Annual Report - Orascom Development

46 | consolidated financial statements | OHD Annual Report 2006
2. Investments in subsidiary
Investment of Orascom Hotels and Development in Orascom Hotels Holding Company became 43,976,788 shares including 26,273,189 shares
that are pledged in favor of some banks and financial institutions as follows:
Shares
Shares pledged to Commercial International Bank “Giza branch”. 8,823,189
Shares pledged to Abu Dubai Bank 3,450,000
Shares pledged to Misr Bank “El Orman branch”. 12,000,000
Shares pledged to the National Bank of Egypt 2,000,000
26,273,189
During the period from 28 March 2006 to 11 April 2006 the company purchased 25 000 share from Orascom Hotels Holding Company in which
the percentage of shares is 97.21% as at 31 December, 2006.
3. Accounting Basis for the Preparation of the Consolidated Financial Statements
The consolidated financial statements are prepared according to the Egyptian Accounting Standards and the prevailing Egyptian laws and regulations.
4. Significant Accounting Policies Applied
The significant accounting policies applied in the preparation of the consolidated financial statements are as follows:
4.1 Principles of Consolidation
The consolidated financial statements include the assets, liabilities and results of operations of Orascom Hotels and Development (Parent
Company) and all subsidiaries that are controlled by the Parent Company, hereunder referred to as the “Group”. The basis of preparation of
the consolidated financial statements is as follows:
• All inter-group balances, transactions and unrealized profit or loss have been eliminated.
• Minority interest, in the equity and results of the entities that are controlled by the Parent Company, is shown as a separate line
item in the consolidated financial statements and calculated as the minority’s portion in the assets and liabilities of the subsidiary
company in the date of the acquisition.
• The cost of acquisition represent the total cost incurred by the parent company to acquire the investment and was
allocated as follows: the fair value of the assets and liabilities owned by the company at the acquisition date of the investment
to the extent of the parent company’s interest obtained on that date.
• If the acquisition cost increases over the parent company share in the fair value of the assets and liabilities of the subsidiaries, the
difference is treated as goodwill and is recorded as long-term assets. A study is being prepared to find out if there is any indications
of impairments in its value. In case there is, the impairments will be included in the income statements.
• If the parent company’s share in the fair value of the assets and liabilities has decreased over the acquisition cost in some of the
companies, the difference is recorded as a negative goodwill and will be recorded as revenue in the income statement at the date
of purchasing.