (404,040,902) (413,507,739)
TOTAL EQUITY . . . . . . . . . . . . . . . . . 4,200,968,264 550,297,127 4,039,541,511 529,151,364 594,037,589 465,026,752
Liabilities
Interest-bearing loans and borrowings . . . . — — 475,020 62,224 171,290,093 231,977,713
Land purchase liabilities . . . . . . . . . . . . 525,812,458 68,877,713 635,340,594 83,225,124 574,511,035 360,745,187
Provision for employees’ end-of-service
benefits . . . . . . . . . . . . . . . . . . . . . 12,837,160 1,681,577 8,852,688 1,159,640 6,768,775 7,409,228
Non-current liabilities . . . . . . . . . . . . . . 538,649,618 70,559,290 644,668,302 84,446,987 752,569,903 600,132,128
Current liabilities . . . . . . . . . . . . . . . . 8,751,397,060 1,146,371,111 8,410,053,100 1,101,657,467 10,096,093,636 9,029,751,561
TOTAL LIABILITIES . . . . . . . . . . . . . . 9,290,046,678 1,216,930,401 9,054,721,402 1,186,104,454 10,848,663,539 9,629,883,689
TOTAL LIABILITIES AND EQUITY . . . . 13,491,014,942 1,767,227,527 13,094,262,913 1,715,255,818 11,442,701,128 10,094,910,441
Notes:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the Exchange Rate in effect as of 31 March 2015) for
convenience.
Notes:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the Exchange Rate in effect as of 31 March 2015) for
convenience.
37
OPERATING AND FINANCIAL REVIEW
The following discussion and analysis should be read in conjunction with the Financial Statements, including
the notes thereto, included elsewhere in this Offering Memorandum, the Selected Financial Information and the
information relating to Emaar Misr’s business in the sections titled ‘‘Description of Emaar Misr’’ and ‘‘Risk
Factors’’, and other information about Emaar Misr included elsewhere in this Offering Memorandum. This
discussion and analysis contains forward-looking statements that involve risks and uncertainties. Emaar Misr’s
actual results could differ materially from those anticipated in these forward-looking statements as a result of
certain factors including, but not limited to, those discussed in ‘‘Risk Factors’’ and in ‘‘Forward-Looking
Statements’’.
Overview
Emaar Misr is a leading real estate developer in Egypt focusing on premium-quality master-planned
lifestyle communities in prime locations that are anchored by landmark developments.
Emaar Misr has a strong portfolio of developments distributed among three projects under development
and a plot of undeveloped land in prime locations in East, West and Central Cairo as well as the North
Coast:
• Project Uptown Cairo is a 4.5 million square metre project under development designed to be a
mixed-use development in Central Cairo situated at the highest point in the city, built 200 metres
above sea level with easy accessibility from East, West and Central Cairo. Project Uptown Cairo has
the potential to become a new iconic city centre in Cairo. The project has been designed by world-
class architects and designers and is expected to be the first gated, integrated community project in
Central Cairo offering a wide range of amenities, including world-class shopping centres, business
park, hotels, spa, an 18-hole golf course and club house. Project Uptown Cairo will be home to Emaar
Misr’s flagship development, Emaar Square, a world-class shopping, residential, leisure and
entertainment complex comprising an open-air retail mall and office space designed to attract global
brands and leading local and international companies, a five star and a five-plus-star hotel, including
the first ‘‘The Address’’ branded hotel in Cairo and a state-of-the-art entertainment and leisure
centre.
• Project Marassi is a 6.5 million square metre project under development that is expected to become a
year-round resort situated in a prime location in one of the most attractive stretches of the North
Coast with easy accessibility from local and international airports. Project Marassi is designed to
feature a fully-integrated resort community, retail space, twelve anchor hotels, including three
boutique hotels, an 18-hole golf course with a golf academy and clubhouse and a 250 slip yacht
international marina inspired by the French Riviera which, due to its unique location and features, is
difficult to replicate in the region and is therefore expected to transform the area into a premier
international tourist destination. The Marassi Marina is designed to be integrated with customs and
immigration approvals for ease of access and benefits from a unique location and unmatched climate
along one of the most beautiful coastlines in the Mediterranean.
• Project Mivida is a 3.7 million square metre project under development designed to be a fully-
integrated ecologically friendly and energy-efficient community with lush landscapes in a strategic
location in New Cairo City. It is strategically located on New Cairo’s main road and is in close
proximity to the American University in Cairo and Cairo International Airport. Designed by world-
class architects and designers, Project Mivida is expected to be a fully-fledged family-oriented, leisure
and work destination featuring a range of amenities, including a business park, educational, sports and
leisure facilities and a 33-acre central park. Project Mivida will feature Mivida Downtown, a boulevard
shopping area featuring international and local brands strategically located in the centre of New Cairo
City. Mivida Downtown was designed to comprise wide pedestrian streets, water features, full
spectrum dining and easy accessibility to the town centre with multiple access points combining to
provide an unrivalled experience to visitors.
• Cairo Gate is a plot of land of approximately 0.6 million square metres in 6th of October City with a
with frontage of the Cairo—Alexandria Desert highway, an area with limited land offerings, which
makes Cairo Gate a strong value proposition.
As of 31 March 2015, the cumulative number of residential units sold for future delivery and the number of
residential units delivered amounted to 4,676 and 1,850 (including serviced and branded apartments),
respectively. Emaar Misr’s net sales for the three months ended 31 March 2015 were EGP 2.0 billion
38
compared to EGP 1.0 billion for the three months ended 31 March 2014. Emaar Misr’s net sales for 2014
amounted to EGP 7.1 billion, an increase of 71% compared to EGP 4.2 billion in 2013, which in turn was
an increase of 27% compared to EGP 3.3 billion in 2012. Emaar Misr’s total revenue amounted to
EGP 751.5 million for the three months ended 31 March 2015, EGP 2.6 billion for the year ended
31 December 2014, EGP 1.2 billion for the year ended 31 December 2013 and EGP 0.8 billion for the year
ended 31 December 2012.
In a market sample comparing Emaar Misr to certain listed Egyptian real estate developers, Emaar Misr’s
share of total new net sales in Egypt increased from 10% in 2010 to 36% in 2014, which represents an
EGP 6.0 billion increase in Emaar Misr’s total new net sales in a market sample that grew by
EGP 8.7 billion. Emaar Misr’s increase in sales during that period was partially the result of the brand’s
strength and Management’s confidence in continuing to invest, construct and deliver residential units
despite the unprecedented market conditions.
Source:
(1) Source: CAPMAS, January 2015.
(2) Information provided is as of June for the given year.
(3) Source: Economist Intelligence Unit, February 2015.
Development Costs
Development costs constitute a significant portion of Emaar Misr’s operating costs. Development costs
include purchase price for land, infrastructure costs, contractors’ fees and expenses and costs of
construction materials, master planners, project managers, financing costs and other consultants and
designer costs. In particular, Emaar Misr does not maintain an in-house construction team and relies on
third-party contractors to undertake all construction works. Under the terms of the contracts with third-
party contractors, Emaar Misr is required to make contractual payments, some of which are subject to
inflation and foreign currency related adjustments above certain amounts for costs relating to cement, steel
and energy. As such, these costs are particularly sensitive to factors affecting the macro-economic
environment of Egypt, such as the rate of inflation and GDP, and movements in foreign exchange rates.
Development costs increased between 2012 and 2015, primarily as a consequence of increases in
construction and real estate activity in Egypt and corresponding increases in the cost of land and
construction materials. The total development costs amounted to EGP 0.4 billion in the three months
ended 31 March 2015, EGP 1.5 billion in the year ended 31 December 2014, EGP 0.7 billion in the year
ended 31 December 2013 and EGP 0.4 billion in the year ended 31 December 2012. The total amount of
investments as of 31 March 2015 amounted to EGP 13.4 billion.
To the extent that Emaar Misr has experienced increases in development costs, Management has mitigated
in the past, and intends to continue to mitigate in the future, such increases through a number of actions,
including hiring professional surveyors and pricing consultants to better reflect construction cost in the
feasibility study, incorporating a minimum of 5% contingency buffer above the estimated construction cost
for any unforeseen costs, reviewing annually the total infrastructure cost (indirect cost) at different stages
39
of a project to ensure proper cost allocation, reviewing and increasing prices on a monthly basis to ensure
units are sold at market rates, phasing launches of a relatively small number of units to allow for price
adjustments based on market demand in subsequent launches as various amenities are completed over
time, shortening the time between launch of a project and the award of construction contracts to mitigate
price escalation in the construction market and using a majority of lump sum contracts that only allow for
price fluctuation of a limited number of items.
Revenue Recognition
Emaar Misr determines whether a property is classified as investment property or development property.
Development properties comprise properties that are held for sale in the ordinary course of business.
Principally, these are residential properties that Emaar Misr develops and intends to sell before or on
completion of construction. Investment properties comprise buildings that are not occupied substantially
for use by, or in the operations of Emaar Misr, nor for sale in the ordinary course of business, but are held
primarily to earn rental income and capital appreciation. These buildings comprise commercial, retail and
hospitality properties rented to tenants and not intended to be sold in the ordinary course of business.
Residential properties. Emaar Misr’s revenue recognition policy has a significant impact on its results of
operations. All contracts with customers relating to the residential properties are classified as contracts for
the sale of completed properties. In line with IFRS, Emaar Misr follows the delivery for sold residential
properties in accordance with IAS 18 Revenue and International Financial Reporting Interpretations
Committee 15 Agreements for the Construction of Real Estate, which require capitalisation of expenditure in
the development properties account until the delivery of the units. After completion of the unit, at the
point in time when Emaar Misr transfers the risks and rewards of ownership of the property in its entirety
to the customer, revenue and the associated costs are recognised by delivery in accordance with IAS 18
Revenue and International Financial Reporting Interpretations Committee 15. Hence, the point of
recognition where operating revenue is realised and settled with operating costs related to the unit sold is
the time at which the contracts are exchanged and the buyer takes possession of the property. In
conditional exchanges, revenue is recognised when all significant conditions are satisfied and at the fair
value of the consideration received or receivable, taking into consideration defined terms of payment and
excluding taxes or duty. Therefore, revenue recognised on the statement of profit or loss for any given year
does not reflect the contractual sales entered into during that year but is rather related to completed and
delivered units sold. Sale discounts granted to purchasers of units are netted against sales revenue when
sales revenues are recognised in the statement of profit or loss. Discounting of future receivables in respect
of units is netted against revenue recognised for such delivered units.
Revenue recognition in Project Uptown Cairo started in 2012, and the majority of the delivered units are
attributed to the Platinum Launch event in 2006, in which Emaar Misr was contractually committed to sale
prices ranging from EGP 4500 to EGP 5000 per unit in certain villages. The prices were based on
assumptions made by the Principal Shareholder’s former joint venture partner and are different from
Emaar Misr’s current standards. After the full acquisition, Emaar Misr respected the commitments with
the customers. Future expected losses were recognised in the year ended 31 December 2014 in accordance
with applicable accounting standards.
Commercial, retail and hospitality properties. Emaar Misr does not yet realise material levels of revenue
from leasing of commercial, retail and hospitality properties. Rental income from investment properties is
recognised, net of any discounts to tenants, in accordance with the terms of the lease contracts over the
lease term on a straight-line basis. Revenue from hotel accommodation, food and beverages and other
related services is recognised, net of discount and municipality fees, at the point at which the services are
rendered, and is included in the other income line item of Emaar Misr’s statement of profit or loss.
Interest income. Emaar Misr receives interest income on financial assets which comprise bank balances,
cash and accounts receivable. Interest income is recognised as interest accrues using the effective interest
method under which the rate used discounts estimated future cash receipts through the expected life of the
financial asset to the net carrying amount of the financial asset.
For a discussion of new IFRS accounting standards relating to revenue recognition that will apply to
Emaar Misr in the future, see ‘‘—Future Accounting Changes’’.
40
Cost of Revenue Recognition
Emaar Misr’s recognition of cost of revenue significantly impacts its results of operations. Cost of revenue
relating to a real estate property that is sold includes costs that are related directly to the specific contract
of the unit sold and delivered (such as the cost of land purchased and the costs of construction and
construction inputs) as well as indirect costs that are attributable to the activity in general and can be
allocated to the unit sold and delivered (such as infrastructure costs).
These costs are allocated as direct and indirect costs. Direct costs are land and development costs related
and allocable directly to a unit or group of units. Indirect costs are land and development costs relating to
common areas, facilities or services in respect of a development project or a phase thereof. Direct and
indirect costs are recognised at the time a unit is delivered, which is also when revenues are recognised.
Upon recognition of revenue when a unit is delivered, an allocable portion of indirect costs is recognised at
that time for a development project or phase thereof, which takes into account total estimated indirect
costs for the development project or phase thereof and the state of completion at the time the unit is
delivered.
Investment Properties
Investment properties are measured at cost less accumulated depreciation and any accumulated
impairment in value. Management determines the estimated useful lives of its investment properties for
calculating depreciation. This estimate is determined after considering the expected usage of the asset or
physical wear and tear. Management periodically reviews estimated useful lives and the depreciation
method to ensure that the method and period of depreciation are consistent with the expected pattern of
economic benefits from these assets. Depreciation is calculated on a straight-line basis over the estimated
useful life (20 years). No depreciation is charged on land and capital work-in-progress.
Tax Holidays
Emaar Misr benefits from a tax holiday for the activities of planning and establishing urban regions and
furnishing such regions with required utilities and services until 31 December 2018. The tax holiday does
not apply to certain other income, including interest income on deposits. Taxable income from other
activities or projects that do not benefit from the tax holiday are taxable at a corporate tax rate of 25% on
annual taxable income plus 5% additional tax on the annual taxable income exceeding EGP 1 million. The
addition is due to be implemented starting from year 2014 until the end of 2016. Furthermore, during the
period from 8 June 2008 until 31 December 2013, Emaar Misr benefitted from a tax holiday in relation to a
finance lease with Turner relating to a portion of office space at the Uptown Cairo sales centre, which was
terminated in 2013.
The following table sets forth the total amount of tax benefits:
Total Exempted
Period Corporate Tax
(EGP)
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,259,203
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,859,580
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,090,593
Q1 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,015,593
41
Explanation of Certain Line Items in Statement of Profit or Loss
Revenue. Historically, Emaar Misr has generated substantially all of its revenues from the sales of
residential units and, to a lesser extent, sales of office units. Revenue in the statement of profit or loss
reflects the total amount of revenue recognised during that period in respect of delivered properties. See
‘‘—Factors Affecting Results of Operations—Revenue Recognition’’.
Cost of revenue. Cost of revenue corresponding to units sold and delivered represents costs that are
directly related to the specific contract of the unit delivered, costs that are generally attributable to
activities related to revenue generation and can be allocated to the unit sold. Cost of revenue comprises
the cost of the land plot of a parcel, infrastructure costs (site grading, slot stabilisation, utilities, roads,
traffic solutions, community centres and others), hard costs (direct building construction costs excluding
infrastructure costs), soft costs (costs related to the design, supervision, project management and
consultant fees) and finance costs (capitalised borrowing costs directly attributable to the acquisition and
construction) and other costs (expected infrastructure cost that are expected to be incurred in the future in
relation to the delivered units and impairment losses relating to the Aurora village in Project Uptown
Cairo). See ‘‘—Factors Affecting Results of Operations—Cost of Revenue Recognition’’.
Selling, general and administrative expenses. Selling, general and administrative expenses represent all
sales, general and administrative expenses incurred during the year or period, as applicable, pertaining to
the properties sold (regardless of the number of properties delivered during that year or period). These
expenses can be categorised under the one of the following categories: advertisement, depreciation
expenses of plant, property and equipment, depreciation expenses of investment property, marketing
production and material, events and exhibition, sales commission, other marketing expenses, salaries and
benefits, professional fees, information technology expenses, travel and entertainment, cleaning and
maintenance, communication, facility management expenses, other bank charges and other expenses.
Finance costs. Finance costs include interest on bank credit facilities and loans, loan arrangement fees,
bank charges relating to the letters of guarantee and other bank charges as well as net foreign exchange
loss.
Other expenses. Other expenses include results of operations of hospitality properties as well as amenities.
Other income. Other income represents customer service charges, penalties and units upgrades, other
income, operating lease income, finance lease income and gain from disposal of property, plant and
equipment.
Provisions no longer required. Provisions no longer required include previous provisions for legal, tax and
other claims that were determined to no longer be required.
Provision. Provisions include provisions for legal, tax and other claims.
Income tax. Income tax expense represents Egyptian tax payable in relation to profits associated with
projects that do not benefit from a tax holiday. Current income tax assets and liabilities for the current and
prior years are measured on a project-by-project basis at the amount expected to be recovered from or
paid to the tax authority. Deferred income tax is recognised using the liability method on temporary
differences between the amount attributed to an asset or liability for tax purposes (tax base) and its
carrying amount in the balance sheet (accounting base). Deferred tax assets and liabilities are measured on
a project-by-project basis at the tax rates that are expected to apply in the year when the asset is realised or
the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at
the reporting date.
Reporting Segments
As of the date of this Offering Memorandum, Emaar Misr’s business lines of retail, commercial and
hospitality do not meet the criteria under IFRS 8 required for reporting segments, and as such, are not
separately disclosed in the Financial Statements. Consequently, all revenue of Emaar Misr in the years
ended 31 December 2014, 2013 and 2012 and the three months ended 31 March 2015 and 2014 was
reported under one segment in the Financial Statements and related primarily to revenue from sales of
residential properties. Management expects that in the future the retail, commercial and hospitality
42
segments will meet the criteria and be identified as separate reporting segments in accordance with IFRS 8
in addition to the residential segment.
Results of Operations
The following table sets forth information from Emaar Misr’s statement of profit or loss for the three
months ended 31 March 2015 and 2014 and the years ended 31 December 2014, 2013 and 2012:
Three months ended 31 March Year ended 31 December
2015 2014 2014 2013 2012
(1) (1)
EGP US$ EGP EGP US$ EGP EGP
Revenue . . . . . . . . . . . . . . . . . . 751,457,041 98,435,557 357,675,325 2,603,926,691 341,095,977 1,188,328,131 756,968,701
Cost of revenue . . . . . . . . . . . . . . (526,349,414) (68,948,050) (233,479,833) (1,826,867,902) (239,306,773) (777,782,195) (543,918,072)
Gross profit . . . . . . . . . . . . . . . . 225,107,627 29,487,507 124,195,492 777,058,789 101,789,205 410,545,936 213,050,629
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . (86,138,235) (11,283,449) (52,947,905) (325,819,863) (42,680,097) (284,965,694) (204,380,360)
Finance income . . . . . . . . . . . . . . 17,428,943 2,283,068 2,504,757 29,946,133 3,922,732 3,698,614 2,024,187
Finance costs . . . . . . . . . . . . . . . (1,729,235) (226,518) (21,434,044) (111,908,022) (14,659,159) (209,990,965) (113,515,995)
Other expenses . . . . . . . . . . . . . . (6,478,785) (848,675) (6,011,461) (3,500,837) (458,585) (6,949,477) (5,537,734)
Other income . . . . . . . . . . . . . . . 12,800,101 1,676,723 5,789,564 35,294,227 4,623,294 27,320,069 9,627,715
Provisions no longer required . . . . . 1,760,489 230,612 — — — — —
Provisions . . . . . . . . . . . . . . . . . (157,156) (20,586) — (3,538,485) (463,517) — —
Profit/(loss) before tax . . . . . . . . . . 162,593,749 21,298,631 52,096,403 397,531,942 52,073,872 (60,341,517) (98,731,558)
Income tax . . . . . . . . . . . . . . . . . (1,166,996) (152,868) (18,481,238) 26,515,980 3,473,406 69,808,354 —
Profit/(loss) for the period/year . . . . 161,426,753 21,145,763 33,615,165 424,047,922 55,547,278 9,466,837 (98,731,558)
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
43
The following table sets forth the total revenue and the number of delivered properties for the three
months ended 31 March 2015 and 2014 and the years ended 31 December 2014, 2013 and 2012:
Three months Three months Year ended 31 December
ended ended
31 March 2015 31 March 2014 2014 2013 2012
PROJECT UPTOWN
CAIRO
Number of residential units
delivered . . . . . . . . . . . . 58 12 105 82 75
Villas . . . . . . . . . . . . . . . 6 3 19 15 14
Townhouses . . . . . . . . . . 1 8 31 67 61
Apartments . . . . . . . . . . . 51 1 55 — —
Mixed . . . . . . . . . . . . . . . — — — — —
Revenue (EGP) . . . . . . . . . 98,226,537 63,345,749 311,385,612 307,967,431 234,502,538
PROJECT MARASSI
Number of residential units
delivered . . . . . . . . . . . . 59 41 308 175 209
Villas . . . . . . . . . . . . . . . 6 6 78 49 21
Townhouses . . . . . . . . . . 12 2 34 1 —
Apartments . . . . . . . . . . . 11 10 60 36 168
Mixed . . . . . . . . . . . . . . . 30 23 136 89 20
Revenue (EGP) . . . . . . . . . 290,633,612 215,582,724 1,560,671,751 880,360,700 461,008,576
PROJECT MIVIDA
Number of residential units
delivered(1) . . . . . . . . . . . 146 41 315 — 1
Villas . . . . . . . . . . . . . . . 63 41 206 — —
Townhouses . . . . . . . . . . 83 — 108 — —
Apartments . . . . . . . . . . . — — — — —
Mixed . . . . . . . . . . . . . . . — — — — —
Revenue (EGP) . . . . . . . . . 362,596,892 78,743,852 731,869,328 — 61,457,587
Total number of residential
units delivered . . . . . . . . 263 94 728 257 285
Total cumulative number of
residential units
delivered(1)(2) . . . . . . . . . . 1,852 955 1,589 861 604
Total revenue (EGP) . . . . . . 751,457,041 357,675,325 2,603,926,691 1,188,328,131 756,968,701
Notes:
(1) Includes two office buildings, one sold in the year ended 31 December 2014 and one in the year ended 31 December 2012.
Three Months Ended 31 March 2015 Compared to Three Months Ended 31 March 2014
Revenue. Revenue increased by 110.1% to EGP 751.5 million during the three months ended 31 March
2015 from EGP 357.7 million during the three months ended 31 March 2014. The increase was due
primarily to a higher number of residential units delivered in Project Mivida during the three months
ended 31 March 2015.
• In Project Uptown Cairo, Emaar Misr delivered 6 villas, 1 townhouse and 51 apartments with a total
value of EGP 98.2 million (corresponding to 11,100 square metres of GFA) during the three months
ended 31 March 2015 compared to 3 villas, 8 townhouses and 1 apartment with a total value of
EGP 63.3 million (corresponding to 4,513 square metres of GFA) delivered during the three months
ended 31 March 2014.
• In Project Marassi, Emaar Misr delivered 6 villas, 12 townhouses, 11 apartments and 30 mixed units
with a total value of EGP 290.6 million (corresponding to 17,406 square metres of GFA) during the
three months ended 31 March 2015 compared to 6 villas, 2 townhouses, 10 apartments and 23 mixed
units with a total value of EGP 215.6 million (corresponding to 12,933 square metres of GFA)
delivered during the three months ended 31 March 2014.
44
• In Project Mivida, Emaar Misr delivered 63 villas and 83 townhouses with a total value of
EGP 362.6 million (corresponding to 32,939 square metres of GFA) during the three months ended
31 March 2015 compared to 41 villas with a total value of EGP 78.7 million (corresponding to 9,059
square metres of GFA) delivered during the three months ended 31 March 2014.
Cost of revenue. Cost of revenue increased by 125.4% to EGP 526.3 million during the three months
ended 31 March 2015 compared to EGP 233.5 million during the three months ended 31 March 2014. The
increase reflects primarily the increase in the number of residential units delivered during the three
months ended 31 March 2015 and a reversal of an impairment loss amounting to EGP 5.9 million for
impaired units sold.
The following table sets forth the split of cost of revenue for the three months ended 31 March 2015 and
2014:
Three months ended
31 March
2015 2014
EGP US$(1) EGP
(millions)
PROJECT UPTOWN CAIRO
Land Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 0.5 2.7
Infrastructure Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.0 1.4 8.5
Hard Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64.9 8.5 29.0
Soft Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 1.1 2.8
Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 0.3 1.6
Other Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6 0.7 9.1
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97.4 12.8 53.7
PROJECT MARASSI
Land Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.0 2.0 11.4
Infrastructure Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.3 2.3 7.9
Hard Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93.6 12.3 78.8
Soft Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 1.2 4.5
Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 1.3 6.0
Other Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.7 3.5 13.8
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171.3 22.4 122.1
PROJECT MIVIDA
Land Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53.3 7.0 15.8
Infrastructure Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38.6 5.1 1.8
Hard Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119.0 15.6 27.3
Soft Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 2.0 2.0
Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.8 0.1 0.2
Other Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.9 4.0 10.3
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257.7 33.8 57.4
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526.3 68.9 233.5
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
Gross profit. As a result of revenue and cost of revenue, total gross profit increased by 81.3% to
EGP 225.1 million during the three months ended 31 March 2015 compared to EGP 124.2 million during
the three months ended 31 March 2014. Total gross profit margin decreased by 4.7% to 30.0% during the
three months ended 31 March 2015 compared to 34.7% during the three months ended 31 March 2014.
• Project Uptown Cairo. Gross profit during the three months ended 31 March 2015 decreased to
EGP 0.8 million compared to EGP 9.6 million during the three months ended 31 March 2014. The
gross margin during the three months ended 31 March 2015 decreased to 0.8% compared to 15.2%
during the three months ended 31 March 2014.
45
• Project Marassi. Gross profit during the three months ended 31 March 2015 increased to
EGP 119.4 million compared to EGP 93.2 million during the three months ended 31 March 2014. The
gross margin during the three months ended 31 March 2015 was 41.1% compared to 43.2% during the
three months ended 31 March 2014.
• Project Mivida. Gross profit during the three months ended 31 March 2015 amounted to
EGP 104.9 million compared to EGP 21.4 million during the three months ended 31 March 2014. The
gross margin during the three months ended 31 March 2015 was 28.9% compared to 27.2% during the
three months ended 31 March 2014.
Selling, general and administrative expenses. Selling, general and administrative expenses increased by
62.7% to EGP 86.1 million during the three months ended 31 March 2015 compared to EGP 52.9 million
during the three months ended 31 March 2014. Selling, general and administrative expenses are recorded
in respect of the units sold during that year (regardless of the number of units delivered during that
period).
The increase in selling, general and administrative expenses during the three months ended 31 March 2015
compared to the three months ended 31 March 2014 was due primarily to an increase in salaries and
benefits of EGP 14.3 million, an increase in sales commission of EGP 10.7 million, an increase in facility
management expenses of EGP 3.1 million, an increase in professional fees of EGP 1.5 million and an
increase in advertisement of EGP 1.2 million.
As a percentage of net sales, selling, general and administrative expenses decreased to 4.3% during the
three months ended 31 March 2015 compared to 5.3% during the three months ended 31 March 2014 due
to an increase in sales over time, a progressive increase in the leveragability of the operating platform and
increased brand awareness.
Finance income. Finance income increased to EGP 17.4 million during the three months ended 31 March
2015 compared to EGP 2.5 million during the three months ended 31 March 2014 due primarily to an
increase in cash collection from customers which is used to settle payments with the balance being placed
as time deposits.
Finance cost. Finance costs decreased by 91.9% to EGP 1.7 million during the three months ended
31 March 2015 compared to EGP 21.4 million during the three months ended 31 March 2014 due primarily
to a decrease in net foreign exchange losses of EGP 13.5 million relating to a charge recorded in March
2014 in respect of the shareholders current account which was capitalised in Emaar Misr’s capital in
December 2014, and a decrease in the finance costs due to the settlement of credit facilities utilised to
finance selling, general and administrative disbursements.
Other expenses. Other expenses increased by 7.8% to EGP 6.5 million during the three months ended
31 March 2015 compared to EGP 6.0 million during the three months ended 31 March 2014 due primarily
to an increase in net operating losses relating to the El Alamein hotel reflecting the seasonal nature of
lower revenue during the first quarter of the year as well as the Marassi beach club, the golf academy in
Project Marassi and the golf club in Project Uptown Cairo.
Other income. Other income increased by 121.1% to EGP 12.8 million during the three months ended
31 March 2015 compared to EGP 5.8 million during the three months ended 31 March 2014 due primarily
to an EGP 5.2 million increase in late payment charges, reinstatement fees and upgrade fees collected
from customers and an EGP 2.2 million increase in customer service charges related to water consumption
charges in Project Marassi.
Provisions no longer required. Provisions no longer required for the three months ended 31 March 2015
were EGP 1.8 million.
Provisions. Provisions for the three months ended 31 March 2015 were EGP 0.2 million related to legal
claims.
Income tax. Income tax expense decreased by 93.7% to EGP 1.2 million during the three months ended
31 March 2015 compared to an income tax expense of EGP 18.5 million during the three months ended
31 March 2014 due primarily to an increase of the deferred tax assets calculated on the provisions as of
31 March 2015 compared to 31 March 2014.
46
Profit/(loss) for the period. As a result of the foregoing, profit for the quarter increased to
EGP 161.4 million during the three months ended 31 March 2015 compared to a profit of
EGP 33.6 million during the three months ended 31 March 2014.
Cost of revenue. Cost of revenue increased by 134.9% to EGP 1,826.9 million during the year ended
31 December 2014 compared to EGP 777.8 million during the year ended 31 December 2013. The increase
reflects primarily the increase in the number of residential units delivered during the year ended
31 December 2014.
The following table sets forth the split of cost of revenue for the years ended 31 December 2014 and 2013:
Year ended 31 December
2014 2013
EGP US$(1) EGP
(millions)
PROJECT UPTOWN CAIRO
Land Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.8 1.9 15.1
Infrastructure Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.6 5.4 33.4
Hard Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154.5 20.2 152.0
Soft Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 2.0 14.1
Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 0.6 8.1
Other Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71.7 9.4 49.3
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302.5 39.6 272.0
PROJECT MARASSI
Land Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118.5 15.5 52.3
Infrastructure Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158.0 20.7 23.6
Hard Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 366.5 48.0 380.6
Soft Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41.4 5.4 15.7
Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50.2 6.6 23.6
Other Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 220.3 28.9 9.9
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 954.9 125.1 505.7
47
Year ended 31 December
2014 2013
EGP US$(1) EGP
(millions)
PROJECT MIVIDA
Land Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116.1 15.2 —
Infrastructure Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86.7 11.4 —
Hard Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 254.0 33.3 —
Soft Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.9 3.5 —
Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 0.3 —
Other Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83.7 11.0 —
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 569.5 74.6 —
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,826.9 239.3 777.7
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
Gross profit. As a result of revenue and cost of revenue, total gross profit increased by 89.3% to
EGP 777.1 million during the year ended 31 December 2014 compared to EGP 410.5 million during the
year ended 31 December 2013. Total gross profit margin decreased by 4.7% to 29.8% during the year
ended 31 December 2014 compared to 34.5% during the year ended 31 December 2013.
• Project Uptown Cairo. Gross profit during the year ended 31 December 2014 decreased to
EGP 9.0 million compared to EGP 36.0 million during the year ended 31 December 2013. The gross
margin during the year ended 31 December 2014 decreased to 2.9% compared to 11.7% during the
year ended 31 December 2013. While the total number of units delivered during the year ended
31 December 2014 increased to 105 compared to 82 units delivered during the year ended
31 December 2013, the gross margin during the year ended 31 December 2014 was negatively
impacted by the loss relating to the Aurora village launched in 2006 fully booked in 2014, which was
only offset by the booked revenue from the delivery in 2014 of 55 units out of the 155 units sold in
2006.
• Project Marassi. Gross profit during the year ended 31 December 2014 increased to
EGP 606.0 million compared to EGP 375.0 million during the year ended 31 December 2013. The
gross margin during the year ended 31 December 2014 remained relatively stable at 38.8% compared
to 42.6% during the year ended 31 December 2013 due primarily to a higher proportion of villas
delivered during the year ended 31 December 2014, which have a higher profit margin which was
partly offset by an increase in infrastructure costs due to the addition of a power plant for a total
estimated cost of EGP 300 million.
• Project Mivida. Gross profit during the year ended 31 December 2014 amounted to
EGP 162.0 million compared to nil during the year ended 31 December 2013. The gross margin during
the year ended 31 December 2014 was 22.2% reflecting the commencement of delivery of residential
units during the year.
Selling general and administrative expenses. Selling, general and administrative expenses increased by
14.3% to EGP 325.8 million during the year ended 31 December 2014 compared to EGP 284.9 million
during the year ended 31 December 2013. Selling, general and administrative expenses are recorded in
respect of the units sold during that year (regardless of the number of units delivered during that period).
The increase in selling, general and administrative expenses during the year ended 31 December 2014 was
due primarily to an increase of EGP 19.1 million in facility management expenses relating to Emaar Misr’s
share in the community facility management expenses in addition to its own asset facility management
expenses, an increase in salaries and benefits of EGP 10.0 million, an increase in marketing production and
material of EGP 2.8 million, an increase in events and exhibition of EGP 3.6 million, an increase in
professional fees of EGP 4.0 million relating to the increase in audit fees, legal fees and tax advisor fees
and an increase in other expenses of EGP 3.6 million relating to the increase in rent expenses and office
related expenses.
As a percentage of net sales, selling, general and administrative expenses decreased to 4.6% during the
year ended 31 December 2014 compared to 6.8% during the year ended 31 December 2013 due to an
48
increase in sales over time, a progressive increase in the leveragability of the operating platform and
increased brand awareness.
Finance income. Finance income increased to EGP 29.9 million during the year ended 31 December 2014
compared to EGP 3.7 million during the year ended 31 December 2013 due primarily to an increase in
interest income from time deposits by EGP 19 million due primarily to an increase in cash collection from
customers which is used to settle payments with the balance being placed as time deposits and an increase
in interest income from current accounts by EGP 7 million during the year ended 31 December 2014.
Finance cost. Finance costs decreased by 46.7% to EGP 111.9 million during the year ended
31 December 2014 compared to EGP 210.0 million during the year ended 31 December 2013 due primarily
to an EGP 85.5 million decrease in net foreign exchange relating to the current account of the Principal
Shareholder, which was transferred to equity.
Other expenses. Other expenses decreased by 49.6% to EGP 3.5 million during the year ended
31 December 2014 compared to EGP 6.9 million during the year ended 31 December 2013 due primarily
to a decrease in net operating losses relating of the El Alamein hotel, the Marassi beach club, the golf
academy in Project Marassi and the golf club in Project Uptown Cairo.
Other income. Other income increased by 29.2% to EGP 35.3 million during the year ended 31 December
2014 compared to EGP 27.3 million during the year ended 31 December 2013 due primarily to an
EGP 14.0 million increase in customer service charges relating mainly to the increase in water
consumption charges in Project Marassi, an increase in profit related to Emaar Plus services and rental
income from leasing of commercial areas in Project Marassi and an office floor in Project Mivida.
Provisions. Provisions for the year ended 31 December 2014 were EGP 3.5 million in respect of legal
claims raised by customers.
Income tax. Income tax credit decreased by 62.0% to EGP 26.5 million during the year ended
31 December 2014 compared to EGP 69.8 million during the year ended 31 December 2013 due primarily
to deferred tax assets recognised in 2013 that mainly resulted from carry forward losses which was used in
2014. No deferred tax assets relating to carry forward losses were recognised during the year ended
31 December 2014.
Profit/(loss) for the year. As a result of the foregoing, profit for the year increased to EGP 424.0 million
during the year ended 31 December 2014 compared to a profit of EGP 9.5 million during the year ended
31 December 2013.
Cost of revenue. Cost of revenue increased by 43.0% to EGP 777.8 million during the year ended
31 December 2013 compared to EGP 543.9 million during the year ended 31 December 2012. The increase
49
reflects primarily the increase in the number of residential units delivered during the year ended
31 December 2013.
The following table sets forth the split of cost of revenue split for the years ended 31 December 2013 and
2012:
Year ended
31 December
2013 2012
EGP EGP
(millions)
PROJECT UPTOWN CAIRO
Land Cost . . . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1 13.0
Infrastructure Cost ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33.4 29.5
Hard Cost . . . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152.0 116.2
Soft Cost . . . . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1 10.4
Finance Cost . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 5.2
Other Cost . . . . . . ...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.3 36.0
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 272.0 210.2
PROJECT MARASSI
Land Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52.3 18.5
Infrastructure Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.6 12.5
Hard Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380.6 189.2
Soft Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.7 8.3
Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.6 10.3
Other Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9 47.8
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505.7 286.5
PROJECT MIVIDA
Land Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5.8
Infrastructure Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.4
Hard Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 33.4
Soft Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1.7
Finance Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 0.1
Other Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 5.9
Total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 47.2
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777.7 543.9
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
Gross profit. As a result of revenue and cost of revenue, gross profit increased by 92.7% to
EGP 410.5 million during the year ended 31 December 2013 compared to EGP 213.1 million during the
year ended 31 December 2012. Total gross profit margin increased by 6.4% to 34.5% during the year ended
31 December 2013 compared to 28.1% during the year ended 31 December 2012.
• Project Uptown Cairo. Gross profit during the year ended 31 December 2013 increased to
EGP 36.0 million compared to EGP 24.0 million during the year ended 31 December 2012. The gross
margin during the year ended 31 December 2013 increased to 11.7% compared to 10.4% during the
year ended 31 December 2012.
• Project Marassi. Gross profit during the year ended 31 December 2013 increased to
EGP 375.0 million compared to EGP 175.0 million during the year ended 31 December 2012. The
gross margin during the year ended 31 December 2013 increased to 42.6% compared to 37.9% during
the year ended 31 December 2012 due primarily to a higher proportion of villas delivered during the
year ended 31 December 2013 which have a higher profit margin.
50
• Project Mivida. Emaar Misr did not record any gross profit during the year ended 31 December
2013 compared to EGP 14.0 million of gross profit recorded during the year ended 31 December
2012. The gross margin during the year ended 31 December 2012 was 23.1%.
Selling, general and administrative expenses. Selling, general and administrative expenses increased by
39.4% to EGP 285.0 million during the year ended 31 December 2013 compared to EGP 204.4 million
during the year ended 31 December 2012.
Selling, general and administrative expenses are recorded in respect of the units sold during that year
(regardless of the number of units delivered during that period). The increase in selling, general and
administrative expenses during the year ended 31 December 2013 was due primarily to an
EGP 49.8 million increase in sales commissions corresponding to higher levels of sales of residential units
in Project Marassi and Project Uptown Cairo, an increase of EGP 11.7 million relating to advertising
expenses for Project Marassi, Project Uptown Cairo and Project Mivida and an increase of EGP 5.1 million
relating to general marketing expenses.
As a percentage of net sales, selling, general and administrative expenses increased to 6.8% during the year
ended 31 December 2013 compared to 6.2% during the year ended 31 December 2012.
Finance income. Finance income increased by 82.7% to EGP 3.7 million during the year ended
31 December 2013 compared to EGP 2.0 million during the year ended 31 December 2012 due primarily
to an increase in deposits from customers and a higher interest on bank deposits during the year ended
31 December 2013.
Finance costs. Finance costs increased by 85.0% to EGP 210.0 million during the year ended
31 December 2013 compared to EGP 113.5 million during the year ended 31 December 2012 due primarily
to an EGP 92.5 million increase in net foreign exchange loss relating to the depreciation and revaluation of
the Egyptian pound of a current account balance (maintained in United Arab Emirates dirham) and an
EGP 3 million increase in interest paid on credit facilities for general and administrative expenses as a
result of the fluctuation of discount rates announced by the Central Bank of Egypt.
Other expenses. Other expenses increased by 25.5% to EGP 6.9 million during the year ended
31 December 2013 compared to EGP 5.5 million during the year ended 31 December 2012 due primarily
to an increase in net operating losses relating to the Marassi beach club, the golf academy in Project
Marassi and the golf club in Project Uptown Cairo, partly offset by net operating profits from the
operations of the El Alamein hotel.
Other income. Other income increased by 183.8% to EGP 27.3 million during the year ended
31 December 2013 compared to EGP 9.6 million during the year ended 31 December 2012 due primarily
to an EGP 3.7 million increase in the recognition of income from customer charges and an EGP 5.7 million
increase in customer penalties during the year ended 31 December 2013.
Income tax. Income tax credit of EGP 69.8 million relating primarily to the accumulated deferred tax
assets was recognised starting from the year ended 31 December 2013 as they were expected to create
future taxable benefits. No deferred tax assets were recognised during the year ended 31 December 2012
since it was not probable that the carry forward losses would result in future tax benefits before 2013.
Profit/(loss) for the year. As a result of the foregoing, profit for the year increased to EGP 9.5 million
during the year ended 31 December 2013 compared to a loss of EGP 98.7 million during the year ended
31 December 2012.
51
facilities to fund development activities with a focus on mid- to long-term financing of investment
properties to maximise returns on capital, with a long-term target ratio of up to one-third debt to total
capital for commercial properties. Reliance on project financing is generally limited given market
conditions and the comparably higher cost of funding. Project financing loans are used to finance
disbursements for the projects. The interest expense, fees and other charges due under the project
financing agreements are capitalised over the development period and reflected in the statement of profit
or loss upon delivery of units.
Cash flows
The following table sets forth a summary of Emaar Misr’s net cash flow statement for the three months
ended 31 March 2015 and 2014 and the years ended 31 December 2014, 2013 and 2012:
Three months ended 31 March Year ended 31 December
2015 2014 2014 2013 2012
EGP US$(1) EGP EGP US$(1) EGP EGP
Net cash from/(used in)
operating activities . . . . . . . 468,712,974 61,398,084 205,843,139 1,083,396,675 141,917,301 (303,041,678) (610,162,821)
Thereof working capital
changes . . . . . . . . . . . . 303,897,007 39,808,358 118,023,442 481,246,469 63,039,883 (501,610,447) (673,663,031)
Net cash (used in) investing
activities . . . . . . . . . . . . . (1,127,109) (147,643) (27,840,615) (40,168,397) (5,261,776) (84,791,516) (72,980,164)
Net cash from/(used in)
financing activities . . . . . . . (202,734,954) (26,556,845) (123,495,715) (376,935,042) (49,375,824) 477,004,030 672,274,616
Cash and cash equivalent at
the end of the period/year . . 1,113,328,630 145,838,175 232,346,221 844,974,315 110,685,658 177,707,978 85,552,567
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
52
Year ended 31 December 2014
Net cash from operating activities was EGP 1,083.4 million during the year ended 31 December 2014. The
factors resulting in this positive net cash inflow were the positive net changes to working capital of
EGP 481.2 million and positive cash from operations before working capital changes of EGP 602.2 million.
The positive changes in working capital were due primarily to:
• change in advances from customers of EGP 921.2 million relating to an increase in customer
collections for Project Mivida, Project Marassi, and Project Uptown Cairo net of revenue recognised
of EGP 2,771 million, and
• change in trade and other payables of EGP 423.0 million relating to a charge to consultants and
contractors for Project Mivida, Project Marassi and Project Uptown Cairo,
which was offset by:
• change in accounts and notes receivables of EGP 468.7 million relating to new delivered units net of
collection of previous units delivered, and
• change in other receivables, deposits and prepayments of EGP 405.7 million relating to advance
payments to consultants and contractors for Project Mivida, Project Marassi and Project Uptown
Cairo in addition to collection of maintenance deposits related to delivered units.
53
which was partly offset by:
• change in advances from customers of EGP 333.5 million relating to customer collection for Project
Mivida, Project Marassi and Project Uptown Cairo net of revenue recognised in 2012 of
EGP 783 million, and
• change in trade and other payables of EGP 248.2 million relating to payments to consultants and
contractors for Project Mivida, Project Marassi and Project Uptown Cairo.
54
Cash flows from/used in financing activities
Three months ended 31 March 2015
Net cash used in financing activities amounted to a cash outflow of EGP 202.7 million during the three
months ended 31 March 2015. The factors resulting in the negative net cash flow were primarily the
repayment of interest-bearing loans and borrowings relating to a credit facility from Mashreq Bank (in the
amount of EGP 171.2 million), a credit facility from Ahli United Bank (in the amount of
EGP 42.6 million) and a credit facility from Emirates NBD (in the amount of EGP 1.4 million) and the
finance costs paid of EGP 1.3 million, partly offset by proceeds from interest-bearing loans and borrowings
of EGP 10.5 million.
55
Credit Facilities
As of 31 March 2015, Emaar Misr’s total outstanding indebtedness was EGP 616.2 million. The following
table sets forth a summary of the key terms of Emaar Misr’s credit facilities.
As of 31 March 2015
Total amount
Interest rate drawn Maturity(2)
EGP US$(1)
(millions)
Current borrowings
Commercial International Bank EGP 272 million credit facility . . . . 2.25% + CBE 271.3 35.5 May 15(3)
corridor offered
rate
Mashreq Bank USD 30 million credit facility . . . . . . . . . . . . . . . 2.5% + CBE 62.9 8.2 September 15
corridor
average rate
Emirates NBD EGP 100 million discounted cheques facility . . . . . . 2.25% + CBE — — June 16
mid corridor
rate
Ahli United Bank EGP 300 million credit facility . . . . . . . . . . . . . 2.25% + CBE 223.2 29.2 December 17
corridor offered
rate
Commercial International Bank EGP 234 million credit facility . . . . 2.25% + CBE 54.1 7.1 May 15(4)
corridor offered
rate
HSBC EGP 425 million discounted cheques facility . . . . . . . . . . . 1.5% + CBE — — Based on maturity
mid corridor of post-dated
offered rate cheques (subject to
discounting) up to
December 2018
Emaar Properties promissory note . . . . . . . . . . . . . . . . . . . . . . 1% + LIBOR 4.7 0.6 —
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616.2 80.7
Notes:
(1) Translated into US$ at an exchange rate of EGP 7.634 = US$ 1.00 (being the Exchange Rate in effect as of 31 March 2015) for
convenience.
(4) The amount drawn under the facility was settled in May 2015.
Emaar Misr’s net cash position (defined as bank balances and cash less outstanding debt) amounted to
EGP 0.5 billion as of 31 March 2015.
The majority of Emaar Misr’s credit facilities include change of control restrictions which require Emaar
Properties to not decrease its shareholding in Emaar Misr below 51%, failing which Emaar Misr may be
considered in default under the relevant credit facility.
56
The following table sets Emaar Misr’s finance costs for the three months ended 31 March 2015 and 2014
and the years ended 31 December 2014, 2013 and 2012:
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
57
Contractual Commitments
The following table sets forth Emaar Misr’s contractual obligations and commercial commitments as of
31 March 2015 that are expected to have an impact on liquidity and cash flow in future periods.
Note:
(1) Translated into US$ at an Exchange Rate of EGP 7.634 = US$ 1.00 (being the exchange rate in effect as of 31 March 2015) for
convenience.
Note:
(1) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
As of 31 March 2015, the sales backlog (defined as cumulative net sales (including offices and serviced
apartments) less cumulative revenue) amounted to EGP 17.8 billion and the collections backlog (defined
as cumulative net sales (including offices and serviced apartments) less cumulative collections) amounted
to EGP 12.9 billion.
58
Emaar Misr has two letters of guarantee with a fully cash-covered margin recorded under other
receivables.
59
Foreign currency risk
The following table sets forth the sensitivity to a reasonably possible change in US$, EGP and euro
exchange rates, with all other variables held constant. The impact on Emaar Misr’s profit before tax is due
to changes in the value of monetary assets and liabilities. Emaar Misr’s exposure to foreign currency
changes for all other currencies is not material.
Liquidity risk
Liquidity risk is the risk that Emaar Misr will not be able to meet its financial obligations as they fall due.
Emaar Misr monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool
considers the maturity of its financial assets (such as trade receivables, other financial assets) and projected
cash flows from operations.
The cash flows, funding requirements and liquidity of Emaar Misr are monitored by local company
management supported by the Principal Shareholder. Emaar Misr’s objective is to maintain a balance
between continuity of funding and flexibility through the use of bank overdrafts, bank borrowings and
finance lease contracts. Emaar Misr manages liquidity risk by maintaining adequate reserves, banking
facilities and borrowing facilities, by continuously monitoring forecasted and actual cash flows and
matching the maturity profiles of financial assets and liabilities. As of 31 March 2015, Emaar Misr had
sufficient cash on demand to meet expected operational expenses, including the servicing of financial
obligations.
60
IFRS 15, Revenue from Contracts with Customers
New standard on revenue recognition, superseding IAS 18 Revenue, IAS 11 Construction Contracts and
related interpretations.
IFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers.
Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity
expects to be entitled in exchange for transferring goods or services to a customer. The principles in
IFRS 15 provide a more structured approach to measuring and recognising revenue. The new standard is
applicable to all entities and will supersede all current revenue recognition requirements under IFRS.
