FY 2012 Annual Report - Orascom Development

F-53 Orascom Development 2012 Annual Report F-54
22 OTHER FINANCIAL ASSETS
Details of the Group’s other financial assets are as follows:
CHF
Financial assets carried at fair value through profit or loss (FVTPL)
Held for trading non-derivative financial assets - certificates of
mutual funds (i)
Current
Non-current
2012 2011 2012 2011
291,121 7,294,817 - -
Financial assets carried at fair value through
other comprehensive income (FVTOCI)
Nasr City company for Housing & Development (N.C.H.R.) (ii) - - 27,447,108 12,601,741
Egyptian Resort Company (iii) - - 7,116,022 6,174,190
Green Power Uri AG - - 30,000 30,000
Sedrun Bergbahnen AG (iv) - - - 228,800
Andermatt Gotthard Sportbahnen AG (iv) - - - 481,208
Andermatt-Urserntal Tourismus GmbH Investments - - 5,000 5,000
Reclaim Limited - - 1,090,854 1,099,709
Falcon for Hotels SAE (v) - - 18,257,402 18,767,007
Egyptian Mortgage Refinance Company - - 143,450 155,570
Camps and Lodges Company - - 35,863 38,892
Palestine for Tourism Investment Company - - 24,569 26,645
El Koseir Company - - 488 529
Sasso San Gotthardo - - 125,000 -
Golfplatz Sedrun AG - - 7,300 -
Luzern Tourismus AG Investments - - 36,000 -
Financial assets carried at amortized cost
Bonds issued by the Egyptian Government (14.5%, 11
December 2012)
- 7,262,703 - -
(i)
Bonds issued by the Egyptian Government (14%, 3 December
2013)
7,958,036 - - -
TOTAL 8,249,157 14,557,520 54,319,056 39,609,291
Certificates – mutual fund
The Group holds certificates in Mutual Funds and these certificates are recorded at their redemption price at year end.
(ii) Nasr City Company for Housing & Development (N.C.H.R.)
The investment in N.C.H.R. remains unchanged to prior year at 7.07%. In 2009, a development management agreement was
signed between Orascom Development & Management (ODM) and N.C.H.R., an Egyptian listed real estate development
company with a total land bank of 10.13 million square meters. This agreement has been cancelled in 2012.
In general, the stock market in Egypt has recovered significantly in 2012 following the large losses in 2011. However, due to
low turnovers, the markets are still very volatile. In line with this overall recovery the fair value of N.C.H.R has increased by
CHF 14.8 million after it witnessed large losses in 2011.
(iii) Egyptian Resort Company
The investment in Egyptian Resort Company (“ERC”) remains unchanged to prior year. The company is acting as the
developer of the hotel and real estate project in Sahel Hashish (Egypt). Since March 2011, ERC is involved in a dispute with the
General Authority for Tourism and Development (“GATD”).
As mentioned above, the stock market in Egypt has recovered significantly in 2012 following the large losses in 2011.
However, due to low turnovers, the markets are still very volatile. In line with this overall recovery the fair value of ERC has
increased by CHF 0.9 million after it witnessed large losses in 2011.
(iv) Sedrun Bergbahnen AG / Andermatt Gotthard Sportbahnen AG
Due to the deconsolidation of one of the Group’s Swiss subsidiaries, which held these financial investments, they were
deconsolidated as well. For further information refer to notes 20 and 37.
(v) Falcon for hotels
The financial statements of Falcon Company for Hotels (“Falcon”) were incorporated into ODH’s consolidated financial
statements at 31 December 2008 in accordance with the International Financial Reporting Standards, as a result of the
business combination previously effected through one of ODH’s subsidiaries whereby control had existed over Falcon at that
time. Subsequent to the first time consolidation, but prior to the completion of the transfer of the legal title on the Egyptian
Stock Exchange (EGX), a dispute over the Falcon securities purchase agreement had arisen. At the beginning of October
2009, the Group ceased consolidating Falcon due to changes in Falcon’s management resulting in a loss of control for the
Group which was one of the reasons of the dispute. Management believes that the carrying amount of this investment is the
best estimate of its fair value as at 1 January 2011 and any period since then (for further details refer to note 2.1).
23 OTHER CURRENT ASSETS
CHF 2012 2011
Advance to suppliers (i) 10,836,547 9,741,155
Other debit balances (ii) 33,934,262 19,228,883
Amounts due from employees and the management team (iii) 1,831,250 12,995,352
Down payments for investments 42,605 186,217
Prepaid expenses 3,968,603 7,568,536
Deposit with others 3,823,240 4,040,411
Prepaid sales commissions related to uncompleted units 8,716,562 7,376,268
Withholding tax 5,603,634 3,268,261
Urban development authority 990,199 1,073,860
Letters of guarantee – cash margin 2,091,455 6,413,957
Cash imprest 285,667 298,172
Accrued revenue 1,891,169 1,528,517
TOTAL 74,015,193 73,719,589
(i) The increase in advance to suppliers mainly relates to prepayments in relation to construction activity in Switzerland.
(ii) Included in other debit balances as at 31 December 2012 is an amount of CHF 11.4 million which is the value of OHC withdrawn
land amounting to CHF 9.7 million as well as infrastructure expenditures located on the withdrawn land in Fayoum amounting
to CHF 1.7 million.. Further, other debit balances include deferred proceeds of net CHF nil million (2011: CHF nil million) from
the sale of all interests in Joud Fund 1, 2, 3 and 4 net of the impairment charge of CHF 33 million of which CHF 15 million was
recorded against other debit balances at 31 December 2010 to cover any shortfall that might occur as a result of the recent
political developments in the Middle East region. In 2011 an additional impairment charge of CHF 18 million was recorded.
(iii) This amount is due from employees and management team including executive board members as a result of receiving two
million OHD shares in 2007. These shares were previously issued based on a general assembly resolution in OHD dated 13
February 2006 authorizing the company to issue 2 million shares at par to be used to allocate to employees and management
team (see note 42). All of these shares were swapped at a rate of 1:10 for ODH shares in 2008. On one side payment of the
share price was deferred and payback period was extended each year, on the other side employees and management were
instructed not to sell their unpaid shares. Due to the fact that the share price decreased substantially since the allocation of the
shares, provisions against these receivables were recognized in 2011 and 2012. In March 2013, the terms and conditions of the
final settlement were ultimately determined by the Board of Directors based on the share price as at 31 December 2012. This
resulted in an amount of CHF 1,831,250 (2011: 12,787,116) which is due from employees and management team including
executive board members and a residual provision of CHF 1,068,750. All other amounts due were netted off. The reduction in
the amount due from employee and management is not considered remuneration as the shares were not ready for use until
this final settlement agreement. Therefore only the issuance of shares to the employees and management in 2007 should be
regarded as remuneration.
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