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We Stand Together
Annual Report 2020
2020 Annual Report 2
2020 Annual Report
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CONTENTS
EFG Hermes at a Glance
Chairperson’s Foreword
A Note from Our Group CEO
Management Discussion & Analysis
Sell-Side Platform
Frontier
Investment Banking
Securities Brokerage
Research
Buy-Side Platform
Asset Management
Private Equity
NBFI Platform
Tanmeyah
valU
EFG Corps-Solutions
PayTabs Egypt
Corporate Governance
Risk and Compliance
Our People
Executive Committee
Board of Directors
Corporate Social Responsibility
Financial Statements
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10
16
20
30
34
38
44
52
56
60
64
68
72
78
84
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94
100
104
108
116
126
132
2020
ANNUAL REPORT
2020 Annual ReportSection Flag 4
2020 Annual Report
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EFG HERMES AT A GLANCE
Our deeply rooted industry knowledge and talented team
are what prompt our stakeholders to believe in us and lead
our communities to value us
2020 Annual ReportSection Flag 6
2020 Annual Report
EFG Hermes At A Glance
7
The Leading Financial Services
Corporation in FEM
Over its 36-year history of success, EFG Hermes
has gone from strength to strength. From a
leading Egyptian investment bank to a fully in-
tegrated financial service provider with presence
in 13 markets across four continents — EFG
Hermes has evolved not only to match shifting
market dynamics but also meeting growing
stakeholder needs. Through organic growth,
strategic mergers and acquisitions, and a lateral
business strategy, EFG Hermes has transformed
itself into a leading financial services corporation
with a diverse product range, encompassing both
investment banking services as well as non-bank
financial services. The Firm leverages its expansive
on-the-ground presence across the world, an
ever-expanding portfolio of services, and com-
mitment to driving shareholder value to cement
its leadership position across some of the world’s
most rapidly growing markets.
What We Do
Through its two platforms, the Investment Bank and
Non-Bank Financial Institutions (NBFIs), the Group is
able to consistently bring innovative products to the
table, offering a comprehensive service portfolio
to meet the evolving needs of its growing base
of institutional investors and retail clients. During
2020, the Firm further expanded its foothold across
fast-growing and increasingly attractive markets de-
spite volatility that plagued markets the world over.
The Investment Bank
Securities Brokerage
EFG Hermes Securities Brokerage offers its client
base, be they individual retail investors or some
of the most prominent institutional investors and
high-net-worth-individuals, an unrivalled access
to FEMs opportunities. Today, the division stands
as the leading brokerage house in both the MENA
region and across the wider FEM space, with
presence in Egypt, Kuwait, the UAE, Saudi Arabia,
Oman, Jordan, Pakistan, Kenya, Nigeria, Bangla-
desh, and Vietnam.
Throughout 2020, EFG Hermes continued to
strengthen market shares across its footprint, rank-
ing first on the Egyptian Stock Exchange (EGX), both
the Dubai Financial Market (DFM) and NASDAQ
Dubai, the Kuwaiti Stock Exchange (KSE), and the
Nairobi Securities Exchange (NSE). It placed second
in Abu Dhabi and Nigeria (by value traded) and
secured a third-place spot in Oman. The division
currently covers 95% of the MSCI Frontier and MSCI
Emerging Frontier indices and can execute in over
75 markets across Frontier and Emerging markets.
Investment Banking
Since the division’s launch in 1995, EFG Hermes In-
vestment Banking has climbed the regional rankings
to become a leader in M&A advisory, Equity Capital
Market (ECM) executions, and Debt Capital Market
(DCM) capabilities. Leveraging its ability to tap a
global client base and utilize its unrivalled network
of MENA clients to raise demand for compelling
opportunities, the division continued to execute a
growing number of transactions across an expand-
ing global footprint. In 2020, the division posted
yet another year of record-breaking 24 transac-
tions worth a total of USD 1.7 billion despite the
incredibly challenging circumstances. Over the last
twelve months, EFG Hermes Investment Banking
team closed 14 DCM transactions at a value of USD
757.6 million, 3 ECM transactions worth USD 828.1
billion, and 7 M&A deals valued at USD 99.0 million.
dates. As of year-end 2020, the division recorded
USD 2.1 billion in regional AUM and EGP 19.1 billion
in the local Egyptian market.
Research
EFG Hermes Research is the leading provider of
real-time, high-quality coverage of FEM. The divi-
sion brings together equities, macro, strategy, and
index research to offer fair and comprehensive
analysis that helps guide EFG Hermes’ other lines
of business and the Firm’s large client base when
making financial decisions. Leveraging a team of
experienced analysts and presence in numerous
markets around the world including Cairo, Dubai,
Pakistan, Kenya, Nigeria, Saudi Arabia, Oman,
and the UK, the division provides unmatched
insights on 299 equities across 22 markets as of
year-end 2020. In 2018, EFG Hermes launched
EFG Hermes One, an innovative, retail-oriented
online trading platform that has quickly become
the go-to information provider for analysts and
clients looking for reliable daily insights on local
and regional markets.
Private Equity
EFG Hermes Private Equity today is widely recog-
nized as a leading player in the field with an un-
paralleled ability to raise money from around the
world to invest across the MENA region and Europe.
The division invests across a wide spectrum of
sectors with a specific focus on renewable energy,
education, and healthcare. The division manages its
renewables investments through its Vortex Energy
platform, which was established in 2014 to invest in
renewable energy projects. The EFG Hermes Egypt
Education Fund is a USD 150 million investment
fund launched in 2018, as part of a USD 300 million
education platform in partnership with Dubai-based
education provider GEMS Education. Rx Healthcare
Management was established to manage diverse
investments across the healthcare sector to meet
the ever-growing demand for healthcare products
and services across Egypt as well as the MENA and
Africa regions at large.
Asset Management
EFG Hermes Asset Management is the MENA
region’s largest asset manager serving an increas-
ingly diverse client base including multinational
corporations, endowments, foundations, and family
offices with a continued focus on long-term and
institutional clients. The division offers a wide array
of tailored products including mutual funds and
discretionary portfolios with both country-specific,
regional, conventional, and sharia-compliant man-
Non-Bank Financial Institutions
EFG EV Fintech
Launched at the end of 2017, EFG EV Fintech
is the first fintech-focused startup accelerator and
early-stage venture capital fund in Egypt. It was es-
tablished as a joint venture between EFG Finance and
Egypt Ventures, a government-backed VC fund. The
company’s goal was to invest in more than 20 fintech
startups in a period of five years and bolster Egypt’s
fintech ecosystem in the process. To maximize
2020 Annual Report 8
2020 Annual Report
EFG Hermes At A Glance
9
its impact, EFG EV Fintech offers two separate
investment programs. In partnership with Falak
Startups, the company operates an accelerator
for seed-stage startups, which invests up to
EGP 1 million in cash and EGP 300,000 worth
of support functions in up to 10 companies
per year. EFG EV Fintech works closely with its
startups and supports them from investment to
exit. In parallel, the venture capital arm invests
up to EGP 5 million per company in later-stage
startups, bridging the gap between seed finance
and series-A funding. To date, EFG EV Fintech
boasts the largest fintech portfolio in Egypt and
its investee startups are making waves in the
Egyptian entrepreneurship ecosystem.
Tanmeyah
EFG Hermes Finance acquired Tanmeyah Micro-
enterprise Services in 2016 and it has since be-
come the Firm’s flagship company under its NBFI
platform. Tanmeyah, which today stands as the
number one non-bank provider of microfinance
solutions in Egypt, provides financing for micro
and very small businesses across Egypt. Through
its financing programs, the company gives its
thousands of clients access to the necessary capital
to find a path out of poverty which supports them
to grow their businesses. The company also offers
products and services that complement the diverse
needs of small businesses. As of year-end 2020,
Tanmeyah had 285 operational branches catering
to the needs of over 335,000 borrowers in 25 of
the 27 Egyptian governorates.
EFG Hermes Corp-Solutions
EFG Hermes Corp-Solutions is a leading provider
of leasing and factoring solutions, in addition to
value-added advisory services offered to a wide
range of clients, including large corporations and
SMEs alike. The Firm’s leasing arm was established
in 2015 under EFG Hermes Leasing, offering its
clients a range of tailored solutions with the fastest
turnaround time in the industry. Seeking to further
diversify our NBFI platform, the Firm introduced
EFG Hermes Factoring in 2018, offering alternative
sources of financing to companies seeking to grow
their businesses and meet their working capital
needs. In July 2020, EFG Hermes consolidated its
factoring and leasing arms to form EFG Hermes
Corp-Solutions, offering a full range of financing
solutions to suit clients of all sizes.
valU
valU, which was launched in 2017, is EFG Hermes’
first fintech product offering consumer finance
services and is part of a wider diversification
strategy by the Firm as it looks to tap into new,
growing segments of the financial sector. The
innovative solution gives customers the ability to
use their smartphones to buy now and pay later
from 898 merchants across Egypt over convenient
installments from 6 to 60 months. With strong
marketing efforts since inception, valU has quick-
ly grown in popularity with over 91,000 active
users as of year-end 2020.
PayTabs Egypt
Established in Saudi Arabia in 2014, PayTabs is an
award-winning global fintech solutions platform.
Following the successful replication of its business
model into other countries in the region, the com-
pany began eyeing the Egyptian market, seeking to
capitalize on the lucrative opportunities available
in it as well as a flexible and ever-evolving market
landscape poised for digital payment growth. In
2019, EFG Hermes partnered with PayTabs to estab-
lish PayTabs Egypt as part of the Firm’s growing NBFI
platform, working together to build a cutting-edge
platform to facilitate financial inclusion and catering
to both the online and digital payment needs of
multiple consumer segments.