Either a full or modified retrospective application is required for annual periods beginning on or after
1 January 2017 with early adoption permitted.
Emaar Misr has elected to start applying IFRS 15 from 1 January 2016. Under IFRS 15, Emaar Misr will
use a ‘percentage-of-completion method’ to determine the appropriate amount of revenue to be
recognised over the period of the contract rather than at the time of delivery of sold units.
61
DESCRIPTION OF EMAAR MISR
The following discussion of the Company should be read in conjunction with the information relating to Emaar
Misr’s business in the sections titled ‘‘Operating and Financial Review’’, ‘‘Risk Factors’’, ‘‘Material Contracts’’,
‘‘Certain Relationships and Related Party Transactions’’ and other information about Emaar Misr included
elsewhere in this Offering Memorandum. This description contains forward-looking statements that involve risks
and uncertainties. Emaar Misr’s actual results could differ materially from those anticipated in these forward-
looking statements as a result of certain factors including, but not limited to, those discussed in ‘‘Forward-
Looking Statements’’, ‘‘Presentation of Operating and Other Information’’ and ‘‘Risk Factors’’.
Overview
Emaar Misr is a leading real estate developer in Egypt focusing on premium-quality master-planned
lifestyle communities in prime locations that are anchored by landmark developments.
Emaar Misr has a strong portfolio of developments distributed among three projects under development
and a plot of undeveloped land in prime locations in East, West and Central Cairo as well as the North
Coast:
• Project Uptown Cairo is a 4.5 million square metre project under development designed to be a
mixed-use development in Central Cairo situated at the highest point in the city, built 200 metres
above sea level with easy accessibility from East, West and Central Cairo. Project Uptown Cairo has
the potential to become a new iconic city centre in Cairo. The project has been designed by world-
class architects and designers and is expected to be the first gated, integrated community project in
Central Cairo offering a wide range of amenities, including world-class shopping centres, a business
park, hotels, a spa, an 18-hole golf course and club house. Project Uptown Cairo will be home to
Emaar Misr’s flagship development, Emaar Square, a world-class shopping, residential, leisure and
entertainment complex comprising an open-air retail mall and office space designed to attract global
brands and leading local and international companies, a five star and a five-plus-star hotel, including
the first ‘‘The Address’’ branded hotel in Cairo and a state-of-the-art entertainment and leisure
centre.
• Project Marassi is a 6.5 million square metre project under development that is expected to become a
year-round resort situated in a prime location in one of the most attractive stretches of the North
Coast with easy accessibility from local and international airports. Project Marassi is designed to
feature a fully-integrated resort community, retail space, twelve anchor hotels, including three
boutique hotels, an 18-hole golf course with a golf academy and clubhouse and a 250 slip yacht
international marina inspired by the French Riviera which, due to its unique location and features, is
difficult to replicate in the region and is therefore expected to transform the area into a premier
international tourist destination. The Marassi Marina is designed to be integrated with customs and
immigration approvals for ease of access and benefits from a unique location and unmatched climate
along one of the most beautiful coastlines in the Mediterranean.
• Project Mivida is a 3.7 million square metre project under development designed to be a fully-
integrated ecologically friendly and energy-efficient community with lush landscapes in a strategic
location in New Cairo City. It is strategically located on New Cairo’s main road and is in close
proximity to the American University in Cairo and Cairo International Airport. Designed by world-
class architects and designers, Project Mivida is expected to be a fully-fledged family-oriented, leisure
and work destination featuring a range of amenities, including a business park, educational, sports and
leisure facilities and a 33-acre central park. Project Mivida will feature Mivida Downtown, a boulevard
shopping area featuring international and local brands strategically located in the centre of New Cairo
City. Mivida Downtown was designed to comprise wide pedestrian streets, water features, full
spectrum dining and easy accessibility to the town centre with multiple access points combining to
provide an unrivalled experience to visitors.
• Cairo Gate is a plot of land of approximately 0.6 million square metres in 6th of October City with
frontage of the Cairo-Alexandria Desert highway, an area with limited land offerings, which makes
Cairo Gate a strong value proposition.
As of 31 March 2015, the cumulative number of residential units sold for future delivery and the number of
residential units delivered amounted to 4,676 and 1,850 (including serviced and branded apartments),
respectively. Emaar Misr’s net sales for the three months ended 31 March 2015 were EGP 2.0 billion
compared to EGP 1.0 billion for the three months ended 31 March 2014. Emaar Misr’s net sales for 2014
62
amounted to EGP 7.1 billion, an increase of 71% compared to EGP 4.2 billion in 2013, which in turn was
an increase of 27% compared to EGP 3.3 billion in 2012. Emaar Misr’s total revenue amounted to
EGP 751.5 million for the three months ended 31 March 2015, EGP 2.6 billion for the year ended
31 December 2014, EGP 1.2 billion for the year ended 31 December 2013 and EGP 0.8 billion for the year
ended 31 December 2012.
In a market sample comparing Emaar Misr to certain listed Egyptian real estate developers, Emaar Misr’s
share of total new net sales in Egypt increased from 10% in 2010 to 36% in 2014, which represents an
EGP 6.0 billion increase in Emaar Misr’s total new net sales in a market sample that grew by
EGP 8.7 billion. Emaar Misr’s increase in sales during that period was partially the result of the brand’s
strength and Management’s confidence in continuing to invest, construct and deliver residential units
despite the unprecedented market conditions.
History
Emaar Properties PJSC, a premier Middle Eastern developer, founded Emaar Misr in 2005 as a joint
venture with a local partner, Artoc Group for Investment and Development S.A.E. In 2007, Emaar
Properties acquired the local partner’s 60% stake in Emaar Misr, thereby acquiring full ownership in the
company. Because Emaar Misr was not a party to the transaction, it did not record a cost for the
acquisition.
In order to implement Emaar Misr’s business strategy of creating master-planned lifestyle communities,
Emaar Misr acquired its first property, Uptown Cairo, in August 2005. In February 2006, it acquired the
land (through a tender process) that would later become Project Marassi. In 2006, Emaar Misr acquired
the Cairo Gate land plot in West Cairo. In September 2006, it acquired the Mivida land plot. In June 2007,
a platinum launch event (Marassi and Uptown Cairo), the first launch for Emaar Misr’s projects in Egypt,
took place. In February 2009, the initial launch of Project Mivida took place.
Corporate Structure
Emaar Misr has no subsidiaries.
Competitive Strengths
Emaar Misr believes it differentiates itself from its competition through the strength of the internationally
recognised Emaar brand, its strategically located land bank acquired at attractive rates, its offer of fully
integrated lifestyle communities of premium quality standards, its strong expertise across asset classes
leveraging Emaar Properties’ proven expertise and capabilities, and its retention of revenue generating
commercial assets.
63
Economist Intelligence Unit, February 2015). Moreover, Egypt has experienced relatively high
inflation, with consumer prices increasing by 7.8% in 2012, 9.5% in 2013 and expected to increase by
10.1% in 2014 (source: Economist Intelligence Unit, February 2015). Going forward, high inflation in
Egypt is expected to continue in the following three years, with estimates of 9.5% in 2015, 8.7% in
2016 and 9.0% in 2017 (source: Economist Intelligence Unit, February 2015). Management believes
that high inflation rates combined with the relative absence of other investment opportunities should
encourage investment in quality real estate properties as a hedge against inflation.
• Increasing demand for premium residential properties. Management believes that Egypt’s attractive
demographic characteristics combined with increasing levels of disposable income will drive demand
for premium quality housing in and around Cairo as well as secondary homes located in attractive
locations on the North Coast, a segment that Emaar Misr targets through Project Marassi. Personal
disposable income (after taxes and deductions) in Egypt is expected to grow at a compound annual
growth rate of 13% between 2015 and 2017 compared to 10% from 2009 to 2014 (source: Economist
Intelligence Unit, February 2015). The favourable prospects for residential development are further
supported by the gradual increase in mortgage finance availability, which may increase the
accessibility of residential housing.
• Underserved retail market coupled with limited quality of offerings. The supply of high-quality retail
space in Cairo remains considerably limited with only 0.07 square metres of retail space per capita in
2013 and is significantly lower than other major cities in the MENA region (source: DTZ as of 2013).
By 2018, the GLA per capita in Cairo is expected to increase to 0.15 square metres per capita
reflecting an increase in purchasing power of the local population (source: DTZ, March 2015). Emaar
Misr intends to increase its presence in the retail segment going forward in an attempt to capitalise on
unmet demand for high-quality retail space. Management’s development plans encompass a target of
more than 250,000 square metres of retail GLA.
• Attractive prospects for office space. Although Management believes that office space has historically
been undersupplied in Egypt, economic growth in the country is expected to support long-term tenant
demand. According to Jones Lang LaSalle, Cairo’s office stock GLA in the fourth quarter of 2014 was
0.9 million square metres which is lower than in most other countries in the MENA region. The
market for office space has historically been concentrated in downtown Cairo with no recognised
central business district. Furthermore, the lack of office supply has led to the transformation of
previously residential properties into office space. Management believes that Emaar Misr is well
positioned to capture growth opportunities in this sector due to the strategic location of its projects in
and around Cairo where companies continue to search for new land plots to develop adjacent to
major transportation hubs. Management’s development plans encompass a target of more than
150,000 square metres of office GLA.
• Growing hospitality segment. Leveraging on the expected increase in demand for premium quality
hotels, secondary homes and growth of the internal and external tourism industry, Management’s
development plans include a target of 15 hotels, comprising approximately 4,000 hotel room keys and
serviced and branded apartments, most of which are expected to be part of Project Marassi located on
the North Coast. Emaar Misr intends to increase its investments in this segment where Management
believes there are significant growth opportunities.
Business model focused on integrated master plans supported by robust project development processes
Emaar Misr’s business model is to develop premium-quality master-planned lifestyle communities in prime
locations that are anchored by landmark developments. Management believes that Emaar Misr’s product
offering is differentiated by the quality and design of its projects combined with the flexibility under its
master plans to modify its projects, including the mix of properties, on an on-going basis in order to adapt
to prevailing and changing market trends and customers’ preferences.
• Rare offer of a dynamic portfolio of premium-quality move-in ready residential properties. Emaar Misr
offers premium-quality, fully-finished and move-in ready residential units (including apartments, twin
houses, town houses and villas) that cater to differing needs and various consumer price levels.
Management believes that this is a rare offer in the Egyptian real estate market currently dominated
by semi-finished residential properties.
• Anchored by landmark developments. Each project is designed to be anchored by a landmark
development comprising a wide range of amenities, such as golf courses, golf club houses, community
64
centres, central parks, sports and leisure centres, schools and medical centres, thereby creating
self-contained, fully-integrated master-planned lifestyle communities.
• Combined with robust project development processes across all stages of a project life cycle. Emaar Misr
relies on a well-proven and efficient development process from the initial stages of opportunity
identification to the delivery and completion of a project that is underpinned by an internal
operational structure designed to emphasise accountability and quality control. Throughout the
master planning phase, Emaar Misr focuses on delivering premium quality products consistent with
the Emaar brand name. As part of this process, Emaar Misr centralises the design and tender phases
with the aim of creating economies of scale that improve value across all of its projects. Emaar Misr
coordinates the launch of residential units with retail and office space, gradually increasing the supply
of residential properties to allow for the appreciation of home values and residential areas through
heightened visibility and availability of amenities. Following the delivery of residential units, Emaar
Misr retains control of the community and facility management function in order to manage the
customer experience and preserve the community environment.
Retain most commercial assets to optimise future revenue streams and cash flows
Emaar Misr’s business model is to continue to build a portfolio of residential properties for sale while
growing its presence in the premium retail, hospitality and office segments through ownership of
investment properties that are leased to tenants. Premium quality retail and hospitality properties are
planned across all projects while office properties are planned for Project Uptown Cairo and Project
Mivida. As of the date of this Offering Memorandum, Emaar Misr has launched its first shopping mall
(MPorium in Project Marassi) and has sold serviced and branded apartments in Project Marassi.
Emaar Misr’s business model is designed to allow it to capture growth opportunities in different market
segments and, by retaining control over its commercial properties, to enable it to manage the mix of
occupants and retailers to better reflect consumer preferences and adapt to changes in the market.
Management believes that this strategy will improve the breadth and stability of Emaar Misr’s revenue
65
streams and cash flow in the medium term by including sustainable rental income, therefore allowing
Emaar Misr to achieve a more diversified revenue profile over the medium to long term.
66
Benefit from ownership by the premier Middle Eastern developer
Management believes that Emaar Misr’s association with Emaar Properties, its controlling shareholder
and a leading real estate developer with cross-asset class expertise in the MENA region, is one of Emaar
Misr’s competitive advantages. Emaar Properties has led Emaar Misr through significant growth since 2005
during which time it provided Emaar Misr with highly valuable support, know-how, expertise and business
planning at each level of the project development life cycle, including distinctive development concepts,
premium quality properties, sophisticated planning and quality controls from the design phase through the
property management and maintenance phases. Emaar Properties’ reputation and experience are based on
its development of some of the most significant master-planned projects in the UAE, including Downtown
Dubai, Burj Khalifa, BLVD Heights, ‘‘The Address Dubai’’, Armani Hotel in Dubai, Arabian Ranches,
Emirates Living and Dubai Marina. These successful urban and resort destinations each contribute to
Emaar Properties’ status as one of the largest real estate developers globally by market capitalisation.
Following the Combined Offering, Emaar Misr expects to continue to benefit from the support and
expertise of Emaar Properties, which will remain Emaar Misr’s controlling shareholder. Furthermore,
Management believes that the long-standing experience and know-how of Emaar Malls Group (owner and
operator of Dubai Mall, the world’s largest shopping and entertainment destination and a member of the
Emaar Group) and Emaar Retail Group will be instrumental in developing and operating Emaar Misr’s
retail properties in Project Uptown Cairo and Mivida. Management also believes that the track record,
experience, brand name and operational excellence of Emaar Hospitality Group will provide strategic
value to the development and operations of ‘‘The Address’’ and ‘‘Vida’’ hotels across Emaar Misr’s
projects.
Strategy
Emaar Misr’s vision is to become Egypt’s premier lifestyle community provider, through developing world-
class projects to fulfil the aspirations of its customer base. Emaar Misr’s aim is to continue to maintain a
strong market position while increasing revenue and profitability. Emaar Misr intends to pursue the
following business and growth strategies.
67
Maximising value from its property portfolio through dynamic phasing of launches
Emaar Misr intends to continue to implement a coordinated phasing strategy aimed at timing the launch
and completion of its residential properties with the roll-out of retail, office and hospitality properties and
other amenities, thereby allowing for a faster creation of thriving, fully integrated and self-contained
lifestyle communities. As part of this strategy, Emaar Misr intends to continue to sell fully-finished,
move-in ready residential properties in small units comprising completed villages and parcels within its
projects which are expected to act as a catalyst for incremental leasing demand through increased property
foot traffic in the projects. Furthermore, Emaar Misr plans to continue to launch certain amenities at an
early stage with the aim of having a positive impact on the demand for and value of the residential
properties over time while also building sales momentum. Management believes that the phasing strategy
will provide Emaar Misr with the flexibility needed to respond efficiently to changes in the Egyptian real
estate market and changing consumer preferences by allowing Emaar Misr to tailor its products.
68
return of approximately 16% and an achievable minimum gross margin of approximately 25%, with
particular attention to the availability of Cairo-based land plots. See ‘‘Important Note Regarding the Target
Rates of Return’’. For such acquisitions, Emaar Misr may selectively consider entering into joint ventures or
revenue sharing projects, while maintaining full management control over the projects.
Management believes that Emaar Misr has developed a rigorous, disciplined and highly selective land
acquisition methodology. Rooted in an analytical approach to decision making, the methodology
emphasises risk identification and mitigation, and screens for fundamental asset value with a high
risk-adjusted return potential. It is designed to enable Management to identify, evaluate and act upon land
acquisition and development opportunities based on a variety of indicators, including demand for
residential housing that exceeds available and expected supply, home affordability, and areas with
well-regarded educational systems and institutions, high educational attainment levels, accommodative
transportation infrastructure, proximity to major trade corridors, positive employment trends and diverse
employment bases.
69
Regarding the Target Rates of Return’’ and ‘‘Risk Factors—Risks Relating to Emaar Misr’s Business and
Industry—There can be no assurance that any targets, including Emaar Misr’s target levered project investment
rates of return, will be achieved’’. In the risk assessment stage, the management, finance, legal and
marketing departments evaluate the conceptual plan with a focus on potential barriers in the development
process. The conceptual plan and risk assessment ultimately lead to a detailed project viability analysis
which is designed to assess the likely returns of the project, the acquisition costs and payment terms in light
of the risk involved. Emaar Misr may also engage external market consultants, planning and design firms if
the initial assessment signals viability of the project from a financial and legal perspective.
The Board of Directors approve the final proposal for acquiring the land based on certain criteria,
including a minimum expected return on investment, the tax efficiency of the development, the legal
position with regard to the title and all necessary governmental authorisations. Upon approval by the
Board of Directors, the legal director coordinates and attempts to resolve any land ownership issues, with
the assistance of the legal and governmental relations department as needed. Emaar Misr then proceeds to
submit a bid in a tender process or otherwise seeks to acquire the land.
Depending on the available tax exemptions granted by law, Emaar Misr may enjoy certain tax exemptions
or moratoriums on payments for a set period of time. As of the date of this Offering Memorandum, the
Company’s activity of planning and establishment of urban communities and furnishing such communities
with the required utilities and services is tax exempt until 2018.
Master Planning
The master planning phase begins once the land is acquired. This stage of the process is designed to ensure
that the project will reflect the Emaar Misr brand and quality standards, which are checked on an on-going
basis by quality assurance and control teams at each stage in the development process. Emaar Misr
organises the master planning of its properties through a team of experienced in-house professionals who
strategically coordinate the process by outsourcing to external consultants and integrating their designs.
These professionals work directly with select external master planners, which have included Wimberly
Allison Tong & Goo and JZMK Partners. Additional external advisers consulted throughout the process
have included MVE & Partners, Inc, RTKL Associates, MACRO Consulting Group, AECOM Technology
Corporation, SB Architects, Genseler & Associates, Inc., Harradine Golf and Burton Architecture. The
master planning phase is led by the development department, chaired by the Chief Development Officer.
The department consists of development directors, senior managers and technical design directors,
together tasked with producing the master plan.
Emaar Misr also leverages its network and seeks advice from external consultants, design firms and others.
Typically, this involves consultation with various stakeholders, including relevant governmental bodies and
agencies (handling traffic, infrastructure), potential independent utility providers as well as architects and
designers. Management believes that this network helps Emaar Misr maintain and reinforce its brand
image of building high-quality fully-integrated master-planned lifestyle communities that conform to
international standards.
During this stage, the development team coordinates the process of planning out the property with the
finance, business analysis, sales and marketing divisions. The team creates a preliminary land development
strategy and vision which sets out key assumptions and the theme of the project including in relation to
land usage, density, infrastructure expenditures, potential amenities and utilisation of the land as well as
the overall concept, target market, architectural design and the expected timetable for development. The
strategy emphasises key features of the project, in accordance with the internal requirements for different
types of developments. Business analysis teams, in reliance on market research along with the sales team,
are consulted during this process to provide views with respect to the targeted segment, product mix and a
product brief, which includes descriptions of the amenities, style and finishes to the design. A preliminary
financial feasibility study and business plan further outline cash flow assumptions, cost estimates and
expected returns of the project. In the next step, the team creates a development brief that defines key
objectives of the development project in terms of scope, quality, cost and schedule.
The master plan requires approval from the respective executive design boards before the design stage
starts. Emaar Misr has three internal executive design boards responsible for (i) residential, (ii) retail and
commercial and (iii) hospitality properties, with specific standards for completing the design for each type
of property.
70
After receiving the approved master plan, the development director is responsible for the project master
schedule and the project master feasibility study. The governmental relations department, together with
the legal department, then submits the master plan to the relevant Egyptian legislative body to obtain
approvals of the master plan transportation, engineering and other stages.
The competent authority must approve the master plan and future amendments thereto, for any lands sold
to Emaar Misr. The competent authority for Project Mivida is NUCA, for Project Uptown Cairo is the
Governorate of Cairo, for Project Marassi is the Governorate of Matrouh together with the General
Authority for Tourism Development, and for Cairo Gate is the 6th of October City Authority. Generally,
the competent authority does not withhold approval unless the construction would violate building codes
or regulations and no legal exceptions are available. Under certain circumstances, the competent authority
may assess additional fees for amendments to the permitted use of land. For example, Emaar Misr paid
EGP 60 million to amend the utilisation purpose of certain areas of the Uptown Cairo master plan.
Infrastructure Construction
Infrastructure construction is the initial step in the overall development of a project. It involves liaising
with the relevant government authorities and independent utility providers, undertaking works related to
site grading, utility networks (water and sewage), road construction, building water treatment plants,
pumping stations and electrical generation facilities. All works in this stage are planned and carried out in
accordance with applicable regulatory requirements and partially financed through residential pre-sales.
This stage is aimed at improving accessibility to the project, developing high-quality infrastructure,
planning and overall construction spending. In certain circumstances, Emaar Misr may elect to develop
certain amenities in early stages of a project in order to attract traffic to the site and help generate
demand. The infrastructure is usually developed in accordance with the development requirements and
can be amended during the construction phase based on actual sales patterns.
71
Marketing, Sales and Leasing
A marketing campaign begins with the preparation of marketing materials which are designed to
strengthen brand awareness and recognition of Emaar Misr’s properties. Emaar Misr has devoted in-house
public relations, media relations, marketing communications, digital marketing, customer relationship
management, event management and corporate social responsibility teams in charge of marketing
activities. According to AC Nielsen, Emaar Misr’s brand recognition and awareness was valued 3.5 on the
2013 Brand Equity Index, which was higher than many of its competitors in Egypt, and 98 on Total Brand
Awareness as of February 2014 (source: Emaar Misr Brand Health Tracker, February 2014).
Prices of units are determined by the development team, following input from the sales, business analysis,
marketing and finance departments and additional advice from external consultants. Price setting is based
on an analysis of the master plan, unit and phase location, survey of the surrounding areas and review of
competitor projects and pricing amongst other factors. Further reviews of prices are conducted prior to the
launch based on demand reports produced by the sales and marketing team. Unlike most real estate
developers in Egypt, Emaar Misr offers primarily fully finished units, which Management believes provides
Emaar Misr with a competitive advantage.
Senior management determines the size of the launch in terms of number and value of units released
based in part on precedent inventory levels from previous launches. Launch events for the residential
projects have historically been successful and positively impacted the demand for the properties. In the
past, approximately 80% of sales were generated at the launch events. As of 31 March 2015, Emaar Misr
has launched 41 residential villages with a 90% ratio of launched units to sold units. Once a project
launches, Emaar Misr uses an ‘‘off-plan’’ sales model that follows a phased approach to build sales
momentum and increase the value of the project. Approximately 90 representatives work full time on the
sale of units for Emaar Misr. They are located across Emaar Misr’s offices in Project Uptown Cairo,
Project Marassi, Project Mivida, Heliopolis and Mohandessin as well as Dubai to allow it to reach potential
clients outside of Egypt. Management incentivises these sales people with commissions based on source of
the sales, payment terms and stagnant inventory targets, among others.
Emaar Misr attempts to avoid excessive reliance on third parties, such as brokers, to conduct sales and
instead focuses on its capacity to manage the sales and leasing processes in-house. Emaar Misr’s sales in
2014 were completed through the following channels: marketing activities (approximately 32%), online
sales (approximately 33%), sales centres and teams (approximately 26%) and brokers and similar parties
(approximately 9%). The leasing department is responsible for the leasing of retail properties, and the
sales team is responsible for the sales of residential properties and the leasing of commercial properties.
Given Emaar Misr’s planned focus on retail and commercial properties going forward, these two business
segments are expected to become a core function in the future. Emaar Misr uses standardised policies and
procedures, standard lease contracts and criteria selection parameters that are developed by the Emaar
Malls Group to control risk in retail leases.
Emaar Misr has implemented a marketing system designed to increase sales and brand awareness by using
innovative promotional programmes. Emaar Misr markets itself through a variety of channels, including
community events, trade shows, formal programming, online companies, sales books and other print,
digital and televised media. Its Choose Your Neighbour programme allows existing customers to refer their
friends and family for the purchase of extended payment plan units in Emaar Misr’s various projects in
return for financial incentives. It also organises luxury community events with the aim of helping engage
target audiences and stimulate word of mouth and indirect sales. Emaar Misr has made presentations at
major local and international real estate developers’ trade shows as well. Emaar Misr also uses its online
presence and social media for marketing and has been recognised as a leader in online media. Emaar Misr
received the Pan Arab award for the most interactive real estate social media page and best developed real
estate website in the Middle East and Gulf Region for 2012 and 2013, respectively.
Emaar Misr uses a lead management system that is strictly monitored and controlled. Prospective
customers that indicate interest in the company through the internet or call centres typically receive
responses within hours. Furthermore, Emaar Misr polls current and prospective customers with surveys to
improve its marketing strategy with customer feedback.
Emaar Misr’s marketing strategy extends beyond the initial sale or lease of units and includes the entire
customer relationship cycle. Employees monitor customer satisfaction and service quality through
customer relationship management programmes. There is a strong focus on customer retention through
72
innovative programs like the ‘‘Emaar Privilege’’ rewards program and ‘‘We Care’’ communication channel
for existing and potential customers.
Customers
As of 31 March 2015, over 90% of Emaar Misr’s customers were Egyptian nationals, with the remainder
coming from Saudi Arabia, the UAE, Kuwait, the United States of America and other countries. Across
Emaar Misr’s properties, approximately 31% of customers were between ages 40 to 50, 23% of customers
were between ages 50 to 60 and 22% of customers were between ages 30 to 40. In terms of gender,
approximately 79% of customers were male and 21% were female. Approximately 86% of customers were
married with 13% single and the remaining widowed. Of the customers with children, approximately 40%
have two children, 32% have three children, 12% have four children and 11% have one child.
Approximately 47% of customers at Emaar Misr’s properties were self-employed, with 42% employed,
5% working as homemakers, 4% students and 1% retired. Only about 1% of customers were unemployed.
Furthermore, approximately 43% of customers earn a monthly income in the range of EGP 45,000 to
EGP 65,000 and 30% of customers earn a monthly income exceeding EGP 65,000.
73
Construction
Emaar Misr awards tenders and the construction of a project typically commences within six to 18 months
following the launch of a project. The projects department is managed by the Director of Projects and
overseen by the Managing Director. The projects department, together with the external project
management consultant and supervision consultant, are responsible for the supervision of the construction
process. The construction of all types of properties is outsourced to third parties and monitored by daily
and monthly reports highlighting progress and development. Compiled reports with critical issues are
reported to the Managing Director and Chief Development Officer on a monthly basis.
Standard payment terms for construction contracts include a 10-20% advance payment against bank
guarantees with monthly interim payments according to progress of works and payable within 40 days. A
5% deposit is released in two equal payments at substantial and final completion stages, with another 10%
revised contract sum as performance guarantees. Liquidated damages and penalties of up to 10% of the
contract value are assessed for contractor delays in meeting handover dates. Additionally, construction
contracts allow for a one year warranty on defects from handover dates, in which contractors must attend
to requests by Emaar Misr to correct any defects. Alternatively, Emaar Misr may correct defects and bill
this to contractor or deduct it from retained accounts with the contractor.
Business Lines
All of Emaar Misr’s projects under development include residential units, retail properties and hospitality
areas. Uptown Cairo and Mivida will also contain commercial spaces.
Residential
Residential properties comprise villas, townhouses and apartments forming high-quality fully integrated
master-planned communities. Emaar Misr aims to develop approximately 26,400 residential units
representing approximately 5.0 million square metres of the planned total Gross Floor Area by 2026.
74
The following table sets forth the total number of units sold, total sales of residential units and the amount
of collections and cancellations (excluding non-residential units) for the three months ended 31 March
2015 and 2014 and the years ended 31 December 2014, 2013 and 2012:
Total number of
residential units sold . 320 237 1,649 1,335 1,072
Total cumulative
number of residential
units sold(1) . . . . . . . . 6,526 4,794 6,206 4,557 3,222
Total net sales of
residential units
(EGP)(1) . . . . . . . . . . 2,013,094,481 990,247,155 6,942,275,258 4,077,454,376 3,197,951,752
Collections
Annual (EGP billion) 0.8 0.5 3.0 1.6 1.0
Cumulative (EGP
billion) . . . . . . . . . 11.0 7.6 10.1 7.1 5.5
Cancellations(2)
(EGP million) . . . . . . 32.4 19.2 215 136 128
Notes:
(1) For the period. Excludes serviced apartments.
Retail
Retail properties will comprise shopping malls and retail stores. Emaar Square in Uptown Cairo is
designed to be Emaar Misr’s first major retail development, followed by major retail centres in Downtown
Mivida and Marassi Marina. In an attempt to increase income-generating assets and recurring income,
Emaar Misr intends to maintain ownership of those properties and lease the space to tenants. In 2014,
Emaar Misr launched its first shopping mall (MPorium) in Project Marassi. Retail properties are expected
to comprise approximately 0.35 million square metres of the planned total GFA. Management expects
certain tenants to anchor the retail areas. The term ‘‘anchor tenant’’ is not strictly defined by Emaar Misr,
but factors that determine whether a tenant anchors an area include size of occupancy, brand, function and
products or services sold.
Office
Office properties will comprise multi-tenant office properties in Uptown Cairo and Mivida that are
expected to cater to a range of local and multinational corporations. In an attempt to increase income-
generating assets and recurring income, Emaar Misr intends to maintain ownership of the properties and
lease the space to tenants. Office properties are expected to comprise approximately 0.21 million square
metres of the planned total GFA.
Hospitality
Emaar Misr aims for hospitality properties to comprise a target of 15 hotels across Emaar Misr’s three
projects: 12 anchor hotels, three of which will be boutique hotels and one associated with a golf course, in
Project Marassi, two hotels are planned for Project Uptown Cairo and one hotel is planned for Project
Mivida. Emaar Misr intends to sell the plot of land of 13,980 square metres in Project Mivida on which the
hotel is planned to be located. Hotels are designed to comprise serviced apartments, located within the
premises of the hotel, furnished and finished according to the guidelines of the hotel operator.
Hospitality developments are expected to comprise approximately 4,000 keys consisting of hotel rooms and
serviced and branded apartments. Hotels are designed to comprise a total of 2,720 rooms (Project Uptown
Cairo: 280 rooms, Project Mivida: 180 rooms and Project Marassi: 2,260 rooms).
As of the date of this Offering Memorandum, Emaar Misr operates one hotel (El Alamein) at Marassi
with 130 keys and 14 villas. In summer 2014, Emaar Misr launched serviced and branded apartments at
75
‘‘The Address’’ hotel, with a target 49 hotel room keys, 68 serviced apartments and 20 branded apartments
(of which 44 serviced and branded apartments have been sold).
In addition, Emaar Misr expects to develop golf courses, educational and medical centres in some of its
fully integrated master-planned communities. These additions are expected to further enhance the value of
the properties and to improve the overall marketability to customers.
As of the date of this Offering Memorandum, Emaar Misr’s business lines of retail, commercial and
hospitality do not meet the criteria under IFRS 8 required for reporting segments, and as such, are not
separately disclosed in the Financial Statements. Consequently, all revenues of Emaar Misr in the three
months ended 31 March 2015 and 2014 and the years ended 31 December 2014, 2013 and 2012 were
reported under one segment in the Financial Statements and related primarily to revenue from sales of
residential properties. Management expects that in the future the retail, commercial and hospitality
segments will meet the criteria and be identified as separate reporting segments in accordance with IFRS 8
in addition to the residential segment.
Description of Projects
Emaar Misr currently has three property developments under construction and a plot of undeveloped land.
Emaar Misr’s properties are strategically located in East, West and Central Cairo as well as on the North
Coast.
The following table sets forth certain key information and metrics relating to Emaar Misr’s projects as of
31 March 2015:
Projects under Development Undeveloped Land
Uptown Cairo Marassi* Mivida Cairo Gate
Location . . . . . . . . . . . . . . . . . . . . Mokattam in North Coast on New Cairo City in 6th of October City
Central Cairo the Mediterranean East Cairo on Cairo’s West
Sea Axis
Primary Use . . . . . . . . . . . . . . . . . . Residential and Resort Residential and Mixed-Use
Mixed-Use Mixed-Use
Total Land Area(1) (million m2) . . . . . . 4.5 6.5 3.7 0.6
Target GFA(2)(3) (million m2) . . . . . . . . 2.0 2.4 1.8 —
Residential GFA (million m2)(2)(3) . . . 1.6 2.0 1.5 —
Retail GFA (m2)(2)(3) . . . . . . . . . . . 209,000(4) 43,300 96,000 —
Office GFA (m2)(2)(3) . . . . . . . . . . . 98,000 — 116,000 —
Hospitality GFA (m2)(2)(3) . . . . . . . . 79,000 393,000 10,000 —
Other GFA (m2)(2)(3) . . . . . . . . . . . 26,000 25,000 106,000 —
GFA Sold as a Percentage of Target
GFA(2) . . . . . . . . . . . . . . . . . . . . 19% 28% 48% —
Residential
Target Number of Residential
Units(3)(5) . . . . . . . . . . . . . . . . . 7,994 13,097(6) 5,357 —
Number of Residential Units
Launched(5) . . . . . . . . . . . . . . . 1,367 2,672 3,095
Number of Residential Units Sold as
Percentage of Total Launched
Units(5) . . . . . . . . . . . . . . . . . . 89.0% 82.8% 98.6% —
Sold Residential GFA (million m2)(2) . 0.4 0.7 0.9 —
Cumulative net sales since inception
(EGP billion) . . . . . . . . . . . . . . 5.0 9.5 9.5 —
Retail
Target Retail GLA (m2)(3)(7) . . . . . . . 156,504 32,318 78,037 —
Launched Retail GLA (m2)(7) . . . . . . — 4,686 —
Office
Target Office GLA (m2)(3)(7) . . . . . . . 83,102 — 88,040(8) —
Launched Office GLA (m2)(7) . . . . . . — — 19,810
Hospitality
Target Number of Hotels(3) . . . . . . . 2(9) 12(10) 1(11) —
Target Number of Keys(3) . . . . . . . . c.600 c.3,250 —
Amenities . . . . . . . . . . . . . . . . . . . Golf course, club Golf course and Clubhouse, —
house, sports club, beach clubhouse, Downtown Mall
school and Emaar Marina and Central Park
Square
76
Projects under Development Undeveloped Land
Uptown Cairo Marassi* Mivida Cairo Gate
Landmark Development . . . . . . . . . . Emaar Square Marassi Marina Mivida Downtown —
Construction Commencement Date . . . 2007 2008 2009 Master Planning
Phase
Expected Construction Completion Date 2026 2024 2021 —
Percentage owned (%) . . . . . . . . . . . . 100% 100% 100% —
Tax Holidays . . . . . . . . . . . . . . . . . No Exempt until 2018 Exempt until 2018 —
DTZ Valuation(12) . . . . . . . . . . . . . . . EGP 6,897,630,000 EGP 8,916,800,000 EGP 6,650,650,000 EGP 962,940,000
Total Remaining Estimated
Investment(13) (EGP) . . . . . . . . . . . 28.4 billion 26.2 billion 10.5 billion —
Investment(14) (EGP) . . . . . . . . . . . . 3.6 billion 5.8 billion 3.7 billion 0.2 billion
Notes:
* Excluding the South Land plot in Project Marassi comprising a residential area (gross land area of approximately 29,678 square
metres, target GFA of 50,064 square metres and planned to include 616 apartments) and a commercial area (gross land area of
approximately 38,456 square metres, target GFA of 53,573 square metres and target GLA of 44,307 square metres (serviced
apartments)).
(1) Land area acquired.
(2) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
(3) Approximations based on management plans. Hospitality segments include GFA of serviced apartments. Development plans
are subject to changes within the limit imposed by each ministerial decree. No assurance can be given that current plans will be
consistent with product mix actually being launched in the future.
(4) Excludes Project Uptown Cairo clubhouses of approximately 5,100 square metres.
(5) Excludes serviced and branded apartments.
(6) Number subject to approval on height extension.
(7) Gross Leasable Area (GLA) is defined as the gross surface area available for leasing, expressed in thousands of square metres.
(8) 870,526 square metres have been launched and 851,686 square metres have been sold (excluding offices).
(9) Excludes no build zone and spa land hotels that are still in early planning stages.
(10) Excludes three boutique hotels and serviced apartments. Includes El Alamein hotel which is the only operational hotel of
Emaar Misr as of the date of this Offering Memorandum.
(11) Emaar Misr intends to sell the plot of land of 13,980 square metres on which the hotel is planned to be located.
(12) Valuation is based on DTZ’s estimates as of 31 December 2014. Cairo Gate valuation is based on the assumption that a portion
of the land area will not be expropriated for public use. For more information on project valuation, see ‘‘Valuation Report’’.
(13) Defined as sum of estimated hard cost, estimated soft cost, estimated land cost, finance cost and estimated infrastructure costs
less investment to date.
(14) As of 31 March 2015. Defined as sum of development properties and cost of sales less infrastructure provision.
77
Risks Relating to Emaar Misr’s Business and Industry—Developers, including Emaar Misr, face legal
complexities and uncertainties in obtaining, retaining and enforcing title to land in Egypt’’ and ‘‘Material
Contracts—Land and Property Contracts—Uptown Cairo: Preliminary Sale Agreement’’. The master plan for
the project was approved in 2008.
In June 2007, the Uptown Cairo sales centre opened along with the Street of Dreams, featuring fully
furnished model homes. Sales of residential units began in 2007 during the Platinum Launch of Uptown
Cairo and Marassi. The award-winning Golf Club-House opened in 2011. Management expects the first
nine holes of the golf course to be operating in 2016 with the remainder to open by the end of 2019.
Delivery of residential units began at the end of 2012. As of 31 March 2015, Emaar Misr has delivered 320
residential units, representing approximately 79,131 GFA.
The following table sets forth certain key information about residential, retail, office and hospitality area in
Project Uptown Cairo as of 31 March 2015:
Notes:
(1) Includes a school with GFA of 25,500 square metres. The school is expected to be based on a revenue share agreement with
American International Schools.
(2) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
(3) Gross Leasable Area (GLA) is defined as the gross surface area available for leasing, expressed in thousands of square metres.
(4) Including target GFA for serviced apartments of 58,912 square metres.
Residential Developments
The following table sets forth an overview of the target residential plan for Project Uptown Cairo as of
31 March 2015:
Note:
(1) Includes approximately 3,300 Emaar Square units expected to launch in 2016.
Project Uptown Cairo is expected to feature 16 residential villages, of which 10 were launched as of
31 March 2015.
78
The following table sets forth the target GFA of residential units in Project Uptown Cairo as of 31 March
2015:
The following table sets forth the number of residential units sold and the total net sales in Project Uptown
Cairo for the three months ended 31 March 2015 and 2014 and for the years ended 31 December 2014,
2013 and 2012:
Villas (‘000 m2) . . . . . . . . . . . . 1.6 2.4 6.7 2.5 12.3 9.2 25.4 8.6 19.2 4.9
Apartments (‘000 m2) . . . . . . . . 7.3 8.5 13.8 0.2 37.0 10.6 25.3 — 17.1 —
Townhouses (‘000 m2) . . . . . . . . — 0.2 3.6 1.8 3.3 6.8 9.5 14.7 7.8 13.3
Mixed (‘000 m2) . . . . . . . . . . . . 19.1 — 9.3 — 45.1 10.6 — — — —
Net GFA(1) (‘000 m2) . . . . . . . . . 28.0 11.1 33.5 4.5 97.7 26.5 60.2 23.3 44.1 18.2
Note:
(1) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
Cumulative net sales amounted to EGP 5.0 billion as of 31 March 2015, EGP 4.4 billion as of 31 December
2014, EGP 2.8 billion as of 31 December 2013 and EGP 2.0 billion as of 31 December 2012.
79
The following table sets for the average sales price per square metre by residential unit type in Project
Uptown Cairo for the three months ended 31 March 2015 and 2014 and the years ended 31 December
2014, 2013 and 2012 and:
Three months
ended 31 March Year ended 31 December
2015 2014 2014 2013 2012
EGP EGP EGP EGP EGP
Villas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,248 17,714 20,164 16,458 14,461
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . . . 26% 8% 23% 14% —
Apartments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,155 10,313 11,186 10,004 8,406
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . . . 28% 7% 12% 19% —
Townhouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,974 15,126 16,373 13,882 12,364
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . . . 52% 14% 18% 13% —
Retail Developments
Emaar Misr plans to construct approximately 209,000 square metres of retail GFA, with an emphasis on
open air retail centres featuring luxury and fashion brands. Retail space is expected to be located primarily
at Emaar Square, the landmark development of Project Uptown Cairo. See ‘‘—Emaar Square’’ below.
Office Developments
Emaar Misr plans to construct approximately 98,000 square metres of GFA for commercial space,
consisting of an office park for large and small businesses that is expected to be located at Emaar Square.
See ‘‘—Emaar Square’’ below. Emaar Misr’s strategy is to sell 30% of the office space and lease the
remaining 70% of the office space. The majority of the total office portfolio is expected to be financed
through office sales.
Hospitality Developments
Emaar Misr plans to construct approximately 84,000 square metres of hospitality area in Uptown Cairo,
including a five star and a five-plus star hotel, including the first ‘‘The Address’’ branded hotel in Cairo.
See ‘‘—Emaar Square’’ below. Emaar Misr expects to build boutique hotels in villages, as well, for local
use.
Emaar Square
Emaar Misr is in the concept design stage of developing Emaar Square, a project developed with the vision
to become an iconic city centre catering to domestic and tourist demand for retail and lifestyle venues. It is
expected to be the first outdoor retail and lifestyle venue of its kind in Egypt and one of the largest open
air malls in the Middle East. With a GFA of over 850,000 square metres, Emaar Square’s master plan
features hospitality centres, residential areas, office space and an open air retail area intended to attract
numerous global brands and leading local and international companies. RTKL Associates and
Dar Al-Handasah designed Emaar Square as part of a consortium of designers with input from the Emaar
Malls Group. Emaar Square is planned to be strategically located in the North Eastern area of Uptown
Cairo for ease of accessibility, and is expected to open in 2021 with a tentative completion of 2024.
The following table sets forth certain key metrics and milestones of Emaar Square as of 31 March 2015:
Residential Retail Office Hospitality
(1)
Target GFA Split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54% 25% 11% 9%
Target GFA(1) (m2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 461,439 209,000 98,000 84,000
Target GLA(2) (m2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 156,504 83,102 —
Target Number of Keys . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — 600(3)
Target Start of Construction . . . . . . . . . . . . . . . . . . . . . . . . 2016 2016 2016 2018
Target End of Construction . . . . . . . . . . . . . . . . . . . . . . . . . 2024 2021 2021 2024
Expected Launch Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 2021 2021 2021
Expected Completion Date . . . . . . . . . . . . . . . . . . . . . . . . . 2024 2024 2024 2024
Notes:
(1) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
80
(2) Gross Leasable Area (GLA) is defined as the gross surface area available for renting.
Emaar Misr expects the retail area to include luxury and fashion brand tenants, world-class shopping, and
a state-of-the-art leisure and entertainment complex designed to international standards. Emaar Malls
Group, a subsidiary of the Principal Shareholder, is expected to operate the retail areas. See ‘‘Certain
Relationships and Related Party Transactions—Service Agreements—Mall Services’’.
Emaar Square’s master plan features one five-star hotel (‘‘Vida’’) and one five-plus-star hotel (‘‘The
Address’’). Hotels at Emaar Square are expected to have 280 keys in addition to 314 serviced apartments
being part of the hotel.
Management expects its total estimated investment in Emaar Square to amount to approximately
EGP 17.9 billion. A significant portion of the net proceeds from the Combined Offering are currently
expected to finance the development of Emaar Square, including the necessary infrastructure. See ‘‘Use of
Proceeds’’.
Direct(5) Indirect(5)
Hard Soft Finance Land infrastructure infrastructure
costs(1) costs(2) costs(3) costs(4) costs costs
Notes:
(1) Hard costs are the direct building construction costs excluding the infrastructure costs.
(2) Soft costs are the costs related to design, supervision, project management and cost consultant.
(3) Finance costs are the capitalised borrowing costs directly attributable to the acquisition and construction.
(4) Land costs are the costs of the land plots and parcels comprising the project.
(5) Infrastructure costs are site grading, slope stabilisation, utilities, roads, traffic solutions, community centres and similar costs.
The following table sets forth the breakdown of the total expected hard cost over the lifetime of Project
Uptown Cairo and the total hard cost incurred as of 31 March 2015:
Villas Apartments Townhouses Mixed Retail Office Hospitality Other
Project Marassi
Inspired by Europe’s renowned marinas and the French Riviera, Emaar Misr is in the process of
developing Marassi as a premium year-round international tourism destination located in the moderate
climate of the North Coast. Marassi’s master plan features Marassi Marina, a port designed to be an
international yacht marina.
81
Marassi stretches across approximately 6.5 million square metres of land along a 6.25 kilometre
Mediterranean Sea coastline. The architectural styles of the Mediterranean inspired the design of the
Marassi development, reflected in the design’s backdrops of beaches, greenery, waterways and lagoons.
Wimberly Alison Tong & Goo designed Marassi’s master plan in cooperation with other globally renowned
architects and designers. Marassi’s master plan features a premium beach resort, residential units
(including plans for 52 Armani-designed villas), a 250 slip yacht marina, a town centre, a wellness centre,
an entertainment centre, an 18-hole golf course (designed by Harradine Golf) and spas. The project is
easily accessible from nearby airports, with Al Alamein Airport approximately 20 minutes away and Borg
El Arab Airport about 55 minutes away.
Emaar Misr won the tender for the property in an auction in August 2006 held by the Egyptian General
Company for Tourism and Hotels, Egypt’s sponsored tourism division, and construction commenced in
2008. Emaar Misr paid full consideration for the land but title to the land has not yet been registered to
Emaar Misr. Emaar Misr is in the process of registering title to the land. See ‘‘Risk Factors—Risks Relating
to Emaar Misr’s Business and Industry—Developers, including Emaar Misr, face legal complexities and
uncertainties in obtaining, retaining and enforcing title to land in Egypt’’ and ‘‘Material Contracts—Land and
Property Contracts—Marassi: Preliminary Sale Agreement’’. The master plan for the project was approved by
the Engineering Department of El Alamein District, Governorate of Matrouh in 2013.
Sales for the project began in 2007 during the Platinum Launch of Marassi and Uptown Cairo. In June
2009, the Marassi Beach Club opened. In 2012, the golf course and golf academy became operational and
in 2013 Emaar Misr introduced a floating restaurant to the development.
Delivery of units began at the end of 2010. As of 31 March 2015, Emaar Misr has delivered 1,070 units,
representing approximately 261,378 square metres of GFA. In July 2014, Emaar Misr launched the first
retail centre in Marassi, the Marassi MPorium. Emaar Misr currently operates 130 keys and 14 villas at the
historic El Alamein hotel located in Marassi. Management expects that the property will be exempt from
taxes until 2018.
On 26 June 2014, Emaar Misr acquired the South Land plot which is divided into a residential area (gross
land area of approximately 29,678 square metres, target GFA of 50,064 square metres and planned to
include 616 apartments) and a commercial area (gross land area approximately 38,456 square metres,
target GFA of 53,573 square metres and target GLA of 44,307 square metres (serviced apartments) (the
‘‘Marassi South Land’’).
The following table sets certain key information about residential, retail and hospitality area of Project
Marassi (excluding the Marassi South Land) as of 31 March 2015:
Residential Retail Hospitality(3) Other(4)
(1)
Target GFA Split (%) . . . . . . . . . . . . . . . . . . . . . . . . . 81% 2% 16% 1%
Target GFA(1) (m2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.0 million 45,000 393,000 25,000
Target GLA(2) (m2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 32,318 — —
Target Number of Keys . . . . . . . . . . . . . . . . . . . . . . . . . — — 3,382(5) —
Target Start of Construction . . . . . . . . . . . . . . . . . . . . . . 2008 2018(6) 2015 2015
Target End of Construction . . . . . . . . . . . . . . . . . . . . . . 2024 2024 2024 2022
Launch Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2008 2014 2014(7) 2009
Expected Completion Date . . . . . . . . . . . . . . . . . . . . . . . 2024 2024 2024 2022
Notes:
(1) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
(2) Gross Leasable Area (GLA) is defined as the gross surface area available for renting.
(3) Includes community clubs.
