Annual Report - Orascom Development

4.13 Cash Flows Statement
• For the purpose of preparing the cash flow statement, cash and cash equivalents at the beginning and end the year comprised of Cash
on hand and banks current accounts and deposits and it is prepared according to the indirect method.
• Cash flows resulted from the acquisition or disposal of subsidiaries are separetly represented and classified as investing activities.
4.14 Borrowings Cost
Borrowings costs are recognized as expenses in the Income Statement when incurred.
4.15 Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event that is probable
that the company will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. When the
effect of the time value of money is material, the amount of provision is determined by deducting future cash flows using the deduction
rate–before tax–taking this effect into consideration. Provisions are reviewed at the balance sheet date and amended (when necessary) to
represent the best estimate.
4.16 Provision for Infrastructure Completion
Infrastructure completion provision value is determined according to feasibility study prepared and approved by the company and it represents
the estimated cost to complete the work.
4.17 Accounting Estimates
According to the Egyptian Accounting Standards and due to the factors of uncertainty of business activities, some items in the financial
statements can not be accurately measured but can only be estimated counting on reasonable estimate of Company’s management. The
company’s management will only rely on the reasonable estimates. These estimates should not consider, the adjustments resulting from the
amendments of estimates, as an extraordinary items or fundamental errors.
4.18 Loans
Loans are recognized according to the received amounts. The amounts due during the year are recorded in the current liabilities. If the
company does not obtain the right of delaying the loan payment for a period exceeding 12 months from the balance sheet date then, the
loan will be recorded in the long-term liabilities.
4.19 Legal Reserve
According to the company’s Articles of Incorporation, 5% of the net profit is reserved to form a legal reserve, and it is discontinued once the
reserve reaches 20% of the company’s issued capital, and resumes again whenever the reserve decreases. The reserve can be used based on
the General Assembly’s decision and the Board of Directors suggestion. The reserve or portion of it can be transferred into shares in order
to increase the value of the issued capital. The increased shares are distributed on the company’s shareholders based on their percentage
of contribution and in light of what is stated in the Executive Regulation Article No. (23) of Law 95 for 1992.