The General Assembly of the Arab Contractors Company, headed by Dr. Moustafa
Madbouli - Minister of Housing, Utilities and Urban Development, approved the
financial statements of the AC on 30/6/2017, the supplementary notes and the
final accounts for the fiscal year 2016/2017. The second session of the General
Assembly also approved the increase of the issued and paid up share capital of
the AC. The third meeting approved the company's planning budget for the
financial year 2018/2019. During his address to the General Assembly, Dr. Moustafa
Madbouli - Minister of Housing, Utilities and Urban Development said: "We
are in the process of presenting the financial results of the company. I would
like to briefly mention the most important economic variables that have
affected the company's activities inside Egypt and abroad during this year.
First, to take a package of economic reform measures in Egypt during 2016/2017,
which was the most important (liberalization of foreign exchange rates against
the Egyptian pound, which led to a rise in the prices of basic raw materials
"Iron - Cement - Pipes - Petromin – auxiliary materials - services and
medical expenditures”, in addition to the issuance of the value added tax law
no. 67 of 2016, the increase in energy prices after the reduction of the
subsidy ratio, the sovereign wage increases and associated social insurance); these
measures led to an increase in the prices of goods and services and the government
tried to mitigate the negative effects of these variables. Law No. 84 of 2017
on compensation in construction and supplying contracts was issued to
compensate contracting companies for the effects of the increase in cost
arising from the economic reform measures. For the fiscal year mentioned in
accordance with the tables annexed to the law and included in the revenues, and
began work on the adoption from the awarding authorities. Second, the continued
commitment of the government to an ambitious program to provide the needs of
Egyptian citizens with adequate housing, roads, bridges, water and sanitation
projects,… etc. was reflected in the continued growth of national projects and
a growth in investment spending on these projects. Investment spending in Egypt
during the fiscal year 2016/2017 is about 57.6%, mainly due to the increase in
investments implemented by the government in the fields of infrastructure and
housing. Investment expenditure on roads and bridges projects, construction and
development of hospitals and schools has reached 34 billion EGP, and investment
spending in residential buildings amounted to 21.8 billion EGP, non-residential
buildings was about 16.6 billion EGP.
Third, the company was affected by several regional variables in the foreign
countries in which it operates. In the Arab and African region, which is the
main market for the company's activity abroad. This decline led to a slow
payment of the dues of the companies operating in addition to postponement of
new projects. "The company has achieved a number of positive results. The
most important of these is the growth in the value of executed works at a rate
of 13.68% compared to the previous year, where the executed works reached a
value of 20,192 EGP, gross profit is 632 million EGP and net profit is 532
million EGP, an increase in total equity of the company as at 30 June 2017
amounted to 8.433 billion EGP compared to 6.405 billion EGP in the previous
year, In addition to achieving a return rate of 6.3% during the previous fiscal
year - a return on investment in companies that contribute to the company in
their capital abroad of 248 million EGP - the total contracts value available
to the company in 30.6.2017 amounted to 45.166 billion EGP, of which 9.893
billion EGP for the branches abroad represent 21.9% of the volume of contracts.
Dr. Moustafa Madbouli stressed that evaluating the role of the Arab Contractors
Company is not limited to evaluating its financial results only, but extends to
evaluating its ability to implement the projects entrusted to it on time and according
to the required quality, which leads to providing the needs of Egyptian
citizens from infrastructure projects (roads, tunnels, ports- bridges – water –
wastewater – power plant – hospitals – housing projects) and the company
participation in the implementation of what is required to manage the crises
that the Egyptian government may face at any phase. Finally, I would like to
stress that the government is very keen on the AC success and to overcome all
the obstacles and challenges in its path towards the growth in order to achieve
the proper management of the assets of the government as a wholly owned by the government,
as considered one of its most influential important tool and arm in
implementing the most important national projects throughout the successive
economic and social development plans of the government. Eng. Mohsen Salah - Chairman
of the Arab Contractors Company, said that during the fiscal year 2016/2017,
the company achieved outstanding results. The target plan was achieved and
approved by the General Assembly. The company achieved revenues of 20.192
billion EGP and a growth rate of 13.68 %; the results showed a net profit of 532
million EGP (2.6% of the target plan). The target surplus was achieved by 152%.