(4) Includes beach club, golf academy, golf club house and other amenities.
(5) Including 978 keys for serviced and branded apartments.
(6) Construction of MPorium mall began in 2013.
(7) Launch of ‘‘The Address’’ hotel.
82
Residential Developments
The following table sets forth an overview of the target residential plan for Project Marassi (excluding the
Marassi South Land) as of 31 March 2015:
Note:
(1) Excluding serviced and branded apartments.
Project Marassi is expected to feature 22 residential villages, of which 11 were launched as of 31 March
2015.
The following table sets forth the target GFA of residential units in Project Marassi (excluding the Marassi
South Land) as of 31 March 2015:
Notes:
(1) Cumulative GFA as of 31 March 2015.
The following table sets forth the number of residential units sold (excluding serviced apartments) and the
total amount of net sales of residential units in Project Marassi (excluding the Marassi South Land) for the
three months ended 31 March 2015 and 2014 and for the years ended 31 December 2014, 2013 and 2012:
Note:
(1) Excluding serviced apartments.
As of 31 March 2015, Emaar Misr sold 255 villas, 80 townhouses, 1,371 mixed-use units, 45 serviced
apartments and 507 apartments. Total cumulative net sales of residential units, excluding serviced
apartments, as of 31 March 2015 amounted to EGP 9.3 billion, of which EGP 4.0 billion have been
recognised so far as revenue.
The following table sets forth the GFA of units sold and units delivered (excluding serviced apartments) in
Project Marassi, excluding the Marassi South Land (net of cancellations, terminations, upgrades and
83
downgrades) for the years ended 31 December 2014, 2013 and 2012 and the three months ended 31 March
2015 and 2014:
Note:
(1) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
Cumulative net sales amounted to EGP 9.5 billion as of 31 March 2015, EGP 9.0 billion as of 31 December
2014, EGP 6.5 billion as of 31 December 2013 and EGP 5.3 billion as of 31 December 2012.
The following table sets for the average sales price per square metre by residential unit type in Project
Marassi (excluding the Marassi South Land) for the three months ended 31 March 2015 and 2014 and the
years ended 31 December 2014, 2013 and 2012:
Three months
ended 31 March Year ended 31 December
2015 2014 2014 2013 2012
EGP EGP EGP EGP EGP
Villas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,933 14,332 18,865 16,828 16,623
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . . 67% 8% 12% 1% —
Apartments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,934 15,737 17,113 14,368 —
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . . 20% 5% 19% — —
Townhouses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,226 11,189 12,777 11,291 10,638
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . . 45% (2.0)% 13% 6% —
Retail Developments
Emaar Misr plans to construct approximately 32,318 square metres of retail GLA in Project Marassi. An
estimated 4,686 square metres of retail space was operational as of 31 March 2015. As of 31 March 2015,
phase 1 of the Marassi MPorium has been fully occupied and leased since summer 2014 with an average
rate of EGP 2400 per square metre per year for the whole mall.
Hospitality Developments
According to the master plan, the hospitality area is expected to feature 12 hotels, including a golf hotel,
three boutique hotels and serviced apartments for a total of 3,350 keys, of which three hotels and one
boutique hotel are expected to be located in the Marassi Marina. See ‘‘—Marassi Marina’’ below. The
hospitality area is expected to comprise different types and tiers of hotels in order to accommodate
different age groups as well as income brackets. The Emaar Hospitality Group and subsidiary of the
Principal Shareholder is expected to operate ‘‘The Address’’ hotel.
Emaar Misr currently operates 130 keys and 14 villas at the historic El Alamein hotel located in Marassi
which it acquired with the land and renovated subsequently. An additional minor renovation is expected at
the hotel during 2015. In 2024, Management plans to renovate the El Alamein hotel into a five star hotel
with approximately 260 keys, including serviced apartments. Management expects the cost of developing
hospitality segments in Project Marassi to amount to approximately EGP 9.5 billion, including land cost,
infrastructure costs, hard and soft costs and finance cost.
In summer 2014, Emaar Misr launched serviced and branded apartments at ‘‘The Address’’ hotel, with a
target 49 hotel room keys, 68 serviced apartments and 20 branded apartments (of which 44 serviced and
branded apartments have been sold).
84
Marassi Marina
Emaar Misr is in the initial design stages for developing a 250-slip yacht marina on the North Coast which
is designed to make Project Marassi a year-round destination. The Marassi Marina’s master plan features a
wide range of dining venues, cafes and retail outlets in addition to residential units with marina views.
Marassi is expected to be Egypt’s first private development on the North Coast with an international
marina, which Management believes will allow international tourism inflows unmatched by any other
developments in Egypt as the marina’s location is expected to be difficult to replicate in the region. The
marina is designed to be integrated with customs and immigration approvals for ease of access and benefits
from a unique location and unmatched climate along one of the most beautiful coastlines in the
Mediterranean. The total expected GFA of the marina is anticipated to be approximately 859,000 square
metres. Emaar Misr is seeking approval for the Marassi Marina to be used as an international port and
expects to complete the construction by the end of 2024. Once the final design of the marina is completed,
Emaar Misr will seek all required licences and permits, which will be required prior to commencing
construction.
The following table sets forth certain key metrics and milestones of Marassi Marina as of 31 March 2015:
Residential Retail Hospitality(1)
(2)
Target GFA Split . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77% 4% 19%
Target GFA(2) (m2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 668,000 36,351 163,592
Target GLA(3) (m2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 27,263 —
Target Number of Keys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 1,492(3)
Commencement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2016 2018 2018
Expected Launch Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 2020 2022
Expected Completion Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2024 2024 2024
Notes:
(1) Includes 4 hotels with 1,022 keys.
(2) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces. Estimate excludes the hospitality segment.
(3) Gross Leasable Area (GLA) is defined as the gross surface area available for renting.
(4) Includes 470 keys for serviced apartments.
Construction of desalination plants and the main road have largely been completed. Additionally, Emaar
Misr has begun site grading after obtaining approvals from the relevant authorities. The opening of the full
golf course is expected to be completed by the end of 2016 along with the launch of the Armani residential
units. Emaar Misr aims for Marassi Marina and retail areas to begin operating in 2019.
Management expects total investment costs of the Marassi Marina to amount to approximately EGP
13.5 billion. A significant portion of the net proceeds from the Combined Offering is expected to finance
the roll-out of the retail and hospitality areas at Marassi Marina, including the necessary infrastructure.
See ‘‘Use of Proceeds’’.
85
(2) Soft costs are the costs related to design, supervision, project management and cost consultant.
(3) Finance costs are the capitalised borrowing costs directly attributable to the acquisition and construction.
(4) Land costs are the costs of the land plots and parcels comprising the project.
(5) Infrastructure costs are site grading, slope stabilisation, utilities, roads, traffic solutions, community centres and similar costs.
The following table sets forth the breakdown of the total expected hard cost by the type of property over
the lifetime of Project Marassi and the total hard cost incurred as of 31 March 2015:
Project Mivida
Emaar Misr is in the process of developing Mivida, a community development with environmentally
friendly components and green landscapes and amenities that are planned to cover more than 80% of the
project’s 3.7 million square metres of land. Project Mivida’s master plan includes Mivida Downtown, a
centrally located hub in East Cairo that is expected to include a wide spectrum of amenities, a business
park, a business hotel and a town centre with a boulevard-style shopping area.
Located in the centre of New Cairo City, Project Mivida is situated on approximately 3.7 million square
metres of land along a central road in New Cairo City and features a range of international architectural
styles. JZMK Partners created the master plan. Project Mivida’s master plan features residential, leisure,
retail and office space as well as a medical campus and educational campuses managed by elite schools.
The master plan also comprises other facilities designed for the project, such as a community centre, a
33-acre central park, a business park, a downtown retail development with boulevard shopping, a spa,
sports, leisure facilities. Project Mivida’s master plan includes green walkways connecting various parcels
of land, greenery and landscape views, solar powered lighting for common areas and a green pedestrian
ring road connecting the different parcels. The development is located close to American University in
Cairo and approximately 20 minutes from Cairo International Airport. The project is strategically located
in the centre of New Cairo City, is easily accessible to the town centre through multiple access points
through Road 90, Suez and Sokhna Roads. The project is 30 kilometres from Zamalek/Downtown,
25 kilometres from Maadi, eight kilometres from New Cairo, 12 kilometres from Nasr City and 18
kilometres from Heliopolis.
Emaar Misr acquired the land from NUCA in June 2006, but title to the land may not be registered to
Emaar Misr until full payment is made. Emaar Misr paid an advance payment on the land in February
2006 and the remainder of the purchase price is scheduled to be made over seven annual instalments. As of
the date of this Offering Memorandum, the outstanding amount is approximately EGP 931 million. Of this
outstanding amount, 15% is expected to be paid in 2015, 26% is expected to be paid in 2016 and the
remainder in 2017 (including interest). See ‘‘Risk Factors—Risks Relating to Emaar Misr’s Business and
Industry—Developers, including Emaar Misr, face legal complexities and uncertainties in obtaining, retaining
and enforcing title to land in Egypt’’ and ‘‘Material Contracts—Land and Property Contracts—Mivida:
Preliminary Sale Agreement’’. As of the date of this Offering Memorandum, Emaar Misr is awaiting
approval in the form of a ministerial decree regarding a revised master plan for the project.
Sales for the project began in 2009. Delivery of the first office building was in 2012. Delivery of residential
units began in 2014. As of 31 March 2015, Emaar Misr has delivered 460 residential units, representing
approximately 111,195 square metres of residential GFA.
86
The following table sets forth certain key information about residential, retail, office and hospitality area in
Project Mivida as of 31 March 2015:
Notes:
(1) Emaar Misr intends to sell the plot of land of 13,980 square metres on which the hotel is planned to be located.
(2) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
(3) Gross Leasable Area (GLA) is defined as the gross surface area available for renting.
(4) Includes community clubs (target construction start date: 2012, target construction end date: 2021, target launch date: 2015,
target completion date: 2021), medical centre (located on the plot of land that will be sold), school (target construction start
date: 2016, target construction end date: 2018, target launch date: 2016 (kindergarten), target completion date: 2018), facility
management building (target construction start date: 2015, target construction end date: 2018) and mosque (target construction
start date: 2016, target construction end date: 2018).
Residential Developments
The following table sets forth an overview of the target residential plan for Project Mivida as of 31 March
2015:
Note:
(1) Cumulative GFA as of 31 March 2015.
87
The following table sets forth the number of residential units sold and the total amount of net sales in
Project Mivida for the three months ended 31 March 2015 and 2014 and for the years ended December
2014, 2013 and 2012:
Villas (‘000 m2) . . . . . . . . . . 39.6 17.4 26.6 9.1 86.0 47.8 53.4 — 93.1 —
Apartments (‘000 m2) . . . . . . 3.0 — 2.1 — 68.3 — 70.5 — 16.4 —
Townhouses (‘000 m2) . . . . . 22.7 15.6 1.3 — 4.4 21.1 85.1 — 89.1 —
Mixed (‘000 m2) . . . . . . . . . . 1.7 — — — 44.7 — — — — —
Net GFA(1) (‘000 m2) . . . . . . 67.0 33.0 30.0 9.1 203.4 68.8 209.0 — 198.6 —
Note:
(1) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces.
Cumulative net sales, including office area, amounted to EGP 9.5 billion as of 31 March 2015,
EGP 8.5 billion as of 31 December 2014, EGP 5.5 billion as of 31 December 2013 and EGP 3.3 billion as of
31 December 2012.
The following table sets for the average sales price per square metre by residential unit type in Project
Mivida for the years ended 31 December 2014, 2013 and 2012 and the three months ended 31 March 2015
and 2014:
Three months
ended 31 March Year ended 31 December
2015 2014 2014 2013 2012
EGP EGP EGP EGP EGP
Unfinished Villas . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,322 10,352 10,352 9,771 8,041
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . 67.3% 11.3% 5% 22% —
Finished Villas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,051 15,014 16,726 12,836 11,923
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . 33.5% 22% 30% 8% —
Apartments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,218 9,256 11,861 8,673 7,301
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . 42.8% 19.8% 37% 19% —
Unfinished Townhouses . . . . . . . . . . . . . . . . . . . . . . . . 14,178 11,104 12,458 9,372 6,797
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . 27.7% 41.5% 35% 37.9% —
Finished Townhouses . . . . . . . . . . . . . . . . . . . . . . . . . 17,762 12,458 12,621 9,860 9,100
Year-over-year growth . . . . . . . . . . . . . . . . . . . . . . . 42.58% 38.14% 26% 8% —
88
Retail Developments
Emaar Misr plans to construct approximately 96,000 square metres of GFA (78,000 of GLA), which is
expected to be located exclusively in Mivida Downtown, the landmark development of Project Mivida. See
‘‘—Mivida Downtown’’ below. Management expects the retail segment in Project Mivida to cost
approximately EGP 1.1 billion, including land cost, infrastructure cost, hard and soft costs and finance cost.
Management expects to open its central park retail centre in 2017, the Mivida Mall in 2018 and the Mivida
Downtown retail centres in 2019. Management estimates that approximately 90% of GLA is expected to be
added in 2018 and 2019.
Office Developments
Emaar Misr plans to construct approximately 116,000 square metres of commercial GFA (88,000 of GLA)
that is expected to be located exclusively in Mivida Downtown and of which approximately one-third has
already been leased. See ‘‘—Mivida Downtown’’ below. Emaar Misr’s intends to sell 30% of office space
and lease the remaining 70%.
In 2012 and again in 2014, Emaar Misr delivered two buildings of approximately 4,700 square metres each.
Management expects to open the second phase of Project Mivida’s office park in 2018. As of 31 March
2015, tenants in the business park included major local and multinational companies, with the full first
floor (1,215 square metres) leased at a 100% occupancy rate.
Hospitality Developments
Management intends to sell the plot of land on which the hotel would be located.
Mivida Downtown
Emaar Misr is in the final design stages of developing the master plan for Mivida Downtown, a 376,000
square metre development strategically located in the centre of New Cairo City in East Cairo. Office space
at Mivida Downtown is expected to comprise 116,000 square metres of GFA and apartment space is
expected to comprise 154,000 square metres of GFA across 870 apartments. Mivida Downtown is designed
as a mixed-use project that is expected to feature a shopping boulevard, a business park, outdoor dining,
medical and educational facilities and a hotel. Mivida Downtown’s master plan also features a school and
medical campuses to occupy over 50,500 square metres of land each. The school is expected to have a seat
capacity of approximately 2,000, although seat capacity is not expected to affect revenues as the land is
expected to be sold rather than retained as investment property. Mivida Downtown was designed by JZMK
with an expected GFA of 366,000 square metres. Mivida Downtown is expected to be completed by the end
of 2021.
The following table sets forth certain key metrics and milestones of Mivida Downtown:
Notes:
(1) Emaar Misr intends to sell the plot of land of 13,980 square metres on which the hotel is planned to be located.
(2) Gross Floor Area (GFA) is defined as the area of a building measured to the external face of the perimeter walls at each floor
level, including terraces and roof terraces. Excluding medical centre, school and community club.
(3) Gross Leasable Area (GLA) is defined as the gross surface area available for renting.
89
Overview of Project Mivida’s Cost Structure
The total expected cost of Project Mivida is currently estimated to amount to EGP 14.2 billion, of which
EGP 3.7 billion has been invested as of 31 March 2015. Hard costs are expected to amount to
EGP 8.1 billion, of which EGP 1.0 billion were incurred as of 31 March 2015. As of 31 March 2015,
awarded construction contracts for the project amounted to EGP 3.3 billion, with executed works onsite
amounting to EGP 1.9 billion.
The following table sets forth the breakdown of the total expected investment over the lifetime of Project
Mivida and total investment incurred as of 31 March 2015:
Direct Indirect
Hard Soft Finance Land infrastructure infrastructure
costs(1) costs(2) costs(3) costs(4) costs(5) costs(5)
Total Expected Investment . . . . . . . . 57% 7% 0.2% 14% 11% 11%
Total Incurred Investment . . . . . . . . . 26% 9% 1% 49% 7% 8%
Notes:
(1) Hard costs are the direct building construction costs excluding the infrastructure costs.
(2) Soft costs are the costs related to design, supervision, project management and cost consultant.
(3) Finance costs are the capitalised borrowing costs directly attributable to the acquisition and construction.
(4) Land costs are the costs of the land plots and parcels comprising the project.
(5) Infrastructure costs are site grading, slope stabilisation, utilities, roads, traffic solutions, community centres and similar costs.
The following table sets forth the breakdown of the total expected hard cost by the type of property over
the lifetime of Project Mivida and the total hard cost incurred as of 31 March 2015:
Undeveloped Land
Cairo Gate: 6th of October City
Cairo Gate is a land plot of approximately 0.6 million square metres in 6th of October City with frontage of
the Cairo—Alexandria Desert highway, an area with limited land offerings, which makes Cairo Gate a
strong value proposition.
The master planning of the Cairo Gate development is still in progress. Please see ‘‘Material Contracts—
Land and Property Contracts—Cairo Gate: Preliminary Sale Agreements’’ for a description of the status of
the land upon which Cairo Gate is planned to be developed. In addition, this land is subject to general
usage restrictions on all land connected to the Cairo—Alexandria Desert highway. These restrictions
prohibit construction on land that is within 50 metres of the highway. However, this 50-metre wide strip is
designated as ‘‘open space’’ for purposes of the overall master plan to be approved by 6th of October City
Authority, thereby limiting any loss to overall land available for construction. In addition, approximately
18,550 square metres of land intended for the Cairo Gate project is subject to prime minister decree
no 1702/2010. This decree, which calls for expropriation of land to allow additional road works required to
convert the Cairo—Alexandria road to a freeway, has not been enforced against Emaar Misr. Emaar Misr
has been verbally informed by the Roads and Bridges Authority that the expropriation plan has been
amended. Upon amendment of this decree, these 18,550 square metres of land will not be subject to
expropriation. However, this amendment has not taken place yet and there is no guarantee that the decree
will be amended as indicated. Emaar Misr is obliged to pay change of activities fees in order to obtain a
permit to carry out construction and development activities on the land comprising Cairo Gate. As of the
date of this Offering Memorandum, Emaar Misr is further considering whether to pay the change of
activities fees in addition to obtaining the relevant approvals for the change of ownership. See ‘‘Risk
Factors—Risks Relating to Emaar Misr’s Business and Industry—Developers, including Emaar Misr, face legal
complexities and uncertainties in obtaining, retaining and enforcing title to land in Egypt’’ and ‘‘Material
Contracts—Land and Property Contracts—Cairo Gate: Preliminary Sale Agreement’’ and ‘‘—Legal
Proceedings—Cairo Gate Land Disputes’’.
90
Management expects the master plan to be finalised by the second quarter of 2016. As of 31 March 2015,
the total amount invested was EGP 225.2 million.
Competition
Competition in Egypt’s real estate development industry and the retail segment is highly fragmented and
varies based on region and sector. In Cairo, Emaar Misr developments face competition from several
developments in the Cairo area including those constructed by Palm Hills Developments, SODIC, AMER
Group, Madinet Nasr and TMG. Emaar Misr may also face competition from new entrants and established
developers that seek opportunities in the Egyptian property market given that the local market is
underserved with GLA per capita of 0.9 million square metres of office stock available as of fourth quarter
2014 and 0.07 square metres per capita of retail space as of 2013. Despite the fast growing retail market
and continuously increasing demand, supply of retail space still remains limited, when comparing the retail
space per capita for Cairo to that of other regional cities. Management considers geographic location
important in assessing competition for Emaar Misr’s operations.
Additionally, competition affects Emaar Misr differently depending on the relevant business segment.
Residential developments hold the greatest brand equity due to the visible and tangible progress made in
construction, large customer base and proven track record in the Egyptian market. Retail developments
are expected to benefit from the Emaar Group’s brand, brand recognition of The Dubai Mall and
notability of Emaar Group’s operations in the United Arab Emirates. However, the retail developments
nonetheless require a footing in the Egyptian market. Within hospitality segments, management expects to
face significant competition, as the market for hospitality is more saturated.
The table below sets forth a comparison to other publicly listed developers in Egypt, as based on
Management research and competitors’ reported financial information:
Note:
(1) Includes land held for sale.
Human Resources
Emaar Misr’s human resources department oversees the recruitment, training and retention of employees.
Emaar Misr focuses on assisting its employees to achieve a high standard of work performance by studying
factors affecting employee performance, providing incentives for employees, developing professional
growth opportunities, building strong and effective teams, sharing ideas and disseminating best practices.
Since 2010, the number of employees at Emaar Misr has nearly doubled to approximately 426 full-time
employees as of 31 March 2015. Additionally, most key employees have been with Emaar Misr for more
than five years. Management seeks to employ talent from both domestic and international markets. In
addition, the human resources department offers development programmes to employees to supplement
their job training and expertise. Programmes are offered both in-house and through external training
programmes to further develop talent. Emaar Misr plans to implement a stock option plan to motivate and
retain management and offers various benefits to employees including medical and life insurance, school
allowance, discounts, transportation, bonuses, internal loans and gratuity systems.
91
Employees
As of 31 March 2015, Emaar Misr had 426 full-time employees. The following table sets for the general
categories and corresponding number of employees:
As of As of 31 December
31 March
2015 2014 2013 2012
Senior Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 17 13 16
Design/Engineers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 41 38 24
Sales and Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 89 88 75
Finance/Controls/Administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 234 202 182
Construction Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 33 32 30
Total number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 426 414 376 338
See ‘‘—Legal Proceedings—Employment Disputes’’.
Regulatory Matters
Emaar Misr’s operations are subject to national and local laws, some of which require that Emaar Misr
maintains certain governmental permits and licences. Regulatory approval and permits are generally
required and issued during two stages of the development of a project. Emaar Misr seeks to obtain all
regulatory approvals at the relevant stages of the projects. Approval of a project’s master plan is required
to ensure compliance with building regulations of the relevant authority, and permits are required during
the construction phase to ensure structural integrity as well as compliance with building regulations.
Construction laws in Egypt are evolving with the growth in the construction sector. Currently, the
Construction Law requires, among other things, that design plans be approved by a licenced engineer to be
submitted to the competent administrative authority (NUCA for new urban communities and the General
Authority for Tourism Development for touristic areas) for obtaining the building licence and that the
licencee under each project obtains insurance covering its statutory liability. Violations of the Construction
Law are subject to criminal sanctions ranging from fines to imprisonment (depending on the gravity of the
violations). Management believes that Emaar Misr’s operations conform to Egyptian industry safety
standards applicable to its construction operations through the implementation of what Management
believes are appropriate safety measures on its construction sites.
Presidential Decree No. 339 of 2000 established EGYPTERA. EGYPTERA is mandated to grant licences
relating to, among other things, electricity distribution. Emaar Misr currently holds a valid electricity
distribution licence for one of its developments, namely, Project Marassi.
Emaar Misr’s operations are also subject to various environmental laws and regulations. For example,
Environmental Law No. 4 of 1994 (the ‘‘Environmental Law’’) requires developers to submit an
environmental impact assessment (study) and obtain environmental approval thereof prior to proceeding
with the project. The developer is also required to abide by all Environmental Law provisions relating to
environmental protection that are relevant to the developer’s activity all through the life of the project. A
developer who causes environmental damage is required to compensate those injured for damages. The
Environmental Law also provides for detailed restrictions on the use, transportation, handling and disposal
of hazardous wastes and materials and sets forth regulations concerning emission control standards, zoning
92
restrictions and use of pesticides. The Egyptian Environmental Affairs Agency (the ‘‘EEAA’’), which
enforces the Environmental Law, is authorised to issue fines for violations, and, in extreme cases, seek
prosecution of violators. Management believes that its environmental compliance records and procedures
are in line with those of real estate developers in Egypt.
Additional environmental regulations must be complied with and specific approval obtained for
construction within 200 metres of the coast line. Construction that could affect the natural coast line must
be approved by the Egyptian General Authority for Coasts Preservation and the EEAA. Any
environmental issue that may arise during the course of development of a project is addressed with the
appropriate environmental authority. To date, approval for the environmental impact assessment for
Project Marassi has not been obtained. Management believes that the development is in line with market
practices for real estate developers in the North Coast.
Information Technology
Emaar Misr operates an information technology network designed and constructed by Emaar Properties
for use by companies in the Emaar Group. The network serves corporate operations, development and
customer interface systems. Using a customised intranet and extranet portal, the information technology
network improves product services through delivering a convenient, easy-to-use interface to corporate
users, customers and prospective buyers.
Legal Proceedings
Emaar Misr and certain of its executives and directors are subject to a number of legal, regulatory and
administrative proceedings arising in the ordinary course of Emaar Misr’s business. Although Management
does not believe that any one existing or threatened judicial proceeding or arbitration could have a
material adverse effect on Emaar Misr, because of the nature of these matters (and in particular
misdemeanour criminal proceedings), Emaar Misr is not able to predict their final outcomes, some of
which may be unfavourable to Emaar Misr. As of 31 March 2015, Emaar Misr recorded EGP 1,685,775 in
provisions for litigation and legal claims. As of the date of this Offering Memorandum, the aggregate
impact of the legal proceedings to which Emaar Misr is a party is estimated to be EGP 4.9 million. The
primary existing disputes, litigation and arbitration proceedings involving Emaar Misr are described below.
See ‘‘Risk Factors—Risks Related to Emaar Misr’s Business and Industry—Emaar Misr would be affected by
any damage to the ‘‘Emaar’’ brand’’ and ‘‘Risk Factors—Risks Related to Emaar Misr’s Business and
Industry—Emaar Misr and certain of its executives and directors are and may continue to be party to civil and
criminal misdemeanour legal proceedings, the outcome of which is uncertain’’.
93
According to Egyptian Law, once the accused objects to a judgment rendered in absentia during the
applicable time frame for such objection, the accused is granted the right to a retrial by the first instance
court, and the judgment rendered in absentia is cancelled and replaced by the judgment rendered in the
retrial in the presence of the accused.
Like many businesses operating in Egypt, Emaar Misr and its senior management team has been the
subject of direct misdemeanour criminal cases. In Emaar Misr’s case, these cases have alleged fraud under
Article 336 of the Penal Code and/or breach of trust in connection with the termination of contracts to
purchase units in various Emaar Misr projects. In May 2015, Emaar Misr settled one such case and as of
the date of this Offering Memorandum Emaar Misr and its senior executives are currently contesting two
additional cases. These three cases are described below. Because criminal proceedings may be initiated in
absentia, there may be other cases in process of which the Company and its senior executives are unaware.
• Appeal of misdemeanour No. 59899 for the year 2014 was filed before the Nasr City Misdemeanour
Court of Appeal appealing the judgment rendered in misdemeanour no. 59899 for the year 2014, Nasr
City (misdemeanour) in favour of Ossama El Nagar as claimant against Emaar Misr’s Chairman and
Emaar Misr’s Managing Director. The Chairman was declared innocent but the Managing Director
was sentenced to imprisonment of one year.
This case, which is currently on appeal, arises from a dispute between Ossama El Nagar and Emaar
Misr over the purchase of a residential unit in Project Mivida. According to Management, the
claimant wrote payment checks from his account on behalf of two buyers, whom he represented.
When one of the cheques bounced (which is a misdemeanour under Egyptian law) and the buyers did
not pay the required amount Emaar Misr cancelled the purchase application.
Ossama El Nagar considered Emaar Misr’s cancellation to constitute ‘fraud’ and commenced a direct
misdemeanour case against the Chairman and the Managing Director of Emaar Misr. According to
Emaar Misr’s management, Ossama El Nagar commenced this case without using proper notice
procedures and in a court that did not have jurisdiction over the case. Nonetheless, the court rendered
an in absentia judgment in favour of Ossama El Nagar and sentenced both the Chairman and the
Managing Director to one year of imprisonment. When Emaar Misr objected to this judgment, the
same court held the retrial, and acquitted the Chairman and sentenced the Managing Director to one
year of imprisonment. The Managing Director appealed the judgment.
While the appeal was pending, Emaar Misr settled this dispute on behalf of the Managing Director
without making any monetary payments but rather by rescheduling the customer’s instalment
payments. This settlement will be notified to the court in the next court session scheduled to take
place on 2 June 2015. It is expected that the case will be dismissed as a result.
• Objection No. 17717 for the year 2015 was filed before the Nasr City Misdemeanour Court
challenging the judgment rendered in absentia in favour of Essam Kamal as claimant against the
Managing Director of Emaar Misr. The Managing Director was sentenced to imprisonment for two
years and a bail of EGP 10,000.
According to Management, Essam Kamal purchased a unit in Project Marassi and paid the down
payment. The remainder of the price was to be paid in instalments. Five instalments were not paid
when they fell due. The cheques corresponding to the instalments bounced. Emaar Misr notified
Essam Kamal to pay the due amounts within a week of the notification. Essam Kamal did not pay such
amounts, and Emaar Misr terminated the sale agreement.
Essam Kamal considered Emaar Misr’s termination as ‘fraud’ and commenced a direct misdemeanour
case against the Managing Director of Emaar Misr without using proper notice procedures and in a
court that did not have jurisdiction over the case. Nonetheless, the court rendered an in absentia
judgment of two years of imprisonment against the Managing Director.
This judgment is subject to objection and a retrial has been scheduled for 24 June 2015 to hear the
objection.
• Objection No. 17718 for the year 2015 was filed before the Nasr City Misdemeanour Court
challenging the judgment rendered in absentia in favour of Mohamed Yasser Lotfy as claimant against
the Managing Director. The Managing Director was sentenced to imprisonment of two years and a
bail of EGP 10,000.
According to Management, Mohamed Yasser Lotfy purchased a unit in Project Marassi and paid the
94
down payment. The remainder of the price was to be paid in instalments. Mohamed Yasser Lotfy did
not pay the remainder of the instalments. Therefore, Emaar Misr terminated the sale agreement and
repossessed the unit. Subsequently, Mohamed Yasser Lotfy repurchased the same unit from Emaar
Misr. However, the price of the unit was higher than under the first sale agreement. In addition to the
above, Mohamed Yasser Lotfy purchased another residential unit from Emaar Misr and there was a
difference of 140 square metres between the area set forth in the sale agreement and the actual area
of the purchased unit.
Mohamed Yasser Lotfy considered the above as ‘fraud’ and commenced a direct misdemeanour case
against the Managing Director without using proper notice procedures and in a court that did not
have jurisdiction over the case. Nonetheless, the court rendered an in absentia judgment of two years
of imprisonment against the chief executive officer.
This judgment is subject to objection and a retrial has been scheduled for 25 June 2015 to hear the
objection.
95
• Case number 154 for the year 2012 was filed before the Civil Matrouh first instance court by Waleed
Tawfeek Sadek who sought the validity and enforceability of the contract dated 1 April 2004. The
Court rejected the claim. This judgment was appealed under appeal number 163 for the judicial year
70 (2014). On 23 February 2015, the appellate court rejected the appeal. The judgment is final and
non-appealable and, to date, no challenge has been filed with the court of cassation.
96
Lawsuits filed by Gadallah Mahmoud
Case number 104 for the year 2014 was filed by Gadallah Mahmoud before the Matrouh First Instance
Civil Court who claimed the title to the land and transfer of 200 feddans (approximately 840,000 square
metres) of the Sidi Abdel Rahman land plot and the cancellation of other ownerships at the notary public.
On 30 May 2015, a favourable judgment was rendered rejecting the case.
Employment Disputes
As of the date of this Offering Memorandum, Emaar Misr is party to approximately eight legal
proceedings in the ordinary course of business before civil courts of the districts of South and North Cairo
and Matrouh for unfair or wrongful dismissal or transfer by Emaar Misr of its employees and related
payment of compensatory damages.
Arbitration Dispute
Emaar Misr is a party to an ad-hoc arbitration proceeding initiated on 29 May 2014, by Premix for Ready
Mix Concrete. The tribunal is constituted of three arbitrators, and the parties agreed on the procedural
hearing that all hearings shall be held at the Cairo Regional Center for Commercial International
Arbitration (venue of arbitration) and the dispute shall be governed by the Egyptian law. The claimant in
those proceedings alleges a breach of contractual obligations by Emaar Misr under a memorandum of
understanding dated 18 March 2008 and another contract for land use installation of concrete batching
plants on sites without specifying any monetary claims. The claimant did not quantify the alleged damages,
and requested the tribunal to appoint an expert to perform this exercise. The arbitral tribunal was
constituted on 13 August 2013. The arbitral tribunal held its first session on 29 May 2014 (first procedural
hearing). On 11 December 2014, Emaar Misr submitted its response to the claim and its counterclaim for
an amount of EGP 13,461,430. The claimant’s response to Emaar Misr’s counterclaim was submitted.
Emaar Misr will submit its rejoinder in September 2015.
Insurance
Management believes that Emaar Misr’s insurance coverage for all material aspects of its operations is
comparable to or in excess of that of Egyptian companies in the sector in which Emaar Misr operates.
Insurance for each project under development is provided by Emaar Misr, as required by Egyptian law.
Under Egyptian law, both the construction contractor and the architect of a project are jointly liable for
any harm or loss caused by any defect in construction for 10 years from the date construction is completed.
The coverage that Emaar Misr maintains insures Emaar Misr against this liability, and also covers Emaar
97
Misr for harm or loss caused by natural disasters while a project is under development. The third-party
sub-contractors employed by Emaar Misr are responsible for insuring their construction employees against
injury. Emaar Misr also maintains insurance coverage for the leisure clubs and other infrastructure that are
part of its developments.
98
MATERIAL CONTRACTS
The following are contracts that have been entered into by the Company that contain provisions under
which the Company has an obligation or entitlement that is material to the Company as of the date of this
Offering Memorandum.
99
obtaining required building permits. Outstanding approvals on the land include the authorisations related
to the marina, the maximum height reference point and environmental approvals.
Emaar Misr has paid the purchase price in full when it obtained the rights to the land in 2006, but HOTAC
has not yet transferred land title to Emaar Misr. Emaar Misr is in the process of registering title to the
land, see ‘‘Description of Emaar Misr—Projects under Development—Project Marassi’’. Remaining fees
related to the land include approximately EGP 13 million of costs related to the Marassi Southland asset to
be paid upon registration of the land.
100
sold land includes 18,750 square metres of land that was expropriated by Prime Minister decree No. 1142
of 1994. Emaar Misr was assigned the right to receive any compensation arising from the area and paid the
purchase price in full. The net area in Emaar Misr’s possession under this preliminary sale agreement is
226,040 square metres.
On 11 April 2006, Emaar Misr and Commercial International Bank entered into a preliminary sale
agreement comprising approximately 327,950 square metres of land that is intended for the Cairo Gate
project. The sold land includes a part of the Cairo—Alexandria desert road with an area of approximately
6,750 square metres under the possession of the government. Emaar Misr was assigned the right to receive
any compensation arising from the expropriation of the said area and paid the purchase price in full. In
addition, Emaar Misr has disposed of approximately 8,400 square metres of this land. The net area in
Emaar Misr’s possession under this preliminary sale agreement is 313,000 square metres.
On 16 November 2006, Aida Abdel Nasser, members of her family and Emaar Misr entered into
preliminary sale agreements comprising approximately 109,200 square metres of land that is intended for
the Cairo Gate project. Emaar Misr paid half of the purchase price on the date of signing and the
remaining balance will be paid upon registration of the sale agreement. However, the sold land includes
approximately 46,200 square metres of land that were subsequently determined to be owned by a third-
party, see ‘‘Description of Emaar Misr—Legal Proceedings—Cairo Gate Land Disputes’’. Emaar Misr is in
the process of negotiating with the sellers to replace this disputed land with alternate land that is adjacent
to the rest of the proposed Cairo Gate project. Emaar Misr plans to pay the balance of the purchase price
into an escrow account, from which it will only be released upon registration of title to the net area of
63,000 square metres.
Emaar Misr is obliged to pay change of activities fees in order to obtain a permit to carry out construction
and development activities on the land comprising Cairo Gate. Emaar Misr has currently suspended the
registration of title process until a decision is made with regard to payment of the change of activities fees.
On 15 June 2010, Prime Minister Decree No. 1702/2010 expropriated an additional 18,550 square metres
of the land.
101
Upon Emaar Properties’ instructions, Emaar Misr will take or assist Emaar Properties with any legal
action to protect the Trademarks against any infringement, unlawful registration or unfair competition, and
will notify Emaar Properties immediately upon becoming aware of any act involving such practices by third
parties. Any damages awarded as a result of the foregoing legal action shall vest in and accrue for the
benefit of Emaar Properties.
The Licence Agreement may be terminated by mutual agreement between Emaar Misr and Emaar
Properties. Additionally, Emaar Properties may terminate the Licence Agreement at any time and
effective immediately upon the occurrence of one of the following events: (i) Emaar Properties ceases to
hold 51% of Emaar Misr’s share capital, (ii) Emaar Properties becomes wound up, through voluntary
action or otherwise, (iii) the introduction of any legislation or regulation in Egypt limiting the rights of
Emaar Properties to appoint Emaar Misr’s directors or such directors’ rights to fully participate in the
decision making of Emaar Misr’s Board of Directors, or depriving any shareholder of Emaar Misr of any of
their shares therein or the voting rights attached thereto and (iv) Emaar Misr committing a breach of the
Licence Agreement without remedying such breach within one month of being informed thereof or being
stripped of any of its businesses or undertakings.
Facility Agreements
Emaar Misr is a party to certain credit facility agreements. For a description of the main terms of those
agreements, see ‘‘Operating and Financial Review—Credit Facilities’’. Several of Emaar Misr’s credit
facilities include change of control restrictions which require Emaar Properties PJSC not to decrease its
shareholding in Emaar Misr, failing which Emaar Misr may be considered in default under the relevant
credit facility. Emaar Misr has obtained the relevant bank’s approval where such bank’s approval is
required prior to a change in Emaar Misr’s shareholding structure.
102
MANAGEMENT
Board of Directors
Emaar Misr is governed by its Board of Directors. Directors are generally elected for a term of three years
or until their successors are elected and qualified. The Board of Directors is committed to practices of
corporate governance in line with international best practices. The Board of Directors consists of eight
members who have initially been appointed by Emaar Misr and subsequently will be elected by Emaar
Misr’s shareholders. The Board of Directors is comprised of three independent non-executive directors,
four Emaar Properties non-executive directors and one executive director. The Board of Directors will
meet at least once every three months.
The following table sets forth the current members of the Board of Directors of Emaar Misr:
103
• ensure that the Board of Directors’ composition, structure, policies and processes meet all relevant
legal and regulatory requirements, including applicable corporate governance standards.
104
venture between the Walt Disney Company and the Jawa family. As chairman of the joint venture, he
supervised the sales and marketing of Disney computer software, interactive multimedia, toys, home
furnishing, personal care products, consumer electronics, publishing and English and Arabic videos in the
region. Ahmed served as board member of Tricon Group, a United States based oil and securities trading
firm from 1983 to 1991. He was also chairman of Stallions Home Video LLC, a video distribution company
in the Middle East, and spearheaded the anti-piracy initiative in the region. He is a board member of
Emaar Properties PJSC and chairman of its investment committee and a member of its nomination and
remuneration committee. He is a board member and chairman of the nomination and remuneration
committee of Emaar Economic City, a publically traded company listed on the Saudi Arabian stock
exchange and also involved in the development of the Middle East’s largest private sector real estate
development, King Abdullah Economic City. He is board member of Emaar Turkey and serves on the
board of Emaar MGF India. He is also board member of RAK Petroleum, a publicly traded company, and
chairman of its audit committee. Additionally, he served on the board of Mirapolice, an entertainment
company that builds theme parks in France. Mr Jawa served as chairman of Coflexip Saudi Arabia, a joint
venture with the French giant Elf Aquitaine, which was one of only two companies in the 1980s involved in
laying underwater pipes for crude oil transmission. Mr Jawa, born in Jeddah in 1956, holds a bachelor of
science in Business Administration and a masters in business administration (MBA) from the University of
San Francisco.
Fadel Abdulbaqi Al Ali has served on the Board of Directors since 2015. Mr Al Ali is the Chief Operating
Officer of Dubai Holding, a leading investment conglomerate with operations in 24 countries employing
over 22,000 people. Mr Al Ali plays a significant role in shaping Dubai Holding strategy that manages
AED 116 bn portfolio of assets, which supports the strong development of Dubai’s non-oil economy across
sectors including; tourism, hospitality, media, real estate, ICT, education and financial services. Mr Ali is
Chairman of Dubai International Capital and Dubai Group. He also serves on the Boards of Emirates
Integrated Telecommunications Company PJSC (DU), Dubai Financial Services Authority (DFSA), Dubai
Properties Group and Jumeirah Group. He has considerable experience in the finance industry which
includes several years at Citibank where he served in a number of roles. His last held position at Citibank
was UAE Distribution Head, prior to moving to Dubai Holding. Mr Al Ali holds a B.Sc. (Honours) in
Industrial and System Engineering from the University of Southern California, and holds a Certificate of
Finance from the American University of Sharjah. He has attended several professional development
programs.
Dr Ziad Ahmed Bahaa-Eldin has served as director of Emaar Misr since 2015. He is a non-executive member
of the board of directors of HSBC Bank Egypt and the National Bank of Egypt (UK), and a director of the
Egyptian Initiative for the Prevention of Corruption. From 2013 to 2014, Dr Bahaa-Eldin was the Deputy
Prime Minister for Economic Development and Minister of International Cooperation. He is also a former
Member of Parliament representing Assiut. In 2011, Dr Bahaa-Eldin was a Senior Legal Advisor to the
Central Bank of Egypt. From 2009 to 2011, he was the first Executive Chairman of the Egyptian Financial
Supervisory Authority (EFSA), which he helped found. From 2004 to 2007, he was Executive Chairman of
the Egyptian General Authority for Investment and Free Zones. He acted as a non-executive member of
the Board of Directors of the Central Bank of Egypt from 2004 to 2011 and of the National Bank of Egypt
from 2005 to 2010. As an attorney specializing in financial law, governance, compliance, and economic
legislation, Dr Bahaa-Eldin practiced law in Cairo and Washington, DC and acted from 1997 to 2000 as the
senior legal advisor to the Minister of Economy. Dr Bahaa-Eldin also was an adjunct lecturer at the
Faculty of Law at the Cairo University from 1998 to 2004. He is the founder and member of the Board of
Directors of the Ahmed Bahaa-Eldin Cultural Foundation, a charity promoting education, training, and
creative thinking among Egyptian youth in Upper Egypt, and is a member of the Board of Trustees of the
American University in Cairo. Dr Bahaa-Eldin received his Ph.D. in Financial Law from the London
School of Economics (1997), an LL.M. in International Business Law from King’s College London (1989),
a bachelor degree in Economics from the American University in Cairo (1987) and a Bachelor of Law
degree from Cairo University (1986).
Heba El Gabaly has served on the Board of Directors since 2015. Ms Heba El-Gabaly is currently a
managing partner of Eklego Design Ltd., managing the company’s retail operations, customer and
marketing strategy, and supply chain management. Prior to joining Eklego Design Ltd., Ms El-Gabaly
worked as an associate in the Dubai office of McKinsey & Company. Her experience at McKinsey &
Company includes, among other projects, the organisational transformation of a Middle Eastern
petroleum company to capture savings through the implementation of new organisational processes and
the structuring and developing of a performance management system, the development of a strategy for
105
the government of Dubai to attract investments in select manufacturing industries, and the support of a
leading Middle Eastern bank in the implementation of its retail banking strategy. Prior to joining
McKinsey & Company, Ms El-Gabaly worked at BP Egypt, where she was actively involved in
implementing the strategic business plan development of BP Egypt’s assets, as well as other organisational
tasks, including the development of a performance contract for Gulf of Suez Petroleum Co. Prior to joining
BP Egypt, Ms El-Gabaly worked as brand manager for Procter & Gamble Egypt. Ms El-Gabaly holds a
bachelor degree in Economics & Business Administration from the American University in Cairo and an
MBA from Harvard University.
Tarek Abdalla has served on the Board of Directors since 2015. Mr Abdalla is the Regional Head of
Marketing at Google and is responsible for the MENA region. His role is to build usage and penetration of
Google products in addition to leading commercialisation of products and services for businesses, creators
and publishers across the Arabic speaking world. Since joining Google in 2012, Mr Abdalla has worked, in
partnership with content creators, governments and large and small businesses across industries in the
MENA region, on the launches of YouTube, Google Street View, Google Maps, Google Cultural Institute
and Google Partners, with the aim of further developing the internet economy. With over 17 years of
experience in consumer marketing and strategy consulting in North America, the Middle East and
emerging markets, he has held numerous leadership positions in companies such as Mars Incorporated and
Booz & Company with extensive experience in new product development, brand strategy, life cycle
management, route to market, distributor setup, mergers and acquisitions, technology-based
transformation and emerging markets strategy. Mr Abdalla also serves as an advisory board member of the
CMO Council and is a frequent panellist and speaker in marketing and technology forums in the Middle
East. He holds an MBA from Sheffield Business School, a Post Graduate Diploma in Integrated
Marketing Communications from the International Advertising Association and a bachelor degree in
Business Administration from the American University in Cairo.
Board Committees
The Board of Directors has an Audit Committee.
Audit Committee
As required by the EGX Listing Rules, Emaar Misr has an Audit Committee composed of three
non-executive directors, with at least one of them a financial and accounting expert. The Audit Committee
is accountable to the Board of Directors of Emaar Misr. See ‘‘—Board of Directors’’. The Audit Committee
is chaired by Jamal Majid Bin Thaniah and also includes Ahmed Jawa as a member and Heba El Gabaly as
an expert independent member. Mr Bin Thaniah and Mr Jawa were appointed on 18 September 2014.
Ms El Gabaly was appointed on 18 May 2015.
The Audit Committee shall have at least three Board members all of which are non-executive Board
members with experience in Emaar Misr’s sector, at least one of which shall be independent (i.e., a
non-executive Board member who, during the last three years preceding his/her appointment as such, was
not an employee of, a party to an agreement with or board member of the relevant company, its holding
company, subsidiaries or affiliates or any of their related parties). According to the EGX Listing Rules, if
Emaar Misr does not have sufficient Board members to fulfil the above requirements, Emaar Misr may
appoint audit committee members from outside of it.
The main functions of the Audit Committee are as follows:
• Review and inspection of the internal control procedures of Emaar Misr and the extent of its
application.
• Study of the applicable accounting policies of Emaar Misr and the changes resulting from applying
new accounting policies.
• Review and inspection of the mechanics and tools of internal review, its procedures, plans and results,
in addition to studying the internal review reports and following up on implementing its
recommendations.
• Review the procedures of preparing and reviewing the periodic and annual financial statements,
offering memoranda for public offering and private placement and estimated balance sheets,
including the estimated cash flow sheets and provisional revenue sheets.
106
• Review the preliminary financial statements’ draft before presenting the same to the Board of
Directors with the view of sending the same to the auditor.
• Proposing the appointment of auditors, determining their remuneration and examining all issues
relating to their resignation or dismissal without prejudice to the law’s provisions.
• Provide an opinion with regard to (i) the authorisation to appoint the auditor(s) of Emaar Misr to
undertake services on behalf of Emaar Misr other than the review of the financial statements and
(ii) the estimated remuneration of the auditor(s), not in contradiction with their independence
requirements.
• Review of the auditor’s report with regard to the financial statements and discussing the auditor’s
remarks and reservations in this regard, in addition to working on resolving the differences in points
of view between Emaar Misr’s management and the auditor.
• Ensure that a report is submitted to the Board of Directors by a non-related specialised expert on the
nature of the transactions and operations which have been entered into with related parties and the
extent of harm, if any, such transactions and operations have on Emaar Misr or its shareholders.
The Audit Committee shall ensure that Emaar Misr’s Management comply with the auditor and EFSA’s
recommendations. The Audit Committee is further required to provide the Board with reports at least
once every quarter, meeting at least every three months. The Board of Directors may also delegate to the
Audit Committee any additional matters that they see in the benefit of Emaar Misr. The Board of
Directors is required to address the Audit Committee’s recommendations within 15 days from receiving
notice of such recommendations. If the Board does not follow the material recommendations, the
chairman of the Audit Committee must, within 60 days, notify both the EGX and EFSA.
107
For a description of related party transactions entered into by Emaar Misr, see ‘‘Certain Relationships and
Related Party Transactions’’. All of the transactions described in this Offering Memorandum have, where
appropriate, been executed in compliance with the provisions of the Egyptian Companies Law concerning
related party transactions.
Management Structure
Set forth below is a chart showing the management structure and divisions of Emaar Misr:
28MAY201508454505
Executive Officers
The following table sets forth the current principal executive officers of Emaar Misr, their positions and
years of appointment:
Year of
Name Age Position appointment
108
Association of Certified Fraud Examiners and a CPA designation, from Montana Society of Certified
Public Accountants in the United States. Additionally, he has completed the Advanced Management
Program for Senior Management by INSEAD in France.
