Annual Report - Orascom Development

32. Tax Status
32.1 Corporate Tax
The Company is enjoying a tax holiday for ten years, according to the Articles of Law No. 230 for 1998, starting from 1 January 1997 according
to the tax card of the company. This tax exemption is limited to the Touristic Development Activities. The Company’s book was inspected
till 2002, and the tax liability was determined and paid and the tax inspection for 2003 and 2004 was done and the tax inspection report
will be made by the tax authority.
32.2 Salary Tax
The company’s books were inspected from inception of operation till 2004. The tax liability was determined and paid in full.
32.3 Stamp Tax
The company’s books was inspected from inception of operation till 31 December 2004 and the tax was assessed by an amount LE 639,921.
33. Financial instruments and its related risks management
The financial instruments of the Company are represented in the financial assets (cash, banks and some of debtors and debit balances), also the financial
liabilities (banks credit – over drafts and some suppliers and notes payable accounts).
33.1 Fair Value
Except for investments, which fluctuate due to the market conditions, the carrying amounts of these financial instruments represent a reasonable
estimate for their fair values at the consolidated balance sheet date.
33.2 Foreign Currencies Fluctuation Risk
Foreign currencies fluctuation risk represents the changes in foreign currency rate which affects the payments and receipts in foreign currencies,
as well as the valuation of assets and liabilities in foreign currencies. The company pertain to reduce the foreign currency overdraft
to reduce the risk to lower level.
33.3 Interest Rate Risk
The Company depends on the long term loans and on bank overdraft with fixed interest rate to finance the long term fixed assets and the
portion of working capital. This is to avoid the negative effect of the changes in interest rates on its activities and the value of assets and
liabilities.
33.4 Credit Risk
Credit risk is represented in the inability of customers to pay their debts. The Company is controlling this risk through the property itself by
registering the unit after paying all the amount due and contracting with well reputed customers who have the ability to pay debts and by
forming provision for doubtful debts.
34. Retained Earnings (deficit)
Balance as of 1/1/2005 (175,987,102)
Transferred from general reserve 49,110,908
Net profit for the year 2005 before adjustments 180,912,724
Adjustments* (14,005,949)
Other adjustments 7,217,749
Adjusted balance as of 31 December 2005 47,248,330
* Represents the retroactive addition of a one of its group companies, consequently the group’s financial statement were reclassified to reflect the corrected
figures, as well as other adjustments.
LE