Bedaya
Bedaya offers move-in finance solutions with the
fastest turnaround time in the market, with loan ten-
ures over 10 years. It was founded in 2019 as a joint
venture between EFG Hermes, Talaat Moustafa Group
(TMG), and GB Capital, the NBFI arm of GB Auto.
Each partner holds a third of the firm’s equity, with
Bedaya’s initial paid-in capital set at EGP 150 million.
Tokio Marine Egypt Family Takaful
In 2020, EFG Hermes and GB Auto entered into an
agreement to acquire a 75% stake in life insurance
player Tokio Marine Egypt Family Takaful. Under the
agreement, EFG Hermes Finance and GB Capital,
the NBFI arm of GB Auto, will each own 37.5% of
the company. Tokio Marine Egypt Family Takaful
is owned by Japan-based Tokio Marine Group, a
world-renowned leader in insurance and reinsur-
ance and the largest general insurer in Japan. The
company is set to offer individual and corporate
clients a variety of solutions covering health, home,
life, and car insurance.
95%
MSCI Frontier and MSCI Emerging Frontier
indices covered by the Firm’s Brokerage Division
2020 Annual Report 10
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CHAIRPERSON’S FOREWORD
We work actively to engage, inform, and unlock value for all
2020 Annual ReportSection Flag 12
2020 Annual Report
Chairperson’s Foreword
13
We Stand Together
We had to constantly look at the
best ways to ensure the health
and safety of our employees
and clients, while maintaining
our operations and remaining
profitable throughout.
Each year companies attempt to take inventory
of the challenges and opportunities that are
presented to them and they look for ways to
capitalize on their strengths and address their
weaknesses in order to continue growing and
creating value. The year 2020 was a bit different.
It was about sustaining growth while operating in
high intensity survival mode.
As the leading financial services corporation in
frontier emerging markets, EFG Hermes is an
organization that is quite familiar with volatility.
The 13 countries in which we operate have had
their fair share of economic and political upheav-
als over the years, and we have become quite
proficient at navigating through the turbulence.
With a diverse service offering and an expansive
geographic footprint, we have managed to min-
imize our operational and country risk, but 2020
was the first time in our history that we have
witnessed the entire world go through the same
challenges at the same time.
The Coronavirus pandemic has been called “the
great equalizer” in the sense that it has stopped
us all in our tracks regardless of where we live
and what we do for a living. It has also exposed
certain vulnerabilities such as inequalities in
healthcare systems and there is no doubt that it
is disproportionately affecting socially disadvan-
taged groups and low-income populations but at
the end of the day, we are all at risk, we are all
connected, and we must all stand together to put
an end to it.
For multinational companies such as EFG Hermes,
we were also faced with the challenge of dealing
with the laws and regulations of multiple jurisdic-
tions when it came to abiding by public health
guidelines and government mandated shutdowns.
It has been a delicate balance to maintain. We had
to constantly look at the best ways to ensure the
health and safety of our employees and clients,
while maintaining our operations and remaining
profitable throughout. The beautiful thing is
that we not only managed to do so, but we also
managed to score a number of major wins for the
company, a true testament to our resilience.
Because we had the foresight to establish our
NBFI platform years ago, we have been able to
survive the cyclical nature of capital markets in
the past, and last year was no different.
Our NBFI Platform, which was originally launched
in 2015 to oversee our activities in the non-bank fi-
nancing sector, continued to grow, outperform the
market, and contribute positively to our bottom
line. In 2020, we successfully merged our factoring
and leasing arms under one entity and we added
a new payment solutions provider, PayTabs Egypt,
to our NBFI roster. The two new companies join
our existing NBFI success stories; valU, our online
installment sale service app, Tanmeyah Microfi-
nance, Egypt’s leading provider of microloans, and
Bedaya, our mortgage service provider.
Our Securities Brokerage continued to top the
league tables across our footprint with first place
rankings in our key markets; Egypt, Kuwait,
Dubai, and Kenya. We are also very proud of the
fact that we were able to maintain the corporate
access that we are renowned for by seamlessly
transitioning our signature investor conferences
to a virtual format. Two virtual investor confer-
ences were held in 2020 and the third took place
in March 2021.
All of these assets were particularly crucial for us
last year as more and more retail moved online
due to COVID-19 health and safety measures.
During the crisis, we found ourselves perfectly
positioned to expand on our NBFI product of-
fering which is part of our overall goal to widen
our portfolio of NBFI companies and to bolster
financial inclusion in Egypt.
In 2020, we also received the approval of the Cen-
tral Bank of Egypt to conduct due diligence on the
Arab Investment Bank, an acquisition target that we
are pursuing in partnership with the Sovereign Fund
of Egypt (TSFE). Together, we aim to acquire 76%
of the capital of the Bank. When concluded, the
transaction will mark another important step in our
strategy to transform EFG Hermes from a pure play
investment bank into a universal bank that provides
both banking and non-banking services to its clients
in our home market of Egypt. It will also help to
further the stability of our business and will be of
great benefit to our shareholders.
Even during this remarkably challenging year, EFG
Hermes remained the market leader and precedent
setter it has always been. In terms of transactions,
we concluded our first cross-border M&A transac-
tion in East Africa since entering the Kenyan market
in 2017 with advisory services to Pakistan’s United
Bank Limited (UBL) on the sale of its Tanzanian
subsidiary to Exim Bank Tanzania Limited. We also
continued to ramp up our operations in KSA with
the successful conclusion of advisory on the USD
700 million IPO of Dr. Sulaiman Al Habib Group on
Tadawul early in the year and advisory on Alkhor-
ayef Water & Power Technologies’ USD 144 million
IPO on the Tadawul a year later in March 2021.
The virtual conferences were a great success with
a record number of attendees and thousands of
virtual meetings being held between companies
and investors across the globe. Everyone is adapt-
ing to the new normal and making the best of the
situation that we are faced with. Along the way,
we have learned that you can have virtual confer-
ences, road shows, and meetings from the safety
of your own home and office, and still achieve
your objectives. I believe that once the lockdowns
and constraints are lifted and we have regained
our freedom to move, travel, and communicate
without risk, the world will continue to conduct
virtual activities alongside face-to-face meetings.
Throughout, we have also continued to maintain
our values and ESG principles. The challenges
of the past year have not adversely affected our
commitment to sustainability, good governance,
and giving back to our communities; on the
contrary, they have strengthened our resolve to
lead by example as a responsible investor. We
continued to be leaders in green investments and
products. Our renewable energy platform Vortex
Energy divested its solar platform (Vortex III) in
2020, but we are already making plans to begin
investing in a number of new renewable assets
including both solar and wind.
The EFG Hermes Foundation continued to work
on its longstanding sustainable development
initiatives in the Naga’ El Fawal and El Deir vil-
lages south of Egypt where we are committed to
carrying out a comprehensive integrated devel-
opment plan. The Foundation has also partnered
with the Egyptian Food Bank and the Ministry of
Social Solidarity to support thousands of families
2020 Annual Report 14
2020 Annual Report
Chairperson’s Foreword
15
through the hardships of the pandemic in the
Luxor governorate.
to hold a virtual Annual General Meeting (AGM)
with electronic voting and attendance.
None of these remarkable achievements would
have been possible without our people. I am
extremely proud of our management, board mem-
bers, and each and every member of our team
across the 13 countries in which we operate, for
having pulled through despite the pressure and
the adverse conditions that prevailed and still pre-
vail. I will continue to say that our best and most
valuable asset is our people. Despite the impact
of COVID-19, they have stood up to the challenge
and proven the true resilience of the organization.
I would like to thank the shareholders and our es-
teemed Board of Directors for their support during
these very difficult times. Our multinational board
resides in seven different countries including the
US, the UK, France, Greece, Pakistan, the UAE,
and Egypt, which meant we had to accommodate
different time zones, but nonetheless, we man-
aged to hold all our board meetings virtually and
we were one of the very first public companies
I am very grateful for the year that we have had
and for the fact that we were fortunate enough
to have built a large resilient organization that can
withstand challenges, even ones of such great
magnitude as COVID-19. I am very well aware that
we are among the most privileged, and that many
businesses, particularly small and medium sized
enterprises, in our home country and across the
globe have been severely impacted by the crisis.
We are also painfully aware that many of us have
endured personal losses and hardships and have
had to live with the pain of seeing family, friends,
and loved ones fall ill from the Coronavirus. I am
however optimistic that there is some light at the
end of the tunnel as vaccine rollout continues to
accelerate and an economic recovery that favors
emerging markets begins to take shape. As eco-
nomic activity gains omentum, we can hopefully
reverse some of the damage that has been done.
I am certain that together we will overcome.
7
Countries make up the footprint from which the
Firm’s Board of Directors hail
Despite the impact of COVID-19, our
people have stood up to the challenge
and proven the true resilience of the
organization.
2020 Annual Report 16
2020 Annual Report
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A NOTE FROM OUR CEO
Our vision is guided by our unwavering commitment to the six
guiding principles – the “Six Ps” that drive our success
2020 Annual ReportSection Flag 18
2020 Annual Report
A Note from our CEO
19
A Note from our CEO
Although the Firm continued to
make accomplishments under each
pillar, what set us apart this year
was one thing: perseverance.