Ayman Hamdy has served as the Executive Director, Legal since 2006. Mr Hamdy joined Emaar Properties
PJSC in 2006 and was appointed Company Secretary in 2007. He started his career with a large law firm in
Egypt, working on international business transactions and foreign investment matters. He served as a
public prosecutor for three years before joining Unilever in Dubai as their Regional Head of Legal. He was
also the Resident Partner of the Dubai office of a regional law firm, Shalakany Law Office. Mr Hamdy is a
board member of the Association of Corporate Counsel member of the Egyptian Bar Association, the
Egyptian Association of Judges, the Egyptian Association of Public Prosecutors and a fellow of the
International Bar Association. Mr Hamdy earned an LLB from Alexandria University and an LLM from
Cairo University and Université Paris Dauphine.
Walid El-Hindi has served as the Chief Development Officer since 2008. Eng. El-Hindi has over 20 years of
professional experience in the development, planning, design, and master planning of residential,
commercial and institutional project types. Prior to joining Emaar, Eng. El-Hindi was founder and CEO of
Room Inc., a development firm in the United States (Minneapolis, MN), which developed its own projects
starting from property evaluation, design, financing, marketing, sales and execution. His previous
experience in the United States includes working for AECOM Ellerbe Becket, a world leading consultancy
firm with several international offices. He started his career with Elness Swenson Graham Architects, a
leading design firm with expertise in the hospitality industry. From 2002 to 2008, Eng. El-Hindi was an
adjunct faculty Instructor at the College of Architecture and Landscape Architecture at the University of
Minnesota, where he taught Design with an emphasis on Development and Urban Planning. As a member
of the Executive Committee and the Minneapolis Planning Commission Board from 2006 to 2008, Eng.
El-Hindi served the city of Minneapolis to establish its comprehensive plan as well as approving major
developments within Minneapolis. Eng. El-Hindi holds a bachelor of architecture (B.Arch) degree from
the University of Minnesota. He is an associate member of the American Institute of Architects (AIA) and
the Urban Land Institute (ULI).
Ahmed Fathallah has served as the Chief Investment Officer and Head of Investor Relations since 2014.
Mr Fathallah has over 17 years of experience in the field of corporate finance, treasury and investor
relations. He was previously the Vice Chairman, Chief Investment Officer and Head of Treasury at Egypt
Post since October 2010. In his previous position, Mr Fathallah oversaw and managed Egypt Post’s
portfolio of EGP 140 billion, designing the investment process and organising asset management
best-practices. Previously, Mr Fathallah served for five years as Director of Corporate Finance, Investment
and Investor Relations at Telecom Egypt. He was responsible for overlooking and managing Telecom
Egypt’s portfolio of domestic and international investments as well as the company’s investor relations
activities. He was also a team member in Egypt’s largest initial public offering for the privatisation of
Telecom Egypt. Prior to joining Telecom Egypt, he was Senior Manager in HSBC Investment Banking,
Investment Manager at Al Ahly for Developments and Investments and Assistant Manager in EFG
Hermes Private Equity. Mr Fathallah holds a Bachelor of Commerce from Cairo University where he
majored in accounting. He has successfully completed the Certified Portfolio Manager (CPM) programme
as well as the EFG Hermes Credit and Investment course and he is a CFA Level I candidate.
Nabil Amasha has served as the Chief Marketing Officer since 2008. Mr Amasha is an entrepreneur with an
extensive experience of 20 years in business development, brand management and marketing
communications, covering a range of industries including food, retail and transportation. He was
previously Chief Marketing Officer of a global logistics and transportation company with communications
responsibilities spanning more than 37 countries. He is an avid believer in corporate social responsibility
and brand innovation and was a speaker and a panellist on the subjects in various marketing and real
estate industry conferences inside and outside of Egypt. Mr Amasha is a graduate of California State
University, receiving a degree in Construction Management in 1992.
Moataz Hassouna has served as the Chief Information Officer since 2007. Mr Hassouna is a senior executive
with 25 years of experience in information technology and telecommunications in major organisations.
Previously, Mr Hassouna served as Head of Information Technology and Data Communication SBU
General Manager. Moataz also served at DCT where he served as Manager, Operations. He spent around
15 years of his professional life leading various complex mega projects involving infrastructure and ERP.
Mr Hassouna holds a doctorate degree in Strategic Management, a Masters of Business Administration,
109
diploma in IT Management and a diploma in Marketing and Management from the American University
of Cairo and a bachelor degree in engineering from Cairo University.
Mohamed Said has served as the Senior Projects Director since 2010. Eng. Said has over 22 years of
professional experience in the project management field with various firms including Abu Dhabi General
Transport Co., Wade Adams contracting company in Dubai and Al Rajhi Construction in Dubai where he
was involved in a number of landmark developments. He joined Emaar Misr in 2010 as Head of Projects
and Handing Over, where his responsibilities cover all current and future construction and handing over
activities (including reviewing master plans, getting approvals from governmental and ministerial
authorities, reviewing and negotiating tender documents, monitoring on-site progress, etc.). Eng. Said
graduated with a bachelor of science in Civil Engineering from Cairo University in 1992.
Wael El-Menoufy has served as the Senior Director, Commercial since 2008. Eng. El-Menoufy has over
27 years of professional experience in the real estate development and construction industry. Joining
Emaar Misr as a Project Manager, he moved rapidly to Senior Project Manager and then to Commercial
Director in September 2009. Currently he manages all project related commercial activities including
tendering, packaging strategy, contracts management, material procurement and special attention to items
related to cost management and control. Eng. El-Menoufy has extensive experience in different
engineering fields such as construction, cost control, cost estimate, planning, procurement, contracts and
project management. Before joining Emaar, he held several construction and managerial positions with
some of the leading companies in the real estate development market in Egypt, including Degla for
Engineering & Contracting, Galalah for Touristic Investments, Sunset Hills for Reconstruction, Hacienda,
Ein Valley, as well as in industrial construction with Holderbank of Switzerland, the world’s leading cement
manufacturer. Eng. El-Menoufy graduated in 1988 from Civil Department in the Faculty of Engineering of
Cairo University.
Ahmed Gad has served as the Senior Director of Finance since 2007. Mr Gad has over 20 year of experience
in the field of finance, accounting and auditing. He has been with Emaar Misr for over seven years, having
joined Emaar Misr in May 2007 as Finance Manager for operations in Egypt at the time. Mr Gad has
rapidly moved up until he became the Director of Finance in December 2009. Prior to joining Emaar Misr,
Mr Gad held senior audit positions in KPMG (Egypt and UAE), was Internal Audit Manager in one of the
largest corporations in the UAE (Al Futtaim Group) and has previously held the position of Audit
Manager in Ernst & Young (Qatar). Mr Gad holds a bachelor of science in Commerce from Ain Shams
University. He obtained his post graduate certificate as a Certified Public Accountant (CPA) from the
USA in 1999.
110
OWNERSHIP
As of the date of this Offering Memorandum, Emaar Misr is wholly owned by the Principal Shareholder.
Following the Combined Offering and assuming all Public Offering shares are offered and sold in the
Egyptian Public Offering, the Principal Shareholder will own, directly or indirectly, 4,019,338,000 of the
Ordinary Shares, representing approximately 87.01% of Emaar Misr’s share capital.
The table below sets forth certain information regarding the shareholders of Emaar Misr, including the
identity and percentage ownership of each of the shareholders as of the date of this Offering
Memorandum and the expected ownership as of the date of completion of the Combined Offering.
Ordinary Shares Immediately prior to the Ordinary Shares Immediately after the
Combined Offering Combined Offering
Percentage of total Percentage of total
Number of ordinary ordinary shares Number of ordinary ordinary shares
shares outstanding shares outstanding
Notes:
(1) Emaar Properties PJSC is a public company listed on the Dubai Financial Market.
(3) Emirates Hills Phase 1 Ltd is fully controlled by Emaar Properties PJSC.
(4) Assuming all Public Offering Shares are offered and sold in the Egyptian Public Offering.
111
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Emaar Misr has entered in the past, and will continue to enter, into transactions with certain shareholders,
directors, and affiliated companies. While Management believes that each of its related party transactions
has been entered into on arm’s-length terms in the ordinary course of business and in accordance with
normal business practice, there has been no formal process for the independent assessment of the
appropriateness of the terms of such transactions. The Egyptian Companies Law sets forth certain
guidelines for entering into related party transactions. See ‘‘Management—Fiduciary Duties: Related Party
Transactions’’.
All of the related party transactions described in this Offering Memorandum have been executed in
compliance with the provisions of the Egyptian Companies Law concerning related party transactions.
112
• if the shareholding of Emaar Properties, directly or indirectly, in Emaar Misr falls below
50.1%; or
• if any of the parties goes into voluntary or involuntary liquidation or where either of the
parties is declared insolvent either in bankruptcy proceedings or other legal proceedings.
• Neither the expiration nor termination of the Relationship Agreement or any Service Agreement
shall release any of the parties from the obligation to perform any other duty or to discharge any
other liability that had been incurred prior thereto.
The Relationship Agreement also contains other customary provisions and undertakings of both parties,
including those relating to the compliance with applicable laws and regulations.
Service Agreements
Hospitality Services and IP Licences
Emaar Misr has entered into a hospitality and intellectual property services agreement with Emaar
Hospitality Group. Emaar Hospitality Group is a subsidiary of Emaar Properties and manages hospitality
and leisure projects across the MENA region. The services under the agreement include the following:
• A licence of the general ‘‘Emaar’’ trademark to Emaar Misr for marketing and sale of any residential
units under the general ‘‘Emaar’’ brand. Emaar Hospitality Group is entitled to a general branding fee
to be agreed between the parties in good faith provided that the fee is within the range of 1.0% to
2.5% of the net revenue of residential units under the general licence.
• Hotel management services for Emaar Misr’s hotels under which Emaar Hospitality Group shall be
entitled to certain fees based on the annual gross revenue of any given hotel including: (i) a basic
management fee of 1.0% to 2.0% pro-rated for each operating term; (ii) an incentive management fee
of 0.0% to 12.0%; (iii) a fee equivalent of 0.5% to 1.0% as sales and marketing services fee for each
operating year during the term and (iv) working capital. The duration of the service will run for 10 to
20 years.
• A hospitality reservation system under which the Emaar Hospitality Group shall be entitled to a
reservation service fee varying from US$ 5 to US$ 12 per reservation.
• A non-exclusive, non-transferable licence to use certain hotel brands (including ‘‘The Address’’) in
Egypt under which Emaar Hospitality Group shall be entitled to a licence fee of US$ 1 per year.
• Technical advisory services related to Emaar Misr’s hotels under which Emaar Hospitality Group shall
be entitled to a fee varying from US$ 700 to US$ 1,500 per guestroom key, but no less than an
aggregate fee of US$ 100,000 for any hotel project.
• Feasibility studies for future projects under which Emaar Hospitality Group shall be entitled to actual
cost plus a 15% surcharge.
Retail Services
Emaar Misr has entered into a retail services agreement with the Emaar Retail Group. Emaar Retail
Group is a subsidiary of Emaar Properties and manages certain of Emaar Properties’ leisure attractions.
The services provided to Emaar Misr relate to edutainment, entertainment and education concept
implementation with ancillary consultancy services. The services under the agreement include the
following:
• A lease by Emaar Retail Group of one or more locations owned by the Company under a tenant
arrangement for the provision of the mentioned services. Under this tenant arrangement, Emaar
Retail Group will pay a monthly rent to the Company, in relation to each location, equivalent to the
greater of the following:
• (i) EGP 230 per square metre computed as the sum of the following:
• basic rent of EGP 160 per square metre;
• common area and facility charges of EGP 60 per square metre of the location; and
• promotion and marketing fee of EGP 10 per square metre of the location; or
• (ii) Revenue based remuneration amounting to 10% of the gross sales before deduction of
any taxes.
113
• The duration of this service shall be nine years. Either party may terminate the provision of the
service after providing 10 months’ notice.
• In consideration for the provision of the mentioned services under the management arrangement as
required by Emaar Misr, Emaar Retail Group shall be entitled to a management fee of 6% from the
profits realised from providing the mentioned services under the management arrangement and as
determined by the Company. The duration of this service shall be three years. Either party may
terminate the provision of this service after providing 10 months’ notice.
• The parties shall agree to the provision of the ancillary consultancy services as required by the
Company, the remuneration of which shall be a consultancy fee including the cost of providing the
ancillary consultancy services in addition to a 12% fee of the cost.
Cross Charges
Emaar Misr has entered into a technical support services agreement with Emaar Properties, Emaar Syria
and Emaar Saudi Arabia for the provision of technical support services by key personnel of such
companies for the other companies as outlined below. The services under the agreement include the
following:
• Emaar Properties shall provide technical support services to Emaar Misr for payment at an hourly
rate. Hourly rates shall be based on the actual cost per hour of the gross salary for each person
providing technical support services.
• Emaar Misr, through its Managing Director, shall provide technical support services to Emaar Saudi
Arabia for payment at an hourly rate. Hourly rates shall be based on the actual cost per hour of the
gross salary of the Managing Director.
• Emaar Misr, through its Managing Director, shall provide technical support services to Emaar Syria
for payment at an hourly rate. Hourly rates shall be based on the actual cost per hour of the gross
salary of the Managing Director.
Mall Services
Emaar Misr has entered into a mall services agreement with Emaar Malls Group and its affiliates. Emaar
Malls Group is a subsidiary of Emaar Properties with expertise in the management and development of
premium shopping malls and retail assets. The services under the agreement include the following:
• Advisory services for mall design, mall operating plans and retail delivery support services. Emaar
Malls Group shall be entitled to actual cost plus a 15% fee. Either party may terminate after providing
three months’ notice.
• Mall operations and management services for Emaar Misr’s malls as agreed with Emaar Malls Group.
Emaar Malls Group is entitled to a management fee of between 5% to 9% of the net operating
revenue of a given mall after deducting operation costs. Either party may terminate the provision after
providing six months’ notice.
114
assigned individuals per month (adjusted for inflation) as reflected in the deployment schedule
relating to the project. Either party may terminate this provision after providing six months’ notice.
• Project management services by Turner in relation to Project Mivida. Turner is entitled to an amount
of US$ 29,600,945 for project management services performed until the completion of Project Mivida,
including all current and future applicable taxes. The fees shall be calculated and paid, as invoiced
monthly, to Turner for the provision of the project management services based on the actual assigned
individuals per month (adjusted for inflation) as reflected in the deployment schedule relating to the
project. Either party may terminate this provision after providing six months’ notice.
• Project management services by Turner in relation to future projects as instructed by Emaar Misr.
Emaar Misr shall pay fees, invoiced monthly, to Turner for project management services based on the
actual assigned individuals per month (adjusted for inflation) as reflected in the deployment schedule
relating to the future project. Either party may terminate this provision after providing six months’
notice.
Current Account
There is a current account established between Emaar Misr and Emaar Properties. As of 31 March 2015,
the closing balance of payments due to Emaar Properties was EGP 6.8 million.
Technology Licence
A technology licence agreement was entered into between Emaar Misr and Emaar Properties dated
1 January 2008 under which Emaar Properties grants Emaar Misr a non-exclusive licence to use certain
intellectual property rights in Egypt. Emaar Misr was charged by Emaar Properties EGP 1,318,873 in
information technology expenses during the three months ended 31 March 2015 and EGP 4,724,572,
EGP 5,477,077 and EGP 3,181,308 during the years ended 31 December 2014, 2013 and 2012, respectively.
115
THE EGYPTIAN REAL ESTATE MARKET
Certain information and statistics relating to the Egyptian economy, the Egyptian securities market and the
international and Egyptian real estate development industry included in this section have been extracted or
derived from official and other public sources that Management believes to be reliable, including Business
Monitor International, the Central Bank of Egypt, Demographia World Urban Areas Report, DTZ, Economist
Intelligence Unit, Egypt’s Central Agency for Public Mobilisation and Statistics, Jones Lang LaSalle and the
World Bank. Such information and statistics may be approximations or estimates or use rounded numbers. In
addition, in some cases Management has made rounding adjustments to some of this information and statistics
for consistency of presentation. Similar statistics may be obtainable from other sources, but the underlying
assumptions, methodology and, consequently, the resulting data may vary from source to source. Management
has not independently verified such information or statistics, and does not guarantee their accuracy and
completeness. However, Management confirms that such information has been accurately reproduced in this
Section and that as far as Management is aware and is able to ascertain from such information, no facts have
been omitted which would render the reproduced information inaccurate or misleading.
For information related to Egypt, annual information is presented based on periods from 1 July through
30 June, the fiscal year maintained by the government of Egypt for budgeting and official statistics.
In addition, certain statements are made in this section regarding the Company’s competitive position in its
industry based on statistical information published by certain bodies mentioned above and Management’s
experience and assessment of market conditions. While Management believes these statements to be reasonable
and fair approximations, to the extent that such statements are in part derived from Management’s estimates of
third-party information, individually and on an aggregate, industry-wide basis, these statements cannot and
have not been verified by Management, and independent sources have not verified such statements. Accordingly,
neither a prospective investor nor any other person, firm or company may rely on the accuracy and completeness
of that information. See ‘‘Market and Industry Data’’ and ‘‘Risk Factors—Risks Relating to Egypt and the
MENA Region—Official statistics and market data published in Egypt may not be complete or reliable.’’
Overview
With a population of approximately 88 million as of 1 January 2015, Egypt is the most populous country in
the MENA region (source: CAPMAS, United Nations Population Division). Domestic consumption is an
important driver for economic growth, contributing approximately 80% to GDP in Egypt’s fiscal years
ended 30 June 2012 and 2013 (source: Ministry of Planning, Egypt). This reflects private consumption to
GDP at current and constant prices.
While political unrest weighed down economic activity as reflected in Egypt’s real GDP growth
post-January 2011, the subsequent increase in economic and political stability has improved confidence
and investment appetite.
The following table sets forth the trend in certain economic indicators in Egypt from 2010 to 2014:
Egypt’s fundamentals remain on an upward trend with the State continuing to prioritise investment,
improve infrastructure and create jobs. Real GDP growth of 4.2% is expected in 2015 and 4.3% in 2016
according to the Economist Intelligence Unit as of April 2015. Additionally, multiple policy measures have
recently been undertaken to stimulate investments in Egypt. These policy measures include the following:
• Actions by the Central Bank of Egypt in 2015 to close the gap between the Egyptian pound and the
U.S. dollar parallel markets aimed at improving U.S. dollar liquidity and easing capital repatriation
for foreign based investors. The Central Bank of Egypt based this strategy on stimulating an estimated
7% weakening of the Egyptian pound, approximately where it was trading in the parallel market
116
before the adjustment, followed by imposing ceilings on the amount of U.S. dollar cash that can be
deposited in banks by companies and individuals at US$10,000 per day and US$50,000 per month,
unless proper documentation or source of funds is provided (source: EFG Hermes, March 2015).
• The Egyptian State is currently building a new Suez Canal to be completed in five years alongside the
existing 145-year-old waterway along with 3,600 kilometres of new roads, which is expected to improve
infrastructure and create jobs.
• The July 2014 energy subsidy reforms reduced energy subsidies by EGP 44 billion. The State also
raised electricity tariffs by an average of 30% for all classes of residential, commercial and industrial
consumers. These are the first steps of reform that will be carried out over the next five years aimed at
reducing Egypt’s fiscal deficit and diverting resources to sustainable projects.
The Egypt Economic Development Conference, held in Sharm El Sheikh from 13 March to 15 March
2015, resulted in the announcement of several major investment deals including the signing of contracts
worth over $30 billion, as well as new pledges of financial aid from the Gulf Cooperation Council (source:
EFG Hermes, March 2015). The State made a number of policy announcements aimed at preserving
confidence and encouraging investment and consumption. These announcements include:
• A new investment law aimed at tackling obstacles faced by businesses. This law would simplify
procedures for investors and significantly reduce the time needed for issuing licences, procuring land,
and obtaining utilities services by enabling the General Authority for Investments to conduct all
investment procedures and obtain all required licences from other State entities on behalf of the
investor.
• An update of the commercial register law in accordance with international standards and in line with
the State’s orientation towards enhancing the investment environment and encouraging foreign
investments.
• A plan to cut the maximum corporate and individual tax rate to 22.5%, to reduce the sales tax rate on
equipment for investment projects to 5% from 10% and to move to a fully-fledged VAT regime that
will strengthen the tax system and improve the conditions for doing business in Egypt.
According to the Economist Intelligence Unit as of April 2015, Egypt’s public finances are expected to
strengthen steadily but remain firmly in deficit over the forecast period. While inflation is expected to be
moderate in line with low oil projections, subsidy cuts and rising domestic demand are expected to increase
average inflation.
Inflation rate in Egypt Purchasing Managers’ Index in Egypt Budget deficit in Egypt (% of GDP)
2009 2010 2011 2012 2013 2014E2015E2016E2017E Q4 2012 H1 2013 H2 2013 H1 2014 H2 2014 2009 2010 2011 2012 2013 2014 2015E2016E2017E
Source: Economist Intelligence Unit as of Apr. 2015 Source: Bloomberg as of Mar. 2015 Source: Central Bank of Egypt; Economist Intelligence Unit
Note: Based on average per year 29MAY201511012442
Note (1): Economist Intelligence Unit estimates as of Apr. 2015
117
economic recovery is expected to increase disposable income at a compounded annual growth rate of
approximately 13% over the period from 2015 to 2017.
Females Males
3.9
>70 2% 2% 3.8
922 3.7
60-70 4% 4% 913 3.6 3.6
898 3.5
50-60 8% 8% 865 3.4 3.4
3.3
40-50 10% 10%
30-40 14% 14%
20-30 20% 20%
10-20 19% 19%
<10 22% 22%
2010 2011 2012 2013 2009 2010 2011 2012 2013 2014 2015E 2016E 2017E
25% 0% 25%
Source: CAPMAS as of Jan. 2015 Source: CAPMAS Source: Business Monitor International data
as of Apr. 2015 29MAY201509130824
Personal disposable income (U.S. dollar billion) Unemployment rates
2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
Source: Economist Intelligence Unit as of Apr. 2015 Source: Economist Intelligence Unit as of Apr. 2015
Note: Personal disposable income after taxes and deductions 29MAY201509130952
Cairo
Egypt is characterised by large, sparsely populated areas interspersed with densely populated urban areas
such as Cairo, Alexandria, Port Said, Suez and Luxor. About half of Egypt’s residents live in urban areas,
with most people residing across major centres such as Greater Cairo, Alexandria and other major cities
along the Nile Delta.
25
30,000
20
15 20,000
10
10,000
5
0 0
Delhi Shanghai Beijing New York Sao Paulo Mexico City Mumbai Moscow Cairo Los Angeles
118
• Memorandum of Understanding between the Ministry of Housing, Palm Hills Development and
Aabar to develop land in 6th of October City which include residential, commercial, retail and
hospitality components.
In addition, Egypt’s Ministry of Housing, Utilities and Urban Development announced in May 2015 that
Bombardier Inc., Orascom Construction and Arab Contractors will construct a 52 kilometre monorail
which will connect the Cairo metro system to areas west of the capital including 6th of October City and
Sheikh Zayed. The project is expected to be completed by 2018.
According to Jones Lang LaSalle’s first quarter 2015 report, residential sale prices continued to increase
across Cairo. Despite the increase in supply of 31,000 units in the first quarter of 2015, selling prices are
expected to increase due to the positive economic and political outlook over the coming years.
30%
22%
104 15%
85 14%
67 74
31 2
14
2011 2012 2013 2014 2015E 2016E 2017E Apartment Villa
Source: Jones Lang LaSalle as of Q4 2014 Source: Jones Lang LaSalle as of Q4 2014 29MAY201507554533
2.20
USA UK Bahrain UAE Qatar Saudi Arabia Kuwait Oman India Egypt¹
119
Due to the lack of quality retail supply in the market, premium quality malls typically have robust
occupancy levels. Retail rental levels within Cairo’s key shopping malls have historically remained
insulated with retail demand largely driven by local spending.
Source: Jones Lang LaSalle Q4 2014, Economist Intelligence Unit as of Apr. 2015 29MAY201507553762
Total formal office stock stood at 1.1 million square metres in the fourth quarter of 2014 and varies widely
in efficiency, quality of finishing and general services. There is currently a shortfall in quality
accommodation, with critical mass established at Smart Village, Pyramids Heights and New Cairo.
Office supply in Greater Cairo Rental levels and service charges in Cairo
Annual rent Annual Service charge
US$ per sqm`
Other Smart Village
33% Pyramids Heights 180 36
38%
Polygon Business… 288 36 Cairo West
World Trade Smart Village 288 96
Centre
Maadi Contact… 132 36
2%
Cairo Festival City 396 57 Cairo East
Nile City Towers 7% Star Capital 360 36
Nile Tower 3% Star Capital 6% Nile Tower 250 25
Cairo Festival City 5% Katamey
World Trade Centre 282 36 Downtown
Downtown
6% Nile City Towers 333 96
Total existing GLA as of 2015: 1.1 mm sqm 0 100 200 300 400 500
Source: DTZ as of 2015 Source: DTZ as of 2015 29MAY201509131076
According to DTZ, Greater Cairo’s office supply is expected to increase by the end of 2017 by 76% to
1.96 million square metres compared to the current existing stock in the city of 1.12 million square metres.
New Cairo will accommodate up to 64% of the Greater Cairo new office supply with the remainder
distributed between 6th of October City and other districts.
120
Hospitality Market in Egypt
Egypt’s historic status as a tourist destination, offering holiday options from beach tourism to cultural
tourism, combined with the stabilising political situation, underlies the expectation of positive momentum
in the tourism sector over the next few years.
According to the 2015 World Travel and Tourism report on Egypt, the direct contribution of travel and
tourism to GDP in 2014 was EGP 117.2 billion (5.9% of GDP). This is forecasted to rise by 3.2% in 2015.
The direct contribution of travel and tourism to GDP is expected to grow by 4.5% per annum to
EGP 187.7 billion (5.6% of GDP) by 2025.
Domestic travel spending generated 64.1% of direct travel and tourism GDP in 2014 compared with 35.9%
for visitor exports (i.e., foreign visitor spending or international tourism receipts). Leisure travel spending
(inbound and domestic) generated 72.0% of direct travel and tourism GDP in 2014, compared with 28.0%
for business travel spending.
In 2014, travel and tourism investment (including the purchase of new aircraft and construction of new
hotels) amounted to EGP 30.6 billion, and is expected to rise by 1.4% in 2015, and 5.1% per annum over
the next ten years to EGP 50.8 billion in 2025.
Political and economic stability and Government efforts to promote Egyptian tourism overseas have
resulted in a more than 50% increase in the number of travellers in the second half of 2014 as compared to
the second half of 2013.
2013 2014
565
765 559 678
673
301
121
According to DTZ, there are an estimated 4,689 keys within the development pipeline until 2018.
Downtown Cairo is expected to account for 43% of the development pipeline and East Cairo and West
Cairo are expected to account for 34% and 26%, respectively.
Other
13% 105.0
78%
3 Star
16% 5 Star 59.0
56%
4 Star
15%
Nov-13 Nov-14
Total keys: 29,513
122
SECURITIES MARKET INFORMATION
Egyptian Securities Market
The Capital Markets Authority (the ‘‘CMA’’) was established by the State in 1979 pursuant to Presidential
Decree No. 520 of 1979 to promote investment in the Egyptian securities market. The development of the
securities market in Egypt since 1992 has encouraged certain Egyptian banks and financial institutions to
begin to provide securities underwriting, brokerage and mutual funds services. Between 1979 and 2009, the
CMA was responsible for regulating the securities market in Egypt, issuing licences for financial
intermediary businesses (including brokerage, venture capital, mutual fund management and portfolio
management), monitoring the continuing obligations of listed companies, monitoring the central securities
depositary and protecting investors. Egyptian Law No. 10 for 2009, published on 1 March 2009, established
the Egyptian Financial Supervisory Authority which replaced the CMA, the Egyptian Insurance
Supervisory Authority and the Egyptian Financial Leasing Authority as of 1 July 2009. The President of the
EGX and the Chairman of EFSA have the right under the Capital Market Law to prohibit certain offers
and bids for shares of listed companies which are considered to be manipulative, distorting or in violation
of market rules.
The most important factor in the growth of the Egyptian securities market since 1992 has been the State’s
privatisation programme. The rate of privatisation in the early years was slow, but the process was
revitalised under the administration of Prime Minister El-Ganzouri from 4 January 1996 to 15 October
1999.
The Capital Market Law permitted the introduction of mutual funds to the Egyptian market.
Egyptian Companies Law permits companies to issue bonds and other tradable securities. The only
corporate bond issue listed on the EGX prior to the enactment of the Capital Market Law was the Credit
Foncier Egyptian bonds, issued in 1951. Recently, Orascom Construction Industries, Golden Pyramids
Plaza Company, Contact, GB Auto and Mobinil have issued bonds on the EGX.
In February 2007, the Minister of Investment issued a decree adding a new chapter to the Executive
Regulations of the Capital Market Law. The new chapter regulated tender offers and mandatory tender
offers by prohibiting acquisitions of securities through open market purchases of one-third or more of the
capital or voting rights of the target company. See ‘‘Description of Share Capital and Applicable Egyptian
Law—Voting Rights and Shareholders’ Meetings—Certificates, Registry and Transfer’’.
The EGX30 Index’s market capitalisation was EGP 219.9 billion (US$28.8 billion) as of 31 March 2015,
EGP 214 billion (US$ 28.0 billion) as of 31 December 2014, EGP 155 billion (US$ 20.3 billion) as of
31 December 2013 and EGP 117 billion (US$ 15.3 billion) as of 31 December 2012.
The Hermes Index’s level was 828.826 as of 31 March 2015, 833.853 as of 31 December 2014, 675.375 as of
31 December 2013 and 551.026 as of 31 December 2012. The EGX is characterised by a relative lack of
liquidity. As of 31 March 2015, there were 14 listed companies only with an average daily traded value
above EGP 10.0 million (US$1.3 million). The average daily trading value for the period from 1 January
2015 to 31 March 2015 was approximately EGP 562.0 million (US$73.6 million), from 1 January 2014 to
31 December 2014 was approximately EGP 788.9 million (US$ 103.3 million), from 1 January 2013 to
31 December 2013 was approximately EGP 368.5 million (US$ 48.3 million), and from January 2012 to
31 December 2012 was approximately EGP 459.8 million (US$ 60.2 million).
123
DESCRIPTION OF SHARE CAPITAL AND APPLICABLE EGYPTIAN LAW
Set out below is a summary of certain information relating to the Ordinary Shares, certain provisions of the
Statutes, the Capital Market Law, Egyptian Companies Law and certain related laws and regulations, all in
effect as of the date hereof. This summary does not purport to be complete.
General
Emaar Misr was established as an Egyptian joint stock company under the Egyptian Investment Law on
16 March 2005. As of the date of its incorporation, Emaar Misr’s authorised share capital was
EGP 100.0 million and the issued share capital was EGP 10.0 million consisting of 1.0 million Ordinary
Shares, each with a nominal value of EGP 10.
The split of the Ordinary Shares in issue prior to the Combined Offering and the change of the par value
of the Ordinary Shares from EGP 10 to EGP 1 was approved by an Extraordinary General Meeting of the
Company held on 31 March 2015, EFSA on 4 May 2015 and GAFI on 5 May 2015.
As of the date of this Offering Memorandum, Emaar Misr’s authorised share capital is EGP 4.5 billion and
the issued share capital is EGP 4,019,338,000 consisting of 4,019,338,000 Ordinary Shares, each with a
nominal value of EGP 1. On 11 May 2015, the Extraordinary Shareholders Meeting approved the increase
of the Company’s authorised capital from EGP 4,500,000,000 to EGP 10,000,000,000. The process of
finalising the capital increase and reflecting it on the Company’s commercial register will be completed
before the closing of the public subscription period in the Egyptian Public Offering which is scheduled to
occur on 25 June 2015. The issuance of the New Shares is subject to EFSA’s and GAFI’s approval which is
expected to be obtained prior to the Closing Date.
The legal objectives of Emaar Misr, as stated in Article 3 of the Statutes, are:
1. Financial leasing in accordance with Article 2 of law number 95 of the year 1995 and the conditions
set out in the law.
2. Design, construction, management, operation and maintenance of electric power stations of different
sources and distributions networks.
3. Design and construction of urban areas and furnishing them with all utilities and services.
4. Construction, operation, management and maintenance of potable water treatment stations and their
distribution networks.
5. Construction, operation, management and maintenance of sewage or industrial waste drainage,
purification stations and their networks.
6. Development of projects, investments and real estate.
7. Ownership, construction, management and touristic marketing of fixed and floating hotels, motels,
touristic apartments, resorts, safari yachts and the service, recreational, sports, commercial and
cultural activities relating to or complementing the aforementioned, as well as completion and
development of their constructions and integrated touristic development.
8. Construction and operation of yacht marinas, golf courses, diving centres and the activities relating to
or completing them.
9. Facility operation and maintenance.
10. The establishment and management of call centres.
11. General and specialised construction.
12. Real estate marketing, real estate and property management and leasing for residential, commercial
and administrative purposes.
13. Electricity distribution.
Limitation of Liability
Pursuant to the Egyptian Companies Law, a shareholder’s liability for an Egyptian joint stock company’s
losses is limited to the amount of his or her investment in the shares, unless the shares are not fully paid, in
124
which case the shareholder shall be liable for the rest of the unpaid portion of the nominal value of the
partly-paid shares.
125
the ratified minutes by GAFI need to be submitted to the EGX at the most 3 days after receiving the
ratified minutes from GAFI.
The manner of voting in all shareholders’ meetings is by the means proposed by the meeting’s chairman
and approved by the shareholders represented at the meeting. If the resolution to be passed relates to;
(a) the appointment or removal of any director, (b) the filing of any allegations against any director or the
Chairman of the Board, or (c) if at least 10.0% of the shareholders attending the meeting so request, a
secret ballot must be held. No director may vote on any resolution relating to the determination of his
remuneration, fees, discharge of liability or relating to his management conduct. Corporate shareholders
represented on the Board must be represented at the shareholders level by a representative other than its
director on the Board, if relevant.
Any shareholder may attend shareholders’ meetings in person or by proxy. The proxy must be in writing
and must be given to a shareholder. Shareholders that are not represented by directors on the Board may
not give a proxy to a Board director in a shareholders’ meeting to represent them. A shareholder may not
represent by proxy more than 10.0% of the total number of shares in Emaar Misr or 20.0% of the shares
represented at the meeting.
The minutes of the shareholders’ meetings are ratified by GAFI, within a maximum of one month from the
date of convening the meeting and are recorded in a register held by Emaar Misr. Once Emaar Misr is
listed on the EGX, the minutes are required to be disclosed to the EFSA and the EGX immediately
following the meeting and before the following trading session. The minutes, executed by the Chairman,
are required to be delivered to the EGX within a maximum period of one week from the date of convening
the meeting. The ratified minutes are required to be delivered to the EGX within a maximum period of
three business days from the date of receipt from GAFI. The minutes registers are available for review and
inspection by the shareholders, Emaar Misr’s auditor and the competent administrative authorities, but are
not available to the public. However, as Emaar Misr is listed on the EGX, the resolutions will be required
to be disclosed to the EFSA and the EGX and material resolutions are published on the EGX’s website as
a reporting and transparency requirement.
Shareholders who have objected to any given resolution or who did not attend the meeting where the
resolution was passed, for a valid reason, are entitled to request the suspension or nullification of such
resolution if the resolution is found to be in favour or disfavour of a certain group of shareholders or
provides a special benefit to Emaar Misr’s Board of Directors or others without considering Emaar Misr’s
interests. GAFI may act on behalf of the shareholders if so requested.
Dividends
The Statutes provide that dividends, if any, are paid annually based on the net profits generated according
to Emaar Misr’s audited financial statements prepared in accordance with Egyptian Accounting Standards.
Pursuant to the Egyptian Companies Law, Emaar Misr must convene an Ordinary General Meeting no
later than three months after the end of the fiscal year to determine the dividends, if any, to be distributed.
Dividends declared by resolution of the shareholders at an Ordinary General Meeting must be distributed
within one month from the date of the Ordinary General Meeting. The Statutes provide that certain
portions of Emaar Misr’s profits should be allocated as legal reserves, distribution to employees,
shareholders’ dividends and remuneration of the Board of Directors. See ‘‘Dividend Policy’’.
126
Increases in the share capital must be made at fair value at the time of issuance of the shares in accordance
with a fair valuation report issued by an independent financial advisor (an ‘‘IFA’’), provided that the rights
issue allocated among existing shareholders of Emaar Misr may be made at par value subject to the
approval by the Extraordinary General Meeting. For all capital increases, approval at an Extraordinary
General Meeting is required. The decision of the Extraordinary General Meeting determines whether the
shares may be offered to a new investor or to existing shareholders. However, where the decision is to offer
shares to new investors, the Board of Directors must submit substantive reasons along with an auditor
report indicating the benefits the Company will achieve from offering the shares to new investors. The
Extraordinary General Meeting may approve the waiver of any pre-emption rights. An IFA report is
required if any new shares are offered to a new investor at fair value. In the case of rights’ issuance, the
subscription rights may be traded by the holders of the shares together with the Ordinary Shares before the
commencement of the subscription period and independently from the shares following the
commencement of the subscription period. If a rights issue is made above par value, an IFA report will be
required.
According to the EGX Listing Rules, Emaar Misr may not increase or decrease its share capital, publish
the invitation to any Extraordinary General Meeting to consider the same or carry out the required
procedures, without submitting a disclosure report in the prescribed form to the EGX together with the
relevant Board minutes approving the increase or decrease, the EGX’s approval of such report and its
publication on the EGX trading screens. The invitation of the Extraordinary General Meeting for the
commencement of capital increase or decrease procedures must be made within one week at most from
the date of EGX’s approval of the disclosure report and its publication on EGX trading screens. The
relevant Board minutes must include an authorisation to the Chairman to undertake the same.
127
(a) acquires more than an additional 2.0% of the share capital or voting rights within 12 consecutive
months, or (b) exceeds one-half of the share capital or voting rights at any point in time; or
(iii) if a person that holds, independently or together with related parties, between one-half and three-
quarters of the share capital or voting rights of Emaar Misr, independently or together with related
parties, and (a) acquires more than an additional 2.0% of the share capital or voting rights within 12
consecutive months, or (b) exceeds three-quarters of the share capital or voting rights at any point in
time.
The foregoing provisions do not apply in case of the decrease of capital due to the cancellation of treasury
shares or the increase of capital in cash or though debt-to-equity swaps. However, it will apply where there
are purchases of subscription rights.
Pre-emptive Rights
If there is an increase in the share capital of Emaar Misr by the issuance of shares, the Egyptian
Companies Law and the Statutes provide that the existing shareholders have pre-emptive rights in
connection with that share issue pro rata to the percentage held by each existing shareholder prior to the
issuance of the new shares, unless the Extraordinary General Meeting resolves by a 75.0% majority of the
shares present or represented at the relevant meeting to offer part or all of the capital increase shares in a
public subscription without applying the pre-emptive rights.
Although any pre-emptive rights in connection with any future issuance of shares for cash will be (unless
waived) available to the holders of Ordinary Shares, U.S. holders of Ordinary Shares may not be entitled
to exercise their pre-emptive rights unless a registration statement under the Securities Act has been
declared effective in respect of such rights and such Ordinary Shares or an exemption from the registration
requirements thereunder is available. Emaar Misr intends to evaluate at the time of any pre-emptive rights
offering the costs and potential liabilities associated with the filing of any such registration statement or
qualifying for any such exemption, if required, as well as the indirect benefits to it of enabling the exercise
of pre-emptive rights by U.S. holders of Ordinary Shares and any other factors Emaar Misr considers
appropriate at such time, and then to make a decision regarding whether to file such registration statement
or seek to qualify for such exemption. If no registration statement is filed and Emaar Misr does not take
steps to comply with an exemption from the registration requirements under the Securities Act in relation
to such rights, the registrar is required to sell U.S. holders’ pre-emptive rights or, in its discretion, to
arrange for such rights to be exercised and the resulting shares or securities to be sold and to distribute the
net proceeds thereof to U.S. holders. See ‘‘Risk Factors—Risks Relating to the Shares—Shareholders in the
United States may be unable to participate in future rights offerings’’.
128
form of treasury shares. Emaar Misr must hold the treasury shares acquired for a minimum of three
months and a maximum of one year, after which they must be cancelled and the capital decreased
accordingly.
Emaar Misr must first hold a meeting of the Board of Directors to approve the treasury buyback and
subsequently notify the EGX of its wish to acquire treasury shares at least three business days before
carrying out the acquisition. The notice must include the reasons for the acquisition, the source of
financing, the expected impact on Emaar Misr’s performance indicators, the purchase price, the quantity,
the envisaged period of implementation and Emaar Misr’s broker. The minutes of the Board of Directors’
meeting must be attached to the notice.
The securities acquired by Emaar Misr must be local shares (i.e., not including depositary receipts). Emaar
Misr must disclose to the EGX the percentage of treasury shares acquired or disposed of at the end of
each day in which transactions in treasury shares take place, and the EGX publishes the disclosed
information on its trading screens and website.
129
TRANSFER RESTRICTIONS
The Institutional Offering is being made in accordance with Rule 144A and Regulation S of the Securities
Act. The Institutional Offering Shares have not been and will not be registered under the Securities Act or
with any securities regulatory authority of any state or other jurisdiction of the United States, and,
accordingly, are not being offered or sold within the United States, except to QIBs in reliance on the
exemption from the registration requirements of the Securities Act provided by Rule 144A or another
exemption from, or in transactions not subject to, the registration requirements of the Securities Act, and
to persons outside the United States in accordance with Regulation S. Terms used in this paragraph that
are defined in Rule 144A or in Regulation S under the Securities Act are used herein as so defined.
130
Investors outside the United States
Each purchaser of Regulation S Shares will be deemed to have represented and agreed as follows:
1. It acknowledges (or if it is a broker-dealer, its customer has confirmed to it that such customer
acknowledges) that the Regulation S Shares (as the case may be) have not been and will not be
registered under the Securities Act and that the sale of the Regulation S Shares is being made
pursuant to and in accordance with Regulation S.
2. It certifies that either:
(a) it is, or at the time the Regulation S Shares are issued will be, the beneficial owner of the
Regulation S Shares and (i) it is located outside the United States and has acquired, or has
agreed to acquire and will have acquired, the Regulation S Shares outside the United States,
(ii) it is not an affiliate of the Company or a person acting on behalf of such an affiliate, and
(iii) it is not in the business of buying and selling securities or, if it is in such business, it did not
acquire the Regulation S Shares from the Company or any affiliate thereof in the initial
distribution of Regulation S Shares; or
(b) it is a broker-dealing acting on behalf of its customer, its customer has confirmed to it that such
customer is, or at the time the Regulation S Shares are issued will be, the beneficial owner of the
Regulation S Shares and (i) it is located outside the United States and acquired, or has agreed to
acquire and will have acquired, the Regulation S Shares outside the United States, (ii) it is not an
affiliate of the Company or a person acting on behalf of such an affiliate, and (iii) it is not in the
business of buying and selling securities or, if it is in such business, it did not acquire the
Regulation S Shares from the Company or any affiliate thereof in the initial distribution of the
Regulation S Shares.
3. It acknowledges that the Company, the Managers and others will rely upon the truth and accuracy of
the foregoing acknowledgements, representations and warranties and agrees that if any such
acknowledgements, representations and warranties deemed to have been made by virtue of its
purchase of the Regulation S Shares are no longer accurate, it will promptly notify the Company, and
if it is purchasing Regulation S Shares as a fiduciary or agent for one or more accounts, it represents
that it has sole discretion with respect to each such account and full power to make the foregoing
acknowledgements, representations and warranties on behalf of each account.
131
TAXATION
The following summary of material U.S. federal income and Egyptian tax consequences of the acquisition,
ownership, and disposition of Ordinary Shares is of a general nature and based upon laws, regulations, decrees,
rulings, double taxation conventions, agreements and arrangements, administrative practice and judicial
decisions in effect as of the date of this Offering Memorandum. Legislative, judicial or administrative changes
or interpretations may, however, be forthcoming that could alter or modify the statements and conclusions set
forth herein. Any such changes or interpretations may be retroactive and could affect the tax consequences to
holders of the Ordinary Shares. This summary does not purport to be a legal opinion or to address all tax
aspects that may be relevant to a holder of Ordinary Shares.
EACH PROSPECTIVE HOLDER IS URGED TO CONSULT HIS, HER OR ITS TAX ADVISER AS
TO THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF THE ACQUISITION,
OWNERSHIP AND DISPOSITION OF ORDINARY SHARES, INCLUDING THE APPLICABILITY
AND EFFECT OF ANY OTHER TAX LAWS OR TAX TREATIES, AND OF PENDING OR
PROPOSED CHANGES IN APPLICABLE TAX LAWS AS OF THE DATE OF THIS OFFERING
MEMORANDUM AND OF ANY ACTUAL CHANGES IN APPLICABLE TAX LAWS AFTER SUCH
DATE.
132
forth in the executive regulations of the Egyptian Tax Law. Settlement shall take place every three months
on account of tax. The remaining balance is declared by the Non-Resident directly with the Egyptian tax
authority by filing the required forms pursuant to the procedures set by the Egyptian tax authority.
MCDR shall, at the end of the fiscal year, settle the difference between the CGT amount which has been
withheld and remitted to the Egyptian tax authority with the actual CGT amount due at the end of the
fiscal year. The Egyptian tax authority shall rebate any amounts which have been withheld and remitted in
excess to actual due CGT in accordance with the procedures and within the timeframes set forth in the
executive regulations of the Egyptian Tax Law.
On 17 May 2015, the Egyptian Ministerial Cabinet decided to postpone the application of the capital gains
tax for two years. However, as of the date of this Offering Memorandum, no formal regulation has been
promulgated to this effect. The Minister of Investment stated on 28 May 2015, that the amendments
pertaining to the postponement of the application of the capital gains tax would be issued within three
weeks and would be applicable as of 17 May 2015.
133
APPLICABILITY AND EFFECT OF OTHER FEDERAL, STATE, LOCAL, FOREIGN AND OTHER
TAX LAWS AND POSSIBLE CHANGES IN TAX LAW.
Distributions
Subject to the discussion below under ‘‘—Passive Foreign Investment Company Considerations,’’ the gross
amount of any distribution of cash or property with respect to the Ordinary Shares generally will be
included in a U.S. Holder’s gross income as dividend income to the extent such distributions are paid out
of the Company’s current or accumulated earnings and profits (as determined under U.S. federal income
tax principles). Because the Company does not maintain calculations of its earnings and profits under U.S.
federal income tax principles, U.S. Holders should assume that any distribution will be treated as a
dividend for U.S. federal income tax purposes. The amount of a dividend will include any amounts
withheld in respect of foreign taxes. A dividend will be included in a U.S. Holder’s income as ordinary
income on the date such U.S. Holder receives it, and it will be treated as foreign-source dividend income.
The dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S.
Holders.
Subject to certain holding period requirements and other conditions, dividends paid to individuals and
other non-corporate U.S. Holders of the Ordinary Shares may be eligible for preferential rates of taxation
if the dividends are ‘‘qualified dividends’’ for U.S. federal income tax purpose. Dividends received with
respect to the Ordinary Shares may be qualified dividends if the Company (i) is eligible for the benefits of
a comprehensive income tax treaty with the United States that the IRS has approved for purposes of the
qualified dividend rules, and (ii) was not a passive foreign investment company (‘‘PFIC’’) during the year
in which the dividend is paid or the prior taxable year and certain other requirements. The U.S. Treaty has
been approved for purposes of the qualified dividend rules and the Company expects to be eligible for the
benefits of the U.S. Treaty. U.S. Holders should consult their tax advisors regarding the application of the
relevant rules to their particular circumstances.
134
to determine whether it needs to apply for a reduced U.S. Treaty rate and what U.S. Treaty certification
requirements would be required under Egyptian law.
135
Passive income for this purpose generally includes dividends, interest, royalties, rents and certain gains
from commodities (other than commodities sold in an active trade or business) and securities transactions.