These results reflect the good performance of the company in its projects,
which reinforces its position and leading role in the Egyptian Contracting Sector.
This is clear in the company participation in most of the national projects (New
Alamein – the New Administrative Capital – Rod El Farg Axis – Suez Canal Tunnels
– Cairo Metro – etc…)
Eng. Mohsen Salah
said that the company is keen to implement the project with a very small profit
margin, believing in operating under the prevailing economic conditions in the
country, which casts a shadow on the low levels of profitability of the
activity and the company continued this year to strengthen its regional existence
through the progress of the appropriate international projects in order to gain
new business opportunities, knowing that the business indicators in these
countries reflecting the intensification of competition from international
companies that started to work in these markets, but the company overcame this
by developing its executive performance, and increase the execution quality. The
AC honored by the excellency award from
the American Concrete Institute in 2017 for using the latest technology and the
highest quality techniques in the building and construction of Jaber Al Ahmed
Al Sabah Hospital in Kuwait, the largest hospital in the Middle East and the
sixth in the world. "Despite these challenges, the company achieved
another year of growth and profitability as the company continued its
operational performance to meet the challenges through sustained and ambitious
work to maintain the name and reputation of itself at the national and international
level. The company began to take advantage of the market value of one of its
financial assets. It was agreed basically with both the National Bank of Egypt
and Banque Misr to buy a 4% share in Al Mustaqbal for Urban Development as the
Arab Contractors Company is shareholder in it, with the company retaining the right
to repurchase in whole or divided into phases within two years from the date of
purchase and at the same price that the banks will buy these shares, in
addition to the benefits to be agreed upon, the sale is expected to reach 2.533
billion EGP. The sale proceeds will be used to repay the bank's outstanding
balances, consolidate the working capital of the company and inject new
investments into fixed assets. Eng. Mohsen reviewed the most important results
achieved during the fiscal year 2016/2017, as follows: the total turnover amounted
to 20.192 billion EGP compared to 17.762 billion in the previous year, an
increase of 13.68%. The turnover abroad reached 4.798 billion EGP compared to
4.247 billion EGP last year with an increase of 551 million EGP (13% over the previous
year). The net profit amounted to 532 million EGP compared to a net profit of
201 million EGP during 2015/2016, along with an increase in equity (public
shareholding of the company) from 6.405 billion EGP in 30/6/2016 to 8.433
billion EGP on 30/6/2017, and increase the company's share capital from the
profits realized by the company. In addition to the company's payment during
the fiscal year of the following cash commitments (5.43 billion EGP is the
subcontractors overdue - 4.99 billion EGP is the suppliers' payments - 3.44
billion EGP net salaries for the employees - 412 million EGP commissions and
bank expenses - 346 million EGP Social insurance installments - 172 million EGP
payments for the sales tax - 152 million EGP for the medical treatment payments
- 100 million EGP in payments to the Taxation Authority). The AC’s Board of
Directors approved a bonus for the employees. Eng. Mohsen during his talk about the company’s
future vision said: "I would like to point out that the company's slogan
is to sustain its achievements and to be one of the leading companies in the
contracting sector by being committed to the time schedules and quality standards
while maintaining the safety and occupational health of the employees in these
projects, with the vision of sustainable development of its market share in the
construction sector, it aims to continue growth in the turnover. The company
has decided to continue the trend in several axes to achieve this, the most
important of which is (maximizing the company's competitive capabilities -
maximizing the utilization of the company's physical, human resources and
equipment - achieving professional security and psychological and financial
stability of the employees - continuing to raise the efficiency of the
employees of the company through the diversification of training programs that
are consistent with the requirements of the company work – linking between the investment
spending on productive assets with the actual needs of projects inside Egypt and
abroad - reducing the bank debt, thus reducing the financing expenses incurred
by the company). Eng. Mohsen Salah - Chairman of the AC thanked the Board
Members and all the employees of the Arab Contractors Company who are exhorting
their best efforts to implement the various projects to raise their country,
serve their people and ascension of their company's name.