Each year I use this space to reflect on the year
that has passed, its challenges and achievements
as well as the headwinds and the tailwinds that
shaped us as an organization. 2020 was a year
unlike any other, not just for us as EFG Hermes
but also for the world, yet despite its challenges
and circumstances, I am proud to say the year
was marked with numerous accomplishments. As
is customary, this year we continued our progress
in terms of our six pillars; the 6Ps, that guide our
strategic progress: recruiting People with the
most talented minds to join our growing family,
our Positioning in the various markets in which
we operate, the new Products and services we
offer our clients, our proximity to clients in terms
of our on-the-ground Presence and expertise, the
Profitability we deliver our shareholders in terms
of absolute figures and ROEs, and our Public
responsibility towards the communities that we
operate in continue to be primary areas of focus
in every step that we take as a group.
Although the Firm continued to make accom-
plishments under each pillar, what set us apart
this year was one thing: perseverance. Faced with
a pandemic that continues to impact the lives
of our employees, clients, and their loved ones,
and one that claims lives daily, it is only through
the incredible, collective effort of each and every
one, from healthcare professionals to front-line
workers, teachers to parents, employees both
at home and at the office, that we have perse-
vered as individuals and — for us here at EFG
Hermes — as a Firm during the past 12 months.
Our resilience in the face of challenges speaks
volumes to the strength of the teams we have put
together across our platforms, from the buy-side
to our NBFIs as well as our sell-side divisions. Our
revenue streams are well diversified, our systems
are robust and, most importantly, we are backed
by an incomparable and agile group of people
working tirelessly in each of our jurisdictions.
We were fortunate to enter this latest crisis with
an unleveraged balance sheet, but we were also
proactive in managing our liquidity, prudent in
implementing IFRS 9 (a year in advance of the
required deadline), and sensibly provisioned for
our growing NBFI loan book. Amid the chaos,
we also started looking for ways to enhance our
business model and increase opportunities for
cross selling, which prepares us for more growth
that should come in a post-COVID world. Our
investment banking division successfully conclud-
ed 24 transactions worth an aggregate value of
USD 1.7 billion, displaying our ability as a leading
adviser across our markets executing high-value
transactions in sub-optimal market conditions.
On the Private Equity front, realized incentive fees
of EGP 349 million from the strategic exit from
our controlling stake in Vortex Solar significantly
contributed to the Group’s performance for the
period. Our NBFI platform continues to bring
in stellar results, with our consumer financing
platform valU recording its highest-ever bookings
since launch.
Our outstanding support functions began prepar-
ing well in advance for potential work-from-home
scenarios, allowing our employees to continue to
serve clients at the level to which they have become
accustomed, even as lockdowns across our multiple
jurisdictions became a reality.
Perhaps our crowning achievement this year is
being named Sustainability Champion by Egypt’s
Financial Regulatory Authority (FRA) in its first
publication recognizing players in the non-bank
financial service industry championing sustainable
development. Since 2014, EFG Hermes has made
sustainability a fundamental strategy plank when
it comes to our vision for the future. Our opera-
tions are aligned with the principles of the United
Nations Global Compact (UNGC) and Sustainable
Development Goals (SDGs), in addition to Egypt’s
journey to inclusive development as outlined in
the nation’s Vision 2030. In 2020, the Firm began
laying the groundwork to implement frameworks
to integrate ESG principles in decision making
processes, investment strategies, client advisory
solutions, and even in research products in the
year ahead. With responsible investing becoming
a strategic necessity around the globe, the Firm
will continue to work toward growing its ESG eco-
system, identifying risks and impacts the business
has on its stakeholders, as well as measuring and
mitigating those impacts to drive shared value.
The past few years have seen the Firm build a
robust business model to help withstand another
year of volatility, with the challenges that plagued
us in 2020 expected to carry into 2021. As always,
we will remain committed to driving value for all
our stakeholders, be that in terms of returns, em-
ployee engagement, or community development,
and we could not be better positioned to come
out the other end of the storm as strong, if not
stronger than before.
Karim Awad
EFG Hermes Group CEO
1.7USD
BN
Value of Investment Banking Transactions in 2020
2020 Annual Report 20
2020 Annual Report
21
MANAGEMENT DISCUSSION
AND ANALYSIS
Through exceptional financial management, we create value
not only for shareholders but our entire stakeholder base
2020 Annual ReportSection Flag 22
2020 Annual Report
MD&A
23
Management Discussion
and Analysis
Despite the impacts of COVID-19 on global capital
markets, EFG Hermes was able to witness growth at
its Investment Bank and NBFI platforms in 2020. The
Group successfully maintained its leading positions
in the brokerage space across its footprint and was
also able to execute successful exits on the private
equity front throughout the year. EFG Hermes’ NBFI
platform maintained its double-digit growth trajec-
tory in 2020, a testament to the value it provides
to stakeholders through its comprehensive and
innovative offering.
EFG Hermes’ Investment Bank platform recorded a
revenue increase of 12% Y-o-Y on the back of a
solid performance from the Group’s buy-side and
Capital Markets and Treasury revenues. The Group’s
successful exit from Vortex Solar, as well as higher
incentive fees booked by FIM, supported the Invest-
ment Bank’s top line for the year. On the sell-side
front, despite recording a decline in revenues due
to the impact of the pandemic on capital markets,
EFG Hermes’ Brokerage arm successfully led in
Egypt, Dubai, Kuwait, and Kenya in terms of market
share. The Investment Banking division successfully
concluded 24 ECM, M&A, and DCM transactions
worth an aggregate of USD 1.7 billion — the highest
number of transactions the division has recorded in
a single year.
The Group’s NBFI platform recorded a top line
increase of 13% Y-o-Y and contributed 26% to
EFG Hermes’ revenues in FY20. The NBFI plat-
form’s growth came on the back of a stellar per-
formance by consumer financing business valU,
which recorded a more than four-fold increase
in revenues in FY20. Additionally, valU acquired
a consumer financing license from the FRA in
the tail-end of the year, marking the complete
regulation of all the Group’s NBFI operations.
Microfinancing business Tanmeyah continued to
contribute the lion’s share of revenues for the
NBFI platform in FY20. At the Group’s factoring
and leasing operations, 2020 saw the merger of
these two divisions under EFG Hermes Corp-Solu-
tions with a goal to capitalize on cross-selling
opportunities and grow their contributions to
the top line. Both leasing and factoring per-
formed exceptionally well over the past year and
recorded improved results on the back of strong
bookings at the leasing business and a significant
expansion in the factoring portfolio.
EFG Hermes recorded an increase of 12% Y-o-Y
in operating revenues to EGP 5.5 billion in FY20.
Top line growth for the year was driven by im-
proved performance at the Group’s Investment
Bank platform, which was primarily supported by
solid results at the Group’s buy-side operations
and Capital Markets and Treasury revenues in
FY20. Additionally, EFG Hermes’ top line results
for the period were supported by the continued
growth of the NBFI platform, which recorded
double-digit growth across the majority of its
divisions. Despite an unfavorable operating en-
vironment due to the impacts of the pandemic,
EFG Hermes’ fees and commissions recorded a
small uptick in growth at 2% Y-o-Y to EGP 3.5
billion, contributing 64% of the Group’s rev-
enues in FY20. Moreover, the Group’s Capital
Markets and Treasury Operations reaped the re-
wards of recovering regional capital markets and
the subsequent revaluation of seed capital and
investments and delivered a top line expansion of
36% Y-o-Y to EGP 1.9 billion in FY20.
Group operating expenses recorded an increase
of 17% Y-o-Y to EGP 3.6 billion on the back of
an increase in employee expenses as EFG Hermes
continued to expand its team, as well as an in-
crease in provisions and impairment charges over
the course of the year. The Group’s ratio of em-
ployee expenses to operating revenues remained
below management’s threshold of 50% and
stood at 42% in FY20.
EFG Hermes recorded an increase of 4% Y-o-Y in
net operating profit to reach EGP 1.9 billion, yield-
ing a margin of 34% in FY20. Net profit after tax
and minority interest came in at EGP 1.3 billion,
representing a decline of 5% Y-o-Y on the back
of higher tax charges over the course of the year,
which included deferred taxes for unrealized gains
on investments as well as the reversal of FY19 de-
ferred tax gains at the holding level in FY20.
Group Revenues (EGP mn)
Group Net Profit (EGP mn)
Group Net Profit (EGP bn)
4,008
4,006
3,630
5,459
1,580
4,859
1,378
1,305
1,225
1,012
2016
2017
2018*
2019*
2020
2016
2017
2018*
2019*
2020
* Revenues and net profit figures for 2018 and 2019 are adjusted to reflect IFRS 16.
2020 Annual Report 24
2020 Annual Report
MD&A
25
Revenue Contribution by Platform
NPAT Contribution by Platform
2020
74%
26%
2020
88%
12%
2019
74%
26%
2019
77%
23%
Investment Bank
NBFIs
Group Financial Highlights
In EGP mn
FY20
FY19
Change
Group Operating Revenue
Investment Bank
NBFIs
Group Operating Expenses
Group Net Operating Profit
Group Net Operating Profit Margin
5,459
4,062
1,396
3,604
1,855
34%
Group Net Profit after Tax & Minority Interest
1,305
Investment Bank
NBFIs
1,150
155
4,859
3,620
1,240
3,080
1,779
37%
1,378
1,061
317
12%
12%
13%
17%
4%
-
-5%
8%
-51%
The Investment Bank
Securities Brokerage
EFG Hermes Securities Brokerage completed USD 55.1
billion in executions, representing a minor decline of
1% Y-o-Y on the back of lower capital markets activity
in Saudi Arabia, Qatar, Egypt, and the Group’s Struc-
tured Products due to the pandemic. The Group was
able to maintain its leading position as the broker of
choice across multiple markets, retaining its position
as the leading brokerage house in Egypt with a mar-
ket share of 36.4% in FY20. The Group successfully
retained 49.0% of the 19.8% of foreign participation
in the market during the year and 11.1% of the retail
business in Egypt. In parallel, EFG Hermes ranked first
on the DFM and second on the ADX, hitting market
shares of 32.5% and 27.6%, respectively in FY20.