The Company does not believe that it was classified as a PFIC for U.S. federal income tax purposes for its
most recent taxable year ending 31 December 2014, and based on the nature of the Company’s business,
the projected composition of the Company’s income and the projected composition and estimated fair
market values of the Company’s assets, the Company does not expect to be a PFIC for U.S. federal income
tax purposes for the Company’s current taxable year or the foreseeable future. Whether the Company is a
PFIC is a factual determination made annually, and the Company’s status could change depending upon,
among other things, changes in the composition and relative value of its gross receipts and assets
(including the amount of cash held by the Company), which may be dependent on the market value of the
Ordinary Shares, and the manner in which the Company otherwise conducts its business. Accordingly, no
assurance can be given that the Company will not be a PFIC in the current or any future taxable year.
If the Company is treated as a PFIC for any taxable year during which a U.S. Holder holds Ordinary
Shares, gain recognised by a U.S. Holder upon a sale or other taxable disposition (including certain
pledges) of Ordinary Shares will generally be allocated rateably over the U.S. Holder’s holding period for
such Ordinary Shares. The amounts allocated to the taxable year of the sale or other taxable disposition
and to years before the Company became a PFIC would be taxed as ordinary income. The amount
allocated to each other taxable year would be subject to tax at the highest rate in effect for that taxable
year for individuals or corporations, as appropriate, and an interest charge would be imposed on the tax
attributable to the allocated amount. Further, to the extent that any distribution received by a U.S. Holder
on Ordinary Shares exceeds 125% of the average of the annual distributions on such Ordinary Shares
received during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, that
distribution would be subject to taxation in the same manner as gain, described immediately above.
Certain elections may be available that would result in alternative treatments (such as mark-to-market
treatment) of the Ordinary Shares. An election for mark-to-market treatment is available only if the
Ordinary Shares are considered ‘‘marketable stock,’’ which generally includes stock that is regularly traded
in more than de minimis quantities on a qualifying exchange. No assurance can be given that the Ordinary
Shares will be considered regularly traded on a qualifying exchange, and therefore considered ‘‘marketable
stock,’’ for purposes of the PFIC mark-to-market election. Each U.S. Holder is encouraged to consult its
own tax advisor as to whether a mark-to-market election is available or desirable in their particular
circumstances.
The Company does not intend to prepare or provide the information that would enable U.S. Holders to
make a ‘‘qualified electing fund’’ election.
U.S. Holders should consult their tax advisors concerning the Company’s possible PFIC status and the
consequences to them if the Company were a PFIC for any taxable year.
136
PLAN OF DISTRIBUTION
Emaar Misr and the Managers have entered into the Underwriting Agreement with respect to the
Institutional Offering. Subject to the satisfaction of certain conditions set out in the Underwriting
Agreement, each Manager has agreed, severally but not jointly, to act as the Company’s agents and to use
reasonable endeavours to procure purchasers for, or failing which, to purchase itself from the Company, at
the Offer Price, such number of Institutional Offering Shares set forth opposite its name in the following
table. Emirates Financial Services PSC is acting as a manager in connection with the Institutional Offering
but not as an underwriter. Emirates NBD Bank PJSC, an affiliate of Emirates Financial Services PSC, is
acting only as an underwriter in connection with the Institutional Offering and will have the obligation to
purchase Institutional Offering Shares for which Emirates Financial Services PSC fails to procure
purchasers.
Number of Institutional
Offering Shares
Managers
EFG Hermes Promoting and Underwriting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 408,450,000
J.P. Morgan Securities plc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91,000,000
Emirates NBD Bank PJSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,550,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510,000,000
The Underwriting Agreement does not relate to the Egyptian Public Offering and the Managers are not
under any obligation to procure purchasers for, or to purchase any, Public Offering Shares offered in the
Egyptian Public Offering. Furthermore, J.P. Morgan has no obligation to underwrite sales to Egyptian
institutions in the Institutional Offering.
The net proceeds from the sale of the New Shares (assuming all Public Offering Shares are offered and
sold in the Egyptian Public Offering) are expected to amount to approximately EGP 2,180,000,000
(US$285.6 million), after deducting underwriting commissions, discretionary fees and expected expenses of
approximately EGP 100,000,000 (US$13.1 million), attributed to the Combined Offering, and assuming no
Ordinary Shares are purchased during the Stabilisation Period using the Stabilisation Fund. All expenses of
the Combined Offering will be borne by the Company.
Underwriting Agreement
In the Underwriting Agreement, Emaar Misr has made certain representations and warranties and will
agreed to indemnify the several Managers against certain liabilities, including liability under the Securities
Act. The obligations of the Managers are subject to approval of legal matters by counsel, including the
validity of the New Shares, and other conditions contained in the Underwriting Agreement.
The Joint Global Coordinators may terminate the Underwriting Agreement prior to 25 June 2015 (the
‘‘Prefunding Longstop Date’’) under certain specified conditions that are typical for an agreement of this
nature. If any of the conditions are not satisfied or waived, or if the Underwriting Agreement is otherwise
terminated prior to the Prefunding Longstop Date, then the Institutional Offering will be terminated.
Offer Price
The Offer Price is EGP 3.80 per New Shares. The Institutional Offering Shares and the Public Offering
Shares are offered at the Offer Price.
Allocation
The Combined Offering comprises the Institutional Offering and the Egyptian Public Offering. The
allocation of New Shares in the Institutional Offering has been determined by Emaar Misr in consultation
with the Managers. The allocation of New Shares in the Egyptian Public Offering will be conducted on a
pro rata basis in the case of oversubscription, without discretion. Factors that may be taken into account
when determining the allocations between prospective investors in the event of over-subscription may
include participation in the marketing process for the Combined Offering, holding behaviour in previous
offerings, holdings in similar companies, pre-funding of indication of interest and other factors that Emaar
Misr and the Managers may deem relevant.
137
The Company, in consultation with the Managers, may re-allocate New Shares from either the Institutional
Offering to the Egyptian Public Offering or from the Egyptian Public Offering to the Institutional Offering
depending on the level of subscription for each tranche. Any re-allocation of New Shares from the
Institutional Offering to the Egyptian Public Offering will take place at least three business days prior to
the closing of the Egyptian Public Offering which is scheduled for 25 June 2015. Any re-allocation from the
Egyptian Public Offering to the Institutional Offering will take place on the day following the closing of the
Egyptian Public Offering which is scheduled for 25 June 2015.
Date Event
All investors in the Institutional Offering must (i) establish a valid client specific custody account with a
custodian authorised by the EFSA (a ‘‘Local Custodian’’) into which such investor’s Institutional Offering
Shares can be delivered and (ii) obtain a unique, personalised stock exchange code for the EGX (a
‘‘Unified Code’’). The process of establishing an account with a Local Custodian and obtaining a Unified Code
can take up to two weeks, and these are required in order to subscribe for Institutional Offering Shares.
Investors will need to provide, among other things, information as to their legal name and any sub account
details, together with details of their custody account and their Unified Code, when submitting a request
for an allocation of Institutional Offering Shares.
In order to effect the issuance and listing of the New Shares, all investors in the New Shares (including
investors in the Institutional Offering Shares) must prefund the purchase of such New Shares, no later than
the Prefunding Longstop Date. Payment for the New Shares is expected to be made to the Company’s
capital increase account and the New Shares will come into existence and be admitted for unconditional
trading once GAFI and EFSA approvals are obtained, the Company’s Statutes are amended, the New
Shares are recorded in book-entry form with the MCDR and the New Shares are listed on the EGX. The
delivery of the New Shares is expected to take place on or around 2 July 2015, subject to receipt of such
approvals.
The trading in the New Shares is conditional upon the satisfaction of the following conditions: (i) at least
10% of the Company’s issued capital is owned by shareholders (other than the founders of the Company),
(ii) 5% of the Company’s total outstanding shares is free float (as defined in the EGX Listing Rules)
having a market value of not less than EGP 10 million, and (iii) the New Shares are being subscribed for by
a minimum of 300 investors.
The Local Custodian designated by the purchaser will hold the ordinary shares in accordance with the
purchaser’s instructions. Ownership of the ordinary shares will be shown on, and any transfer of that
ownership will be executed on, the EGX books and will be effected through the records of the MCDR. All
transfers of ownership of the ordinary shares must be effected on the EGX by an EFSA-licensed broker.
Subject to compliance with the transfer restrictions described in ‘‘Transfer Restrictions’’, purchasers wishing
to sell their ordinary shares must instruct an EFSA-licensed broker to block such ordinary shares. The
broker then must effect such sale through the EGX which will register such sale on the EGX books. See
‘‘Securities Market Information—Stock Exchange Trading Mechanisms’’ for more information.
None of the Company, the Principal Shareholder or the Managers will have any responsibility for the
performance by any Local Custodian or its agents of their respective obligations under the rules and
procedures governing their operations.
138
Stabilisation
In connection with the Combined Offering, the Stabilisation Manager, or any of its agents, may effect
transactions in the ordinary shares on the EGX with a view to supporting or maintaining the market price
of the ordinary shares at a level higher than that which might have otherwise prevailed in the open market.
However, there is no assurance that the Stabilisation Manager (or persons acting on its behalf) will
undertake any stabilisation action. Any stabilising action may begin on or after the date of the
commencement of trading of ordinary shares on the EGX, and if begun, may end at any time, but must end
no later than 30 calendar days after that date (referred to as the Stabilisation Period). The Company will
finance an amount equal to 15% of the gross proceeds of the Combined Offering (referred to as the
Stabilisation Fund) and make such funds available to the Stabilisation Manager prior to commencement of
trading. Starting on the commencement of trading, the Stabilisation Manager will place an open purchase
order at the Offer Price, which will remain open until the end of the Stabilisation Period. At the end of the
Stabilisation Period this open purchase order will be matched with open sale orders and executed on the
EGX. If the purchase order submitted by the Stabilisation Manager exceeds the amount deposited in the
Stabilisation Fund, such purchase orders will be executed on a pro rata basis up to the amount of the
Stabilisation Fund and all ordinary shares purchased will be placed in the Stabilisation Fund. The
Stabilisation Manager will remit to the Company, at the end of the Stabilisation Period, any proceeds of
the Combined Offering then remaining in the Stabilisation Fund and any remaining ordinary shares
purchased during the Stabilisation Period using the Stabilisation Fund. The Stabilisation Manager will
disclose the stabilisation transactions to the EGX at the end of the Stabilisation Period.
Lock-up Arrangements
The Company has agreed that, without the prior written consent of the Joint Global Coordinators (such
consent not to be unreasonably withheld or delayed), it and its officers and directors will not during a
period of 180 days from the date of the Underwriting Agreement, directly or indirectly, issue, offer, pledge,
sell, contract to sell, sell or grant any option, right, warrant or contract to purchase, exercise any option to
sell, purchase any option or contract to sell, or lend or otherwise transfer or dispose of, directly or
indirectly, any Ordinary Shares (including treasury shares), or securities convertible or exchangeable into
or exercisable for any Ordinary Shares or warrants or other rights to purchase Ordinary Shares or any
security or financial product whose value is determined directly or indirectly by reference to the price of
the Ordinary Shares, (ii) enter into any swap, or any other agreement or any transaction that transfers, in
whole or in part, directly or indirectly, the economic consequence of ownership of the Ordinary Shares, in
each case, whether any such transaction is to be settled by delivery of Ordinary Shares or other securities,
in cash or otherwise, or (iii) publicly announce such an intention to effect any such transaction. These
restrictions shall not apply to the sale of the New Shares to be sold in the Combined Offering or to the
Ordinary Shares that Emaar Misr may issue pursuant to the ESOP described in this Offering
Memorandum.
The Principal Shareholder has agreed that, without the prior written consent of the Joint Global
Coordinators (such consent not to be unreasonably withheld or delayed), it will not during a period of
180 days from the date of the Underwriting Agreement, directly or indirectly, offer, pledge, sell, contract to
sell, sell or grant any option, right, warrant, or contract to purchase, exercise any option to sell, purchase
any option or contract to sell, or lend or otherwise transfer or dispose of, directly or indirectly, any
Ordinary Shares, or securities convertible or exchangeable into or exercisable for any Ordinary Shares or
warrants or other rights to purchase Ordinary Shares or any security or financial product whose value is
determined directly or indirectly by reference to the price of the Ordinary Shares, (ii) enter into any swap,
or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Ordinary Shares, in each case, whether any such transaction is
to be settled by delivery of Ordinary Shares or other securities, in cash or otherwise, or (iii) publicly
announce such an intention to effect any such transaction. These lock-up restrictions shall not apply to
(i) any inter-company transfers of Ordinary Shares by Emaar Properties in favour of its affiliates;
(ii) acceptance of a general offer made to all holders of Ordinary Shares then in issue (other than Ordinary
Shares held by the person making the offer or its affiliates) on terms which treat all holders of Ordinary
Shares alike, or executing and delivering an irrevocable commitment or undertaking to accept such a
general offer (without any further agreement to transfer or dispose of any Ordinary Shares or any interest
therein); (iii) taking up any rights granted in respect of a pre-emptive share offering by the Company;
(iv) selling or otherwise disposing of Ordinary Shares pursuant to any offer by the Company to purchase its
own Ordinary Shares which is made on identical terms to all holders of Ordinary Shares in the Company;
139
(v) any disposal by and/or allotment and issue of shares to Emaar Properties pursuant to any capital
reorganisation in respect of any Ordinary Shares beneficially owned, held or controlled by Emaar
Properties, provided that any shares issued to or otherwise acquired by Emaar Properties pursuant to such
capital reorganisation shall be subject to the restrictions of this clause; or (vi) transferring or otherwise
disposing of Ordinary Shares pursuant to a compromise or arrangement between the Company and its
creditors or any class of them or between the Company and its members of any class of them which is
agreed to by the creditor or members and (where required) sanctioned by any applicable authority. It is
agreed that the carve-out in subsection (i) above is subject to the following conditions: (x) that any of such
affiliate transferees shall agree to be bound by the lock-up obligations of Emaar Properties described
above during the lock-up period; and (y) that any of such inter-company transfers of Ordinary Shares shall
be performed on terms and conditions that do not conflict with the Combined Offering.
In addition, the Principal Shareholder is subject to a statutory lock-up requirement (as set forth in the
EGX Listing Rules issued by EFSA Decree No. 11 dated 22 January 2014), which requires the Principal
Shareholder to maintain at least 51% (as measured prior to the Combined Offering) of its Ordinary Shares
for a period of two years following the commencement of trading of the Ordinary Shares on the EGX.
Nevertheless, subject to the approval of EFSA and the general shareholders’ meeting of Emaar Misr, the
Ordinary Shares subject to the lock-up requirement may be transferred, wholly or partially, during such
period if (i) the purchaser is a bank, an insurance company, a direct investment fund, an entity specialised
in investment or a corporation with distinguished experience and track record in Emaar Misr’s field of
activity and (ii) the acquirer undertakes to abide by the lock-up requirement until the end of the two-year
period.
Other Relationships
The Managers are full service financial institutions engaged in various activities, which may include
securities trading, commercial and investment banking, financial advisory, investment management,
principal investment, hedging, financing and brokerage activities. The Managers and their respective
affiliates have in the past performed commercial banking, investment banking and advisory services for
Emaar Misr and its affiliates from time to time for which they have received customary fees and
reimbursement of expenses and may, from time to time, engage in transactions with and perform services
for Emaar Misr and its affiliates in the ordinary course of their business for which they may receive
customary fees and reimbursement of expenses. In the ordinary course of their various business activities,
the Managers and their respective affiliates may make or hold a broad array of investments and actively
trade debt and equity securities (or related derivative securities) and financial instruments (which may
include bank loans and/or credit default swaps) for their own account and for the accounts of their
customers and may at any time hold long and short positions in such securities and instruments. Such
investment and securities activities may involve the Company’s securities and instruments. Emirates NBD
Bank PJSC is the lender under the EGP 100 million discounted cheques facility made available to the
Company. Emirates Financial Services PSC is an affiliate of Emirates NBD Bank PJSC. See ‘‘Operating
and Financial Review—Credit Facilities’’.
In connection with the Institutional Offering, each of the Managers and any of their affiliate acting as an
investor for its own account may take up Institutional Offering Shares and in that capacity may retain,
purchase or sell for its own account such Institutional Offering Shares and any related investments and
may offer or sell such Institutional Offering Shares or other investments otherwise than in connection with
the Institutional Offering. Accordingly, references in this Offering Memorandum to the Institutional
Offering Shares being offered or placed should be read as including any offering or placement of
Institutional Offering Shares to the Managers and any affiliate acting in such capacity. No Manager
intends to disclose the extent of any such investment or transactions otherwise than to the Company and/or
in accordance with any legal or regulatory obligation to do so. In addition, in connection with the
Institutional Offering, certain of the Managers may enter into financing arrangements with investors, such
as share swap arrangements or lending arrangements where Institutional Offering Shares are used as
collateral, that could result in such Manager acquiring shareholdings in the Company.
In connection with the Institutional Offering, the Managers are not acting for anyone other than the
Company and will not be responsible to anyone other than the Company for providing the protections
afforded to its clients nor for providing advice in relation to the Institutional Offering.
140
Selling Restrictions
General
No action has been or will be taken in any jurisdiction that would permit a public offering of the
Institutional Offering Shares or the possession, circulation or distribution of this Offering Memorandum or
any other material relating to the Company, the Principal Shareholder or the Institutional Offering Shares
in any jurisdiction where action for such purpose is required. Accordingly, the Institutional Offering Shares
may not be offered or sold directly or indirectly, and neither this Offering Memorandum nor any other
offering material or advertisements in connection with the Institutional Offering Shares may be distributed
or published, in or from any country or jurisdiction except under circumstances that will result in
compliance with any applicable rules and regulations of any such country or jurisdiction.
The issue and distribution of this Offering Memorandum and the offering of the Institutional Offering
Shares may be subject to statutory restrictions in other jurisdictions. The Company, the Principal
Shareholder and the Managers request persons into whose possession this Offering Memorandum may
come to inform themselves of and to observe all such restrictions. Neither the Company, the Principal
Shareholder, the Managers accept any legal liability for any violation of any such restriction by any person,
whether or not a prospective purchaser of the Institutional Offering Shares.
United States
The Institutional Offering Shares have not been and will not be registered under the ‘‘Securities Act’’, or
with any securities regulatory authority of any state or other jurisdiction of the United States, and may not
be offered or sold, directly or indirectly, except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act and in compliance with any applicable
securities laws of any state or other jurisdiction of the United States. The Institutional Offering Shares will
be offered (i) outside the United States in ‘‘offshore transactions’’ in reliance on Regulation S under the
Securities Act to institutional investors in a number of countries, including Egypt and (ii) in the United
States only to QIBs as defined in Rule 144A under the Securities Act, in reliance on Rule 144A or another
exemption from, or a transaction not subject to, the registration requirements of the Securities Act.
Prospective purchasers that are qualified institutional investors are hereby notified that the sellers of
shares may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by
Rule 144A. The Institutional Offering Shares are subject to transfer restrictions in certain jurisdictions.
Prospective purchasers should read the restrictions described under ‘‘Transfer Restrictions’’.
Any offers and sales of the Institutional Offering Shares in the United States will be conducted by broker-
dealers registered with the U.S. Securities and Exchange Commission. EFG Hermes is expected to make
offers and sales in the United States through its selling agent, Auerbach Grayson & Company, Inc., a US
registered broker-dealer.
141
Each person in a Member State who receives any communication in respect of, or who acquires any
Institutional Offering Shares will be deemed to have represented, warranted and agreed to and with each
Joint Global Coordinator and the Company that:
(a) it is a qualified investor within the meaning of the law in a Member State implementing Article 2(1)(e)
of the Prospectus Directive; and
(b) in the case of any Institutional Offering Shares acquired by it as a financial intermediary, as that term
is used in Article 3(2) of the Prospectus Directive, (i) the Institutional Offering Shares acquired by it
have not been acquired on behalf of, nor have they been acquired with a view to their offer or resale
to, persons in any Member State other than qualified investors, as that term is defined in the
Prospectus Directive, or in the circumstances in which the prior consent of the representatives of the
Managers has been given to the offer or resale or (ii) where Institutional Offering Shares have been
acquired by it on behalf of persons in any Member State other than qualified investors, the offer of
such shares to it is not treated under the Prospectus Directive as having been made to such persons.
For the purposes of the provisions and representations above, the expression ‘‘an offer to the public’’ in
relation to any shares in any Member State means the communication in any form and by any means of
sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to
decide to purchase or subscribe for any Institutional Offering Shares, as the same may be varied in that
Member State by any measure implementing the Prospectus Directive in that Member State, the
expression ‘‘Prospectus Directive’’ means Directive 2003/71/EC (and amendments thereto, including the
2010 PD Amending Directive, to the extent implemented in the Member State), and includes any relevant
implementing measure in the Member State and the expression ‘‘2010 PD Amending Directive’’ means
Directive 2010/73/EU.
United Kingdom
This Offering Memorandum is for distribution only to persons who: (i) are outside the United Kingdom;
or (ii) have professional experience in matters relating to investments falling within Article 19(5) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the ‘‘Financial
Promotion Order’’); or (iii) are persons falling within Article 49(2)(a) to (d) (‘‘high net worth companies,
unincorporated associations etc’’) of the Financial Promotion Order; or (iv) persons to whom an invitation
or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) in
connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be
communicated (all such persons together being referred to as ‘‘relevant persons’’). This Offering
Memorandum is directed only at relevant persons and must not be acted on or relied on by persons who
are not relevant persons. Any investment or investment activity to which this Offering Memorandum
relates is available only to relevant persons and will be engaged in only with relevant persons.
Each Joint Global Coordinator has represented and agreed that:
(a) it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in
circumstances in which Section 21(1) of the FSMA does not apply to the Company; and
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to the shares in, from or otherwise involving the United Kingdom.
Egypt
New Shares may not be offered or sold in any form of general solicitation or general advertising or in a
public offering in Egypt, unless the pre-approval of the EFSA and/or EGX has been obtained. Institutional
Offering Shares may only be offered or sold in Egypt through a private placement to Egyptian QIBs,
Professional High Net Worth Investors, or Professionally Experienced Investors (each as defined below)
whose ordinary activities involve them in acquiring, holding, managing or disposing of investments for the
purposes of their business and only in accordance with the Public Subscription Notice and the applicable
Egyptian law and regulations including the applicable provisions of the Capital Market Law, its Executive
Regulations as amended, the EGX Listing Rules and the provisions of the Capital Market Authority’s
(EFSA predecessor) Directives no. 31 for the year 2002 concerning private placements.
142
Each purchaser of Institutional Offering Shares in Egypt will be deemed to have represented that it is
either an Egyptian QIB, a Professional High Net Worth Investor or a Professionally Experienced Investor
within the meaning of the EFSA Directives no. 31 for the year 2002 concerning private placements.
An Egyptian QIB is an institutional investor having: (i) a minimum asset book value of EGP 20.0 million;
(ii) a minimum equity book value of EGP 10.0 million; (iii) a minimum investment in securities (excluding
securities acquired in the Combined Offering) of EGP 5.0 million as of the date of the placement; or (iv) a
licence to undertake a security related activity and permitted to acquire securities within its objects and
permitted activities.
A Professional High Net Worth Investor is an individual investor: (i) who owns assets with a minimum
value of EGP 2.0 million; (ii) with a minimum annual income of EGP 500,000; (iii) with a minimum bank
savings account balance of EGP 500,000; or (iv) who, as of the placement date, holds securities in two joint
stock companies (excluding securities acquired in the Combined Offering) with a minimum value of
EGP 2.0 million.
A Professionally Experienced Investor is an individual who has experience in stock markets and capital
markets locally and globally for a period of 5 years, which period may be reduced to 4 years for an
individual who passed EFSA-approved training courses in the field of capital markets.
143
number 2-11-2004 dated 4 October 2004 and amended by the Board of the Capital Market Authority
resolution number 1-28-2008 dated 18 August 2008.
The Capital Market Authority does not make any representations as to the accuracy or completeness of
this Offering Memorandum, and expressly disclaims any liability whatsoever for any loss arising from, or
incurred in reliance upon, any part of this Offering Memorandum. Prospective investors of the
Institutional Offering Shares should conduct their own diligence on the accuracy of the information
relating to the Institutional Offering Shares. If a prospective purchaser does not understand the contents
of this Offering Memorandum, he or she should consult an authorised financial adviser.
The Institutional Offering Shares must not be advertised, offered or sold and no memorandum,
information circular, brochure or any similar document has or will be distributed, directly or indirectly, to
any person in the KSA other than to Sophisticated Investors within the meaning of Article 10 of the Saudi
Regulations.
The offer of Institutional Offering Shares in the KSA shall not, therefore, constitute a ‘‘public offer’’
pursuant to the Saudi Regulations. Prospective investors are informed that Article 17 of the Saudi
Regulations places restrictions on secondary market activity with respect to the Institutional Offering
Shares. Any resale or other transfer, or attempted resale or other transfer, made other than in compliance
with the above stated jurisdictions shall not be recognised by the Company.
Lebanon
This Offering Memorandum does not constitute or form part of any offer or invitation to sell or issue, or
any solicitation of any offer to purchase or subscribe for, any Institutional Offering Shares in the Company
in the Lebanese territory, nor shall it (or any part of it), nor the fact of its distribution, form the basis of, or
be relied on in connection with, any subscription.
The Company has not been, and will not be, authorised or licenced by the Central Bank of Lebanon and its
Institutional Offering Shares cannot be marketed and sold in Lebanon. No public offering of the
Institutional Offering Shares is being made in Lebanon and no mass-media means of contact are being
employed. This Offering Memorandum is aimed at institutions and sophisticated, high net worth
individuals only, and this Offering Memorandum will not be provided to any person in Lebanon except
upon the written request of such person.
Recipients of this Offering Memorandum should pay particular attention to the section titled ‘‘Risk
Factors’’ in this Offering Memorandum. Investment in the Institutional Offering Shares is suitable only for
sophisticated investors with the financial ability and willingness to accept the risks associated with such an
investment, and said investors must be prepared to bear those risks.
Oman
This Offering Memorandum does not constitute a public offer of securities in the Sultanate of Oman, as
contemplated by the Commercial Companies Law of Oman (Royal Decree No. 4/1974) or the Capital
Market Law of Oman (Royal Decree No. 80/1998) and Ministerial Decision No.1/2009 or an offer to sell
or the solicitation of any offer to buy non-Omani securities in the Sultanate of Oman.
This Offering Memorandum is strictly private and confidential. It is being provided to a limited number of
sophisticated investors solely to enable them to decide whether or not to make an offer to the Company to
enter into commitments to invest in the Institutional Offering Shares outside of the Sultanate of Oman,
upon the terms and subject to the restrictions set out herein and may not be reproduced or used for any
other purpose or provided to any person other than the original recipient.
Additionally, this Offering Memorandum is not intended to lead to the making of any contract within the
territory or under the laws of the Sultanate of Oman.
The Capital Market Authority and the Central Bank of Oman take no responsibility for the accuracy of the
statements and information contained in this Offering Memorandum or for the performance of the
Company with respect to the Institutional Offering Shares nor shall they have any liability to any person
for damage or loss resulting from reliance on any statement or information contained herein.
144
Bahrain
The Institutional Offering Shares have not been offered or sold, and will not be offered or sold to any
person in the Kingdom of Bahrain except on a private placement basis to persons who are ‘‘accredited
investors’’.
For this purpose, an ‘‘accredited investor’’ means:
(i) an individual holding financial assets (either singly or jointly with a spouse) of USD 1,000,000 or
more;
(ii) a group, partnership, trust or other commercial undertaking which has financial assets available for
investment of not less than USD 1,000,000; or
(iii) a government, supranational organisation, central bank or other national monetary authority or a
state organisation whose main activity is to invest in financial instruments (such as a state pension
fund).
Kuwait
The Institutional Offering Shares have not been and will not be offered, sold, promoted or advertised in
Kuwait except on the basis that an offer is made in compliance with Decree Law No. 31 of 1990 and the
implementing regulations thereto, as amended, and Law No. 7 of 2010 and the bylaws thereto, as amended
governing the issue, offering and sale of securities. No private or public offering of the Institutional
Offering Shares is being made in Kuwait, and no agreement relating to the sale of the Institutional
Offering Shares will be concluded in Kuwait. No marketing or solicitation or inducement activities are
being used to offer or market the Institutional Offering Shares in Kuwait.
Qatar
The Institutional Offering Shares have not been offered or sold, and will not be offered or sold or
delivered, directly or indirectly, in the State of Qatar including the Qatar Financial Centre, other than on
the basis that an offer is made: (i) in compliance with all applicable laws and regulations of the State of
Qatar including the Qatar Financial Centre; and (ii) through persons or corporate entities authorised and
licenced to provide investment advice and/or engage in brokerage activity and/or trade in respect of foreign
securities in the State of Qatar.
Jordan
Any marketing of the Institutional Offering Shares to Jordanian investors shall be done by way of private
placement only. The Institutional Offering Shares are being offered in Jordan on a cross border basis
based on one-on-one contacts to no more than 30 potential investors and accordingly the Institutional
Offering Shares will not be registered with the Jordanian Securities Commission and a local prospectus in
Jordan will not be issued.
Switzerland
The securities may not and will not be publicly offered, distributed or re-distributed on a professional basis
in or from Switzerland and neither this Offering Memorandum nor any other solicitation for investments
in the securities may be communicated or distributed in Switzerland in any way that could constitute a
public offering within the meaning of Articles 1156 or 652a of the Swiss Code of Obligations or of Article 2
of the Federal Act on Investment Funds of March 18, 1994. This Offering Memorandum may not be
copied, reproduced, distributed or passed on to others without the Managers’ prior written consent.
This Offering Memorandum is not a ‘‘prospectus’’ within the meaning of Articles 1156 and 652a of the
Swiss Code of Obligations or a ‘‘listing prospectus’’ according to article 32 of the Listing Rules of the Swiss
exchange and may not comply with the information standards required thereunder. Emaar Misr will not
apply for a listing of the securities on any Swiss stock exchange or other Swiss regulated market and this
Offering Memorandum may not comply with the information required under the relevant listing rules. The
securities have not and will not be registered with the Swiss Federal Banking Commission and have not and
will not be authorised under the Federal Act on Investment Funds of March 18, 1994. The investor
protection afforded to acquirers of investment fund certificates by the Federal Act on Investment Funds of
March 18, 1994, does not extend to acquirers of the securities.
145
Hong Kong
The securities may not be offered or sold by means of any document other than (1) in circumstances which
do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of
Hong Kong), or (2) to ‘‘professional investors’’ within the meaning of the Securities and Futures
Ordinance (Cap.571, Laws of Hong Kong) and any rules made thereunder, or (3) in other circumstances
which do not result in this Offering Memorandum being a ‘‘prospectus’’ within the meaning of the
Companies Ordinance (Cap.32, Laws of Hong Kong), and no advertisement, invitation or document
relating to the securities may be issued or may be in the possession of any person for the purpose of issue
(in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely
to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong
Kong) other than with respect to securities which are or are intended to be disposed of only to persons
outside Hong Kong or only to ‘‘professional investors’’ within the meaning of the Securities and Futures
Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
Japan
The securities have not been and will not be registered under the Financial Instruments and Exchange Law
of Japan (the Financial Instruments and Exchange Law) nor will the securities be offered or sold, directly
or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means
any person resident in Japan, including any corporation or other entity organised under the laws of Japan),
or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except
pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the
Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial
guidelines of Japan.
Singapore
This Offering Memorandum has not been registered as a prospectus with the Monetary Authority of
Singapore. Accordingly, this Offering Memorandum and any other document or material in connection
with the offer or sale, or invitation for subscription or purchase, of the securities may not be circulated or
distributed, nor may the securities be offered or sold, or be made the subject of an invitation for
subscription or purchase, whether directly or indirectly, to persons in Singapore other than (1) to an
institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the
‘‘SFA’’); (2) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the
conditions, specified in Section 275 of the SFA or (3) otherwise pursuant to, and in accordance with the
conditions of, any other applicable provision of the SFA.
Where the securities are subscribed or purchased under Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole business of which is to hold investments and the
entire share capital of which is owned by one or more individuals, each of whom is an accredited investor;
or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments
and each beneficiary is an accredited investor, Institutional Offering Shares, debentures and units of
Institutional Offering Shares and debentures of that corporation or the beneficiaries’ rights and interest in
that trust shall not be transferable for 6 months after that corporation or that trust has acquired the
securities under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a
relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions,
specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation
of law.
South Africa
Due to restrictions under the securities laws of South Africa, the Institutional Offering Shares are not
offered, transferred, sold, made, renounced or delivered in South Africa or to a person with an address in
South Africa and the Combined Offering is not made, offered, transferred, sold, renounced or delivered in
South Africa or to a person with an address in South Africa, unless such person falls within one or more of
the exemptions to the securities laws relating to offers to the public set out in Section 96 of the Companies
Act, No. 71 of 2008 (as amended). The exemptions include:
• offers made only to the following persons, namely (i) persons whose ordinary business, or part of
whose ordinary business, is to deal in securities, whether as principals or agents; (ii) the Public
Investment Corporation as defined in the Public Investment Corporation Act, No. 23 of 2004 (as
146
amended); (iii) persons regulated by the Reserve Bank of South Africa; (iv) authorised financial
services providers as defined in the Financial Advisory and Intermediary Services Act, No. 37 of 2002
(as amended); (v) financial institutions as defined in the Financial Services Board Act, No. 97 of 1990;
(vi) wholly owned subsidiaries of the persons contemplated in (iii), (iv) and (v), acting as agent in the
capacity of authorised portfolio manager for a pension fund registered in terms of the Pension Funds
Act, No. 24 of 1956 or as a manager for a collective investment scheme registered in terms of the
Collective Investment Schemes Control Act, No. 45 of 2002; (vii) any combination of the persons
contemplated in (i) to (vi); and
• offers made to a single addressee acting as principal where the contemplated acquisition cost of the
Institutional Offering Shares is equal to or greater than R1,000,000.
The Combined Offering does not constitute an offer for the sale of or subscription for, or the solicitation
of an offer to buy and subscribe for, Institutional Offering Shares to the public as defined in the
Companies Act, No. 71 of 2008 (as amended) and will not be distributed to any person in South Africa in
any manner which could be construed as an offer to the public in terms of the Companies Act, No. 71 of
2008 (as amended) and should any person who does not fall into any of the above exemptions receive this
Offering Memorandum they should not and will not be entitled to acquire any Institutional Offering
Shares or otherwise act thereon. This Offering Memorandum does not, nor is it intended to, constitute a
prospectus prepared and registered under the Companies Act, No. 71 of 2008 (as amended).
147
LEGAL MATTERS
Certain legal matters in connection with the Institutional Offering will be passed upon for the Company
with respect to United States federal law and the laws of England and Wales by Shearman & Sterling LLP
and with respect to Egyptian law by Shalakany Law Office.
Certain legal matters in connection with the Institutional Offering will be passed upon for the Managers
with respect to United States federal law and the laws of England and Wales by White & Case LLP and
with respect to Egyptian law by Zulficar & Partners Law Firm.
INDEPENDENT AUDITORS
The Annual Financial Statements, included elsewhere in this Offering Memorandum, have been prepared
in accordance with IFRS as issued by the International Accounting Standards Board, and have been
audited by EY in accordance with the International Standards on Auditing, as stated in their report
appearing elsewhere in this Offering Memorandum.
The Interim Financial Statements, included elsewhere in this Offering Memorandum, have been prepared
in accordance with International Accounting Standard No. 34 ‘‘Interim Financial Reporting’’ and have been
reviewed by EY in accordance with the International Standard on Review Engagements 2410, ‘‘Review of
Interim Financial Information Performed by an Independent Auditor of the Entity’’ as stated in their report
included elsewhere in this Offering Memorandum.
EY’s address is at P.O. Box 20 Kattameya, Rama Tower, Ring Road, Zone #10A, Kattameya, Cairo, Egypt.
148
GENERAL INFORMATION
1. Copies in English of the following documents may be inspected at the offices of the Company, during
usual business hours on any business day (Fridays, Saturdays and public holidays excepted) for one
month following the Closing Date:
• the Statutes in effect upon the completion of the Combined Offering;
• the Annual Financial Statements, together with the report of EY contained therein;
• the Interim Financial Statements, together with the review report of EY contained therein; and
• the Underwriting Agreement.
2. The address of the independent property valuer is: DTZ Qatar LLC P.O. Box 37584 Mezzanine Floor
Tornado Tower West Bay, Doha.
3. The Company is in full compliance with Egypt’s corporate governance regime.
4. There has been no significant change in the financial position of the Company since 31 March 2015,
the end of the last financial period for which reviewed financial information has been published.
5. Emaar Misr was incorporated on 16 March 2005, as a joint stock company with limited liability in
Egypt with the Investment Commercial Register Office, with Registration No. 12841, under the
provisions of Egyptian Investment Incentives and Guarantees Law No. 8 of 1997. The duration of
Emaar Misr under the Statutes is 25 years from the date of incorporation, unless extended by an
Extraordinary General Meeting super-majority vote of 66.66% Emaar Misr’s corporate headquarters
are located at Uptown Cairo Sales Center, Mokattam 229, Cairo, Egypt and Emaar Misr may be
contacted at +20 2 25032000.
6. Management believes that there has been no material change to the aggregate market value of Emaar
Misr’s properties since 31 December 2014, which is the date as of which such properties were assigned
the market value set forth in the Valuation Report.
7. The results of the Institutional Offering will be made public through a press release issued by the
Company promptly upon the closing of the Institutional Offering.
149
INDEX TO FINANCIAL STATEMENTS
Page
Unaudited interim condensed financial statements as of and for the three months ended
31 March 2015
Independent auditor’s review report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statement of profit or loss and other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Statement of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Statement of changes in shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
Notes to the financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-10
Audited financial statements as of and for the years ended 31 December 2014, 2013 and 2012
Independent auditor’s report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-27
Statement of profit or loss and other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . F-28
Statement of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-29
Statement of changes in shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-30
Statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-33
Notes to the financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-34
F-1
Emaar Misr for Development Company (S.A.E.)
Unaudited interim condensed
financial statements
For the period ended 31 March 2015
F-2
Emaar Misr for Development Company (S.A.E.)
Unaudited interim condensed financial statements
For the period ended 31 March 2015
Table of contents
Page
F-3
REPORT ON REVIEW OF INTERIM CONDENSED FINANCIAL STATEMENTS
The Board of Directors of Emaar Misr for Development S.A.E.
Introduction
We have reviewed the accompanying interim condensed statement of financial position of Emaar Misr for
Development S.A.E. as of 31 March 2015 and the related interim statements of profit or loss and other
comprehensive income, changes in equity and cash flows for the three-month period then ended, and
explanatory notes. Management is responsible for the preparation and presentation of these interim
condensed financial statements in accordance with IAS 34 Interim Financial Reporting (IAS 34). Our
responsibility is to express a conclusion on these interim condensed financial statements based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410, Review
of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim
financial information consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with International Standards on Auditing and, consequently,
does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying
interim condensed financial statements are not prepared, in all material respects, in accordance with
IAS 34.
We have not audited or reviewed the financial information for the three month period ended 31 March
2014 and accordingly do not express an opinion thereon.
F-4
Emaar Misr for Development Company (S.A.E)
INTERIM, CONDENSED STATEMENT OF PROFIT OF LOSS AND
OTHER COMPREHENSIVE INCOME
For the period ended 31 March 2015 (unaudited)
F-5
Emaar Misr for Development Company (S.A.E)
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION
As at 31 March 2015
F-6
Emaar Misr for Development Company (S.A.E)
INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY
For the period ended 31 March 2015 (Unaudited)
Amounts paid
Share under capital Legal Retained
Notes capital increase reserve earnings Total
EGP EGP EGP EGP EGP
Balance at 1 January 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 878,338,000 3,141,000,000 247,803 19,955,708 4,039,541,511
F-7
Amounts paid
Share under capital Legal Retained
capital increase reserve earnings Total
EGP EGP EGP EGP EGP
F-8
F-9
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited)
1 BACKGROUND
Emaar Misr for Development Company (S.A.E.) (the ‘‘Company’’) is a joint stock company established in
Egypt under the Investment Guarantees and Incentives Law No. 8 of 1997. The Company was registered in
the commercial register on 16 March 2005 under No. 12841.
The listing of Emaar Misr for Development Company (S.A.E.) on the Egyptian stock exchange was
approved on 4 March 2015.
The purpose of the Company is:
• Planning and construction of urban districts and providing them with utilities and services,
• Constructing, operating, managing and maintenance of water desalination and refining plants
together with their distribution networks,
• Constructing, operating, managing and maintenance of sewage systems,
• Projects development, investment and real estate development,
• Owning, constructing, managing and touristic marketing for hotels, motels, lodges and tourism villages
and its related supplementary activities in servicing, entertainment, sporting, commercial, and cultural,
• Establishing and operating yachts marina, golf courses and diving centres and its related
supplementary activities,
• Finance leasing,
• Designing, constructing, managing, operating and maintenance of power plants with their different
sources and distribution networks.
The Company is currently engaged in planning and construction of urban districts and providing them with
utilities, services and projects development, investment and real estate development.
The Company’s parent is Emaar Properties PJSC.
F-10
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
3 SEGMENT INFORMATION
Currently the Company’s main business segment is developing projects and selling the developed units.
Revenues, profits and investments in other business segments are currently immaterial. Accordingly retail,
commercial and hospitality business segments do not meet the criteria of reportable segments under
IFRS 8, and as such, are not separately disclosed in the interim financial statements. All revenues of the
Company were reported under one segment in the financial statements.
4 REVENUE
Revenue for the three months ended 31 March 2015 and 2014 is as follows:
5 COST OF REVENUE
Cost of revenue for the three months ended 31 March 2015 and 2014 is as follows:
Period from Period from
1 January 2015 1 January 2014
to 31 March 2015 to 31 March 2014
EGP EGP
Cost of revenue from sale of property
Marassi Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171,255,242 122,374,122
Uptown Cairo Project* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97,408,041 53,746,607
Mivida Project . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257,686,131 57,359,104
526,349,414 233,479,833
* The cost of revenues of Uptown Cairo Project includes the reversal of an impairment loss amounting to EGP 5,883,688. The
reversal was recognized since some of the impaired units were sold during the first quarter of 2015.
F-11
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
7 FINANCE COST
Finance cost for the three months ended 31 March 2015 and 2014 is as follows:
Period from Period from
1 January 2015 1 January 2014
to 31 March 2015 to 31 March 2014
EGP EGP
Interest on bank credit facilities and loans . . . . . . . . . . . . . . . . . . . . 2,746,446 6,386,227
Loan arrangement fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1,050,000
Bank charges—Letters of Guarantees related to borrowings . . . . . . . . 533,114 1,858,576
Other bank charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,654 223,319
Net foreign exchange (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,581,979) 11,915,922
1,729,235 21,434,044
F-12
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
8 OTHER INCOME
Other income for the three months ended 31 March 2015 and 2014 is as follows:
Cash at banks earn interest based on prevailing bank deposit rates. Short-term fixed deposits are made for
varying periods between one day and three months, depending on the immediate cash requirements of the
company, and earn interest at the respective short-term deposit rates. Current accounts with an average
interest rate of 7% (2014: 7%). Time deposits with an average effective interest rate of 8.7% (2014: 8.5%).
Cash at banks as at 31 December 2014 include an amount of EGP 26,926,089 received from customers
during December 2014 towards maintenance deposits and is transferred to customer maintenance—
current account in 2015 which is used for financing facility management expenses (other receivables
Note 11).
For the purpose of statement of cash flow cash and cash equivalents represents the following:
F-13
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
As at 31 March 2015, accounts and notes receivables were not impaired (impairment of 2014: nil).
* These amounts represents amounts collected from customers, which are invested in interest bearing current accounts and time
deposits, the interest income generated is used for the purpose of financing the facility management expenses for delivered
units, the company can not use these amounts except for this purpose.
F-14
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
12 DEVELOPMENT PROPERTIES
The movement of development properties during the three months ended 31 March 2015 and 2014 as
follows:
* Transfers made to property, plant and equipment due to a change in management intention to use these assets instead of selling
them in the ordinary course of business.
Development properties as at 31 March 2015 and 31 December 2014 are analysed as follows:
F-15
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
Accumulated depreciation
As of 1 January 2015 . . . . . . . . . . . . . . . . . . . . . . . 103,769,975 37,379,825 17,386,162 18,467,547 31,624,902 61,387,573 — 270,015,984
Depreciation for the period . . . . . . . . . . . . . . . . . . 5,890,884 2,435,661 2,308,917 1,172,391 1,000,703 1,782,328 — 14,590,884
Reclassification . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,625 — — (35,625) — —
As of 31 March 2015 . . . . . . . . . . . . . . . . . . . . . . . 109,660,859 39,851,111 19,695,079 19,639,938 32,589,980 63,169,901 — 284,606,868
Net carrying amount:
At 31 March 2015 . . . . . . . . . . . . . . . . . . . . . . . . . 384,099,509 15,208,035 93,205,412 11,624,963 6,472,006 18,777,868 54,502,558 583,890,351
Accumulated depreciation
As of 1 January 2014 . . . . . . . . . . . . . . . . . . . . . . . . 80,295,557 28,514,064 8,884,912 12,773,524 26,289,705 54,897,680 — 211,655,442
Depreciation for the period . . . . . . . . . . . . . . . . . . . 5,825,933 2,144,690 1,885,491 1,792,208 1,335,599 1,779,064 — 14,762,985
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — (281,998) — — — (281,998)
As of 31 March 2014 . . . . . . . . . . . . . . . . . . . . . . . . 86,121,490 30,658,754 10,770,403 14,283,734 27,625,304 56,676,744 — 226,136,429
Net carrying amount:
At 31 March 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . 400,218,576 11,995,808 70,686,632 11,644,587 8,932,803 22,698,277 67,583,280 593,759,963
Net carrying amount:
At 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . 389,985,042 14,669,882 95,345,151 12,259,354 7,794,418 20,318,845 45,732,626 586,105,318
14 INVESTMENT PROPERTIES
No movements in the investment properties during the three months ended 31 March 2015, except the
depreciation charge for the three months amounted to EGP 939,371 (the three months ended 31 March
2014: EGP 142,896).
No material changes in Investment properties fair value valuation in the three months ended 31 March
2015.
* Deferred revenue represents amounts deducted from customers who cancelled their contracts. Customers can use these
amounts to buy new units from the company during one year. If these amounts are not used by customers, the company has the
right to keep these amounts and thus transfer to revenue.
** Customers maintenance payable represents the collected instalments in respect of delivered units that are used to finance
facility management expenses. These amounts are invested in deposits and interest-bearing current accounts for this purpose
(Note 11).
17 RETENTIONS PAYABLE
F-18
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
Latest maturity
Type Interest rate % (renewal) 31 March 2015 31 December 2014
EGP EGP
Current portion interest-bearing loans and borrowings
Credit facility 1 2.25% + CBE corridor Offered Rate May 2015 271,286,528 271,286,528
Credit facility 2 CBE corridor Average Rate + 2.5% Oct 2015 62,975,063 223,593,303
Credit facility 3 CBE mid corridor Rate + 2.25% Settled — 950,040
Credit facility 4 CBE corridor offered Rate + 2.25% Dec 2017 223,199,085 265,767,136
Credit facility 5 CBE corridor offered Rate + 2.25% May 2015 54,069,356 54,069,356
Total current interest-bearing loans and borrowings 611,530,032 815,666,363
Non-current interest-bearing loans and borrowings
Credit facility 3 CBE mid corridor Rate + 2.25% Settled — 475,020
Total non-current interest-bearing loans and borrowings — 475,020
Total interest-bearing loans and borrowings 611,530,032 816,141,383
* As per the company’s legal certificate, no declared mortgage registered, but there are proxy mortgage as follows:
- Obligation to register mortgage on some units built on Sidi Abdelrahman land as guarantee to Credit facility 4.
The movement of interest-bearing loans and borrowings during the three months ended 31 March 2015
and 2014 is as follows:
F-19
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
20 PROVISIONS
No longer
Charged required Used
Balance as of during during the during Balance as of
1 January 2015 the period period the period 31 March 2015
EGP EGP EGP EGP EGP
Provision for legal claims . . . . . . . . . . 3,289,108 157,156 (1,760,489) — 1,685,775
Provision for tax and other claims* . . . 49,715,863 — — (275,248) 49,440,615
53,004,971 157,156 (1,760,489) (275,248) 51,126,390
No longer
Charged required Used
Balance as of during during during Balance as of
1 January 2014 the period the period the period 31 March 2014
EGP EGP EGP EGP EGP
Provision for tax and other claims* 49,466,486 — — (123,264) 49,343,222
49,466,486 — — (123,264) 49,343,222
* Provision for other claims is advised by the tax consultant for withholding taxes related to tax withheld at source on services provided
from foreign companies.
No other material contingent liabilities other than what was provided for in the provisions above or what
was disclosed in note 26 in respect of tax position.
21 SHARE CAPITAL
On 16 December 2014, an extraordinary general assembly meeting was held and approved the company
capital increase by EGP 3,141,000,000 to be EGP 4,019,338,000, the total amount will be paid at
subscription as follows:
• Deducting an amount of EGP 3,086,234,900 from shareholders current account (Emaar Properties
PJSC) presented on financial position as of 30 June 2014.
• Payment an amount of EGP 54,765,100 through cash deposit at bank.
On 15 March 2015, the company has registered the increase and updated the commercial register.
22 LEGAL RESERVE
As required by Egyptian Companies’ law and the Company’s articles of association, 5% of the net profit
for the prior year is to be transferred to legal reserve. The Company may resolve to discontinue such
annual transfers when the reserve totals 50% of the issued share capital. The legal reserve is calculated
based on Egyptian Accounting Standards financial statements net profit amounting to EGP 417,946,327
for the year ended 31 December 2014.
F-20
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
24 COMMITMENTS
At 31 March 2015, the company had commitments in respect of its projects not provided for in the
financial statements amounted to EGP 4,166,607,380 (December 2014: EGP 4,123,265,496).
31 March 2015
IT Consultancy Finance Sold
Company Nature Expenses expenses fees costs Financing* Revenue units**
EGP EGP EGP EGP EGP EGP EGP
Turner Construction
International Egypt . . . . . . . Joint venture
of the parent — — 18,899,327 — — — —
Emaar Properties—PJSC . . . . Parent (224,551) 1,318,873 — — 846,598 — —
Board members and key
management personnel . . . . — — — — — — —
F-21
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
31 March 2014
IT Consultancy Finance Sold
Company Nature Expenses expenses fees costs Financing* Revenue units**
EGP EGP EGP EGP EGP EGP EGP
Turner Construction
International Egypt . Joint venture
of the parent — — 18,793,998 — — — —
Emaar Properties—
PJSC . . . . . . . . . . . Parent 14,774 1,327,385 — 130,626 1,132,743,115 — —
Board members and
key management
personnel . . . . . . . . — — — — — 2,441,893 6,806,888
* Financing transactions represents funds transferred from Emaar Properties PJSC to Emaar Misr for Development Company
and the related foreign exchange differences.
** Sold units transactions represent sales contracts signed with related parties during the Period.
The following table provides the balances with related parties as at 31 March 2015 and 31 December 2014:
31 March 2015
Trade Advance Trade and
payables from notes
Due from Due to and accruals customers receivables
EGP EGP EGP EGP EGP
Parent** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 6,753,724 — — —
Subsidiaries of the parent . . . . . . . . . . . . . . . . . . 13,126 — — — —
Joint venture of the parent . . . . . . . . . . . . . . . . . — — 51,287,752 — —
Board members and key management personnel . . — — 36,150,683 2,189,539
13,126 6,753,724 51,287,752 36,150,683 2,189,539
31 December 2014
Trade Advance Trade and
payables from notes
Due from Due to and accruals customers receivables
EGP EGP EGP EGP EGP
Parent** . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 4,812,802 — — —
Subsidiaries of the parent . . . . . . . . . . . . . . . . . . 13,126 — — — —
Joint venture of the parent . . . . . . . . . . . . . . . . . — — 53,178,542 — —
Board members and key management personnel . . — — — 33,904,029 2,189,539
13,126 4,812,802 53,178,542 33,904,029 2,189,539
** Due to parent represent a current account, callable by the parent, non-interest bearing, which resulted mainly from the
financing and support received from the parent and other operating activities.
F-22
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
26 INCOME TAX
The company’s tax position is as follows:
1. Corporate tax
• The company submits the tax returns within the legal grace period.
• The company’s records were inspected for the period since inception till 31 December 2008, the
company objected on the results and the disputed points have been transferred to the Internal
Committee which issued its decision by resolving some disputed points and transferred others to the
appeal committee.
• The company’s records are in process of being inspected for the years 2009 and 2010.
• No corporate tax inspection has taken place for the period from 1 January 2015 till 31 March 2015.
• The company enjoys tax holiday on the projects established in the urban area till 31 December 2018.
2. Salary tax
• The company’s records were inspected for the period since inception date till 2008, all tax dues were
settled.
• The company’s records are in process of being inspected for the years from 2009 to 2011.
• No Salary tax inspection took place for the periods from 1 January 2012 till 31 March 2015.
3. Sales tax
• The company’s records were inspected for the periods since inception date till 2011, all tax dues were
settled.
• The company’s records were inspected for the years 2012 and 2013, and the tax authority did not issue
the tax claim till date.
F-23
Emaar Misr for Development Company (S.A.E)
NOTES TO THE INTERIM CONDENSED FINANCIAL STATEMENTS
For the period ended 31 March 2015 (Unaudited) (Continued)
4. Stamp tax
• The company’s records are in process of being inspected for the period from inception date till 2010,
and the tax authority did not issue the tax claim till date.
• No Stamp tax inspection took place for the periods from 1 January 2011 till 31 March 2015.
F-24
EMAAR MISR FOR DEVELOPMENT COMPANY (S.A.E.)
FINANCIAL STATEMENTS
FOR THE YEARS ENDED 31 DECEMBER 2014, 2013 AND 2012
F-25
Emaar Misr for Development Company (S.A.E.)
Financial Statements
For the years ended 31 December 2014, 2013 and 2012
Table of Contents
Page
F-26
INDEPENDENT AUDITOR’S REPORT TO THE SHAREHOLDERS OF
EMAAR MISR FOR DEVELOPMENT COMPANY (S.A.E.)
We have audited the accompanying financial statements of Emaar Misr for Development Company
(S.A.E) (the ‘‘Company’’), which comprise the statement of financial position as at 31 December 2014,
2013 and 2012, and the statement of profit or loss and other comprehensive income, statement of changes
in equity and statement of cash flows for the years then ended, and a summary of significant accounting
policies and other explanatory information.
This report is made solely to the company’s shareholders, as a body. Our audit work has been undertaken
so that we might state to the company’s shareholders those matters we are required to state to them in an
auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company and the company’s shareholders as a body, for our
audit work, for this report, or for the opinions we have formed.
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 International Standards on Auditing. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about 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 risks 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 accounting policies used and the
reasonableness of 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.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company as at 31 December 2014, 2013 and 2012, and its financial performance and cash flows for the
years then ended in accordance with International Financial Reporting Standards.
Cairo, Egypt
11 March 2015
F-27
Emaar Misr for Development Company (S.A.E)
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the years ended 31 December
F-28
Emaar Misr for Development Company (S.A.E)
STATEMENT OF FINANCIAL POSITION
As at 31 December
F-29
Emaar Misr for Development Company (S.A.E)
STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December
Retained
Amounts paid earnings/
Share under capital Legal accumulated
Notes capital increase reserve losses Total
EGP EGP EGP EGP EGP
Balance at 1 January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 878,338,000 119,544,000 196,491 (404,040,902) 594,037,589
F-30
Amounts paid
Share under capital Legal Accumulated
capital increase reserve losses Total
EGP EGP EGP EGP EGP
F-31
Amounts paid
Share under capital Legal Accumulated
capital increase reserve losses Total
EGP EGP EGP EGP EGP
EGP EGP EGP EGP EGP
F-32
Non-cash transactions
• The cost of new land purchased during the year 2014 amounting to EGP 13,626,772 by incurring a
land purchase liability.
• Amounts due to related parties amounting to EGP 3,086,234,900 was transferred to amounts paid
under capital increase (Note 23)
F-33
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS
For the years ended 31 December
1 BACKGROUND
Emaar Misr for Development Company (S.A.E.) (the ‘‘Company’’) is a joint stock company established in
Egypt under the Investment Guarantees and Incentives Law No. 8 of 1997. The Company was registered in
the commercial register on 16 March 2005 under No. 12841.
The listing of Emaar Misr for Development Company (S.A.E.) on the Egyptian stock exchange was
approved in March 2015.
The purpose of the Company is:
• Planning and construction of urban districts and providing them with utilities and services,
• Constructing, operating, managing and maintenance of water desalination and refining plants
together with their distribution networks,
• Constructing, operating, managing and maintenance of sewage systems,
• Projects development, investment and real estate development,
• Owning, constructing, managing and touristic marketing for hotels, motels, lodges and tourism villages
and its related supplementary activities in servicing, entertainment, sporting, commercial, and cultural,
• Establishing and operating yachts marina, golf courses and diving centres and its related
supplementary activities,
• Finance leasing,
• Designing, constructing, managing, operating and maintenance of power plants with their different
sources and distribution networks.
The Company is currently engaged in planning and construction of urban districts and providing them with
utilities, services and projects development, investment and real estate development.
The Company’s parent is Emaar Properties PJSC.
F-34
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Estimates
The estimates at 1 January 2012, 31 December 2012 and 2013 are consistent with those made for the same
dates in accordance with EAS and applicable Egyptian laws.
F-35
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-36
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
IFRS as at
Notes EAS Reclassifications Remeasurement 31 December 2014
EGP EGP EGP EGP
ASSETS
Non-current assets
Property, plant and equipment . . . . A2, A3 531,551,015 45,732,626 8,821,677 586,105,318
Property under construction . . . . . A2 45,732,626 (45,732,626) — —
Investment properties . . . . . . . . . . 84,866,442 — — 84,866,442
Deferred Tax Asset . . . . . . . . . . . . 96,324,334 — — 96,324,334
758,474,417 — 8,821,677 767,296,094
Current assets
Development properties . . . . . ... A3 9,809,475,476 — 5,720,506 9,815,195,982
Accounts and notes receivables ... 862,177,324 — — 862,177,324
Due from related parties . . . . . ... 13,126 — — 13,126
Other receivables, deposits and
prepayments . . . . . . . . . . . . ... 777,679,983 — — 777,679,983
Bank balances and cash . . . . . ... 871,900,404 — — 871,900,404
12,321,246,313 — 5,720,506 12,326,966,819
TOTAL ASSETS . . . . . . . . . . . . . 13,079,720,730 — 14,542,183 13,094,262,913
EQUITY AND LIABILITIES
Equity
Share capital . . . . . . . . . . . . . . .. 878,338,000 — — 878,338,000
Amounts paid under capital
increase . . . . . . . . . . . . . . . . .. 3,141,000,000 — — 3,141,000,000
Legal reserve . . . . . . . . . . . . . . .. 247,803 — — 247,803
Retained Earnings/Accumulated
losses . . . . . . . . . . . . . . . . . . .. A3 5,413,525 — 14,542,183 19,955,708
Total equity . . . . . . . . . . . . . . . . . 4,024,999,328 — 14,542,183 4,039,541,511
LIABILITIES
Non-current liabilities
Interest-bearing loans and
borrowings . . . . . . . . . . . . . . . . 475,020 — — 475,020
Land purchase liabilities . . . . . . . . 635,340,594 — — 635,340,594
Provision for employees’
end-of-service benefits . . . . . . . . 8,852,688 — — 8,852,688
644,668,302 — — 644,668,302
Current liabilities
Interest-bearing loans and
borrowings . . . . . . . . . . . . . . . . 815,666,363 — — 815,666,363
Borrowing from related parties . . . 4,445,292 — — 4,445,292
Trade and other payables . . . . . . . 1,423,931,166 — — 1,423,931,166
Due to related parties . . . . . . . . . . 4,812,802 — — 4,812,802
Land purchase liabilities . . . . . . . . 166,998,103 — — 166,998,103
Advances from customers . . . . . . . 5,733,822,529 — — 5,733,822,529
Provisions . . . . . . . . . . . . . . . . . . 53,004,971 — — 53,004,971
Retentions payable . . . . . . . . . . . . 207,371,874 — — 207,371,874
8,410,053,100 — — 8,410,053,100
TOTAL LIABILITIES . . . . . . . . . . 9,054,721,402 — — 9,054,721,402
TOTAL LIABILITIES AND
EQUITY . . . . . . . . . . . . . . . . . 13,079,720,730 — 14,542,183 13,094,262,913
F-37
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Notes to the reclassifications and reconciliation between local GAAP and IFRS as at 1 January 2012
and 31 December 2014 and the year ended 31 December 2014.
A Property, plant and equipment
1—Under EAS, finance leased assets are not derecognised from the lessors financial statements; instead
they continue to be presented in property, plant and equipment. Under IFRS, such leased assets are
derecognised and the receivables due from lessee are recognised at the present value of the minimum lease
payments, accordingly the property, plant and equipment were reduced by the carrying amount of the
finance leased asset amounting to EGP 2,900,126 as of 1 January 2012 and the receivables due from lessee
were recognised in other receivables net of unearned interest revenues. No effect for 2014 since the
contract was closed in 2013.
2—Under EAS, Property under construction amounting to EGP 45,732,626 as of 31 December 2014 was
presented separately on the face of the statement of financial position. Under IFRS, this amount was
reclassified to property, plant and equipment at 31 December 2014. There was no such difference between
the EAS financial statements and IFRS financial statements as of 1 January 2012.
3—The company entered into a sale and finance lease back in 2013. Under EAS the asset was
derecognised and the loss from sale was amortised over the lease term and rent expense was charged to the
Profit or loss for rental payments. In 2014 the contract was cancelled and the company paid the PV of the
balance of the liability and reacquired the title, the asset was recorded in the balance sheet at the amount
F-38
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-39
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-40
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-41
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-42
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Amendments to IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation
The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic
benefits generated from operating a business (of which the asset is part) rather than the economic benefits
that are consumed through use of the asset. As a result, a revenue-based method cannot be used to
depreciate property, plant and equipment and may only be used in very limited circumstances to amortise
intangible assets. The amendments are effective prospectively for annual periods beginning on or after
1 January 2016, with early adoption permitted. These amendments will not have any impact on the
Company’s financial statements.
F-43
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Judgments
Revenue recognition for real estate units
In making their judgment, the management considered the detailed criteria for the recognition of revenue
from the sale of real estate units as set out in IAS 18 Revenue, IFRIC 15 Agreements for the Construction of
Real Estate and, in particular, whether the Company had transferred to the buyer the significant risks and
rewards of ownership of the real estate units.
Classification of properties
The Company determines whether a property is classified as investment property or development
property:
Investment property comprises land and buildings that are not occupied substantially for use by, or in the
operations of, the Company, nor for sale in the ordinary course of business, but are held primarily to earn
rental income and capital appreciation. These land and buildings are substantially rented to tenants and
not intended to be sold in the ordinary course of business.
Development property comprises property that is held for sale in the ordinary course of business.
Principally, this is residential property that the Company develops and intends to sell before or on
completion of construction.
Estimations
Estimation of net realisable value for development property
Development property is stated at the lower of cost and net realisable value (NRV).
NRV for completed property is assessed by reference to market conditions and prices existing at the
reporting date and is determined by the Company, based on comparable transactions.
NRV in respect of development property under construction is assessed with reference to market prices at
the reporting date for similar completed property, less estimated costs to complete construction.
F-44
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Taxes
The Company is subject to income taxes in Egypt. Significant judgment is required to determine the total
provision for current and deferred taxes. The Company established provisions, based on reasonable
estimates, for possible consequences of audits by the tax authorities in Egypt. The amount of such
provision is based on various factors, such as experience of previous tax audits and differing interpretations
of tax regulations by the Company and the responsible tax authority. Such differences of interpretations
may arise on a wide variety of issues depending on the conditions prevailing in Egypt.
Deferred tax assets are recognised for unused accumulated tax losses to the extent that it is probable that
taxable profit will be available against which the losses can be utilised. Significant management judgement
is required to determine the amount of deferred tax assets that can be recognised, based upon the likely
timing and the level of future taxable profits together with future tax planning strategies.
F-45
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Hospitality revenue
Revenue from hotel accommodation, food and beverages and other related services are recognised, net of
discount and municipality fees, at the point at which the services are rendered.
Finance income
Finance income is recognised as it accrues using the effective interest rate (EIR) method. EIR is the rate
that exactly discounts the estimated future cash payments or receipts over the expected life of the financial
instrument or a shorter period, where appropriate, to the net carrying amount of the financial asset or
liability.
F-46
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Foreign currencies
Transactions in foreign currencies are initially recorded using the exchange rate at the date of the
transaction.
Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate at
the reporting date. All differences are recognised in the Statement of Profit or Loss.
Nonmonetary items that are measured at historical cost in foreign currency are translated using the
exchange rates at the dates of the initial transactions.
Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates at
the date when the fair value is determined.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that
necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part
of the cost of the asset. All other borrowing costs are expensed in the period in which they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of
funds.
Income tax
Income tax is calculated in accordance with the Egyptian tax law.
F-47
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Years
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Model homes, Sales center and Mockup . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Machinery and equipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Motor vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Computers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Furniture, fixtures and Office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Banners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Heavy equipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 - 20
Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
No depreciation is charged on land and capital work-in-progress. The useful lives and depreciation method
are reviewed periodically to ensure that the method and period of depreciation are consistent with the
expected pattern of economic benefits from these assets.
Expenditure incurred to replace a component of an item of property, plant and equipment that is
accounted for separately is capitalised and the carrying amount of the component that is replaced is
written off. Other subsequent expenditure is capitalised only when it increases future economic benefits of
the related item of property, plant and equipment. All other expenditure is recognised in the Statement of
Profit or Loss as the expense is incurred.
Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of property, plant and equipment may not be recoverable. Whenever the
carrying amount of property, plant and equipment exceeds their recoverable amount, an impairment loss is
recognised in the Statement of Profit or Loss. The recoverable amount is the higher of fair value less costs
to sell of property, plant and equipment and the value in use. The fair value is the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date. While value in use is the present value of estimated future cash flows expected to
arise from the continuing use of property, plant and equipment and from its disposal at the end of its
useful life.
Reversal of impairment losses recognised in the prior years are recorded when there is an indication that
the impairment losses recognised for the property, plant and equipment no longer exist or have reduced.
Investment properties
Properties held for rental or capital appreciation purposes are classified as investment properties.
Investment properties are measured at cost less accumulated depreciation and any accumulated
impairment in value.
Investment properties represents lands and buildings. Buildings are depreciated on a straight-line basis
over their estimated useful lives (20 years). No depreciation is charged on land and capital
work-in-progress.
The useful lives and depreciation method are reviewed periodically to ensure that the method and period
of depreciation are consistent with the expected pattern of economic benefits from these assets.
Transfers are made to investment properties when and only when, there is a change in use, evidenced by
the end of owner occupation or commencement of an operating lease. Transfers are made from investment
properties when and only when, there is a change in use evidenced by commencement of owner occupation
F-48
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Development properties
Properties acquired, constructed or being constructed for sale in the ordinary course of business are held
as development properties and are measured at the lower of cost or net realisable value (NRV).
Cost includes:
• Cost of land;
• Amounts paid to contractors for construction;
• Borrowing costs, planning and design costs, costs of site preparation, professional fees for legal
services, property transfer taxes, construction overheads and other related costs.
Net realisable value is the estimated selling price in the ordinary course of the business, based on market
prices at the reporting date and discounted for the time value of money if material, less costs to complete
and the estimated costs of sale.
The cost of development properties recognised in the Statement of Profit or Loss on sale is determined
with reference to the specific costs incurred on the property sold and an allocation of any non-specific costs
based on the relative size of the property sold.
The management reviews the carrying values of the development properties on an annual basis.
Financial assets
Financial assets are initially measured at cost, plus transaction costs. All recognised financial assets are
subsequently measured at amortised cost
F-49
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-50
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-51
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Leases
The determination of whether an arrangement is, or contains a lease is based on the substance of the
arrangement at inception date and whether the fulfilment of the arrangement is dependent on the use of a
specific asset or assets or the arrangement conveys a right to use the asset.
Company as a lessee
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor, are
classified as operating leases. Payments, including prepayments, made under operating leases (net of any
incentives received from the lessor) are recognised as expenses in the Statement of Profit or Loss in
accordance with the terms of the lease contracts over the lease term based on a straight line basis.
Company as a lessor
The Company has entered into leases on its investment properties. The Company has determined, based
on an evaluation of the terms and conditions of the arrangements, that it retains all the significant risks and
rewards of ownership of these properties and accounts for the contracts as operating leases. Lease income
is recognised in the Statement of Profit or Loss over the lease term on a straight line basis.
End-of-service benefits
The Company provides end-of-service benefits to its employees. The entitlement to these benefits is
usually based upon the employees’ final salary and length of service, subject to the completion of a
minimum service period. The costs of these benefits are accrued over the period of employment.
Provisions
Provisions are recognised when the Company has a legal or constructive obligation as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, and the amount can be reliably estimated. When the Company expects some or all of a
provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of
Profit or Loss net of any reimbursement.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation at the end of the reporting period, using a rate that reflects current market assessments of the
time value of money and the risks specific to the obligation.
F-52
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Contingencies
Contingent liabilities are not recognised in the financial statements. They are disclosed unless the
possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not
recognised in the financial statements but disclosed when an inflow of economic benefits is probable.
F-53
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
3 SEGMENT INFORMATION
Currently the Company’s main business segment is developing projects and selling the developed units.
Revenues, profits and investments in other business segments is currently immaterial. Accordingly retail,
commercial and hospitality business segments do not meet the criteria of reportable segments under
IFRS 8, and as such, are not separately disclosed in the financial statements. All revenues of the Comapny
in the years ended 31 December 2014, 2013 and 2012 were reported under one segment in the financial
statements.
4 REVENUE
5 COST OF REVENUE
2014 2013 2012
EGP EGP EGP
Cost of revenue from sale of property
Marassi Project . . . . . . . .. ....................... 954,912,965 505,747,440 286,495,396
Uptown Cairo Project* . . .. ....................... 302,454,037 272,034,755 210,183,266
Mivida Project . . . . . . . . .. ....................... 569,500,900 — 47,239,410
1,826,867,902 777,782,195 543,918,072
* Cost of Uptown Cairo Project includes impairment losses amounted to EGP 56,577,454 (Note 13).
Marassi project
Located at Al-Alamein Town, Marsa Matrouh Governorate. The units available for sale include villas,
apartments, retail, hospitality, serviced and branded units. The project includes 38 villages.
F-54
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
7 FINANCE COST
2014 2013 2012
EGP EGP EGP
Interest on bank credit facilities and loans . . .. ......... . 22,014,835 28,532,695 25,415,965
Loan arrangement fees . . . . . . . . . . . . . . . . .. ......... . — 3,947,700 3,573,000
Bank charges—Letters of Guarantees related to borrowings . 4,979,839 6,895,114 6,554,712
Other bank charges . . . . . . . . . . . . . . . . . . .. ......... . 494,029 659,688 547,438
Net foreign exchange loss . . . . . . . . . . . . . . .. ......... . 84,419,319 169,955,768 77,424,880
111,908,022 209,990,965 113,515,995
8 OTHER INCOME
F-55
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
9 INCOME TAX
The deferred income tax asset was recognised starting from 2013 as it is expected to create future taxable
benefits, but was not recognised in 2012 and 2011, since it was not probable that the carry forward losses
would result in future tax benefits before 2013.
The relationship between the tax expense and the accounting profit can be explained as follows:
1. Corporate Tax
• The company submits the tax returns within the legal grace period.
• The company’s records were inspected for the period since inception till 31 December 2008, the
company objected on the results and the disputed points have been transferred to the Internal
Committee which issued its decision by resolving some disputed points and transferred others to the
appeal committee.
• The company’s records are in process of being inspected for the years 2009 and 2010.
F-56
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
3. Sales tax
• The company’s records were inspected for the period since inception date till 2011, all tax dues were
settled.
• The company’s records were inspected for the years 2012 and 2013, and the tax authority did not issue
the tax claim till date.
4. Stamp tax
• The company’s records are in process of being inspected for the period from inception date till 2010.
Cash at banks earn interest based on prevailing bank deposit rates. Short-term fixed deposits are made for
varying periods between one day and three months, depending on the immediate cash requirements of the
company, and earn interest at the respective short-term deposit rates.
Current account with an average effective interest rate of 7% (2013: 6.5%, 2012: 5% and 2011: 3.5%).
Time deposits with an average effective interest rate of 8.5% (2013: 7.5%, 2012: 9.5% and 2011: 6.5%).
For the purpose of statement of cahs flow cash and cash equivalents represents the following:
2014 2013 2012 1 January 2012
EGP EGP EGP EGP
Bank balances and cash . . . . . . . . . . . . . . . . . 871,900,404 177,707,978 85,552,567 96,347,964
Customer maintenance cash to be transferred . (26,926,089) — — —
Cash and cash equivalent . . . . . . . . . . . . . . . . 844,974,315 177,707,978 85,552,567 96,347,964
F-57
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
At 31 December, the ageing analysis of net accounts and notes receivables is as follows:
F-58
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
* These amounts represents amounts collected from customers, which are invested in interest bearing current accounts and time
deposits, the interest income generated is used for the purpose of financing the facility management expenses for delivered
units, the company can not use these amounts except for this purpose.
Customers maintenance—Current account with an average effective interest rate of 7% (2013: 6.5%,
2012: 5% and 2011: 3.5%) for balance of EGP 13,950,205 (2013: EGP 22,847,896, 2012: EGP 5,238,954
and 2011: EGP 2,145,919).
Customers maintenance—Time deposits with effective interest rate of 9.13% (2013: 9%, 2012: 9.5% and
2011: 6.5%) for balance of EGP 280,143,593 (2013: EGP 116,915,234, 2012: EGP 62,007,479 and 2011:
EGP 24,800,000).
13 DEVELOPMENT PROPERTIES
* Transfers made to property, plant and equipment due to a change in management intention to use these assets instead of selling
them in the ordinary course of business.
** Transfers made to investment properties due to a change in use of the assets, evidenced by commencement of leasing the asset
starting 2014.
F-59
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-60
14 PROPERTY, PLANT AND EQUIPMENT
Plant, Model homes,
Computers machinery sales center, Capital
Land and and office and heavy Motor Furniture mockup and work-in-
buildings equipment equipment vehicles and fixtures other assets progress Total
EGP EGP EGP EGP EGP EGP EGP EGP
Cost
As of 1 January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 485,322,900 41,662,282 73,535,480 25,961,221 36,293,258 79,370,977 39,627,550 781,773,668
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,265,765 10,387,425 2,567,296 5,531,580 3,126,062 6,557,096 41,473,656 70,908,880
Transfers from development properties . . . . . . . . . . . . . . . . . . 764,618 — 7,661,691 — — — — 8,426,309
Transfers from capital work-in-progress . . . . . . . . . . . . . . . . . . 6,401,734 — 28,966,846 — — — (35,368,580)
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — (765,900) — (4,221,655) — (4,987,555)
As of 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 493,755,017 52,049,707 112,731,313 30,726,901 39,419,320 81,706,418 45,732,626 856,121,302
Accumulated depreciation
As of 1 January 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,295,557 28,514,064 8,884,912 12,773,524 26,289,705 54,897,680 — 211,655,442
F-61
Depreciation for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,474,418 8,865,761 8,501,250 6,040,625 5,335,197 7,253,750 — 59,471,001
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — (346,602) — (763,857) — (1,110,459)
As of 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103,769,975 37,379,825 17,386,162 18,467,547 31,624,902 61,387,573 — 270,015,984
Net carrying amount:
At 31 December 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 389,985,042 14,669,882 95,345,151 12,259,354 7,794,418 20,318,845 45,732,626 586,105,318
Depreciation expense is allocated as follows:
2014
EGP
Selling, general and administrative expenses (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,051,842
Facility management expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,643,689
Depreciation expense charged to the income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,695,531
Development properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775,470
Total depreciation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59,471,001
14 PROPERTY, PLANT AND EQUIPMENT (Continued)
2013
EGP
Selling, general and administrative expenses (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,633,295
Facility management expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,953,512
Depreciation expense charged to the income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,586,807
Development properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 775,470
Total depreciation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,362,277
14 PROPERTY, PLANT AND EQUIPMENT (Continued)
Plant, Model homes,
Computers machinery Sales center, Capital
Land and and office and heavy Motor Furniture Mockup and work-in-
buildings equipment equipment vehicles and fixtures other assets progress Total
EGP EGP EGP EGP EGP EGP EGP EGP
Cost
As of 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449,332,585 23,778,853 6,950,833 11,509,839 26,715,020 66,166, 771 34,545,289 618,999,190
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,182,878 9,815,761 7,665,639 9,169,739 3,088,576 7,382,301 29,621,691 74,926,585
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (9,000) — — — — — (9,000)
As of 31 December 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 457,515,463 33,585,614 14,616,472 20,679,578 29,803,596 73,549,072 64,166,980 693,916,775
Accumulated depreciation
As of 1 January 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,475,952 15,819,626 1,167,278 4,229,266 16,630,468 35,964,861 — 110,287,451
Depreciation for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,504,952 5,252,287 2,540,021 3,438,114 4,232,924 10,960,853 — 47,929,151
F-63
2012
EGP
Selling, general and administrative expenses (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,397,131
Depreciation expense charged to the income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,397,131
Development properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 532,020
Total depreciation expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,929,151
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
15 INVESTMENT PROPERTIES
Investment property includes land amounting EGP 11,881,336 (2013: Nil, 2012: Nil), and buildings
amounting EGP 75,149,637 (2013: EGP 11,431,616, 2012: Nil),
The valuation of the company’s investment properties performed by independent professional qualified
valuers. At 31 December 2014, the fair value of investment properties is EGP 149,227,875 (2013:
EGP 23,440,500) compared with a carrying value of EGP 84,866,442 (2013: EGP 11,431,616).
The building and land are valued using market approach by an independent valuer.The market was
researched and a minimum of three recent sales of properties were selected that were considered to be
most comparable to the subject property. Adjustment was made when appropriate to reflect the market
reaction to those items of significant variation. If a significant item in a comparable property is superior to,
or more favourable than, the subject property a negative adjustment was made to reduce the sales price of
the comparable and, if a significant item in a comparable property is inferior to, or less favourable than the
subject properly, a positive adjustment was made to increase the adjusted sales price of the comparable.
F-64
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
* Deferred revenue represents amounts deducted from customers who canceled their contracts. Customers can use these
amounts to buy new units from the company during one year. If these amounts are not used by customers, the company has the
right to keep these amounts and thus transfer to revenue.
** Customers maintenance payable represents the collected instalments in respect of delivered units that are used to finance
facility management expenses. These amounts are invested in deposits and interest-bearing current accounts for this purpose
(Note 12).
Trade and other payables are non-interest bearing and for explanations on the company’s liquidity risk
management process, refer to (Note 28c).
The effective interest rate used to discount land purchase liabilities is 10% (2013 and 2012: 10%, 2011:
9.5%). The amortization of the discount is charged to development properties.
F-65
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
19 RETENTIONS PAYABLE
* These amounts include the proceeds from sale and finance lease back in 2013 amounting to EGP 35,955,000 and payments in
2013 amounting to EGP 5,041,425. The balance as of 31 December 2013 amounting to EGP 30,913,575 was fully paid in 2014.
F-66
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Latest
maturity
Type Interest rate % (renewal) 2014 2013 2012 1 January 2012
EGP EGP EGP EGP
Current portion interest-bearing loans and borrowings
Obligations under
finance lease . . . . 3.07% + CBE
Corridor mid rate Settled — 5,807,670 — —
Credit facility 1 . . . . 4.5% + 1 month libor Settled — 94,020,185 84,318,149 80,615,391
Credit facility 2 . . . . 4.5% + 1 month libor Settled — 69,600,000 63,300,000 —
Credit facility 3 . . . . CBE discount rate + 2.25% Settled — 108,703,013 109,305,800 109,776,241
Credit facility 4 . . . . CBE Bid corridor + 3.5% Settled — 285,946,578 300,000,000 288,535,000
Credit facility 5 . . . . 2.25% + CBE corridor Offered Rate May 2015 271,286,528 271,286,528 271,286,528 271,286,528
Credit facility 6 . . . . 3.25%+ 6 months libor Settled — 347,972,752 316,187,387 301,459,237
Credit facility 7 . . . . 3.25%+ 6 months libor Settled — 112,314,682 102,052,684 87,809,793
Credit facility 8 . . . . 3.25%+ 6 months libor Settled — 6,612,000 6,013,500 —
Credit facility 9 . . . . 3.5%+ 1 year libor Settled — 132,728,728 123,122,517 114,779,670
Credit facility 10 . . . CBE corridor Average Rate + 2.5% Sep 2015 223,593,303 210,807,456 167,181,176 109,396,859
Credit facility 11 . . . CBE mid corridor Rate + 2.25% June 2016 950,040 — — —
Credit facility 12 . . . CBE corridor offered Rate + 2.25% Dec 2017 265,767,136 — — —
Credit facility 13 . . . CBE corridor offered Rate + 2.25% May 2015 54,069,356 — — —
Loan 1 . . . . . . . . . CBE discount rate + 3% Setlled — 104,038,713 92,548,391 74,038,713
Loan 2 . . . . . . . . . 3 month libor + 3.5% Settled — 174,000,000 157,517,234 150,750,000
Loan 3 . . . . . . . . . 5.75% Settled — 130,161,937 — —
Loan 4 . . . . . . . . . CBE average corridor + 2.5% Settled — 22,203,125 — —
Total current interest-bearing loans and borrowings . . . . . . . . . . . . . 815,666,363 2,076,203,367 1,792,833,366 1,588,447,432
Maturity
Type Interest rate % (renewal) 2014 2013 2012 1 January 2012
EGP EGP EGP EGP
Non-current interest-bearing loans and borrowings
Obligations under
finance lease . . . . . . 3.07% + CBE
Corridor mid rate Settled — 25,105,905 — —
Credit facility 11 . . . . . CBE mid corridor Rate + 2.25% June 2016 475,020 — — —
Loan 1 . . . . . . . . . . . . CBE discount rate + 3% Settled — — 74,038,713 148,077,426
Loan 3 . . . . . . . . . . . . 5.75% Settled — 43,387,313 157,939,000 —
Loan 4 . . . . . . . . . . . . CBE average corridor + 2.5% Settled — 102,796,875 — —
Total non-current interest-bearing loans and borrowings . . . . . . . . . . 475,020 171,290,093 231,977,713 148,077,426
Total interest-bearing loans and borrowings . . . . . . . . . . . . . . . . . . 816,141,383 2,247,493,460 2,024,811,079 1,736,524,858
F-67
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
Bank Loans
1- Granted loan from an Egyptian bank by amount of EGP 259,135,495 secured by corporate guarantee
from Emaar Properties (parent).
2- Granted loan from a UAE Bank by amount of USD 25,000,000, guarantee from Emaar Properties
(parent) covering the full amount.
3- Granted loan from a UAE Bank by amount of AED 91,825,000, guaranteed from Emaar Properties
(parent).
4- Granted finance from an Islamic an Egyptian bank by an amount of EGP 125,000,000 to be settled
over 21 quarterly instalments starting from April 2014 till April 2019, secured by corporate guarantee
from Emaar Properties (parent).
All gurantees and securities at 31 December 2014 related to loans and credit facilities have been released
during 2014.
F-68
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
2014
During 2014 the company settled total outstanding obligation of finance lease amounting to EGP
30,913,575.
22 PROVISIONS
No longer
Balance as of Charged required Used Balance as of
1 January during during during 31 December
2014 the year the year the year 2014
EGP EGP EGP EGP EGP
Provision for legal claims . . . . . . . . . . . . . . . — 3,289,108 — — 3,289,108
Provision for tax and other claims* . . . . . . . 49,466,486 249,377 — — 49,715,863
49,466,486 3,538,485 — — 53,004,971
F-69
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
22 PROVISIONS (Continued)
No longer
Balance as of Charged required Used Balance as of
1 January during during during 31 December
2013 the year the year the year 2013
EGP EGP EGP EGP EGP
Provision for suppliers claims . . . . . . . . . . . . 830,799 — — (830,799) —
Provision for tax and other claims . . . . . . . . 49,330,244 136,242 — — 49,466,486
50,161,043 136,242 — (830,799) 49,466,486
No longer
Balance as of Charged required Used Balance as of
1 January during during during 31 December
2012 the year the year the year 2012
EGP EGP EGP EGP EGP
Provision for suppliers claims . . . . . . . . . . . . . 830,799 — — — 830,799
Provision for tax and other claims . . . . . . . . . . 49,244,409 85,835 — — 49,330,244
50,075,208 85,835 — — 50,161,043
* Provision for other claims is advised by the tax consultant for withholding taxes related to tax withheld at source on services
provided from foreign companies.
No other material contingent liabilities other than what was provided for in the provisions above or what
was disclosed in note 9 in respect of tax position.
23 SHARE CAPITAL
1 January
2014 2013 2012 2012
EGP EGP EGP EGP
Authorised capital (shares of EGP 10
each) . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000
Issued and fully paid-up . . . . . . . . . . . . 878,338,000 878,338,000 699,269,000 617,300,000
Number of shares . . . . . . . . . . . . . . . . 87,833,800 87,833,800 69,926,900 61,730,000
During year 2013, the Company received payment under capital increase from shareholders amounting to
EGP 119,544,000, which was approved by board of directors resolution on 14 March 2013 this proposed
increase was cancelled by board of directors resolution on 23 June 2014.
On 16 December 2014, an extraordinary general assembly meeting was held and approved the company
capital increase by EGP 3,141,000,000 to be EGP 4,019,338,000, the total amount will be paid at
subscription as follows:
• Deducting an amount of EGP 3,086,234,900 from shareholders current account (Emaar Properties
PJSC) presented on financial position as of 30 June 2014.
• Payment an amount of EGP 54,765,100 through cash deposit at bank.
The company is still in the process of finalising the legal procedures to register the amounts paid under
capital increase.
24 LEGAL RESERVE
As required by Egyptian Companies’ law and the Company’s articles of association, 5% of the net profit
for the prior year is to be transferred to legal reserve. The Company may resolve to discontinue such
annual transfers when the reserve totals 50% of the issued share capital. The legal reserve is calculated
F-70
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
26 COMMITMENTS
At 31 December 2014, the company had commitments in respect of its projects not provided for in the
financial statements amounted to EGP 4,123,265,496 (31 December 2013: EGP 3,147,252,708,
31 December 2012: EGP 3,216,912,915 and 1 January 2012: EGP 4,274,142,856).
F-71
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
2014
IT Finance Sold
Company Nature Expenses expenses Consultancy costs Financing* Revenue units**
EGP EGP EGP EGP EGP EGP EGP
Turner Construction
International Egypt . . . . Joint venture — — 69,428,237 — — — —
Emaar Properties—PJSC . . Parent 1,332,472 4,724,572 — (2,300,515) (1,798,230,892) — —
Board members and key
management personnel . . — — — — — 28,079,781 18,231,064
2013
Finance
IT Consultancy Finance lease Sold
Company Nature Expenses expenses fees costs Financing* income Revenue units**
EGP EGP EGP EGP EGP EGP EGP EGP
Turner Construction
International Egypt . Joint venture — — 66,860,011 — — 318,142 — —
Emaar Properties—
PJSC . . . . . . . . . . Parent 1,849,379 5,477,077 — 9,313,677 308,506,827 — — —
Board members and
key management
personnel . . . . . . . — — — — — — 1,678,905 10,598,513
2012
Finance
IT Consultancy Finance lease Sold
Company Nature Expenses expenses fees costs Financing* income Revenue units**
EGP EGP EGP EGP EGP EGP EGP EGP
Turner Construction
International Egypt . Joint venture — — 54,541,720 — — 398,683 — —
Emaar Properties—
PJSC . . . . . . . . . . Parent 13,933 3,181,308 — 10,711,275 314,619,523 — — —
Board members and
key management
personnel . . . . . . . . — — — — — — — 1,201,842
* Financing transactions represents funds transfered from Emaar Properties PJSC to Emaar Misr for Development Company and
the related foreign exchange differences.
** Sold units transactions represents sales contracts signed with related parties during the year.
F-72
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
2014
Trade Advance Trade and
payables and from notes
Due from Due to accruals customers receivables
EGP EGP EGP EGP EGP
Parent** . . . . . . . . . . . . . . . . . . . . . .... — 4,812,802 — — —
Subsidiaries of the parent . . . . . . . . . .... 13,126 — — — —
Joint venture of the parent . . . . . . . . .... — — 53,178,542 — —
Board members and key management
personnel . . . . . . . . . . . . . . . . . . . .... — — — 33,904,029 2,189,539
13,126 4,812,802 53,178,542 33,904,029 2,189,539
2013
Trade Advance Trade and
payables and from notes
Due from Due to accruals customers receivables
EGP EGP EGP EGP EGP
Parent** . . . . . . . . . . . . . . . . . . . . . . . — 1,799,266,700 — — —
Subsidiaries of the parent . . . . . . . . . . 41,439 — — — —
Joint venture of the parent . . . . . . . . . — — 79,991,589 — —
Board members and key management
personnel . . . . . . . . . . . . . . . . . . . . — — — 43,631,925 1,285,680
41,439 1,799,266,700 79,991,589 43,631,925 1,285,680
2012
Trade Advance Trade and
payables and from notes
Due from Due to accruals customers receivables
EGP EGP EGP EGP EGP
Parent** . . . . . . . . . . . . . . . . . . . . . . . — 1,474,119,739 — — —
Subsidiaries of the parent . . . . . . . . . . . 41,439 — — — —
Joint venture of the parent . . . . . . . . . . — — 86,914,082 — —
Board members and key management
personnel . . . . . . . . . . . . . . . . . . . . . — — — 31,903,327 —
41,439 1,474,119,739 86,914,082 31,903,327 —
F-73
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
1 January 2012
Trade Advance Trade and
payables and from notes
Due from Due to accruals customers receivables
EGP EGP EGP EGP EGP
Parent** . . . . . . . . . . . . . . . . . . . . . . . — 1,145,017,954 — — —
Subsidiaries of the parent . . . . . . . . . . . 44,117 — — — —
Joint venture of the parent . . . . . . . . . . — — 70,180,650 — —
Board members and key management
personnel . . . . . . . . . . . . . . . . . . . . . — — — 26,284,651 —
44,117 1,145,017,954 70,180,650 26,284,651 —
** Due to parent represent a current account, callable by the parent, non-interest bearing, which resulted mainly from the
financing and support received from the parent and other operating activities.
1 January
2014 2013 2012 2012
EGP EGP EGP EGP
Borrowings from related party
Emaar Properties PJSC—Parent . . . . . . . . . . . . . . . . . . 4,445,292 4,315,096 3,924,505 3,738,510
4,445,292 4,315,096 3,924,505 3,738,510
F-74
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
b) Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices, such as currency risk and interest rate risk, which will affect the
Company’s income. Financial instruments affected by market risk include interest-bearing loans and
borrowings, and deposits. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return. The Company does not hold or issue
derivative financial instruments.
F-75
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
F-76
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
c) Liquidity risk
The cash flows, funding requirements and liquidity of the Company are monitored by local company
management supported by the Parent Company. The Company’s objective is to maintain a balance
between continuity of funding and flexibility through the use of bank borrowings. The Company manages
liquidity risk by maintaining adequate reserves and borrowing facilities, by continuously monitoring
forecasted and actual cash flows and matching the maturity profiles of financial assets and liabilities.
The Company currently has sufficient cash on demand to meet expected operational expenses, including
the servicing of financial obligations.
The table below summarises the maturity profile of the Company’s financial liabilities based on contractual
undiscounted payments.
F-77
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
As at 31 December 2014
Interest-bearing loans and
borrowings . . . . . . . . . . . . . . 298,988,028 617,958,893 475,020 — 917,421,941
Retentions payable . . . . . . . . . — 149,911,052 57,460,822 — 207,371,874
Trade and other payables . . . . . 1,083,185,780 — — — 1,083,185,780
Borrowings from related parties 4,500,896 — — — 4,500,896
Due to related parties . . . . . . . 4,812,802 — — — 4,812,802
Land purchase liabilities . . . . . . 143,909,940 26,626,772 787,175,379 — 957,712,091
Total undiscounted financial
liabilities . . . . . . . . . . . . . . . 1,535,397,446 794,496,717 845,111,221 — 3,175,005,384
As at 31 December 2013
Interest-bearing loans and
borrowings . . . . . . . . . . . . . . 326,718,159 1,934,603,478 208,425,316 — 2,469,746,953
Retentions payable . . . . . . . . . — 59,675,566 143,437,916 — 203,113,482
Trade and other payables . . . . . 838,601,206 — — — 838,601,206
Borrowings from related parties 4,370,696 — — — 4,370,696
Due to related parties . . . . . . . 1,799,266,700 — — — 1,799,266,700
Land purchase liabilities . . . . . . 143,909,940 13,000,000 796,529,525 — 953,439,465
Total undiscounted financial
liabilities . . . . . . . . . . . . . . . 3,112,866,701 2,007,279,044 1,148,392,757 — 6,268,538,502
F-78
Emaar Misr for Development Company (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS (Continued)
For the years ended 31 December
As at 31 December 2012
Interest-bearing loans and
borrowings . . . . . . . . . . . . . . . 340,246,104 1,618,983,264 253,079,395 — 2,212,308,763
Retentions payable . . . . . . . . . . . — 86,845,764 110,245,861 — 197,091,625
Trade and other payables . . . . . . 850,811,830 — — — 850,811,830
Borrowings from related parties . 3,980,105 — — — 3,980,105
Due to related parties . . . . . . . . 1,474,119,739 — — — 1,474,119,739
Land purchase liabilities . . . . . . . — 326,642,180 509,061,144 — 835,703,324
Total undiscounted financial
liabilities . . . . . . . . . . . . . . . . 2,669,157,778 2,032,471,208 872,386,400 — 5,574,015,386
F-79
ANNEX A: VALUATION REPORT
A-1
PRIVATE & CONFIDENTIAL
www.dtz.com
Prepared on behalf of
Emaar Misr for Development S.A.E.
28 April 2014
Contents
1 Instructions ..................................................................................................................................................................................... 1
2 Portfolio Summary.......................................................................................................................................................................... 3
4 Valuation Conditions and Assumptions, Bases of Valuation, Equivalent Yields & Valuation Printout Explanations .................... 31
Appendices
1 Instructions
1.1 INTRODUCTION
DTZ was requested by Emaar Properties PJSC, the “Owner” and Emaar Misr for Development S.A.E., the
“Issuer” or the “Client” to submit a report and valuation in respect of the following properties and
developments, in connection with the Initial Public Offering (“IPO”) and Egyptian Stock Exchange listing of
the Issuer:
Uptown Cairo (a master planned development located in Mokkatam, Cairo extending to 4.5
million sq m);
Mivida (a master planned development located in New Cairo extending to 3.8 million sq m);
Marassi (a master planned development located on the north coast of Egypt extending to 6.5
million sq m);
Cairo Gate (a plot of raw land located in 6th October (Cairo –Alexandria Desert Road) extending
to approximately 0.6 million sq m).
1.2 APPOINTMENT
In accordance with our valuation proposal, dated 30 December 2014, and the subsequent acceptance of
the terms within, DTZ is required to prepare a valuation report of the respective legal interests in the
properties and developments detailed above (the “Properties”).
2 Portfolio Summary
The portfolio comprises three mixed use properties and a raw land plot as follows:
2.1 LOCATION
All of the properties are located in Egypt, with three of the properties located within the greater Cairo
conurbation, and one located on the north coast of Egypt, approximately equidistant between Alexandria
and Marsa Matrouh.
We would set out the location of the properties as follows, indicated by the yellow pins for identification
purposes only:
Additional to the residential provision, there are plans to develop an area known as Emaar Square. Once
complete, Emaar Square will comprise the commercial element of Uptown Cairo providing retail and office
accommodation alongside two hotels, serviced apartments and a residential component.
The subject property occupies a gross site area of 4,526,005 sq m, with construction having commenced in
2010, and completion expected by 2024. Once complete, the development will comprise the following:
The western quadrant of Mivida will comprise the commercial element providing retail and office
accommodation alongside one hotel and a residential component.
The subject property occupies a site of 3,745,900 sq m, with construction having commenced in 2010, and
completion expected by 2023. Once complete, the development will comprise the following:
Given the location of the property on the coast of the Mediterranean Sea the development functions as a
holiday destination. As such, there are development plans for 12 hotels and a residential component onsite
alongside a marina, yacht club, retail accommodation, and food and beverage outlets.
The subject property occupies a site of 6,544,249 sq m, with construction having commenced in 2010, and
completion expected by 2024. Once complete, the development will comprise the following:
Given the location of the property, in close proximity to Sheikh Zayed City, fronting Cairo-Alexandria Desert
Road, there are plans to develop a mixed-use scheme comprising retail, residential, hospitality and
entertainment uses, should planning permission be granted for a change of use from agricultural and
industrial storage to mixed-use. At present, however, planning permission has not been granted.