In Saudi Arabia, the Group delivered a fourth-place
finish among pure brokers (non-commercial banks)
at a 2.2% market share in FY20. Moreover, the Firm
maintained its position as the largest broker operating
on the Kuwait Exchange, closing out the year with a
market share of 34.1% in FY20. In Oman, the Group
improved its ranking, coming in at third place up
from fourth in the previous year, with a market share
of 24.5% in FY20. EFG Hermes ranked thirteenth in
Jordan with a market share of 6.0% in FY20. in ad-
dition to a 3.8% market share in Pakistan. The Group
successfully ranked first in Kenya, recording a market
share of 51.6% to come up from second place in the
previous year, and ranked second in Nigeria with a
market share of 19.8% in FY20.
Securities Brokerage recorded revenues of EGP
1.0 billion, representing a decline of 17% Y-o-Y in
FY20 on the back of lower revenues booked across
multiple markets as well as the Group’s Structured
Products due to the impacts of the pandemic on
capital markets.
Egyptian equities continued to represent the
highest contribution to the Brokerage commission
pool, representing 25.6% of the total, followed
by Kuwait at 19.8%, and Frontier Markets, includ-
ing Nigeria, Kenya, Pakistan, and other Frontier
executions, which came in third with a 14.8%
contribution in FY20.
Group
Revenues
(EGP mn)
FY20
Group
Revenues
(EGP mn)
FY19
Securities Brokerage
Investment Banking
Asset Management
Private Equity
Leasing
Tanmeyah
valU
Factoring
1,007
Securities Brokerage
237
413
468
184
1,077
111
25
Investment Banking
Asset Management
Private Equity
Leasing
Tanmeyah
valU
Factoring
1,208
328
321
341
157
1,048
25
9
Capital Markets & Treasury Operations
1,938
Capital Markets & Treasury Operations
1,422
2020 Annual Report 26
2020 Annual Report
MD&A
27
Investment Banking
EFG Hermes Investment Banking successfully
executed 24 ECM, M&A, and DCM worth an ag-
gregate value of USD 1.7 billion in FY20, marking
the division’s largest number of transactions in a
single year.
On the ECM front, EFG Hermes Investment Bank-
ing acted as joint book runner on the USD 700
million IPO of Saudi-based healthcare company
Dr. Sulaiman Al Habib Group on the Tadawul ex-
change. The team also acted as sole bookrunner
on the USD 50 million accelerated equity offering
of a 7% stake on the EGX for Fawry for Banking
and Payment Technology. Despite the challenging
environment, the transaction witnessed positive
aftermarket performance and unlocked increased
value for shareholders’ residual stake. Addition-
ally, the team acted as buy-side advisor to Abu
Dhabi Developmental Holding Company’s (ADQ)
Alpha Oryx on the purchase of a 4.99% stake
in courier giant Aramex worth USD 77.4 million,
through an accelerated equity offering.
In the M&A space, the team acted as sell-side ad-
visor to Food Company (Americana), the largest
integrated food company in the Middle East, on
the sale of its stake in the Egyptian Starch and
Glucose Company (ESGC), through a mandatory
tender offer (MTO) on the EGX for a total value of
USD 27 million. Moreover, the team successfully
advised Pakistan’s United Bank Limited (UBL) on
the sale of the assets and liabilities of its Tanzani-
an subsidiary, UBL Tanzania (UBLT) to Exim Bank
Tanzania Limited. The division also acted as the
sell-side advisor to Japan-based Tokio Marine
Group on the sale of a 75% stake of its Egyptian
life insurance subsidiary Tokio Marine Egypt Fami-
ly Takaful to EFG Hermes Finance and GB Capital.
The acquisition aims to expand the scope of EFG
Hermes’ and GB Auto’s NBFI offerings through
the introduction of innovative insurance products
that will unlock additional value for both compa-
nies going forward. Building on its longstanding
relationship with Heidelberg Cement, the team
successfully advised on its restructuring plans,
which included an MTO and the delisting of both
Suez Cement and Tourah Portland Cement Com-
pany for USD 12.3 million and USD 6.0 million,
respectively in FY20. The division also successfully
advised EFG Hermes Private Equity on the sale
of a 100% stake in leading water desalination
group, Ridgewood Group, for a total value of USD
27.0 million in FY20.
In the debt-raising space, EFG Hermes successfully
concluded a USD 127 million sukuk issuance for the
Arab Company for Urban Development, the real
estate development arm of Talaat Mostafa Group
(TMG), acting as sole financial advisor, sole lead
arranger, sole bookrunner, and underwriter. The
issuance marked Egypt’s first ever corporate sukuk
issuance, as well as the largest EGP-denominated pri-
vate sector corporate debt issuance in the Egyptian
capital market. The team also successfully issued a
second securitization bond for Premium Internation-
al for Credit Services worth USD 11 million, which
comes as part of the company’s two-year program
to issue EGP 2 billion (USD 125 million) in securitized
bonds. In the third quarter of the year, the division
successfully completed the third issuance of Premium
International for Credit Services securitization pro-
gram, amounting to USD 10.1 million. Additionally,
the division issued the first tranche of Tanmeyah’s
EGP 3 billion securitization program, amounting to
USD 34.4 million, which marks the largest securitiza-
tion transaction amongst microfinance companies in
Egypt. The team also arranged an international debt
facility for private equity firm Actis for a value of USD
14.5 million. In the final quarter of the year, EFG Her-
mes’ Investment Banking Division completed eight
debt transactions. The division successfully conclud-
ed a seven-year USD 265 million debt arrangement
for Orascom Development Egypt (ODE), to refinance
outstanding debts and fund growth plans over a
two-year period. The team also advised on the USD
38.1 million sukuk issuance by Cairo for Investment
and Real Estate Development (CIRA), one of the larg-
est private educational players in Egypt, marking the
first sukuk issuance in the Egyptian education sector
and the division’s second sukuk issuance in 2020. Ad-
ditionally, the division concluded two securitization
issuances for Talaat Mostafa Group (TMG) worth an
aggregate value of USD 83.5 million. Moreover, the
division capitalized on encouraging regulatory devel-
opments following the publication by the Financial
Regulatory Authority (FRA) of Decision No. 172-2018
regarding the rules and procedures for the issuance
of short-term debt instruments and successfully
advised on a series of debt arrangements. The team
advised ADES Investments for a USD 13.0 million
debt facility, a USD 23.2 million facility for New City
Housing and Developments (NCHD), and completed
the advisory for USD 95.5 million worth of debt
financing for Marakez.
The Group’s Investment Banking division record-
ed revenues of EGP 237 million, representing a
decline of 28% Y-o-Y in FY20.
Asset Management
EFG Hermes Egypt Asset Management recorded a
17.2% increase in AUMs to reach EGP 19.1 billion
as of year-end 2020 on the back of strong inflows
from money market funds and equity portfolios.
In parallel, EFG Hermes’ regional asset man-
agement arm Frontier Investment Management
“FIM” saw a strong 40% increase in AUMs and
surpassed the two billion mark to reach USD 2.1
billion in FY20. FIM’s strong performance for the
year added 10.9% to total AUMs in FY20.
The Group’s Asset Management division record-
ed a solid 28% Y-o-Y revenue increase to EGP 413
million in FY20.
Private Equity
EFG Hermes Private Equity division completed the
sale of its managing stake in Vortex Solar, the
sole owner of a 365 MW solar PV farm in the UK,
at an enterprise value of c. GBP 500 million in
FY20. The strategic exit saw EFG Hermes Holding
(which has a 5% indirect share in Vortex Solar)
receive GBP 11 million in cash sales proceeds
compared to an initial investment outlay of GBP
7.5 million, which resulted in a capital gain of GBP
1.6 million on the holding level. Additionally, the
Private Equity division recorded a carry of GBP
16.7 million from the exit.
The division’s education platform, the Egypt
Education Fund, which is jointly owned with
Dubai-based GEMS Education, holds a portfolio
of three investments, including a portfolio of four
operational schools located in East Cairo currently
serving an excess of 6,000 students. Additional-
ly, the Fund owns a school in Al Rehab that is
currently under construction and is anticipated
to begin operations in 2022. The division also
has a majority stake in a leading transportation
provider Option Travel.
On the healthcare front, the division acquired an
80% stake in United Pharma (UP) through EFG
investment management
Hermes’ healthcare
arm, Rx Health Management, at the tail-end
of 2019. In 2020, United Pharma witnessed a
successful turnaround under the stewardship of
the Rx Health Management team and achieved
the targets it had set out for UP in 2020. United
Pharma successfully aligned with the Ministry of
Health’s (MOH) Good Manufacturing Practice
(GMP) guidelines and captured a market share
of 10% despite the turbulent market conditions
in FY20. Additionally, UP has upsized its facilities
and overall capacities to support the company’s
growth trajectory going forward.
In parallel to the division’s progress at United Phar-
ma, the Rx Healthcare platform has begun eyeing
a number of highly promising opportunities across
the generic products and injectables segments with
an aim to further expand the healthcare platform’s
investments in the pharmaceutical space.
The Private Equity division recorded a revenue in-
crease of 37% Y-o-Y to EGP 468 million in FY20.