3 Valuation Summary
In formulating our opinion of Market Value for Uptown Cairo, Mivida and Marassi, DTZ has employed the
investment method of valuation, specifically utilizing the discounted cash flow method. Using this method
we have produced a series of cash flows detailing the projected income and expenditure of the schemes.
For the income producing assets we have capitalized the net revenue of the assets at the end of the cash
flow using an exit yield in order to provide an exit value. The sum of the net revenue and the exit value
(where applicable) for each of the asset classes is then discounted to provide our opinion of Market Value.
The inputs for the cash flow model have predominately been derived using recent comparable transactions
on arms length terms.
Our opinion of Market Value for Cairo Gate has been derived using the direct comparison method of
valuation. This approach involves the analysis of transactions relating to direct comparables, where
available and where direct comparables are not available we have had consideration to properties in
locations further afield, making appropriate allowances for configuration, location, permitted use, size, etc.
Timing
The timing for development of the scheme including construction completion dates, hand over dates, and
occupation dates has been provided by the client. In our opinion the timing seems reasonable for a
development of this scale. Please refer to Appendix 1.5 for the planned development timeline.
Determination of Revenue
Residential
Uptown Cairo is a predominately residential scheme with some 8,308 units with a total of 7,181 units
available for purchase at the date of valuation.
The future revenue stream for the residential accommodation has been provided by the Client. With
regards to timing, future sales for each of the residential parcels is in line with the Client’s proposed
development plans which we consider to be reasonable. The future sales revenue for each of the parcels
has been projected in line with the historic sales on site and also having regard to how sales revenues have
grown year on year since the development was launched. We have been provided with the historic sales
data and consider the future revenue expectations to be reasonable.
The following annual price escalations have been adopted in our projections:
Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Price per sq m 13% 15% 17% 17% 18% 18% 18% 18% 18% 18%
Off plan sales are based upon Emaar’s payment terms with customers which is either over four years until
delivery or over an extended payment schedule that continues after delivery (requiring 70.00% – 80.00%
payment prior to delivery and remainder over 1 – 3 years). The extended price is at a 12.00% premium in
comparison to the four year payment plan price.
Retail
For the retail accommodation, we have had regard to the rental values achieved at other schemes across
the Greater Cairo area when determining our opinion of Market Rent as at the date of valuation. Rental
values have been applied as follows across the various different store types:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the
accommodation becomes leased in 2021. Once leased, the rent is then grown at 10.00% per annum under
the terms of a hypothetical lease which is common practice for commercial leases in Egypt, under the
assumption that rental contracts will be in local currency.
UTC Clubhouse is already operational and has been income generating for a number of years. Predicted
revenue for 2015 is EGP 8,250,000 which we have grown at 10.00% per annum.
Various occupancy rates have been applied depending upon the nature of the store and the amount of
accommodation available as follows:
Additional income is generated through speciality leasing, sponsorship, turnover rent and outdoor food and
beverage. These are included in the cash flow as follows:
Having formulated our opinion of gross income we then made a 15.00% allowance, based upon the gross
rent, for operational expenditure, a 5.00% allowance based upon the net rent, for management fees and a
3.00% allowance, based upon the gross rent, for sales and marketing expenditure, to give the net income
for the retail accommodation. We consider allowances at these levels to be reasonable for a retail scheme
of this nature.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land cost, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the retail element of the subject property we have applied a blended exit
yield of 10.00%. The exit yield applied has been based upon our opinion of yields as at the date of
valuation which have then been adjusted taking into consideration the timing of the exit, the condition of
the building at that time and also the likely occupancy rate at that time.
Our exit date has been determined having regard to the date at which the majority of the retail
accommodation becomes available to lease which is in 2021. We consider that the majority of major
occupiers / international brands will look to sign a ten year contract which would expire in 2031. On expiry
of the initial lease, we would expect the occupiers to renew, dependant on the successfulness of the
scheme, which would mean that a sale in 2032 would be attractive to potential purchasers looking to
benefit from a product offering a long unexpired term.
Offices
The proposed office accommodation within Uptown Cairo totals some 83,102 sq m of which 70.00% is
going to be made available to lease and 30.00% available for purchase.
For the office accommodation available to lease, we have had regard to the rental values achieved at other
schemes across the Greater Cairo area when determining our opinion of Market Rent as at the date of
valuation. Rental values have been applied as follows:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the
accommodation becomes leased. Once leased, the rent is then grown at 10.00% per annum under the
terms of a hypothetical lease which is common practice for commercial leases in Egypt, under the
assumption that rental contracts will be in local currency.
Having formulated our opinion of gross income we then made an allowance for operational expenditure at
EGP 105 per sq m, increasing at 3.00% per annum, for management fees at 5.00% per annum, based upon
the net rent, for G&A expenditure at 1.50% per annum, based upon the net rent, and for sales and
marketing expenditure, at 2.50% per annum, based upon the gross rent, to give the net income for the
office rental accommodation. We consider allowances at this level to be reasonable for an office scheme of
this nature.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land cost, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the office element of the subject property we have applied a blended exit
yield of 10.00%. The exit yield applied has been based upon our opinion of yields as at the date of
valuation which have then been adjusted taking into consideration the timing of the exit, the condition of
the building at that time and also the likely occupancy rate at that time.
For the office accommodation available to purchase, we have applied a current sales rate of EGP 33,000 per
sq m which we have grown at 3.00% per annum. The current sales rate applied is in line with other current
recent transactions which we are aware of. We have anticipated that office sales will occur evenly over a
two year period, with sales of 12,465 sq m in both 2017 and 2018.
Off plan sales are based upon Emaar’s payment terms with customers, which is over three years.
Hotels
Considering the two proposed hotels, firstly we estimated the future revenue stream based upon the
number of rooms, the average daily rate (ADR) and the occupancy rate.
In terms of the ADR, we have had consideration of the rates achieved by similar hotels in the area. Given
the proposed quality and 5*+ rating of ‘Hotel 1” we have applied an ADR of EGP 2,285. ‘Hotel 2’ is a 5*
hotel and so we have made a 20.00% adjustment and applied an ADR of 1,828.
Hotel 1 is anticipated to have an initial occupancy rate of 45.00% in year one (2021), which we have then
grown to reach a stabilized occupancy rate of 63.00% in Year 7 (2027). Hotel 2 is anticipated to have an
initial occupancy rate of 50.00% in year one (2024), which we have then grown to reach a stabilized
occupancy rate of 66.00% in Year 7 (2030).
In terms of non-room revenues we have included food and beverage revenue at 60.00% of room revenue
and other revenue (conference rooms, spa, banquet hall, etc) has been included at 3.00% of room revenue.
We set out below each revenue stream throughout the cash flow period as a percentage of total revenue:
Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Room Revenue 60% 60% 60% 60% 60% 60% 60% 60% 60% 60% 60% 60%
F&B Revenue 37% 37% 37% 37% 37% 37% 37% 37% 37% 37% 37% 37%
Other Revenue 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
Operating expenses including administration, payroll, energy and water were deducted at 51.00% of gross
revenue; FF&E reserve payments were deducted at 1.00% of gross revenue in Year 1, 2.00% in Year 2,
3.00% in Year 3 and 4.00% in Year 4 and thereafter; and management fees of 2.50% of gross revenue were
then deducted to give a Net Operating Profit (NOP).
The NOP was then capitalized using an EBITDA multiple of 10 for both hotels which we consider to be
market facing.
Spa Hotel
The land parcel which has been allocated for the Spa Hotel is to be sold as a land plot and we have applied
sales rate to the net land area as follows:
Land Use Sales Rate Gross Land Area Net Land Area
(EGP per sq m of (sq m) (sq m)
NLA)
Spa Hotel 4,000 57,724 25,781
School
We are advised that the Company has a preliminary agreement with the American International School
(AIS) to operate the school property under a revenue share agreement. The terms involve a fixed contract
with a minimum guaranteed payment plus a percentage revenue share, should revenue targets be
achieved. We have utilized the income and subsequent revenue share projections provided by the
Company, which we consider to be reasonable for such a development. Revenue is anticipated to begin in
2018 as follows:
In determining the exit value for the school element of the subject property we have applied a blended exit
yield of 10.00%. The exit yield applied has been based upon our opinion of yields as at the date of
valuation which have then been adjusted taking into consideration the timing of the exit, the condition of
the building at that time and also the likely occupancy rate at that time.
Construction Costs
Construction costs for the scheme and the timing thereof have been provided by the Client. We would
comment that the average build rates for the various asset classes appear to be reasonable; however, we
are not qualified cost consultants. If further clarification surrounding the costs applied is required then we
recommend appointing specialist cost consultant. We have been advised that construction costs are
inclusive of a 5.00% contingency and an 8.00% annual escalation that is embedded in the cost.
Outstanding construction costs for each element of the scheme are as follows:
Taxation
We have made an adjustment to reflect the liability of Income Tax payable on the income generated
through the developments operations, alongside Capital Gains Tax payable upon a future sale. These taxes
are levied by the Egyptian authorities at a rate of 22.50%.
Finance Costs
Our opinion of Market Value is stated gross of finance costs. Development schemes of this magnitude tend
to be predominately funded by pre-sales. Furthermore any additional finance costs will be specific to a
purchaser dependant on their financial position at the date of purchase and the relationship they have with
lending institutions.
Analysis
The net cash flow has then been discounted annually to give a Net Present Value (NPV) or Market Value for
the scheme.
In our opinion a discount rate of 16.00% is reasonable for a property of this nature and is in line with the
return that investors in the Egyptian property market would require. On this basis we consider the Market
Value of the subject property to be in the region of EGP 6,897,632,177 which we have rounded to EGP
6,897,630,000.
Timing
The timing for development of the scheme including construction completion dates, hand over dates, and
occupation dates has been provided by the client. In our opinion the timing seems reasonable for a
development of this scale. Please refer to Appendix 2.4 for the planned development timeline.
Determination of Revenue
Residential
Mivida is a predominately residential scheme with some 5,357 units with a total of 2,465 units available for
sale at the date of valuation.
The future revenue stream for the residential accommodation has been provided by the Client. With
regards to timing, future sales for each of the residential parcels is in line with the Client’s proposed
development plans which we consider to be reasonable. The future sales revenue for each of the parcels
has been projected in line with the historic sales on site and also having regard to how sales revenues have
grown year on year since the development was launched. We have been provided with the historic sales
data and consider the future revenue expectations to be reasonable.
The following annual price escalations have been adopted in our projections:
Off plan sales are based upon Emaar’s payment terms with customers which is either over four years until
delivery or over an extended payment schedule that continues after delivery (requiring 70.00% – 80.00%
payment prior to delivery and remainder over 1 – 3 years). The extended price is at a 12.00% premium in
comparison to the initial purchase price.
Retail
For the retail accommodation, we have had regard to the rental values achieved at other schemes across
the Greater Cairo area when determining our opinion of Market Rent as at the date of valuation. Rental
values have been applied as follows across the various different store types:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the
accommodation becomes leased, which begins with the Lake Retail in 2017 with the remaining
accommodation planned in 2018 and 2019. Once leased, the rent is then grown at 10.00% per annum
under the terms of a hypothetical lease which is common practice for commercial leases in Egypt, under
the assumption that rental contracts will be in local currency.
Different occupancy rates have been applied depending on the nature of the store and the amount of
accommodation available as follows:
Additional income is generated through speciality leasing, sponsorship, turnover rent and outdoor food and
beverage. These are included in the cash flow as follows:
Having formulated our opinion of gross income we then made a 15.00% allowance, based upon the gross
rent, for operational expenditure, a 5.00% allowance based upon the net rent, for management fees and a
3.00% allowance, based upon the gross rent, for sales and marketing expenditure, to give the net income
for the retail accommodation. We consider allowances at these levels to be reasonable for a retail scheme
of this nature.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the retail element of the subject property we have applied a blended exit
yield of 11.00%. The exit yield applied has been based upon our opinion of yields as at the date of
valuation which have then been adjusted taking into consideration the timing of the exit, the condition of
the building at that time and also the likely occupancy rate at that time.
Our exit date has been determined having regard to the date at which the majority of the retail
accommodation becomes available to lease which is in 2018. We consider that the majority of major
occupiers / international brands will look to sign a ten year contract which would expire in 2028. On expiry
of the initial lease, we would expect the occupiers to renew, dependant on the successfulness of the
scheme, which would mean that a sale in 2032 would be attractive to potential purchasers looking to
benefit from a product offering a long unexpired term.
Offices
The office accommodation within Mivida totals some 88,942 sq m of which 54,278 sq m is available to lease
with the remainder available for purchase.
For the office accommodation available to lease, we have had regard to the rental values achieved at other
schemes across the Greater Cairo area when determining our opinion of Market Rent as at the date of
valuation as well as those achieved by the company in the office accommodation on site which is already
leased. Rental values have been applied as follows:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the
accommodation becomes leased. Once leased, the rent is then grown at 10.00% per annum under the
terms of a hypothetical lease which is common practice for commercial leases in Egypt.
Occupancy rates for each of the parcels have been applied as follows:
Parcel Sq M 2015 2016 2017 2018 2019 2020 2021 2022 2023
35 7,819 - - - - - 65.00% 75.00% 85.00% 90.00%
34-A 6,201 - - - - - - 65.00% 75.00% 85.00%
31-B 7,034 - - - - - - 65.00% 75.00% 85.00%
33 2,469 65.00% 75.00% 85.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
Parcel 2024 2025 2026 2027 2028 2029 2030 2031 2032
35 7,819 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
34-A 6,201 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
31-B 7,034 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
33 2,469 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
Having formulated our opinion of gross income we then made an allowance for operational expenditure at
EGP 346 per sq m, increasing at 3.00% per annum, to give the net income of the office accommodation. We
consider allowances at this level to be reasonable for an office scheme of this nature. This will be fully
recoverable from the tenants via a service charge.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land cost, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the office element of the subject property we have applied a blended exit
yield of 11.00%. The exit yield applied has been based upon our opinion of yields as at the date of
valuation which have then been adjusted taking into consideration the timing of the exit, the condition of
the building at that time and also the likely occupancy rate at that time.
For the office accommodation available to purchase, we have applied a current sales rate of EGP 27,372 per
sq m which we have grown at 3.00% per year until the date of sales. The current sales rate applied is in line
with other current recent transactions which we are aware of.
The timing for the office sales has been applied as follows:
Off plan sales are based upon Emaar’s payment terms with customers, which is over three years.
Other
The remaining land parcels which are to be sold as land plots and we have applied sales rates to the net
land areas for each as follows:
Land Use Sales Rate Gross Land Area Net Land Area
(EGP per sq m of (sq m) (sq m)
NLA)
Hospitality 7,200 33,466 13,980
Medical Centre 6,440 108,147 45,178
School 3,898 85,525 41,047
The sports club is a membership based club which generates revenue through paid memberships. The
initial membership costs of EGP 80,000 per annum is grown at 5.00% per annum, with memberships
growing from 20.00% in Year 1 to 100.00% in Year 9. The total number of memberships is 5,500.
Additional revenue is driven from food and beverage revenue and also sports and activities revenue. The
sports club shall be developed by Emaar but operated by a third party, with Emaar receiving a revenue
from the recurring income.
Land Costs
Remaining land costs and related interest payments have been provided by the client and have been taken
into account.
Construction Costs
Construction costs for the scheme and the timing thereof have been provided by the Client. We would
comment that the average build rates for the various asset classes appear to be reasonable; however, we
are not qualified cost consultants. If further clarification surrounding the costs applied is required then we
recommend appointing specialist cost consultant. We have been advised that construction costs are
inclusive of a 5.00% contingency and an 8.00% annual escalation that is embedded in the cost.
Outstanding construction costs for each element of the scheme are as follows:
Taxation
We have made an adjustment to reflect the liability of Income Tax payable on the income generated
through the developments operations, alongside Capital Gains Tax payable upon a future sale. These taxes
are levied by the Egyptian authorities at a rate of 22.50%. The scheme is tax exempt until the end of 2018.
Finance Costs
Our opinion of Market Value is stated gross of finance costs. Development schemes of this magnitude tend
to be predominately funded by pre-sales. Furthermore any additional finance costs will be specific to a
purchaser dependant on their financial position at the date of purchase and the relationship they have with
lending institutions.
Analysis
The net cash flow has then been discounted annually to give a Net Present Value (NPV) or Market Value for
the scheme.
In our opinion a discount rate of 16.00% is reasonable for a property of this nature and is in line with the
return that investors in the Egyptian property market would require. On this basis we consider the Market
Value of the subject property to be in the region of EGP 6,650,649,316 which we have rounded to
EGP 6,650,650,000.
Timing
The timing for development of the scheme including construction completion dates, hand over dates, and
occupation dates has been provided by the client. In our opinion the timing seems reasonable for a
development of this scale. Please refer to Appendix 3.4 for the planned development timeline.
Determination of Revenue
Residential
Marassi is a predominately residential scheme with a total of 14,691 units and some 12,503 units available
for purchase at the date of valuation.
The future revenue stream for the residential accommodation has been provided by the Client. With
regards to timing, future sales for each of the residential parcels is in line with the Client’s proposed
development plans which we consider to be reasonable. The future sales revenue for each of the parcels
has been projected in line with the historic sales on site and also having regard to how sales revenues have
grown year on year since the development was launched. We have been provided with the historic sales
data and consider the future revenue expectations to be reasonable.
The following annual price escalations have been adopted in our projections:
Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Price per sq m 14% 14% 16% 17% 17% 18% 17% 16% 16% 16%
Off plan sales are based upon Emaar’s payment terms with customers which is either over four years until
delivery or over an extended payment schedule that continues after delivery (requiring 70.00% – 80.00%
payment prior to delivery and remainder over 1 – 3 years). The extended price is at a 12.00% premium in
comparison to the four year payment plan price.
Retail
For the retail accommodation, we have had regard to the rental values achieved at other schemes across
the El Alamein area when determining our opinion of Market Rent as at the date of valuation. Rental
values have been applied as follows across the various different store types:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the
accommodation becomes leased, which began with M Porium in 2014 with the remaining accommodation
planned as per the table below. Once leased, the rent is then grown at 10.00% per annum under the terms
of a hypothetical lease which is common practice for commercial leases in Egypt, under the assumption
that rental contracts will be in local currency.
Different occupancy rates over the summer operational period have been applied depending on the nature
of the store and the amount of accommodation available as follows:
Stabilised
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Type Occupancy Rate
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
(%)
M 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Porium
M
Porium - 100 100 100 100 100 100 100 100 100 100 100 100 100
Phase 2
R1 - - - - - - - - 70 80 90 90 90 90
R2 - - - - - - - - 70 80 90 90 90 90
R3 - - - - - - - - - - 70 80 90 90
S1 - - - - - - - - - 70 80 90 90 90
S2 - - - - - - - - - - 70 80 90 90
Civic
- - - - - - - - 70 80 90 90 90 90
Center 2
Civic
- - - - - - 70 80 90 90 90 90 90 90
Center 3
We understand that a service charge is levied on the existing accommodation although we have considered
it as neutral within the cash flow. We have made a 5.00% allowance based upon the net rent, for
management fees and a 2.50% allowance, based upon the gross rent, for sales and marketing expenditure,
to give the net income for the retail accommodation. We consider allowances at these levels to be
reasonable for a retail scheme of this nature.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land cost, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the retail element of the subject property we have applied a blended exit
yield of 12.00%. The exit yield applied has been based upon our opinion of yields as at the date of
valuation which have then been adjusted taking into consideration the timing of the exit, the condition of
the building at that time and also the likely occupancy rate at that time.
Our exit date has been determined having regard to the date at which the majority of the retail
accommodation becomes available to lease which is in 2024. On expiry of the initial lease, we would
expect the occupiers to renew, dependant on the successfulness of the scheme, which would mean that a
sale in 2032 would be attractive to potential purchasers looking to benefit from a product which is mature
and benefitting from a good occupancy rate.
Hotels
Considering the proposed hotels, firstly we estimated the future revenue stream based upon the number of
rooms, the average daily rate (ADR) and the occupancy rate. ADR’s as at the date of valuation were applied
as follows:
Number of Planned
Hotel ADR
Rooms Opening Date
H1 – Mega Beach Hotel 1,936 261 2024
H2 – Hotel including BCH renovation 1,760 252 2019
H3 – Marina Hotel 1,936 180 2022
H4 – Convention Centre Hotel 1,760 542 2024
H5 – Beach Hotel 1,936 250 2024
H6 – Golf Hotel 1,936 49 2018
H7 – Greek Village Hotel 1,760 350 2023
H8 – Wellness Hotel 1,936 150 2023
R1 – Boutique Hotel 990 50 2023
H9 – Hotel replacing Beach Club 2 1,936 140 2019
Verdi Hub 990 18 2017
Blanca Hub 990 18 2019
Alamein Hotel (Part of H1) 1,760 69 2015
The hotels are anticipated to have low initial occupancy rates in the region of 25.00% - 40.00% which are
grown throughout the cash flow to reach a stabilised rate of 50.00 – 55.00%.
14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Stabilised
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Occupancy
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) Rate (%)
H1 0 0 0 0 0 0 0 0 0 0 37 40 42 45 47 50 50 50 50 50
H2 0 0 0 0 0 35 38 40 43 45 48 50 53 55 55 55 55 55 55 55
H3 0 0 0 0 0 0 0 0 40 43 45 48 50 50 50 50 50 50 50 50
H4 0 0 0 0 0 0 0 0 0 0 35 38 40 43 45 48 50 53 55 55
H5 0 0 0 0 0 0 0 0 0 0 35 38 40 43 45 48 50 50 50 50
H6 0 0 0 0 34 37 39 42 44 47 49 50 50 50 50 50 50 50 50 50
H7 0 0 0 0 0 0 0 0 0 33 36 38 41 43 46 48 51 53 55 55
H8 0 0 0 0 0 0 0 0 0 37 40 42 45 47 50 50 50 50 50 50
R1 0 0 0 0 0 0 0 0 0 35 38 40 43 45 48 50 53 55 55 55
H9 0 0 0 0 0 37 40 42 45 47 50 50 50 50 50 50 50 50 50 50
VH 0 0 0 25 28 30 33 35 38 40 43 45 48 50 50 50 50 50 50 50
BH 0 0 0 0 0 30 33 35 38 40 43 45 48 50 50 50 50 50 50 50
AH 32 35 37 40 42 45 47 50 50 50 - - - - - - - - - 50
In terms of non-room revenues we have included food and beverage revenue ranging between 35.00% and
50.00% of room revenue dependant on the rating of the hotel; other revenue (conference rooms, spa,
banquet hall, etc) has been included at rate between 1.00% and 3.00% of room revenue, again dependant
on the rating of the hotel. We set out below each revenue stream throughout the cash flow period as a
percentage of total revenue:
Operating expenses including administration, payroll, energy and water have been deducted at a rate
ranging between 35.00% and 60.00% of gross revenue, dependant on the rating of the hotel; FF&E reserve
payments were deducted at 1.00% of gross revenue in Year 1, 2.00% in Year 2, 3.00% in Year 3 and 4.00% in
Year 4; and management fees of 2.50% of gross revenue were then deducted to give a Net Operating Profit
(NOP).
The NOP for each hotel was then capitalized using an EBITDA multiple of 10 which we consider to be
market facing.
Other
Throughout Marassi there are various other ancillary uses which have a revenue stream and can therefore
be considered as part of the valuation. The revenue projections for these areas have been supplied by the
Client and we can confirm that in our opinion the assumptions seem reasonable.
Given the scale of the development and significant proportion of commercial uses on site, there are a
number of staff accommodation buildings including residential apartments, staff hostel, administration
buildings, nursery, services building and additional retail accommodation. Again, the Client has provided
the revenue assumption for these buildings which we consider to be reasonable.
Construction Costs
Construction costs for the scheme and the timing thereof have been provided by the Client. We would
comment that the average build rates for the various asset classes appear to be reasonable; however, we
are not qualified cost consultants. If further clarification surrounding the costs applied is required then we
recommend appointing specialist cost consultant. We have been advised that construction costs are
inclusive of a 5.00% contingency and an 8.00% annual escalation that is embedded in the cost.
Outstanding construction costs for each element of the scheme are as follows:
Taxation
We have made an adjustment to reflect the liability of Income Tax payable on the income generated
through the developments operations, alongside Capital Gains Tax payable upon a future sale. These taxes
are levied by the Egyptian authorities at a rate of 22.50%. The scheme is tax exempt until the end of 2018.
Finance Costs
Our opinion of Market Value is stated gross of finance costs. Development schemes of this magnitude tend
to be predominately funded by pre-sales. Furthermore any additional finance costs will be specific to a
purchaser dependant on their financial position at the date of purchase and the relationship they have with
lending institutions.
Analysis
The net cash flow has then been discounted annually to give a Net Present Value (NPV) or Market Value for
the scheme.
In our opinion a discount rate of 16.00% is reasonable for a property of this nature and is in line with the
return that investors in the Egyptian property market would require. On this basis we consider the Market
Value of the subject property to be in the region of EGP 8,916,797,613, which we have rounded to
EGP 8,916,800,000.
Having regards to comparable transactions across the Greater Cairo Area, we have applied individual land
rates to the net areas of the individual plots, based upon the planning permissions currently in place. Given
the location of the subject property and the surrounding mixed-use developments, namely Dandy Mall,
Park Avenue Mall and Smart City, we would assume that a change of use to mixed-use would likely be
granted over the entire site. We are of the opinion that a potential purchaser would take this into account
when making a purchase decision. The additional costs that the Company estimates to be paid to the
Governmental/Regulatory authorities in connection with obtaining planning permission for a mixed-use
development is estimated at EGP 450 per sq m, to be repaid over a period of eight years. In our opinion, a
conversion cost of EGP 450 per sq m seems extremely high. We would expect them to be in the region of
5.00% of land value. Given the uncertainty surrounding the designation of the various land plots our
opinion of Market Value is stated gross of any planning costs there might be.
We set out below a table outlining the land rate applied to the subject property:
We have been asked to provide our opinion of Market Value on the special assumption that the land area
of 18,550 sq m is expropriated for public use and the Market Value on the special assumption that the land
area of 18,550 sq m will not be expropriated for public use. We set out below our Market Value for each
special assumption:
Our opinions of Market Value under these special assumptions are stated gross of any planning costs which
may be incurred in the future by a purchaser.
a. Market Value;
We have set out the definitions of the above basis of valuation in Section 4 of this Valuation Report.
In addition, you have requested that we provide valuations on the following bases:-
b. Market Value on the special assumption that the land area of 18,550 sq m is expropriated for
public use;
c. Market Value on the special assumption that the land area of 18,550 sq m will not be
expropriated for public use.
In preparing our valuation on these bases, it is necessary for us to prepare valuations on a "Special
Assumption". A Special Assumption is referred to in the Glossary in the Red Book as an assumption that
"either assumes facts that differ from the actual facts existing at the valuation date, or that would not be
made by a typical market participant in a transaction on the valuation date".
In the circumstances of this instruction, we consider the above Special Assumption(s) may be regarded as
realistic, relevant and valid.
3.6 VALUATIONS
EGP 6,897,630,000 (Egyptian Pounds Six Billion, Eight Hundred and Ninety Seven Million, Six Hundred and
Thirty Thousand)
EGP 6,650,650,000 (Egyptian Pounds Six Billion, Six Hundred and Fifty Million, Six Hundred and Fifty
Thousand)
EGP 8,916,800,000 (Egyptian Pounds Eight Billion, Nine Hundred and Sixteen Million, Eight Hundred
Thousand)
EGP 933,260,000 (Egyptian Pounds Nine Hundred and Thirty Three Million, Two Hundred and Sixty
Thousand)
Market Value on the special assumption that the land area of 18,550 sq m will not be expropriated for
public use
We are of the opinion that the Market Value on the special assumption that the land area of 18,550 sq m
will not be expropriated for public use, of the freehold interest in the property described in detail in
Appendix 4, as at 31 December 2014, subject to the assumptions and comments in this Valuation Report
and the Appendices is:-
EGP 962,940,000 (Egyptian Pounds Nine Hundred and Sixty Two Million, Nine Hundred and Forty
Thousand)
Yours faithfully
4.1.2 Title
We have not had access to the title deeds of the properties. Unless specifically advised to the contrary by
you or your legal adviser, we have made the Assumption that titles are good and marketable and are free
from rights of way or easements, restrictive covenants, disputes or onerous or unusual outgoings. We have
also made the Assumption that the properties are free from mortgages, charges or other encumbrances.
Where a Certificate of Title has been made available, we have reflected its contents in our valuation(s).
Save as disclosed either in any such Certificate of Title or as referred to in our Valuation Report, we have
made the Assumption that there is good and marketable title and that each property is free from rights of
way or easements, restrictive covenants, disputes or onerous or unusual outgoings. We have also made
the Assumption that each property is free from mortgages, charges or other encumbrances.
Where a Valuation Report contains site plans these are based on extracts of the Ordnance Survey or other
maps showing, for identification purposes only, our understanding of the extent of title based on site
inspections or copy title plans supplied to us. If verification of the accuracy of these plans is required, the
matter must be referred by you to your solicitors.
Our valuations have taken account of the general condition of each of the properties as observed from the
valuation inspection. Where a separate condition or structural survey has been undertaken and made
available to us, we have reflected the contents of the survey report in our valuations, and we may have
discussed the report with the originating surveyor.
Due regard has been paid to the apparent state of repair and condition of each of the properties, but a
condition survey has not been undertaken, nor has woodwork or other parts of the structures which are
covered, unexposed or inaccessible, been inspected. Therefore, we are unable to report that the
properties are structurally sound or are free from any defects. We have made an Assumption that the
properties are free from any rot, infestation, adverse toxic chemical treatments, and structural or design
defects other than such as may be mentioned in our Valuation Report.
We have not arranged for investigations to be made to determine whether high alumina cement concrete,
calcium chloride additive or any other deleterious material have been used in the construction or any
alterations in respect of any of the properties, and therefore we cannot confirm that the properties are free
from risk in this regard. For the purposes of our valuation(s), we have made an Assumption that any such
investigation would not reveal the presence of such materials in any adverse condition.
We have not carried out an asbestos inspection and have not acted as an asbestos inspector in completing
the valuation. We have not made an enquiry of the duty holder, of an existence of an Asbestos Register or
of any plan for the management of asbestos to be made. Where relevant, we have made an Assumption
that a Register of Asbestos and Effective Management Plan is place, which does not require any immediate
expenditure, or pose a significant risk to health. We advise that such enquiries be undertaken by a lawyer
during normal pre-contract or pre-loan enquiries.
No mining, geological or other investigations have been undertaken to certify that the site is free from any
defect as to foundations. We have made an Assumption that the load bearing qualities of the sites of each
of the properties are sufficient to support the buildings constructed, or to be constructed thereon. We
have also made an Assumption that there are no services on, or crossing the site in a position which would
inhibit development or make it unduly expensive and that there are no abnormal ground conditions, nor
archaeological remains present, which might adversely affect the present or future occupation,
development or value of any of the properties.
No tests have been carried out as to electrical, electronic, heating, plant and machinery equipment or any
other services nor have the drains been tested. However, we have made an Assumption that all services,
including gas, water, electricity and sewerage are provided and are functioning satisfactorily.
4.1.5 Goodwill
No account has been taken in our valuation(s) of any business goodwill that may arise from the present
occupation of any of the properties.
Where we were not instructed to measure and calculate the floor areas, we have applied floor areas
provided by the Applicant or their agents. We have made an Assumption that these areas have been
measured and calculated in accordance with the current Code of Measuring Practice prepared by the Royal
Institution of Chartered Surveyors.
Where our enquiries have lead us to believe that a property is unaffected by contamination, flooding or
other environmental problems, then, unless you have instructed us otherwise, our valuation of that
property is based on an Assumption that no contamination or other adverse environmental matters exist in
relation to the property sufficient to affect value.
Save as disclosed in a Certificate of Title or unless otherwise advised, and unless otherwise referred to in
this Valuation Report we have made the Assumption that the building has been constructed in full
compliance with valid town planning and building regulations approvals and that where necessary has the
benefit of current Fire Risk Assessments. Similarly, we have also made the Assumption that each of the
properties are not subject to any outstanding statutory notices as to construction, use or occupation and
that the existing uses of the properties are duly authorised or established and that no adverse planning
conditions or restrictions apply.
We have made the Assumption that each of the properties comply with all relevant statutory requirements.
4.1.9 Leasing
We have read all the leases and related documents provided to us, subject to the provisions of the
paragraph below. We have made an Assumption that copies of all relevant documents have been sent to us
and that they are complete and up to date.
We have not undertaken investigations into the financial strength of any tenant. Unless we have become
aware by general knowledge, or we have been specifically advised to the contrary, we have made an
Assumption that:
a where a property is occupied under leases then the tenants are financially in a position to meet
their obligations, and
b there are no material arrears of rent or service charges, breaches of covenant, current or
anticipated tenant disputes.
However, our valuations reflect the market's general perception of the credit worthiness of the type of
tenant actually in occupation or responsible for meeting lease commitments, or likely to be in occupation.
We have also made an Assumption that wherever rent reviews or lease renewals are pending or
impending, with anticipated reversionary increases, all notices have been served validly within the
appropriate time limits.
4.1.11 Information
We have made the Assumption that the information provided by the Company, the Applicant and the
Company’s respective professional advisers in respect of each of the properties we have valued is both full
and correct. We have made the Assumption that details of all matters relevant to value within your and
their collective knowledge, such as prospective lettings, rent reviews, outstanding requirements under
legislation and planning decisions, have been made available to us, and that such information is up to date.
4.1.12 Taxation
We have made an adjustment to reflect the liability of income tax payable on the income generated
through the developments operations, alongside Capital Gains Tax payable upon a future sale. These taxes
are levied by the Egyptian authorities at the prevailing rates presented within our Valuation Reports.
No adjustment has been made to reflect costs associated with disposal incurred by the owner.
Furthermore, no allowance has been made to reflect any liability to repay any government or other grants,
taxation allowance or lottery funding that may arise on disposal.
Our valuation figure for each property is that receivable by the willing seller excluding VAT, if applicable.
Where we express an opinion upon taxation issues affecting the valuation, then such opinion should be
subject to verification by the client with a suitable qualified Chartered Tax Accountant.
Unless otherwise referred to in the Valuation Report, our valuation of the completed building has been
based on an Assumption that all works of construction have been satisfactorily carried out in accordance
with the building contract and specifications, current British Standards and any relevant codes of practice.
We have also made an Assumption that a duty of care and all appropriate warranties will be available from
the professional team and contractors, which will be assignable to third parties.
The conceptual framework settled by the IVSC is set out in paragraphs 30-34 of the IVS Framework and is
reproduced below:-
"30. The definition of market value shall be applied in accordance with the following conceptual
framework:
(a) "the estimated amount" refers to a price expressed in terms of money payable for the asset in an
arm's length market transaction. Market value is the most probable price reasonably obtainable in the
market on the valuation date in keeping with the market value definition. It is the best price reasonably
obtainable by the seller and the most advantageous price reasonably obtainable by the buyer. This
estimate specifically excludes an estimated price inflated or deflated by special terms or circumstances
such as atypical financing, sale and leaseback arrangements, special considerations or concessions granted
by anyone associated with the sale, or any element of special value;
(b) "an asset should exchange" refers to the fact that the value of an asset is an estimated amount
rather than a predetermined amount or actual sale price. It is the price in a transaction that meets all the
elements of the market value definition at the valuation date;
(c) "on the valuation date" requires that the value is time-specific as of a given date. Because markets
and market conditions may change, the estimated value may be incorrect or inappropriate at another time.
The valuation amount will reflect the market state and circumstances as at the valuation date, not those at
any other date;
(d) "between a willing buyer" refers to one who is motivated, but not compelled to buy. This buyer is
neither over eager nor determined to buy at any price. This buyer is also one who purchases in accordance
with the realities of the current market and with current market expectations, rather than in relation to an
imaginary or hypothetical market that cannot be demonstrated or anticipated to exist. The assumed buyer
would not pay a higher price than the market requires. The present owner is included among those who
constitute "the market";
(e) "and a willing seller" is neither an over eager nor a forced seller prepared to sell at any price, nor
one prepared to hold out for a price not considered reasonable in the current market. The willing seller is
motivated to sell the asset at market terms for the best price attainable in the open market after proper
marketing, whatever that price may be. The factual circumstances of the actual owner are not a part of this
consideration because the willing seller is a hypothetical owner;
(f) "in an arm's length transaction" is one between parties who do not have a particular or special
relationship, eg parent and subsidiary companies or landlord and tenant, that may make the price level
uncharacteristic of the market or inflated because of an element of special value. The market value
transaction is presumed to be between unrelated parties, each acting independently;
(g) "after proper marketing" means that the asset would be exposed to the market in the most
appropriate manner to effect its disposal at the best price reasonable obtainable in accordance with the
market value definition. The method of sale is deemed to be that most appropriate to obtain the best price
in the market to which the seller has access. The length of exposure time is not a fixed period but will vary
according to the type of asset and market conditions. The only criterion is that there must have been
sufficient time to allow the asset to be brought to the attention of an adequate number of market
participants. The exposure period occurs prior to the valuation date;
(h) "where the parties had each acted knowledgeably, prudently" presumes that both the willing buyer
and the willing seller are reasonably informed about the nature and characteristics of the asset, its actual
and potential uses and the state of the market as of the valuation date. Each is further presumed to use
that knowledge prudently to seek the price that is most favourable for their respective positions in the
transaction. Prudence is assessed by referring to the state of the market at the valuation date, not with
benefit of hindsight at some later date. For example, it is not necessarily imprudent for a seller to sell
assets in a market with falling prices at a price that is lower than previous market levels. In such cases, as is
true for other exchanges in markets with changing prices, the prudent buyer or seller will act in accordance
with the best market information available at the time;
(i) "and without compulsion" establishes that each party is motivated to undertake the transaction,
but neither is forced or unduly coerced to complete it.
31. The concept of market value presumes a price negotiated in an open and competitive market
where the participants are acting freely. The market for an asset could be an international market or a
local market. The market could consist of numerous buyers and sellers, or could be one characterised by a
limited number of market participants. The market in which the asset is exposed for sale is the one in
which the asset being exchanged is normally exchanged (see paras 16 to 20 above).
32. The market value of an asset will reflect its highest and best use. The highest and best use is the
use of an asset that maximises its potential and that is possible, legally permissible and financially feasible.
The highest and best use may be for continuation of an asset's existing use or for some alternative use.
This is determined by the use that a market participant would have in mind for the asset when formulating
the price that it would be willing to bid.
33. The highest and best use of an asset valued on a stand-alone basis may be different from its highest
and best use as part of a group, when its contribution to the overall value of the group must be considered.
34. The determination of the highest and best use involves consideration of the following:
(a) to establish whether a use is possible, regard will be had to what would be considered reasonable
by market participants,
(b) to reflect the requirement to be legally permissible, any legal restrictions on the use of the asset, eg
zoning designations, need to be taken into account,
(e) the requirement that the use be financially feasible takes into account whether an alternative use
that is physically possible and legally permissible will generate sufficient return to a typical market
participant, after taking into account the costs of conversion to that use, over and above the return on the
existing use.
Whenever Market Rent is provided, the "appropriate lease terms" which it reflects should also be stated.
"1.3.2 The definition of market rent is a modified definition of market value; IVS 230 Real Property
Interests paragraph C8-C11 provide additional commentary.
1.3.3. Market rent will vary significantly according to the terms of the assumed lease contract. The
appropriate lease terms will normally reflect current practice in the market in which the property is
situated, although for certain purposes unusual terms may need to be stipulated. Matters such as the
duration of the lease, the frequency of rent reviews and the responsibilities of the parties for maintenance
and outgoings will all impact the market rent. In certain countries or states, statutory factors may either
restrict the terms that may be agreed, or influence the impact of terms in the contract. These need to be
taken into account were appropriate.
1.3.4 Market rent will normally be used to indicate the amount for which a vacant property may be let,
or for which a let property be may relet when the existing lease terminates. Market rent is not a suitable
basis for settling the amount of rent payable under a rent review provision in a lease, where the actual
definitions and assumptions have to be used.
1.3.5 Valuers must therefore take care to set out clearly the principal lease terms that are assumed when
providing an opinion of market rent. If it is the market norm for lettings to include a payment or concession
by one party to the other as an incentive to enter into a lease, and this is reflected in the general level of
rents agreed, the market rent should also be expressed on this basis. The nature of the incentive assumed
must be stated by the valuer, along with the assumed lease terms.
Appendices
A-42
Emaar Misr for Development S.A.E.
Date of Report: 28 April 2015
Valuation date: 31 December 2014
A-43
Emaar Misr for Development S.A.E.
Uptown Cairo, Mokkatam, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
1.1.1 Location
The subject property is located in the Mokkatam Hills, a central location in the heart of Cairo, approximately
9.00 kilometres east of Downtown Cairo. The location of the subject property in relation to the wider Cairo
area can be seen on the plan below. The subject property is indicated by the red dot for identification
purposes only:
The subject property is well located, with distances to surrounding areas and landmarks as follows:
Emaar Drive, Uptown Cairo’s main road, will link Uptown Cairo to Downtown Cairo and other greater Cairo
destinations. There will be three points of access and egress on Emaar Drive: one to the north linking to 6th
of October Bridge; one to the west linking to Mokkatam Uphill Road; and one to the east linking to El
Shaheed Axes and to the ring road at Katamiya Heights.
We consider the location of Uptown Cairo and its accessibility, once its road network is complete, to be
major strengths. Once Phase 2 is complete, residents of Uptown Cairo will benefit greatly from short drive
times to the surrounding areas giving the property unrivalled accessibility in comparison to other schemes in
the area.
The figure below shows the northern and western access points highlighted in red with the eastern access
point highlighted in blue. The eastern access point, known as Emaar Drive Phase 2 is yet to be completed,
which is currently planned for completion in 2017:
We have been provided with a copy of the master plan of Uptown Cairo and understand its boundaries to be
as follows, outlined in red for identification purposes only:
1.1.2 Description
The subject property comprises a master planned, mixed-use development. The predominant land use is
residential accommodation (villas, townhouses and apartments) surrounding a golf course, with ancillary
uses such as retail outlets and clubhouses. The development is the only gated community in the centre of
Cairo.
Towards the eastern boundary of the scheme, at Exit 3, an area of land has been allocated for commercial
uses. This area, known as Emaar Square, will provide residential accommodation, retail accommodation,
office accommodation, two hotels, a spa hotel, and a school. Emaar Square is targeted to become Cairo’s
new downtown.
We include a copy of the master plan as Appendix 1.1 and we include the planned development timeline for
the project as Appendix 1.5.
Residential
The residential accommodation within Uptown Cairo is divided into 29 different parcels with the proposed
breakdown of accommodation as follows:
Planned Planned
Units Average GFA
Parcel Villas Townhouses Apartments Launch Delivery
Sold (sq m)
Date Date
Reyna 39 - - 36 2006 2015 695
Isadore 34 - - 34 2007 2015 490
Eleva - 172 - 166 2007 2015 279
Aurora - - 155 155 2006 2015 210
Alba Alyah 44 - - 44 2011 2015 311
Alba Splendia 80 - - 80 2007 2015 496
Alto - - 122 122 2011 2016 176
Terencia 85 - - 81 2012 2017 466
Azzura A - - 530 0 2020 2024 165
Azzura B - - 530 0 2021 2025 165
Azzura C - - 265 0 2022 2025 165
Azzura D - - 530 0 2023 2026 165
Emaar Sq Res
- - 396 0 2015 2021 140
Apartments A
Emaar Sq Res
- - 793 0 2017 2022 140
Apartments B
Emaar Sq Res
- - 973 0 2018 2022 140
Apartments C
Emaar Sq Res
- - 416 0 2020 2022 140
Apartments D
Emaar Sq Res
- - 719 0 2020 2024 140
Apartments E
Emaar Sq SA A - - 135 0 2016 2021 188
Emaar Sq SA B - - 179 0 2019 2024 188
The Sierras P1 - - 133 118 2013 2017 211
The Sierras P2 - - 138 126 2014 2017 215
The Sierras P3 - - 115 35 2015 2018 203
Levana Phase 1 47 88 - 114 2014 2018 345
Levana Phase 2 30 - - 16 2015 2018 506
Levana Phase 3 85 - - 0 2015 2019 464
Levana
43 - - 0 2015 2020 493
Remaining
Village B - 1 180 - - 0 2016 2019 269
Village B - 2 180 - - 0 2017 2020 269
Village B - 3 180 - - 0 2019 2021 269
Z1 - Resi 1 97 - - 0 2020 2024 348
Z1 - Resi 2 97 - - 0 2021 2024 348
Z3 - Phase 1 - - 128 0 2015 2019 172
Z3 - Phase 2 - - 210 0 2015 2019 173
Z5 & Village A –
- - 73 0 2016 2019 195
Phase 1
Z5 & Village A – - - 287 0 2017 2020 196
Planned Planned
Units Average GFA
Parcel Villas Townhouses Apartments Launch Delivery
Sold (sq m)
Date Date
Phase 2
Total 1,221 260 6,827 1,127
The residential accommodation is in various stages of development throughout the subject property, with
some units in the early stages of construction or design, whilst others are fully constructed, sold and
occupied.
The accommodation is of concrete frame construction with rendered block work elevations surmounted by
flat or pitched tiled roofs. Internally the units are finished to a high specification with the benefit of tiled
floors, painted plaster walls and ceilings, fully fitted kitchens, fully fitted bathrooms, and air conditioning
throughout.
Each residential parcel has a community centre which is for the use of the residents. The community centres
typically have the benefit of a swimming pool, retail shop or food and beverage outlet, meeting / function
room, gym and children’s area. These are non-income generating assets although help to increase the
attractiveness of the scheme for potential purchasers.
Emaar Square
At present, Emaar Square is currently a plot of raw land; however, once complete we understand it will
comprise a high-end, open-air shopping centre, office accommodation and two hotels. In keeping with the
residential accommodation within Uptown Cairo and Emaar’s other projects, we expect the accommodation
to be developed to a high specification. We understand the shopping centre is likely to be operated by
Emaar Malls with the hotels operated by The Address and Vida.
The clubhouse is of concrete frame construction with rendered block work elevations surmounted by a
pitched tiled roof. Internally the clubhouse is finished to a high specification and has the benefit of a
restaurant, bar, smoking room, offices, and banquet hall.
raw land to a third party developer. The land allocated for the school will be developed by Emaar and
operated by American International School (AIS) with a preliminary agreement already in place.
We include as Appendix 1.2, a selection of photographs taken during our inspection of the property on 28
January 2015.
1.1.3 Condition
The property appears to have been well maintained having regard to its age, use and construction.
However, we have not undertaken a condition survey and we would draw your attention to our Assumptions
in Section 4.1.
1.1.6 Site
The property comprises an irregular shaped site with approximate site areas of each element as follows:
In practice, purchasers in the property market do not make such an assumption about contamination and a
purchaser of the property may require appropriate investigations to be made so as to assess any risk before
completing a transaction.
We have no basis upon which to assess the reasonableness of this Assumption. If it were to prove invalid
then the value would fall by an unspecified amount.
1.1.8 Planning
We have been provided with a copy of the planning permission approved by Municipality of Cairo. We
include a copy of the approval as Appendix 1.3.
1.1.9 Tenure
We have not been provided with a copy of the title deeds for the subject property. We have therefore
assumed that the property is held freehold, free from rent charge, restriction as to use, title or occupation
and free from any other restriction which may affect value.
1.1.10 Tenancies
The subject property is multi-let in part with the majority of units being sold off on a unit by unit basis. We
have not been provided with copies of the lease agreements and so have relied on the financial information
provided by the Client.
Timing
The timing for development of the scheme including construction completion dates, hand over dates, and
occupation dates has been provided by the client. In our opinion the timing seems reasonable for a
development of this scale. Please refer to Appendix 1.5 for the planned development timeline.
Determination of Revenue
Residential
Uptown Cairo is a predominately residential scheme with some 8,308 units with a total of 7,181 units
available for purchase at the date of valuation.
The future revenue stream for the residential accommodation has been provided by the Client. With
regards to timing, future sales for each of the residential parcels is in line with the Client’s proposed
development plans which we consider to be reasonable. The future sales revenue for each of the parcels
has been projected in line with the historic sales on site and also having regard to how sales revenues have
grown year on year since the development was launched. We have been provided with the historic sales
data and consider the future revenue expectations to be reasonable.
The following annual price escalations have been adopted in our projections:
Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Price per sq m 13% 15% 17% 17% 18% 18% 18% 18% 18% 18%
Off plan sales are based upon Emaar’s payment terms with customers which is either over four years until
delivery or over an extended payment schedule that continues after delivery (requiring 70.00% – 80.00%
payment prior to delivery and remainder over 1 – 3 years). The extended price is at a 12.00% premium in
comparison to the four year payment plan price.