The division’s growth came on the back of its
strategic exit from Vortex Solar in FY20.
2020 Annual Report 28
2020 Annual Report
MD&A
29
Research
EFG Hermes Research continued to expand its cov-
erage in 2020, and successfully added another 20
stocks across its coverage universe over the course
of the year. The expansion included the initiation
of coverage on the world’s largest company, Ar-
amco, as well as widening the team’s coverage of
banks in Vietnam. Additionally, the team started
the initiation of coverage on several stocks in
fast-growing sectors, including healthcare and
electronic payments. Active coverage increased
from 287 stocks in 2019 to 299 by year-end 2020.
EFG Hermes initiated coverage of new equities in
Nigeria (2), Vietnam (7), Pakistan (1), Saudi Arabia
(1), and Kuwait (1). This expansion leaves EFG Her-
mes Research with enhanced in-depth coverage of
a variety of dynamic markets and growth sectors.
As of year-end 2020, the department’s coverage
universe encompassed Egypt (45), UAE (24), Ku-
wait (16), Qatar (11), Saudi Arabia (66), Oman (14),
Pakistan (31), Vietnam (17), Kenya (10), Nigeria (14),
Bangladesh (11), Jordan (6), Morocco (6), Tanzania
(6), United Kingdom (5), Ghana (4), Uganda (3), Sri
Lanka (4), Georgia (2), Mauritius (2), Rwanda (1),
and the Netherlands (1). Despite the impacts of the
pandemic and with it the flurry of social distancing
measures seen across the globe, the team was able
to perservere and adapt to the situation. The team
managed to host three online conferences as well
as a number of virtual roadshows to continue de-
livering the exceptional services that the division’s
clients have come to expect of them. The Research
team reaped the rewards of its efforts and ranked
in first place for Frontier markets and second in
MENA in the 2020 Institutional Investor Poll for
MENA and Frontier Research.
EFG Hermes Leasing
EFG Hermes’ leasing line of business signifi-
cantly grew its market share to 9%, up from
4.5% in FY19, leaving the Group among the
top five leasing companies in Egypt in FY20.
The division’s aggressive cross-selling strategy
saw the team execute larger ticket sizes com-
1.4EGP
BN
NBFI Platform Revenues in 2020
pared to the previous year. The team’s efforts
drove a 38% Y-o-Y increase in the division’s
total outstanding portfolio to EGP 4.7 billion
in FY20.
Leasing revenues increased by 17% Y-o-Y to
reach EGP 184 million in FY20.
Factoring
EFG Hermes’ factoring portfolio more than
doubled in FY20, driven by division capi-
talizing on the cross-selling opportunities
through its merger with the Group’s leasing
operations under EFG Hermes Corp-Solutions
in 2020. The Group’s factoring portfolio grew
to EGP 819 million in FY20, recording a strong
increase from EGP 369 million in the previous
year. The division recorded a revenue increase
of 178% Y-o-Y to EGP 25 million in FY20.
Tanmeyah
EFG Hermes’ microfinance subsidiary Tanmey-
ah saw a 6% Y-o-Y decline in its outstanding
portfolio to EGP 3.0 billion. The contraction
came on the back of an externally challeng-
ing environment due to the pandemic, which
saw lower traffic at Tanmeyah’s branches. The
number of active borrowers declined by 7%
Y-o-Y to 335,000 and the number of loans
declined by 11% Y-o-Y to 312,000 in FY20.
However, despite the impact of the pandem-
ic, Tanmeyah was able to continue growing
its branch network and inaugurate five new
branches and closed out the year with a total
of 285 branches. Additionally, Tanmeyah of-
ficially piloted its new e-payment channel via
Damen across 26 of its branches towards the
tail-end of the year and has witnessed posi-
tive results in its early-stage trials. Tanmeyah
also partnered with a local micro insurance
provider and sold over 103,000 issuance cer-
tificates in FY20 and is looking to expand on
this offering going forward.
Tanmeyah recorded a 3% Y-o-Y increase in
revenues to EGP 1.1 billion in FY20.
valU
valU is a state-of-the art fintech solution
offering Egyptian consumers payment-on-in-
stallment-programs. The Group’s consumer
financing service witnessed an exceptional
performance despite the harsh market con-
ditions over the course of the year. Early on
in the year, valU successfully partnered with
Souq.com, an Amazon subsidiary and the
leading e-commerce platform in the Middle
East, to strengthen valU’s online merchant
network and drive the growth of online
sales. Additionally, valU added Carrefour, the
largest mega store in Egypt, to its network of
partners. With Carrefour now in valU’s net-
work, the Group’s consumer financing plat-
form has successfully partnered with Egypt’s
four largest megastores, including Hyper
One, Spinney’s, Carrefour, and El Morshedy.
In 2020, valU introduced an innovative solu-
tion called “WAQTY”, the first online instant
transaction approval product for non-valU
customers who hold valid credit cards issued
from Egyptian banks. The platform supported
the growth of valU’s transactional base by
providing clients with an automated approval
process. Additionally, valU collaborated with
Raseedi, the first airtime optimization solu-
tion in Egypt, to launch an alternative lending
initiative based on customers’ telecommuni-
cation behavior.
valU closed out the year with 91,000 custom-
ers, reflecting an increase of 56% Y-o-Y in
FY20. The company also reaped the rewards
of its merchant expansion strategy and re-
corded a strong increase to 898 merchants
in FY20, up from 485 in the previous year.
Additionally, over 196,000 transactions were
completed using the valU platform in FY20,
representing an increase of 255% Y-o-Y in
FY20. valU’s total outstanding portfolio grew
by a stellar 130% Y-o-Y to reach EGP 832
million in FY20.
The Group’s consumer financing platform re-
corded revenues of EGP 111 million in FY20,
up from EGP 25 million in the previous year.
It is worthy to note that valU successfully
acquired its consumer finance license from
the FRA in 2020, signaling the complete
regulation of EFG Hermes’ NBFIs operations.
EFG Hermes’ NBFI platform
maintained its double-digit growth
trajectory in 2020, a testament to
the value it provides to stakeholders
through its comprehensive and
innovative offering.
2020 Annual Report SELL-SIDE OVERVIEW
Our sell-side business consistently works to identify, create, and
deliver investment opportunities for clients around the globe
32
2020 Annual Report
Sell-Side Overview
33
Sell-Side Overview
EFG Hermes’ sell-side divisions
surpassed expectations in 2020,
coming out on top once again
to post another year of solid
operational and financial results
To say 2020 was a challenging year would be an
understatement. The COVID-19 pandemic roiled
markets in ways no one could have expected,
with lockdowns across the world hampering eco-
nomic activity, investor sentiment dwindling, and
markets experiencing sizeable volatility as a result.
The pandemic uncovered numerous deficiencies
in the financial system we were operating in, with
markets that were even teetering on vulnerability
before the pandemic suffering major setbacks.
Having said that, EFG Hermes’ sell-side divisions
surpassed expectations in 2020, coming out on
top once again to post another year of solid op-
erational and financial results all while deepening
and expanding its product and service roster.
Our Securities Brokerage division performed well
during the year, maintaining top rankings across
our footprint as market activity began to pick up
toward the end of the year on the back of a re-
sumption in economic activity spurred by vaccine
optimism. The division ranked first on the Egyp-
tian Stock Exchange (EGX), both the Dubai Finan-
cial Market (DFM) and NASDAQ Dubai, and the
Kuwaiti Stock Exchange (KSE). It placed second
in Abu Dhabi and secured a third-place spot in
Oman. While we continued to hold on strong to
our leading rankings in MENA markets, it was our
frontier division that performed exceptionally well
in 2020, with the division reaping the rewards of
the work they’ve put in to enter Sub-Saharan Af-
rica and South and Southeast Asian markets. The
division ranked first on the Kenyan exchange for
the first time and placed second by value traded in
Nigeria based on a calculated strategy to expand
both its retail and high-net-worth investor base.
The Investment Banking division outperformed all
expectations during the year, and even managed
to close an IPO for Dr. Sulaiman Al Habib Group
on Tadwaul — a major achievement considering
global market conditions. While the division had
lined up several ECM and M&A transactions across
the FEM space, most ECM activity was dampened
during the year due to the pandemic. As a result,
the division ramped up its capabilities in the DCM
space, an asset class that the division had already
built the foundations for in years previous to
hedge against turbulence in equity markets. We
booked an incredible 24 transactions for the year,
14 of which were DCM transactions at a value of
USD 757.6 million.
EFG Hermes’ Research division continued to
lead the provision of in-depth, real-time market
insights in the region, especially as global market
conditions continually shifted during the year.
The division was named leading Frontier Research
House and second MENA Research House by
Institutional Investors’ 2020 poll. During the year,
it expanded its coverage to 20 new equities from
key MENA markets and fast-growing FEMs; con-
tinued to diversify its product offerings; and suc-
cessfully hosted two virtual investor conferences
with global institutional investors that collectively
manage trillions of dollars in assets.
Prospects for 2021 leave a lot of room for op-
timism, with the COVID-19 vaccine acting as
the first step towards restoring normalcy across
markets. We’re positive about a pickup across our
footprint, with investors already showing signs
that they’re looking to allocate bigger portions of
their portfolios to FEM markets. A weaker dollar
and higher equity valuations in other parts of the
world have only served to accelerate the pickup
we were seeing at the end of 2020. FDI inflows
are also expected to rise, increasing local currency
values and subsequently lowering interest rates,
which will further accelerate business activity.
In terms of operations, our priorities in the new
year will remain largely unchanged. On the
geographic expansion front, we will continue to
look for new markets to penetrate as we build
our on-the-ground presence across geographies
characterized by solid growth fundamentals and
strong investor interest. We’re looking to deepen
our foothold in key frontier markets by replicating
the success we’ve seen in our home market of
Egypt and use this strength as a springboard into
other markets. On the Investment Banking front,
we’re also keen to continue to expand our product
offering, capitalizing on the headway we’ve made
in the Egyptian debt space in particular, especially
with our securitization and sukuk offerings, as
we continue to diversify our revenue streams. We
have lined up a solid ECM and M&A transaction
pipeline for the year ahead, particularly in Saudi
Arabia where we anticipate a significant increase
in activity. Coupled with the incredible strength
of our Research division, which will continue to
expand in scope and breadth to offer clients the
in-depth coverage they have come to expect from
us, we are confident that we have the tools in
place to capitalize on the expected upswing in
FEMs. All in all, it is shaping up to be an exciting
year for each of our sell-side teams, and I am con-
fident that 2021 will be yet another record-break-
ing year for all our divisions.
Mohamed Ebeid
Co-CEO for the Investment Bank,
EFG Hermes
23%
Of group revenues came from sell-side operations
2020 Annual Report
34
2020 Annual Report
35
EFG HERMES FRONTIER
Our Frontier division continues to grow in compelling FEMs by
solidifying its leadership positions throughout its footprint
2020 Annual ReportSection Flag 36
2020 Annual Report
EFG Hermes Frontier
37
EFG Hermes
Frontier
Overview
In 2020, EFG Hermes’ Frontier division capitalized
on the solid base it built over the last three years
since its launch to effectively and swiftly navigate
hurdles posed by the COVID-19 pandemic across
its footprint. We continued to hold on to our
robust positioning across our FEM market base,
relying heavily on the track record the team has
worked diligently to build and continues to build
even through region-wide lockdowns and having
to work remotely during the peak of the crisis.
FEM economies faced multiple challenges over
2020, including oil price collapse in March, na-
tionwide lockdowns that significantly impacted
economic activity, and global dwindling in in-
vestor sentiment that impacted foreign portfolio
flows. COVID-19 vaccine advancement has driven
optimism back into FEMs, with the year ending
on an optimistic note as domestic liquidity shored
back into key markets, which EFG Hermes Fron-
tier was poised to capitalize on, particularly with
increased activity by local investors in Nigeria,
Kenya, and Pakistan.
Despite these generally volatile market dynamics,
EFG Hermes Frontier continues to strengthen its
foothold across its key markets in Sub-Saharan
Africa and South and Southeast Asia, increasing
domestic penetration with local accounts and
continuing to deliver outstanding research prod-
ucts thanks primarily to the strength and stability
of the team. EFG Hermes retained all members
of staff during the year, allowing it to come out
of the year as resilient as ever. The success of the
team allowed the division to garner several ac-
colades, including being named the Top Frontier
Research House on the Institutional Investor 2020
poll, with analysts nabbing the top two and three
spots in terms of frontier research analysts.
Sub-Saharan Africa
In Kenya, the division reported a second year of
outstanding results. EFG Hermes now stands as
the top-ranked brokerage player in the country
just three years after entering the market with a
51.6% market share, significantly outpacing all
other players in the country. In 2020, the division
deployed a calculated strategy to expand its retail
and high-net-worth investor base in Kenya by
leveraging the group’s existing EFG Hermes One
application. Aiming to launch in 2021, the exten-
sion of the application in the market would be the
first of its kind in Kenya. This would not only firm-
ly establish the Firm’s positioning in the country
but allow it to replicate the trading application’s
success in other frontier markets.
In Nigeria, EFG Hermes leveraged the significant
strides taken in 2019, which were anchored in EFG
Hermes’ expertise and Primera Africa’s on-the-
ground presence in the country, to reinforce its
standing and traction with domestic and foreign
institutional investors alike. To date, the Firm
stands as the second leading broker in the country
with 19.8% market share. The division has been
mandated to conduct numerous investment bank-
ing transactions in Nigeria that were delayed due
to COVID-19 and is currently exploring avenues to
establish a fixed income trading desk in the market.
South and Southeast Asia
In 2019, EFG Hermes partnered with Asia Commer-
cial Bank Securities (ACBS) of Vietnam, giving clients
access and intelligence to trade on the Hanoi Stock
Exchange (HNX), the Ho Chi Minh City Exchange,
and UPCOM. The Firm increased its market share of
foreign inflows this year as it worked to expand its
reach in one of Asia’s most compelling capital mar-
kets despite being the only non-local investment
bank operating in the country.
Following an extensive restructuring program for
its Pakistani operations in 2019 in response to
macro and political challenges, 2020 saw the mar-
ket turn around once COVID-related lockdown
restrictions were lifted. Volumes soared toward
the end of the year driven by high-net-worth and
retail investors, a turnaround the Firm was able
to capitalize on and establish its presence further
within the domestic equity franchise in Pakistan.
Outlook
The division remains optimistic about its FEM strat-
egy in 2021 as several indicators point to an FEM
pickup for the year. Foreign inflows were already
being seen toward the end of 2019, a trend we ex-
pect to continue into the FEM asset class and which
EFG Hermes Frontier is poised to reap the benefits
of. We expect to continue to see domestic yields
come under pressure, but for domestic institutional
as well as high-net-worth and retail investors to
continue to be quite active across our footprint.
In 2021, we plan to further consolidate the base we
have built over the last several years. As a post vac-
cine world and what that means for markets begins
to take form, markets are expected to normalize,
and deals in our pipeline that were postponed
should come to fruition. We will continue our push
in particular into Asian markets, exploring opportu-
nities in Vietnam and Indonesia through strategic
partnerships. We also expect to lay the groundwork
to launch new products across our FEM universe,
including fixed income desks, DCM products, and
others that will drive growth for the division and the
Firm in the year to come.
51.6%
Market share in Kenya, the top broker in the
country
2020 Annual Report INVESTMENT BANKING
The Investment Banking team works to expand into new
products that lead the charge throughout the industry
40
2020 Annual Report
Investment Banking
41
Investment Banking
Overview
EFG Hermes Investment Banking division has EFG
Hermes Investment Banking division has cemented
its regional leadership position in M&A advisory,
ECM and DCM executions, becoming the trusted
partner for MENA and non-MENA FEM clients and
partners. The division is constantly expanding its
reach, executing some of the largest and note-
worthy deals across its focus markets. EFG Hermes
Investment Banking deploys the largest and most
diverse group of professionals in the region who
bring deep understanding of companies, indus-
tries, markets, and economies with proven global
knowledge and execution expertise. The team’s
on-the-ground presence combined with a flexible
business model that quickly adapts to changing
market dynamics have allowed the Firm to offer
advisory on a multitude of value-added services to
an ever-growing client base.
By 2020, the division had executed a total of 281
ECM, DCM, and M&A deals across its footprint,
worth an aggregate value of c. USD 120 billion. It
holds a 5% market share of overall deal executions
according to 9M2020 rankings from Refinitiv’s ECM
MENA League Tables, has placed among the top five
on Bloomberg and Thomson Reuters’ Middle East
ECM League Tables since 2015, and first on the 2019
Refinitiv ECM League Table.
2020 Operational Highlights
2020 was a challenging one for markets the
world over due to an overall slump in investor
sentiment as a result of the COVID-19 pandemic
and lockdown measures that dampened eco-
nomic activity. While the division had lined up a
healthy transaction pipeline across the FEM space
for 2020, the unraveling situation put much of
them on hold. The crisis necessitated a swift and
calculated shift of focus toward the DCM space,
an asset class that the division had laid ground-
work on in years previous as part of its product
diversification strategy. As a result, the division
managed to book an outstanding 24 transactions
for the year by leveraging improved efficiencies
across the full spectrum of its operations, its
growing network of strategic relationships, and
improved execution capabilities. With 40 of some
of the most talented investment banking profes-
sionals, the division closed several cross-border
deals during the year, many entirely remotely. EFG
Hermes’ Investment Banking team closed 14 DCM
transactions at a value of USD 757.6 million, three
ECM transactions worth USD 828.1 billion, and
seven M&A deals valued at USD 99.0 million. Its
success was recognized by multiple international
awarding bodies this year, having been named
Best Investment Bank in Egypt at the 2020 Eu-
romoney Awards for Excellence, Best Corporate
and Investment Bank in Egypt by Asiamoney, Best
Investment Bank in the Middle East and Best In-
vestment Bank in Egypt by Global Finance, as well
as Best Investment Bank in Egypt in the EMEA
Finance African Banking Awards.
As part of its drive to continue to expand its pres-
ence in the Kingdom of Saudi Arabia, EFG Hermes
successfully completed advisory on Dr. Sulaiman Al
Habib Group’s SAR 2.63 billion (USD 700 million)
IPO on Tadawul, with the Firm acting as joint
bookrunner on the deal. The transaction laid solid
foundations for further ECM executions in Saudi
Arabia in 1Q21. At home, the Firm concluded ad-
visory on a USD 50 million sale of a c. 7% stake in
Fawry, following on from the success of the IPO in
2019. EFG Hermes acted as sole bookrunner on
behalf of the selling shareholders on the electronic
payment platform operator’s accelerated offering.
By 2020, the division had executed a total of 281 ECM, DCM, and
M&A deals across its footprint, worth an aggregate value of USD
c.120 billion.