Retail
For the retail accommodation, we have had regard to the rental values achieved at other schemes across the
Greater Cairo area when determining our opinion of Market Rent as at the date of valuation. Rental values
have been applied as follows across the various different store types:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the accommodation
becomes leased in 2021. Once leased, the rent is then grown at 10.00% per annum under the terms of a
hypothetical lease which is common practice for commercial leases in Egypt, under the assumption that
rental contracts will be in local currency.
UTC Clubhouse is already operational and has been income generating for a number of years. Predicted
revenue for 2015 is EGP 8,250,000 which we have grown at 10.00% per annum.
Various occupancy rates have been applied depending upon the nature of the store and the amount of
accommodation available as follows:
Additional income is generated through speciality leasing, sponsorship, turnover rent and outdoor food and
beverage. These are included in the cash flow as follows:
Having formulated our opinion of gross income we then made a 15.00% allowance, based upon the gross
rent, for operational expenditure, a 5.00% allowance based upon the net rent, for management fees and a
3.00% allowance, based upon the gross rent, for sales and marketing expenditure, to give the net income for
the retail accommodation. We consider allowances at these levels to be reasonable for a retail scheme of
this nature.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land cost, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the retail element of the subject property we have applied a blended exit
yield of 10.00%. The exit yield applied has been based upon our opinion of yields as at the date of valuation
which have then been adjusted taking into consideration the timing of the exit, the condition of the building
at that time and also the likely occupancy rate at that time.
Our exit date has been determined having regard to the date at which the majority of the retail
accommodation becomes available to lease which is in 2021. We consider that the majority of major
occupiers / international brands will look to sign a ten year contract which would expire in 2031. On expiry
of the initial lease, we would expect the occupiers to renew, dependant on the successfulness of the
scheme, which would mean that a sale in 2032 would be attractive to potential purchasers looking to benefit
from a product offering a long unexpired term.
Offices
The proposed office accommodation within Uptown Cairo totals some 83,102 sq m of which 70.00% is going
to be made available to lease and 30.00% available for purchase.
For the office accommodation available to lease, we have had regard to the rental values achieved at other
schemes across the Greater Cairo area when determining our opinion of Market Rent as at the date of
valuation. Rental values have been applied as follows:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the accommodation
becomes leased. Once leased, the rent is then grown at 10.00% per annum under the terms of a
hypothetical lease which is common practice for commercial leases in Egypt, under the assumption that
rental contracts will be in local currency.
Having formulated our opinion of gross income we then made an allowance for operational expenditure at
EGP 105 per sq m, increasing at 3.00% per annum, for management fees at 5.00% per annum, based upon
the net rent, for G&A expenditure at 1.50% per annum, based upon the net rent, and for sales and
marketing expenditure, at 2.50% per annum, based upon the gross rent, to give the net income for the office
rental accommodation. We consider allowances at this level to be reasonable for an office scheme of this
nature.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land cost, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the office element of the subject property we have applied a blended exit
yield of 10.00%. The exit yield applied has been based upon our opinion of yields as at the date of valuation
which have then been adjusted taking into consideration the timing of the exit, the condition of the building
at that time and also the likely occupancy rate at that time.
For the office accommodation available to purchase, we have applied a current sales rate of EGP 33,000 per
sq m which we have grown at 3.00% per annum. The current sales rate applied is in line with other current
recent transactions which we are aware of. We have anticipated that office sales will occur evenly over a
two year period, with sales of 12,465 sq m in both 2017 and 2018.
Off plan sales are based upon Emaar’s payment terms with customers, which is over three years.
Hotels
Considering the two proposed hotels, firstly we estimated the future revenue stream based upon the
number of rooms, the average daily rate (ADR) and the occupancy rate.
In terms of the ADR, we have had consideration of the rates achieved by similar hotels in the area. Given the
proposed quality and 5*+ rating of ‘Hotel 1” we have applied an ADR of EGP 2,285. ‘Hotel 2’ is a 5* hotel
and so we have made a 20.00% adjustment and applied an ADR of 1,828.
Hotel 1 is anticipated to have an initial occupancy rate of 45.00% in year one (2021), which we have then
grown to reach a stabilized occupancy rate of 63.00% in Year 7 (2027). Hotel 2 is anticipated to have an
initial occupancy rate of 50.00% in year one (2024), which we have then grown to reach a stabilized
occupancy rate of 66.00% in Year 7 (2030).
In terms of non-room revenues we have included food and beverage revenue at 60.00% of room revenue
and other revenue (conference rooms, spa, banquet hall, etc) has been included at 3.00% of room revenue.
We set out below each revenue stream throughout the cash flow period as a percentage of total revenue:
Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
Room Revenue 60% 60% 60% 60% 60% 60% 60% 60% 60% 60% 60% 60%
F&B Revenue 37% 37% 37% 37% 37% 37% 37% 37% 37% 37% 37% 37%
Other Revenue 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% 3%
Operating expenses including administration, payroll, energy and water were deducted at 51.00% of gross
revenue; FF&E reserve payments were deducted at 1.00% of gross revenue in Year 1, 2.00% in Year 2, 3.00%
in Year 3 and 4.00% in Year 4 and thereafter; and management fees of 2.50% of gross revenue were then
deducted to give a Net Operating Profit (NOP).
The NOP was then capitalized using an EBITDA multiple of 10 for both hotels which we consider to be market
facing.
Spa Hotel
The land parcel which has been allocated for the Spa Hotel is to be sold as a land plot and we have applied
sales rate to the net land area as follows:
Land Use Sales Rate Gross Land Area Net Land Area
(EGP per sq m of (sq m) (sq m)
NLA)
Spa Hotel 4,000 57,724 25,781
School
We are advised that the Company has a preliminary agreement with the American International School (AIS)
to operate the school property under a revenue share agreement. The terms involve a fixed contract with a
minimum guaranteed payment plus a percentage revenue share, should revenue targets be achieved. We
have utilized the income and subsequent revenue share projections provided by the Company, which we
consider to be reasonable for such a development. Revenue is anticipated to begin in 2018 as follows:
In determining the exit value for the school element of the subject property we have applied a blended exit
yield of 10.00%. The exit yield applied has been based upon our opinion of yields as at the date of valuation
which have then been adjusted taking into consideration the timing of the exit, the condition of the building
at that time and also the likely occupancy rate at that time.
Construction Costs
Construction costs for the scheme and the timing thereof have been provided by the Client. We would
comment that the average build rates for the various asset classes appear to be reasonable; however, we
are not qualified cost consultants. If further clarification surrounding the costs applied is required then we
recommend appointing specialist cost consultant. We have been advised that construction costs are
inclusive of a 5.00% contingency and an 8.00% annual escalation that is embedded in the cost.
Outstanding construction costs for each element of the scheme are as follows:
Taxation
We have made an adjustment to reflect the liability of Income Tax payable on the income generated through
the developments operations, alongside Capital Gains Tax payable upon a future sale. These taxes are levied
by the Egyptian authorities at a rate of 22.50%.
Finance Costs
Our opinion of Market Value is stated gross of finance costs. Development schemes of this magnitude tend
to be predominately funded by pre-sales. Furthermore any additional finance costs will be specific to a
purchaser dependant on their financial position at the date of purchase and the relationship they have with
lending institutions.
Analysis
The net cash flow has then been discounted annually to give a Net Present Value (NPV) or Market Value for
the scheme.
In our opinion a discount rate of 16.00% is reasonable for a property of this nature and is in line with the
return that investors in the Egyptian property market would require. On this basis we consider the Market
Value of the subject property to be in the region of EGP 6,897,632,177 which we have rounded to EGP
6,897,630,000.
TOTAL
EGP 6,897,632,177
SAY
EGP 6,897,630,000
(Egyptian Pounds Six Billion, Eight Hundred and Ninety Seven Million, Six Hundred and Thirty Thousand)
2 15
3
4
A-60
12 5
10
8
14 9
7 Exit 3:
11 Mehwar
El Shaheed
13 6
Emaar Misr for Development S.A.E.
Uptown Cairo, Mokkatam, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
A-62
UTC Apartments
UTC Villa
A-63
UTC Community Centre
A-64
Emaar Misr for Development S.A.E.
Uptown Cairo, Mokkatam, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
! ! ! ! ! !
"##
$
! ! ! ! ! !
%
! ! ! ! ! !
! !
&$
! ! ! !
&
! ! ! ! !
! ! ! ! !
&$'
!
" #
A-74
"
(
) * ! ! ! ! !
(+ ! ! ! ! !
(+
&,-
Emaar Misr for Development S.A.E.
Uptown Cairo, Mokkatam, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
A-77
Emaar Misr for Development S.A.E.
Mivida, Greater Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
2.1.1 Location
The subject property is located in Greater Cairo approximately 29.00 kilometres east of Downtown Cairo.
The location of the subject property in relation to the wider Cairo area can be seen on the plan below. The
subject property is indicated by the red dot for identification purposes only:
The subject property is well located, with distances to surrounding areas and landmarks as follows:
Primary access to the subject property is via South El Teseen Street (Road 90) which in turn provides access
to the main highways in the area. We include below, a plan showing the location of the subject property in
relation to the surrounding highways:
We consider the subject property to be well located, being in close proximity to a number of major highways
which provide access to the Greater Cairo area via Road 90, Suez and Sokhna Roads. Furthermore it is well
located in close proximity to other New Cairo amenities including the American University, New Cairo
Hospital and the current retail provision on South El-Teseen Street (Road 90), and 20 minutes from the
airport.
We have been provided with a copy of the master plan of Mivida and understand its boundaries to be as
follows, outlined in red for identification purposes only:
2.1.2 Description
The subject property comprises a master planned, mixed-use development. The predominant land use is
residential accommodation (villas, townhouses and apartments) surrounding a central park, with ancillary
uses such as retail outlets and clubhouses.
The western quadrant of Mivida (known as Mivida Downtown) has been allocated for commercial uses
providing retail accommodation, office accommodation, a school, medical centers, a sports club, and a hotel,
in addition to the residential accommodation in such area. It is the vision of Emaar that this area becomes
the new hub for East Cairo.
We include a copy of the master plan as Appendix 2.1 and we include the planned development timeline for
the project as Appendix 2.4.
Residential
The residential accommodation within Mivida is divided into 38 different parcels with the proposed
breakdown of accommodation as follows:
Planned Planned
Units Average GFA
Parcel Villas Townhouses Apartments Launch Delivery
Sold (sq m)
Date Date
1A 100 - - - 2016 2020 555
1B 193 - - - 2017 2020 456
1C 95 - - - 2015 2018 457
2 - 214 - 209 2009 2015 215
3 110 - - 110 2009 2015 265
4 54 - - 53 2009 2015 404
5 61 - - 61 2010 2015 311
6 68 - - 67 2012 2018 401
7 - 146 - 145 2012 2016 323
8 139 - - 134 2014 2018 399
10 - - 400 383 2014 2018 188
12 101 - - 101 2012 2016 359
13 - 76 - - 2018 2021 349
14 - 176 - 175 2012 2017 315
15 185 - - 183 2011 2017 363
16 - 184 - 184 2011 2016 228
17 72 - - 71 2014 2017 408
18 61 - - 61 2013 2018 411
19 - 98 - - 2017 2020 349
20 - 116 - - 2017 2020 349
21A - 64 - 2015 2018 350
21B - - 112 - 2015 2018 250
21C 87 - - 2015 2018 429
22 155 - 155 2010 2015 249
23 - - 512 509 2012 2017 184
24 - - 560 - 2018 2021 173
25A - 76 - 66 2014 2017 349
25B - - 32 - 2015 2018 250
27A - 66 - 62 2014 2019 349
27B - - 64 - 2015 2018 250
28 - 84 - 84 2013 2017 315
29 - 80 - 79 2013 2017 315
36 - - 136 - 2016 2020 183
37 - - 136 - 2015 2018 192
38 - - 136 - 2015 2018 192
39 - - 136 - 2016 2019 183
40 - - 136 - 2015 2019 192
Planned Planned
Units Average GFA
Parcel Villas Townhouses Apartments Launch Delivery
Sold (sq m)
Date Date
41 - - 136 - 2015 2019 192
Total 1,481 1,380 2,496 2,892
The residential accommodation is in various stages of development throughout the subject property, with
some units in the early stages of construction or design, whilst others are fully constructed, sold and
occupied.
The accommodation is of concrete frame construction with rendered block work elevations surmounted by
flat or pitched tiled roofs. Internally the units are either finished to a high specification with the benefit of
tiled floors, painted plaster walls and ceilings, fully fitted kitchens, fully fitted bathrooms, and air
conditioning throughout or are supplied as shell and core with the purchaser responsible for the fit out
works. However, in line with management strategy, in instances where it offers units that are not fully
finished, certain provisions are included in the agreements with customers to ensure completion of finishing
in a certain timeframe.
The 38 residential parcels are divided into four zones and each zone has a clubhouse, except Zone 4, which is
for the use of the residents. The clubhouses typically have the benefit of a swimming pool, retail shop or
food and beverage outlet, meeting / function room, gym and children’s area. These are non-income
generating assets although help to increase the attractiveness of the scheme for potential purchasers.
Commercial Offering
The western quadrant of Mivida, known as Zone 4, comprises the commercial element of the development
and will, once complete, will provide a retail boulevard, business centre, medical centre, school, and hotel.
Construction has commenced with a number of the office buildings in already in place.
The four storey office accommodation is of concrete frame construction with rendered block work
elevations surmounted by a flat roof. The ground floor has a floor to ceiling height glazed panel with the
upper floors benefitting glazed fenestrations. Internally the commonareas are fitted to good specification
with the benefit of tiled floors, painted plaster walls and ceilings, fluorescent strip lighting, perimeter
trunking, and air conditioning. The leasable areas are provided shell and core.
In keeping with the residential and office accommodation within Mivida and Emaar’s other projects, we
expect the retail accommodation to be developed to a high specification.
Central Park
At the centre of Mivida lies a 33 acre park which will provide a focal point of the scheme. As well as
landscaped gardens and open recreation areas, Central Park will also benefit from a number of food and
beverage outlets.
We include as Appendix 2.2, a selection of photographs taken during our inspection of the property on 26
January 2015.
2.1.3 Condition
The property appears to have been well maintained having regard to its age, use and construction.
However, we have not undertaken a condition survey and we would draw your attention to our Assumptions
in Section 4.1.
2.1.6 Site
The property comprises an irregular shaped site with approximate site areas of each element as follows:
In practice, purchasers in the property market do not make such an assumption about contamination and a
purchaser of the property may require appropriate investigations to be made so as to assess any risk before
completing a transaction.
We have no basis upon which to assess the reasonableness of this Assumption. If it were to prove invalid
then the value would fall by an unspecified amount.
2.1.8 Planning
We have not been provided with any planning documentation relating to the subject property and so, for
the purposes of this valuation, we have made the assumption that current or future development on site is
in compliance with any planning permissions issued by the Municipality.
We recommend that the planning permission is reviewed and verified by your solicitors.
2.1.9 Tenure
We have not been provided with a copy of the title deeds for the subject property. We have assumed that
the property is held freehold, free from rent charge, restriction as to use, title or occupation and free from
any other restriction which may affect value.
We understand the deeds will be obtained once all the land payments have been made. Once obtained, we
recommend the deeds are verified by your solicitors.
2.1.10 Tenancies
The subject property is multi-let in part with the majority of units being sold off on a unit by unit basis. We
have been provided with a selection of the lease agreements and can confirm these are in line with the
financial information supplied by the Client.
Timing
The timing for development of the scheme including construction completion dates, hand over dates, and
occupation dates has been provided by the client. In our opinion the timing seems reasonable for a
development of this scale. Please refer to Appendix 2.4 for the planned development timeline.
Determination of Revenue
Residential
Mivida is a predominately residential scheme with some 5,357 units with a total of 2,465 units available for
sale at the date of valuation.
The future revenue stream for the residential accommodation has been provided by the Client. With
regards to timing, future sales for each of the residential parcels is in line with the Client’s proposed
development plans which we consider to be reasonable. The future sales revenue for each of the parcels
has been projected in line with the historic sales on site and also having regard to how sales revenues have
grown year on year since the development was launched. We have been provided with the historic sales
data and consider the future revenue expectations to be reasonable.
The following annual price escalations have been adopted in our projections:
Off plan sales are based upon Emaar’s payment terms with customers which is either over four years until
delivery or over an extended payment schedule that continues after delivery (requiring 70.00% – 80.00%
payment prior to delivery and remainder over 1 – 3 years). The extended price is at a 12.00% premium in
comparison to the initial purchase price.
Retail
For the retail accommodation, we have had regard to the rental values achieved at other schemes across the
Greater Cairo area when determining our opinion of Market Rent as at the date of valuation. Rental values
have been applied as follows across the various different store types:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the accommodation
becomes leased, which begins with the Lake Retail in 2017 with the remaining accommodation planned in
2018 and 2019. Once leased, the rent is then grown at 10.00% per annum under the terms of a hypothetical
lease which is common practice for commercial leases in Egypt, under the assumption that rental contracts
will be in local currency.
Different occupancy rates have been applied depending on the nature of the store and the amount of
accommodation available as follows:
Additional income is generated through speciality leasing, sponsorship, turnover rent and outdoor food and
beverage. These are included in the cash flow as follows:
Having formulated our opinion of gross income we then made a 15.00% allowance, based upon the gross
rent, for operational expenditure, a 5.00% allowance based upon the net rent, for management fees and a
3.00% allowance, based upon the gross rent, for sales and marketing expenditure, to give the net income for
the retail accommodation. We consider allowances at these levels to be reasonable for a retail scheme of
this nature.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the retail element of the subject property we have applied a blended exit
yield of 11.00%. The exit yield applied has been based upon our opinion of yields as at the date of valuation
which have then been adjusted taking into consideration the timing of the exit, the condition of the building
at that time and also the likely occupancy rate at that time.
Our exit date has been determined having regard to the date at which the majority of the retail
accommodation becomes available to lease which is in 2018. We consider that the majority of major
occupiers / international brands will look to sign a ten year contract which would expire in 2028. On expiry
of the initial lease, we would expect the occupiers to renew, dependant on the successfulness of the
scheme, which would mean that a sale in 2032 would be attractive to potential purchasers looking to benefit
from a product offering a long unexpired term.
Offices
The office accommodation within Mivida totals some 88,942 sq m of which 54,278 sq m is available to lease
with the remainder available for purchase.
For the office accommodation available to lease, we have had regard to the rental values achieved at other
schemes across the Greater Cairo area when determining our opinion of Market Rent as at the date of
valuation as well as those achieved by the company in the office accommodation on site which is already
leased. Rental values have been applied as follows:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the accommodation
becomes leased. Once leased, the rent is then grown at 10.00% per annum under the terms of a
hypothetical lease which is common practice for commercial leases in Egypt.
Occupancy rates for each of the parcels have been applied as follows:
Parcel Sq M 2015 2016 2017 2018 2019 2020 2021 2022 2023
35 7,819 - - - - - 65.00% 75.00% 85.00% 90.00%
34-A 6,201 - - - - - - 65.00% 75.00% 85.00%
31-B 7,034 - - - - - - 65.00% 75.00% 85.00%
33 2,469 65.00% 75.00% 85.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
Parcel 2024 2025 2026 2027 2028 2029 2030 2031 2032
35 7,819 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
34-A 6,201 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
31-B 7,034 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
33 2,469 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00% 90.00%
Having formulated our opinion of gross income we then made an allowance for operational expenditure at
EGP 346 per sq m, increasing at 3.00% per annum, to give the net income of the office accommodation. We
consider allowances at this level to be reasonable for an office scheme of this nature. This will be fully
recoverable from the tenants via a service charge.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land cost, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the office element of the subject property we have applied a blended exit
yield of 11.00%. The exit yield applied has been based upon our opinion of yields as at the date of valuation
which have then been adjusted taking into consideration the timing of the exit, the condition of the building
at that time and also the likely occupancy rate at that time.
For the office accommodation available to purchase, we have applied a current sales rate of EGP 27,372 per
sq m which we have grown at 3.00% per year until the date of sales. The current sales rate applied is in line
with other current recent transactions which we are aware of.
The timing for the office sales has been applied as follows:
Off plan sales are based upon Emaar’s payment terms with customers, which is over three years.
Other
The remaining land parcels which are to be sold as land plots and we have applied sales rates to the net land
areas for each as follows:
Land Use Sales Rate Gross Land Area Net Land Area
(EGP per sq m of (sq m) (sq m)
NLA)
Hospitality 7,200 33,466 13,980
Medical Centre 6,440 108,147 45,178
School 3,898 85,525 41,047
The sports club is a membership based club which generates revenue through paid memberships. The initial
membership costs of EGP 80,000 per annum is grown at 5.00% per annum, with memberships growing from
20.00% in Year 1 to 100.00% in Year 9. The total number of memberships is 5,500. Additional revenue is
driven from food and beverage revenue and also sports and activities revenue. The sports club shall be
developed by Emaar but operated by a third party, with Emaar receiving a revenue from the recurring
income.
Land Costs
Remaining land costs and related interest payments have been provided by the client and have been taken
into account.
Construction Costs
Construction costs for the scheme and the timing thereof have been provided by the Client. We would
comment that the average build rates for the various asset classes appear to be reasonable; however, we
are not qualified cost consultants. If further clarification surrounding the costs applied is required then we
recommend appointing specialist cost consultant. We have been advised that construction costs are
inclusive of a 5.00% contingency and an 8.00% annual escalation that is embedded in the cost.
Outstanding construction costs for each element of the scheme are as follows:
Taxation
We have made an adjustment to reflect the liability of Income Tax payable on the income generated through
the developments operations, alongside Capital Gains Tax payable upon a future sale. These taxes are levied
by the Egyptian authorities at a rate of 22.50%. The scheme is tax exempt until the end of 2018.
Finance Costs
Our opinion of Market Value is stated gross of finance costs. Development schemes of this magnitude tend
to be predominately funded by pre-sales. Furthermore any additional finance costs will be specific to a
purchaser dependant on their financial position at the date of purchase and the relationship they have with
lending institutions.
Analysis
The net cash flow has then been discounted annually to give a Net Present Value (NPV) or Market Value for
the scheme.
In our opinion a discount rate of 16.00% is reasonable for a property of this nature and is in line with the
return that investors in the Egyptian property market would require. On this basis we consider the Market
Value of the subject property to be in the region of EGP 6,650,649,316 which we have rounded to EGP
6,650,650,000.
TOTAL
EGP 6,650,649,316
SAY
EGP 6,650,650,000
(Egyptian Pounds Six Billion, Six Hundred and Fifty Million, Six Hundred and Fifty Thousand)
A-94
Emaar Misr for Development S.A.E.
Mivida, Greater Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
A-96
Mivida Community Centre
A-97
Mivida Offices
A-98
Emaar Misr for Development S.A.E.
Mivida, Greater Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
!""#
$
%%&'()*&+
#
(#
(# %
!"
,/
('
A-100
Emaar Misr for Development S.A.E.
Mivida, Greater Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
A-103
Emaar Misr for Development S.A.E.
Marassi, El Alamein, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
3.1.1 Location
The subject property is located on the north coast of Egypt almost equidistant between Alexandria and
Marsa Matrouh. The location of the subject property in relation to the wider area can be seen on the plan
below. The subject property is indicated by the red dot for identification purposes only:
The subject property is well located on the Alexandria-Marsa Matrouh Road, with distances to surrounding
areas and landmarks as follows:
The property is easily accessible from nearby airports, with Al Alamein Airport approximately 20 minutes
away and Borg El Arab Airport approximately 55 minutes away.
Marassi is located on the north side of the Alexandria-Marsa Matrouh Road and is bounded to the north by
the Mediterranean Sea. The location of the subject property in relation to its immediate surrounds can be
seen on the plan below. The subject property is indicated by the red dot for identification purposes only:
We have been provided with a copy of the site plan and understand its boundaries to be as follows:
Given the development is considered as a holiday destination, there is currently one operational hotel
(which is to be completely refurbished) with plans for another 11 hotels once complete.
The most southerly part of the development comprises an area of land which has been allocated for
commercial and residential use surrounding a marina.
We include a copy of the master plan as Appendix 3.1 and we include the planned development timeline for
the project as Appendix 3.4.
Residential
The residential accommodation within Marassi is divided into 44 different districts with the proposed
breakdown of accommodation as follows:
Planned Planned
Average GFA
Parcel Villas Townhouses Apartments Units Sold Launch Delivery
(sq m)
Date Date
Blanca 1A/B 67 48 - 108 2014 2018 366
Blanca 1C - - 48 48 2014 2018 212
Blanca 2 - - 330 55 2014 2019 170
Blanca 3A 1 - - 0 2016 2019 395
Blanca 3B - 10 - 0 2016 2019 324
Blanca 3C - - 212 0 2016 2019 177
Blanca 4A 30 - - 0 2015 2019 395
Blanca 4B - 78 - 0 2015 2019 324
Valencia V4S 44 - - 32 2008 2017 1064
Valencia V5 15 - - 0 2015 2018 709
Vectoria 184 - - 164 2007 2015 511
Verdi 1&2 - - 396 386 2012 2017 167
Verdi 1V 57 - - 57 2014 2017 355
Verdi 1T - 50 - 49 2014 2017 294
Modena 275 - - 0 2020 2024 202
Veneto West - 80 - 80 2010 2016 357
Veneto East 90 - - 0 2020 2023 321
Isola 100 63 - 157 2007 2016 444
Verona 121 196 - 292 2007 2017 396
Arezzo 106 64 - 160 2007 2015 483
Catania - - 536 505 2008 2015 161
Safi 1 11 10 2013 2015 523
Safi 2 48 - - 41 2013 2018 630
Armani A 25 - - 0 2016 2020 659
Armani B 25 0 2016 2020 659
Greek Village 1 - - 650 0 2017 2020 65
Greek Village 2 - - 1,100 0 2017 2020 96
Greek Village 3 - - 650 0 2017 2020 119
Greek Village 4 - - 130 0 2017 2020 158
R1 - - 1,500 0 2015 2021 95
R2 - - 1,350 0 2016 2022 93
R3 - - 1,350 0 2019 2024 95
Planned Planned
Average GFA
Parcel Villas Townhouses Apartments Units Sold Launch Delivery
(sq m)
Date Date
S1 - - 1,400 0 2018 2023 92
S2 - - 1,560 0 2019 2024 92
H1 62 - - 0 2021 2023 377
H2 - - 120 0 2016 2019 159
H3 - 300 0 2017 2022 80
H5 - - 170 0 2020 2024 124
H6 - - 88 44 2014 2018 146
H7 - - 300 0 2018 2023 75
H8 35 - - 0 2019 2022 300
SL1 - - 205 0 2017 2017 69
SL2 - - 205 0 2019 2019 69
SL3 - - 206 0 2021 2021 69
Total 1,296 589 12,806 2,188
The residential accommodation is in various stages of development throughout the subject property with
some units in the early stages of construction and design whilst others are fully constructed, sold and
occupied.
The accommodation is of concrete frame construction with rendered block work elevations surmounted by
flat or pitched tiled roofs. Internally the units are finished to a high specification with the benefit of tiled
floors, painted plaster walls and ceilings, fully fitted kitchens, fully fitted bathrooms, and air conditioning
throughout.
Each residential parcel has a clubhouse which is for the use of the residents. The clubhouse’s typically have
the benefit of a swimming area, retail shop or food and beverage outlet and children’s area. These are non-
income generating assets although help to increase the attractiveness of the scheme for potential
purchasers.
Overall the residential provision is to a high standard and presents very well. We would also comment upon
the area known as Valencia which comprises 59 villas fronting the Mediterranean Sea. These exclusive villas
are finished to an extremely high standard and have unrivaled views compared to the other districts on site.
Adjacent to Valencia is a plot of land which has been allocated for the development of 50 Armani branded
villas. Once complete, we expect these villas will be the most exclusive area within the development with
views over the Mediterranean and in close proximity to the Beach Club and Hotels.
Retail Accommodation
At present there is one retail centre within Marassi which became operational in 2014. Phase 2 of the centre
is nearly complete and will be operational in 2015.
Located close to Gate 3, along the western boundary of the development, “M Porium” is of concrete frame
construction with glazed and rendered block work elevations surmounted by a flat roof. There are
approximately 30 units which are arranged in a horse shoe formation around a central court yard.
There are plans to develop an additional seven retail areas with a total leasable area of 27,263 sq m.
The three storey hotel, constructed in a linear format parallel with the beach front, is of concrete frame
construction with rendered block work elevations surmounted by a flat roof. Externally the hotel looks
dated although internally, a program of refurbishment works has kept it in good condition. On site there are
also a number of holiday villas which were being refurbished at the time of our inspection.
Located adjacent to El Alamein Hotel is the Beach Club. Recently completed, this high specification building,
provides residents with a range of restaurants, bars, lounges alongside a number of swimming pools, a gym
and various retail units.
There are plans to develop an additional 11 hotels on site, six of which will be five star, three of which will be
four star, and three of which will be three star.
Golf Course
The residential accommodation within Marassi is set around a golf course which also has the benefit of a golf
academy. At the time of inspection 13 holes were playable.
Marina District
We have been informed that a temporary license has recently been granted for a marina which is to be
constructed at the most southerly part of the development. The final license is pending upon other certain
approvals. The Marina District will, once complete, have four hotels, some 7,160 apartments, alongside a
retail provision.
Assets
On site there will also be an array of ancillary uses including the golf academy and clubhouse, two floating
restaurants, dry docks, a gas station, desalination plants, and kiosks.
South Land
With the development there is an area known as South Land which provides and mix of residential
accommodation for staff, some retail provision, an administration building, a nursery, and a services
building.
We include as Appendix 3.2, a selection of photographs taken during our inspection of the property on 28
January 2015.
3.1.3 Condition
The property appears to have been well maintained having regard to its age, use and construction.
However, we have not undertaken a condition survey and we would draw your attention to our Assumptions
in Section 4.1.
3.1.6 Site
The property comprises an irregular shaped site with approximate site areas of each element as follows:
In practice, purchasers in the property market do not make such an assumption about contamination and a
purchaser of the property may require appropriate investigations to be made so as to assess any risk before
completing a transaction.
We have no basis upon which to assess the reasonableness of this Assumption. If it were to prove invalid
then the value would fall by an unspecified amount.
3.1.8 Planning
We have not been provided with any planning documentation relating to the subject property and so, for
the purposes of this valuation, we have made the assumption that current or future development on site is
in compliance with any planning permissions issued by the Municipality.
We recommend that the planning permission is reviewed and verified by your solicitors.
3.1.9 Tenure
We have not been provided with a copy of the title deeds for the subject property. We have therefore
assumed that the property is held freehold, free from rent charge, restriction as to use, title or occupation
and free from any other restriction which may affect value.
3.1.10 Tenancies
The subject property is multi-let in part with the majority of units being sold off on a unit by unit basis. We
have been provided with sample copies of the lease agreements and can confirm these are in line with the
financial information provided by the Client.
Timing
The timing for development of the scheme including construction completion dates, hand over dates, and
occupation dates has been provided by the client. In our opinion the timing seems reasonable for a
development of this scale. Please refer to Appendix 3.4 for the planned development timeline.
Determination of Revenue
Residential
Marassi is a predominately residential scheme with a total of 14,691 units and some 12,503 units available
for purchase at the date of valuation.
The future revenue stream for the residential accommodation has been provided by the Client. With
regards to timing, future sales for each of the residential parcels is in line with the Client’s proposed
development plans which we consider to be reasonable. The future sales revenue for each of the parcels
has been projected in line with the historic sales on site and also having regard to how sales revenues have
grown year on year since the development was launched. We have been provided with the historic sales
data and consider the future revenue expectations to be reasonable.
The following annual price escalations have been adopted in our projections:
Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Price per sq m 14% 14% 16% 17% 17% 18% 17% 16% 16% 16%
Off plan sales are based upon Emaar’s payment terms with customers which is either over four years until
delivery or over an extended payment schedule that continues after delivery (requiring 70.00% – 80.00%
payment prior to delivery and remainder over 1 – 3 years). The extended price is at a 12.00% premium in
comparison to the four year payment plan price.
Retail
For the retail accommodation, we have had regard to the rental values achieved at other schemes across the
El Alamein area when determining our opinion of Market Rent as at the date of valuation. Rental values
have been applied as follows across the various different store types:
The rent applied at the date of valuation has then been grown at 3.00% per annum until the accommodation
becomes leased, which began with M Porium in 2014 with the remaining accommodation planned as per the
table below. Once leased, the rent is then grown at 10.00% per annum under the terms of a hypothetical
lease which is common practice for commercial leases in Egypt, under the assumption that rental contracts
will be in local currency.
Different occupancy rates over the summer operational period have been applied depending on the nature
of the store and the amount of accommodation available as follows:
Stabilised
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Type Occupancy Rate
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
(%)
M 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Porium
M
Porium - 100 100 100 100 100 100 100 100 100 100 100 100 100
Phase 2
R1 - - - - - - - - 70 80 90 90 90 90
R2 - - - - - - - - 70 80 90 90 90 90
R3 - - - - - - - - - - 70 80 90 90
S1 - - - - - - - - - 70 80 90 90 90
Stabilised
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Type Occupancy Rate
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
(%)
S2 - - - - - - - - - - 70 80 90 90
Civic
- - - - - - - - 70 80 90 90 90 90
Center 2
Civic
- - - - - - 70 80 90 90 90 90 90 90
Center 3
We understand that a service charge is levied on the existing accommodation although we have considered
it as neutral within the cash flow. We have made a 5.00% allowance based upon the net rent, for
management fees and a 2.50% allowance, based upon the gross rent, for sales and marketing expenditure,
to give the net income for the retail accommodation. We consider allowances at these levels to be
reasonable for a retail scheme of this nature.
A further annual allowance has been made for maintenance capital expenditure at 0.50% of the gross value
of the investment properties, excluding land cost, which we consider to be reasonable for a scheme of this
nature.
In determining the exit value for the retail element of the subject property we have applied a blended exit
yield of 12.00%. The exit yield applied has been based upon our opinion of yields as at the date of valuation
which have then been adjusted taking into consideration the timing of the exit, the condition of the building
at that time and also the likely occupancy rate at that time.
Our exit date has been determined having regard to the date at which the majority of the retail
accommodation becomes available to lease which is in 2024. On expiry of the initial lease, we would expect
the occupiers to renew, dependant on the successfulness of the scheme, which would mean that a sale in
2032 would be attractive to potential purchasers looking to benefit from a product which is mature and
benefitting from a good occupancy rate.
Hotels
Considering the proposed hotels, firstly we estimated the future revenue stream based upon the number of
rooms, the average daily rate (ADR) and the occupancy rate. ADR’s as at the date of valuation were applied
as follows:
Number of Planned
Hotel ADR
Rooms Opening Date
H1 – Mega Beach Hotel 1,936 261 2024
H2 – Hotel including BCH renovation 1,760 252 2019
H3 – Marina Hotel 1,936 180 2022
H4 – Convention Centre Hotel 1,760 542 2024
H5 – Beach Hotel 1,936 250 2024
H6 – Golf Hotel 1,936 49 2018
H7 – Greek Village Hotel 1,760 350 2023
H8 – Wellness Hotel 1,936 150 2023
R1 – Boutique Hotel 990 50 2023
H9 – Hotel replacing Beach Club 2 1,936 140 2019
Verdi Hub 990 18 2017
Blanca Hub 990 18 2019
Alamein Hotel (Part of H1) 1,760 69 2015
The hotels are anticipated to have low initial occupancy rates in the region of 25.00% - 40.00% which are
grown throughout the cash flow to reach a stabilised rate of 50.00 – 55.00%.
14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Stabilised
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Occupancy
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) Rate (%)
H1 0 0 0 0 0 0 0 0 0 0 37 40 42 45 47 50 50 50 50 50
H2 0 0 0 0 0 35 38 40 43 45 48 50 53 55 55 55 55 55 55 55
H3 0 0 0 0 0 0 0 0 40 43 45 48 50 50 50 50 50 50 50 50
H4 0 0 0 0 0 0 0 0 0 0 35 38 40 43 45 48 50 53 55 55
H5 0 0 0 0 0 0 0 0 0 0 35 38 40 43 45 48 50 50 50 50
H6 0 0 0 0 34 37 39 42 44 47 49 50 50 50 50 50 50 50 50 50
H7 0 0 0 0 0 0 0 0 0 33 36 38 41 43 46 48 51 53 55 55
H8 0 0 0 0 0 0 0 0 0 37 40 42 45 47 50 50 50 50 50 50
R1 0 0 0 0 0 0 0 0 0 35 38 40 43 45 48 50 53 55 55 55
H9 0 0 0 0 0 37 40 42 45 47 50 50 50 50 50 50 50 50 50 50
VH 0 0 0 25 28 30 33 35 38 40 43 45 48 50 50 50 50 50 50 50
BH 0 0 0 0 0 30 33 35 38 40 43 45 48 50 50 50 50 50 50 50
AH 32 35 37 40 42 45 47 50 50 50 - - - - - - - - - 50
In terms of non-room revenues we have included food and beverage revenue ranging between 35.00% and
50.00% of room revenue dependant on the rating of the hotel; other revenue (conference rooms, spa,
banquet hall, etc) has been included at rate between 1.00% and 3.00% of room revenue, again dependant
on the rating of the hotel. We set out below each revenue stream throughout the cash flow period as a
percentage of total revenue:
Operating expenses including administration, payroll, energy and water have been deducted at a rate
ranging between 35.00% and 60.00% of gross revenue, dependant on the rating of the hotel; FF&E reserve
payments were deducted at 1.00% of gross revenue in Year 1, 2.00% in Year 2, 3.00% in Year 3 and 4.00% in
Year 4; and management fees of 2.50% of gross revenue were then deducted to give a Net Operating Profit
(NOP).
The NOP for each hotel was then capitalized using an EBITDA multiple of 10 which we consider to be market
facing.
Other
Throughout Marassi there are various other ancillary uses which have a revenue stream and can therefore
be considered as part of the valuation. The revenue projections for these areas have been supplied by the
Client and we can confirm that in our opinion the assumptions seem reasonable.
Given the scale of the development and significant proportion of commercial uses on site, there are a
number of staff accommodation buildings including residential apartments, staff hostel, administration
buildings, nursery, services building and additional retail accommodation. Again, the Client has provided the
revenue assumption for these buildings which we consider to be reasonable.
Construction Costs
Construction costs for the scheme and the timing thereof have been provided by the Client. We would
comment that the average build rates for the various asset classes appear to be reasonable; however, we
are not qualified cost consultants. If further clarification surrounding the costs applied is required then we
recommend appointing specialist cost consultant. We have been advised that construction costs are
inclusive of a 5.00% contingency and an 8.00% annual escalation that is embedded in the cost.
Outstanding construction costs for each element of the scheme are as follows:
Taxation
We have made an adjustment to reflect the liability of Income Tax payable on the income generated through
the developments operations, alongside Capital Gains Tax payable upon a future sale. These taxes are levied
by the Egyptian authorities at a rate of 22.50%. The scheme is tax exempt until the end of 2018.
Finance Costs
Our opinion of Market Value is stated gross of finance costs. Development schemes of this magnitude tend
to be predominately funded by pre-sales. Furthermore any additional finance costs will be specific to a
purchaser dependant on their financial position at the date of purchase and the relationship they have with
lending institutions.
Analysis
The net cash flow has then been discounted annually to give a Net Present Value (NPV) or Market Value for
the scheme.
In our opinion a discount rate of 16.00% is reasonable for a property of this nature and is in line with the
return that investors in the Egyptian property market would require. On this basis we consider the Market
Value of the subject property to be in the region of EGP 8,916,797,613, which we have rounded to EGP
8,916,800,000.
TOTAL
EGP 8,916,797,613
SAY
EGP 8,916,800,000
(Egyptian Pounds Eight Billion, Nine Hundred and Sixteen Million, Eight Hundred Thousand)
Marassi Villa
A-121
Marassi Internal Waterway
A-122
Marassi M Porium
Marassi M Porium
A-123
Marassi Beach Club
A-124
Emaar Misr for Development S.A.E.
Marassi, El Alamein, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
!
"
#$%
#&'
!"#
!
()*
$%&
'
(
)
(+
(+
#,
A-126
Emaar Misr for Development S.A.E.
Marassi, El Alamein, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
A-129
Emaar Misr for Development S.A.E.
Cairo Gate, Cairo-Alexandria Desert Road, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
4.1.1 Location
The subject property is located close to Sheikh Zayed City approximately 19.00 kilometres west of
Downtown Cairo. The location of the subject property in relation to the wider Cairo area can be seen on the
plan below, with the subject property indicated by the red dot for identification purposes only:
The subject property is well located off the Cairo-Alexandria Desert Road, prior to the toll station, which
provides good access to surrounding areas and landmarks which are located as follows:
Cairo Gate is located on the south side of the Cairo-Alexandria Desert Road opposite Dandy Mall, adjacent to
the not yet operational, Park Avenue Mall, and to the southeast of Smart Village and next to the 26th July
Corridor.
A-130
Emaar Misr for Development S.A.E.
Cairo Gate, Cairo-Alexandria Desert Road, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
The location of the subject property in relation to Sheikh Zayed City can be seen on the plan below, with the
subject property indicated by the red dot for identification purposes only:
The area surrounding the land of the subject property is characterised by a variety of commercial and
administrative projects, including Dandy Mall, Smart Village and Damac’s Park Avenue Mall development.
The location of the subject property in relation to its immediate surrounds can be seen on the plan below,
with the subject property indicated, for identification purposes only:
We have been provided with a copy of the site plan and understand its boundaries to be as follows:
A-131
Emaar Misr for Development S.A.E.
Cairo Gate, Cairo-Alexandria Desert Road, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
The demarcated areas outlined above can be referenced to the table below:
4.1.2 Description
The subject property comprises three adjacent plots of raw land, known as the Arab Contractors plot (Plot
One), the Commercial International Bank plot (Plot Two) and the Aida Abdel Nasser and Daughters plot (Plot
Three), which are allocated by the Municipality for agricultural and industrial storage uses.
Plot One totals some 244,790 sq m and is designated for industrial storage use. Within this plot, however,
we are advised that some 18,750 sq m is not owned by the Company and has been expropriated for public
use pursuant to Prime Minister decree number 1142/1994. We are advised that this deduction is stipulated
in the agreement. The gross area boundaries can be found on the previous plan, demarcated in blue.
Plot Two totals some 327,950 sq m and is designated for agricultural use. Within this plot, however, we are
advised that some 15,150 sq m is not owned by the Company and has been allocated for a public road. We
A-132
Emaar Misr for Development S.A.E.
Cairo Gate, Cairo-Alexandria Desert Road, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
are advised that this is stipulated in the agreement, subject to an increase or decrease, if the allocated area
is amended. The gross area boundaries can be found on the previous plan, demarcated in yellow.
Plot Three totals some 109,200 sq m and is designated for agricultural use. Within this plot, however, we are
advised that some 46,200 sq m is not owned by the Company and is owned and in the possession of a third
party, Dalia Fahmy, pursuant to a final contract validity judgment. We have not been provided with details
on the demise or boundaries not under ownership. The gross area boundaries can be found on the previous
plan, demarcated in purple.
In addition, we are advised that the total land area owned by the Company is subject to a further deduction
pursuant to Prime Minister decree number 1702/2010, expropriating an area of four feddans for the works
required to convert the Cairo/Alexandria Road to a freeway. We are advised that this decree has not been
enforced and was waived by the Roads and Bridges Authority; however, the decree was not amended or
repealed. Accordingly, we are advised that the land is legally expropriated for public use at this date.
Currently scrub lands, the land plots forming the subject property have no construction in place at present,
with the exception of a small structure at the entrance of Plot Two. The land is fully paved and does not
require any site grading works.
4.1.4 Site
The subject property comprises three elements forming an irregular shaped site with approximate individual
areas as follows:
Plot Current Permitted Use Gross Land Area Deductions Net Land Area
(sq m) (sq m) (sq m)
Plot One Industrial Storage 244,790 (18,750) 226,040
Plot Two Agriculture 327,950 (15,150) 312,800
Plot Three Agriculture 109,200 (46,200) 63,000
Total Area Deduction N/A N/A (18,550) (18,550)
Total 681,940 (98,650) 583,290
A-133
Emaar Misr for Development S.A.E.
Cairo Gate, Cairo-Alexandria Desert Road, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
In practice, purchasers in the property market do not make such an assumption about contamination and a
purchaser of the property may require appropriate investigations to be made so as to assess any risk before
completing a transaction.
We have no basis upon which to assess the reasonableness of this Assumption. If it were to prove invalid
then the value would fall by an unspecified amount.
4.1.6 Planning
We have not been provided with any planning documentation relating to the subject property and so, for
the purposes of this valuation, we have made the assumption that current or future development on site is
in compliance with any planning permissions issued by the Municipality.
We recommend that the planning permission is reviewed and verified by your solicitors.
4.1.7 Tenure
We have not been provided with a copy of the title deeds for the subject property. We have assumed that
the property is held freehold, free from rent charge, restriction as to use, title or occupation and free from
any other restriction which may affect value. It should be noted that planning permission and legal rationing
of the land status will be subject to additional costs due to Government agencies.
We recommend that the title deeds are reviewed and verified by your solicitors.
4.1.8 Tenancies
The subject property is vacant at present.
Having regards to comparable transactions across the Greater Cairo Area, we have applied individual land
rates to the net areas of the individual plots, based upon the planning permissions currently in place. Given
the location of the subject property and the surrounding mixed-use developments, namely Dandy Mall, Park
Avenue Mall and Smart City, we would assume that a change of use to mixed-use would likely be granted
over the entire site. We are of the opinion that a potential purchaser would take this into account when
making a purchase decision. The additional costs that the Company estimates to be paid to the
Governmental/Regulatory authorities in connection with obtaining planning permission for a mixed-use
development is estimated at EGP 450 per sq m, to be repaid over a period of eight years. In our opinion, a
conversion cost of EGP 450 per sq m seems extremely high. We would expect them to be in the region of
5.00% of land value. Given the uncertainty surrounding the designation of the various land plots our opinion
of Market Value is stated gross of any planning costs there might be.
A-134
Emaar Misr for Development S.A.E.
Cairo Gate, Cairo-Alexandria Desert Road, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
We set out below a table outlining the land rate applied to the subject property:
We have been asked to provide our opinion of Market Value on the special assumption that the land area of
18,550 sq m is expropriated for public use and the Market Value on the special assumption that the land
area of 18,550 sq m will not be expropriated for public use. We set out below our Market Value for each
special assumption:
Our opinions of Market Value under these special assumptions are stated gross of any planning costs which
may be incurred in the future by a purchaser.
4.3.1 Market Value on the special assumption that the land area of 18,550 sq m is
expropriated for public use
We are of the opinion that the Market Value on the special assumption that the land area of 18,550 sq m is
expropriated for public use, of the freehold interest in the property as described herein, as at 31 December
2014, subject to the assumptions and comments in this Valuation Report and the Appendices is:-
TOTAL
EGP 933,264,000
SAY
EGP 933,260,000
(Egyptian Pounds Nine Hundred and Thirty Three Million, Two Hundred and Sixty Thousand)
A-135
Emaar Misr for Development S.A.E.
Cairo Gate, Cairo-Alexandria Desert Road, Cairo, Egypt
Date of Report: 28 April 2015
Date of Valuation: 31 December 2014
4.3.2 Market Value on the special assumption that the land area of 18,550 sq m will
not be expropriated for public use
We are of the opinion that the Market Value on the special assumption that the land area of 18,550 sq m will
not be expropriated for public use, of the freehold interest in the property as described herein, as at 31
December 2014, subject to the assumptions and comments in this Valuation Report and the Appendices is:-
TOTAL
EGP 962,944,000
SAY
EGP 962,940,000
(Egyptian Pounds Nine Hundred and Sixty Two Million, Nine Hundred and Forty Thousand
A-136
THE COMPANY
Emaar Misr for Development S.A.E.
Cairo, Mokattam 11571
Egypt
PRINCIPAL SHAREHOLDER
Emaar Properties PJSC
P.O.Box 9440
Dubai
United Arab Emirates
LEAD MANAGER
Emirates Financial Services PSC
Emirates NBD Head Office Building
Baniyas Road, P.O. Box No. 777
Deira, Dubai
United Arab Emirates
AUDITORS
Allied for Accounting & Auditing
P.O. Box 20 Kattameya
Rama Tower
Ring Road, Zone #10A
Kattameya, Cairo
Egypt
1JUN201505294162