In the M&A space, EFG Hermes Investment
Banking began 2020 with the conclusion of a
share purchase agreement between Japan-based
Tokio Marine Group, GB Capital, and EFG Hermes
Finance, which saw the sale of a 75% stake in
Tokio’s Egyptian life insurance subsidiary Tokio
Marine Egypt Family Takaful, valued at USD 5.4
million (EGP 84.75 million). On the frontier front,
EFG Hermes successfully completed advisory
to Pakistan’s United Bank Limited (UBL) on the
sale of the assets and liabilities of its Tanzanian
subsidiary, UBL Tanzania (UBLT) to Exim Bank Tan-
zania Limited. The UBL advisory is EFG Hermes’
first cross-border M&A transaction in East Africa
since entering the Kenyan market in 2017.
2020 saw the division turn its focus towards
developing its DCM capabilities and product
offering, particularly in the securitization and
sukuk space. In November, the division concluded
a seven-year USD 265 million debt arrangement
for Orascom Development Egypt (ODE). The Firm
acted as financial advisor, lead manager, global
coordinator, and bookrunner for the transaction.
It also successfully concluded debt arrangements
for ADES Investments (USD 13.0 million), NCHD
(USD 23.2 million), Marakez (USD 95.5 million),
and Actis (USD 14.5 million).
Securitization is a new and burgeoning asset class
in Egypt, coming into increased focus over the last
two years. EFG Hermes has capitalized on such
growth, making numerous strides to offer key se-
curitization issuances for clients in 2020 and closing
six securitization transactions at a combined value
of USD 532 million. The Firm acted as financial
advisor, MLA, and underwriter on the USD 10.9
million second issuance and USD 10.1 million
third issuance of Premium International for Credit
Services securitization program. The division also
acted as financial advisor, MLA, and underwriter
on the USD 27.9 million first issuance and USD
55.6 million second issuance of a securitization
program for TMG Holding and a USD 34.9 million
securitized bond for Tanmeyah Microenterprises.
The division closed two sukuk deals in 2020 at
a value of USD 68 million as part of its drive to
build its debt franchise in Egypt. In April, the Firm
acted as sole financial advisor, sole lead arranger,
sole bookrunner, and sole underwriter for an EGP
2 billion sukuk issuance for TMG Holding, Egypt’s
first ever corporate sukuk issuance, which was
2.5x oversubscribed. Additionally, during the year,
the division acted as sole financial advisor, lead
arranger, and bookrunner on the USD 38 million
sukuk issuance of Cairo for Investment and Real
Estate Development, the first of its kind in Egypt’s
education space.
2020 Deals
Throughout the year, EFG Hermes concluded an
outstanding number of landmark deals across
MENA and non-MENA frontier emerging markets.
ECM Deals
Sulaiman Al Habib IPO – Joint bookrunner on
the USD 700 million initial public offering of the
Saudi healthcare operator.
Aramex Accelerated Offering – Advisor on
the USD 77.7 million accelerated equity offering
of a stake Dubai-based logistics firm Aramex.
Fawry Accelerated Offering – Sole bookrunner
on the USD 50.4 million accelerated equity offer-
ing of a 7.1% stake in payment platform Fawry.
2020 Annual Report
42
2020 Annual Report
Investment Banking
43
M&A Deals
Tokio Marine Family Takaful Egypt Stake Sale
– Sell-side advisor on the USD 5.4 million sale of a
75% stake in the Egyptian insurance player.
Americana Stake Sale – Sell-side advisor to
the USD 26.6 million sale of a 97.5% stake in
the Kuwait-based food and beverage player to
the Egyptian Starch and Glucose Company.
Masria Digital Payments Stake Sale – Sell-
side advisor on the sale of a 43% stake in Mas-
ria Digital Payments to AfricInvest, a leading
Pan-African private equity platform.
Exim Bank Tanzania Limited Sale – Advisory
on Pakistan’s UBL sale of the assets and liabil-
ities of its Tanzanian subsidiary, UBL Tanzania
to Exim Bank Tanzania Limited.
Suez Cement MTO – Advisory on the manda-
tory tender offer and delisting of Suez Cement
amounting to USD 12.3 million.
Tourah Cement MTO – Advisory on the
mandatory tender offer and delisting of Tourah
Cement amounting to USD 6.0 million.
Ridgewood Sale – Advisory on the sale of
100% of Ridgewood worth USD 27 million to
a joint venture between Hassan Allam Utilities
and Almar Water Solutions.
DCM Deals
ODE Debt Arrangement – Financial advisor,
lead manager, global coordinator, and bookrun-
ner for the transaction, worth USD 265.0 million.
ADES Investments Debt Arrangement –
Worth USD 13.0 million.
NCHD Debt Arrangement – Worth USD
23.2 million.
Marakez Debt Arrangement – Worth USD
95.5 million.
Actis Debt Arrangement – Worth USD
14.5 million.
EFG Hermes (HSB) Short-term Bond – Worth
USD 31.8 million.
Premium Card Securitization Program – Fi-
nancial advisor, MLA, and underwriter on the
USD 10.9 million second issuance and USD
10.1 million third issuance of a securitization
program for Premium Card.
TMG Holding Securitization Program – Fi-
nancial advisor, MLA, and underwriter on the
USD 27.9 million first issuance and USD 55.6
million second issuance of a securitization pro-
gram for TMG Holding.
Tanmeyah Securitized Bond – Sole financial
advisor, lead manager, and arranger of a USD
34.9 million securitization bond for Tanmeyah.
TMG Holding Sukuk Program – Sole financial
advisor, lead arranger, bookrunner, and under-
writer on the EGP 2 billion sukuk issuance for
TMG Holding.
CIRA Sukuk Program – Sole financial advisor,
lead arranger, and bookrunner on the USD 38
million sukuk issuance of Cairo for Investment
and Real Estate Development.
2020 Financial Highlights
The division reported total revenues of EGP 237
million in FY20, a 28% decrease compared to
EGP 328 million in FY19. EFG Hermes Invest-
ment Banking fees and commissions contrib-
uted approximately 4% of EFG Hermes’ total
revenue in FY20.
The division managed to book an outstanding 24 transactions for the
year by leveraging improved efficiencies across the full spectrum of its
operations, its growing network of strategic relationships, and improved
execution capabilities.
Outlook
In recent years, the EFG Hermes Investment
Banking division has significantly expanded both
its product offering and geographic footprint,
entering some of the world’s most rapidly growing
markets in Sub-Saharan Africa and Southeast Asia.
In the coming year, the division plans to continue
to build on the successful franchise it has devel-
oped over the years, deepening its ECM and M&A
capabilities across its footprint and expanding its
presence in the DCM space.
As equity markets began to pick up toward the end
of the year, the division expects its ECM pipeline
to ramp up in 2021, both in the MENA region and
FEMs. Having already lined up several deals in the
kingdom for the year to come, EFG Hermes Invest-
ment Banking is particularly bullish on activity in
Saudi Arabia, remaining confident that the strong
fundamentals that underpin the market will drive
economic growth across the wider region. Egypt is
also expected to fare better in terms of IPO activity
in the year to come, with improved market dynam-
ics already being seen toward the end of 2020 as
foreign trading activity picks up. The division is
working on several listings, two of which are lined
up for foreign companies on the EGX, which are
expected to take place in the first quarter of 2021.
The division will also continue to carve out a
greater space in the DCM asset class, particularly
securitization and sukuk in its home market of
Egypt, and work to expand this expertise across
its footprint. At the same time, post-COVID al-
ternative financing is becoming ever important,
including bridge facility arrangements and short-
term financing deals. With the division’s already
established merchant banking platform, which has
seen it deploy USD 50.9 million in 2020 alone to
facilitate financing for clients, it plans to continue
to grow its merchant banking capabilities to both
serve clients and generate business.
2020 Annual Report SECURITIES BROKERAGE
The division continues to make gains in key exchanges as
we work to expand our foothold in both legacy markets
and new geographies
46
2020 Annual Report
Securities Brokerage
47
Securities Brokerage
Overview
As the leading brokerage house in the MENA
region, EFG Hermes Securities Brokerage offers
its growing client base a range of diverse prod-
ucts and services and an unparalleled coverage
of more than 75 MENA and frontier emerging
markets. Despite the challenges of the COVID-19
pandemic, which impacted all sectors around
the world, the division continued to hold an on-
the-ground presence in Egypt, Kuwait, the UAE,
Saudi Arabia, Oman, Jordan, Pakistan, Kenya,
Nigeria, and Bangladesh, with offices in the UK
and the US. The division’s growing client base
ranges from individual retail investors to some
of the most prominent institutional investors and
high-net-worth-individuals in the region and the
world. EFG Hermes Securities Brokerage’s all-en-
compassing portfolio of products and services is
supported by the Firm’s award-winning Research
division, which provides clients with real-time
market intelligence and unique insights, and the
division’s online trading platform, which allows
for instant market access from desktops, laptops,
and mobile phones.
2020 Operational Highlights
The past year saw unprecedented conditions
brought on by the pandemic, but equity markets
continued to perform relatively well, allowing EFG
Hermes Securities Brokerage to reap the benefits
of the already solid positioning it holds in the
markets in which it operates, benefiting from
increased volumes brought on by the pandemic
induced volatility.
EFG Hermes Securities Brokerage reported an-
other year of solid operational results, despite
ongoing global challenges brought on by the
COVID-19 pandemic. Markets continued to im-
prove as the year progressed, on the back of a
relative resumption of economic activities. Higher
executions in Kuwait and frontier markets were
overshadowed by lower executions in Saudi Ara-
bia, Qatar, Egypt, and our Structured Products
Desk, leading executions to be flat on a Y-o-Y ba-
sis, declining by 1%. Brokerage revenues fell 17%
Y-o-Y to EGP 1 billion, mainly on lower revenues
generated by MENA markets, with the exception
of Kuwait and Egypt, lower revenues generated
by frontier markets, with the exception of Kenya
and Pakistan, losses incurred by the Fixed Income
Desk in 1Q20, and lower revenues generated by
the Structured Products Desk. In terms of pure
commissions booked in different markets, Egypt
remained the top contributor to Brokerage com-
missions, at 25.6%. Frontier markets recorded a
14.8% contribution, while UAE markets (Dubai,
Abu Dhabi, and Nasdaq Dubai) stood at 13.1%,
and Kuwait at 19.8%.
Egypt’s equity market picked up towards year-
end, following a year of government measures
to cushion the economic impact of the COVID-19
pandemic. EFG Hermes maintained its number
one ranking on the EGX, with the Firm’s market
share at 36.40% in 2020. Foreign participation
came in at 19.8%, with EFG Hermes successfully
capturing 49.0% of foreign institutional flows.
In the UAE, the Dubai market continued to gain
ground from the second half of the year, allowing
the Firm to retain its number one ranking on the
DFM, with a market share of 32.5%. On the ADX,
EFG Hermes’ market share stood at 27.6%, secur-
ing a second-place finish.
In Kuwait, trading activity picked up toward the
end of the year, especially following Kuwait’s
upgrade to EM status by MSCI inclusion in No-
vember. This allowed the Firm to hit the highest
number of executions ever traded by the Broker-
age division since its inception, at USD 2.7 billion.
The division continued to rank first in the market,
with a market share of 34.1% in 2020 compared
to 33.7% in 2019, capturing the lion’s share of
foreign institutional flows during the year.
Supported by local investors, the Tadawul All
Share Index continued its upwards trajectory,
following the decline in the first half of the year,
allowing the Firm to capitalize on this momentum
and capture significant inflows from all tiers of
investors. The Firm’s market share came in at
2.22%, ranking fourth among brokerage firms
not linked to commercial banks.
EFG Hermes Oman’s market share climbed to
24.5%, with the Firm coming in third place.
Foreign participation stood at 12.3% of market
turnover, with EFG Hermes capturing 19.8%.
FY20
FY19
Market Share
Rank
Market Share
Rank
36.4%
32.5%
27.6%
58.3%
34.1%
51.6%
19.8%
24.5%
2.2%
6.0%
3.8%
1st
1st
2nd
1st
1st
1st
2nd
3rd
4th*
13th
n/a
47.8%
33.5%
39.1%
65.9%
33.7%
34.5%
26.2%
18.4%
6.1%
8.3%
6.2%
1st
1st
1st
1st
1st
2nd
3rd
4th
5th
6th
n/a
Egypt
UAE – DFM
UAE – ADX
UAE – NASDAQ Dubai
Kuwait
Kenya
Nigeria
Oman
KSA
Jordan
Pakistan
*Among brokers not linked to commercial banks
2020 Annual Report 48
2020 Annual Report
Securities Brokerage
49
Frontier Emerging Markets
Despite generally challenging market dynamics,
EFG Hermes Frontier continued to hold its posi-
tion in the territories it operates. As such, EFG
Hermes Frontier continued to noticeably contrib-
ute to the Group’s 2020 financial performance.
In Kenya, inflows from retail investors buoyed
the market in 2020. As such, the division re-
ported a second year of strong performance,
with EFG Hermes now the top-ranked broker-
age player in the country with a 51.6% market
share, significantly outpacing all other players
in the country.
Meanwhile in Nigeria, EFG Hermes leveraged
the strides made the year previous to cement
its position with both retail and foreign insti-
tutional investors. To date, the Firm stands as
the second leading broker in the country with a
19.8% market share.
The Pakistani market witnessed a challenging
year due to the COVID-19 pandemic but
ended the year on a strong note following the
resumption of normal business operations after
the lifting of the country’s lockdown measures,
as well as several positive macro and political
developments. EFG Hermes Pakistan’s market
share came in at 3.8%, capitalizing on increased
inflows from high-net-worth and retail investors.
In Vietnam, the market continued to recover
from its slump during the start of the year.
The Firm boosted its market share of foreign
inflows in 2020 as a result and continued to
expand its reach in the country as one of its key
strategy planks for growth in Southeast Asia.
As such, the Firm retained 0.05% market share
during the year.
EFG Hermes One
Launched in 2017 in partnership with Saxo
Bank, EFG Hermes One grants users one-click
the SaxoTraderGo platform
access to multiple global markets, seamlessly
to
integrates
expand access and capabilities and provides
access to EFG Hermes’ award-winning research
products. The innovative online platform en-
ables local and regional investors to explore
new opportunities in global capital markets
and trade multiple asset classes from a single
account from anywhere in the world.
Investments
One of the main highlights of the year was
the performance of EFG Hermes’ Bahrain
subsidiary, OLT
International.
The Firm’s online platform in collaboration
with Saxo Bank has managed to increase its
client base and assets under platform three-
fold during 2020 compared to 2019, putting
the Firm amongst the significant players in
the region in this domain. The Firm was well
placed to capture the new business initiated
as a result of the increased interest in global
markets due to the volatility seen last year.
During the year, the success of EFG Hermes
One spurred the Firm’s interest in replicating
the application to suit the Kenyan market,
with plans already laid out to that effect set
out for 2021.
Structured Products
2020 saw EFG Hermes Securities Brokerage’s
Structured Product Desk’s revenues decline
35% to EGP 59 million. The Structured Product
Desk was launched in 2016 as part of the Firm’s
strategy to grow its capital market business and
deliver product diversity to the franchise.
Unique Corporate Access
In light of the unprecedented circumstances
imposed by the COVID-19 pandemic, 2020 saw
EFG Hermes cement its commitment to con-
nect global investors with opportunities across
its FEM footprint despite the difficult circum-
stances through launching a new conference
format. The Firm held two successful investor
conferences, virtually for the first time, in place
of the flagship One-on-One Conference.
In June, the first Virtual Investor Conference
spanned three weeks, and facilitated more than
6,500 meetings, bringing together executives
from 72 companies and 14 countries, with 480
institutional investors representing 160 insti-
tutions managing assets in excess of USD 15
trillion. The second Virtual Investor Conference
in September saw an even greater and more
diverse turnout, with 157 companies from
25 countries around the world holding direct
meetings with more than 650 institutional in-
vestors from 240 global institutions managing
assets more than USD 17 trillion.
2020 Financial Highlights
EFG Hermes Securities Brokerage revenues fell
17% y-o-y to EGP 1 billion in 2020, on lower
revenues generated by various products and
across the Firm’s jurisdictions.
Brokerage Revenue
(EGP mn)
2019
2020
Egypt
UAE
KSA
KSA
Kuwait
Pakistan
Kenya
Nigeria
Frontier
Structured Products
Others**
Total Revenue
FY20
474
114
89
142
16
49
36
33
59
(30)
25
1,007
FY19
523
142
114
116
12
38
67
55
98
16
27
1,208
Commission
Breakdown by
Market
FY20
Egypt
DFM
ADX
NASDAQ Dubai
KSA
Kuwait
Oman
Qatar
Jordan
Frontier
Structured Products
Others*
Total
FY20
25.6%
6.6%
5.4%
1.1%
12.1%
19.8%
1.10%
6.8%
0.53%
14.8%
2.7%
5.2%
100%
* Others include: Jordan, Oman, Bahrain, and UK (GDRs)
** Others include: Jordan, Oman, and Bahrain
2020 Annual Report 50
2020 Annual Report
Securities Brokerage
51
Average Daily Commissions
(USD ‘000)
2019
2020
229
231
Awards
The team’s success has garnered recognition
from numerous international ranking institu-
tions and awarding bodies this year, including
Best Brokerage Services by MENA FM and Africa
Global Funds; Best Broker in Egypt, Kenya, and
Nigeria by the EMEA Finance African Banking
Awards; Best Broker in the Middle East, UAE,
KSA, Kuwait, and Oman by the EMA Finance
Middle East Banking Awards; and Broker of
the Year in KSA, Oman, Egypt, and Kuwait by
Global Investor Group MENA Awards.
Outlook
With FEM markets pegged for market recovery
and an uptick in inflows in the year to come,
the team will continue to capitalize on the
significant achievements made during 2020.
It will work to grow its foothold in its primary
MENA markets and build on the successes
achieved in Sub-Saharan Africa to build out an
East and West financial hub through its Kenya
and Nigeria outposts. At the same time, it will
work to grow its standing in Southeast Asia,
building on the tremendous success in Paki-
stan and Vietnam as well as stellar execution
capabilities across the region. All in all, the
division will continue to launch new products,
hone its service offering, and forge partner-
ships that will continue to place it as a broker
of choice throughout its footprint.
75
MENA and Frontier markets covered
EFG Hermes Securities Brokerage
reported another year of solid
operational results, despite ongoing
global challenges brought on by the
COVID-19 pandemic.
2020 Annual Report RESEARCH
The team leads the charge in terms of quality and breadth
of coverage, garnering top spots on some of the world’s
most prestigious investor polls and rankings
54
2020 Annual Report
Research
55
Research
Overview
Having initiated coverage on 20 stocks last year,
bringing the total coverage to 299 stocks across
22 markets as of year-end 2020, the EFG Hermes
Research division continues to be the region’s
leading provider of in-depth, real-time market
insights, guiding the Firm’s various divisions and
ever-growing client base when making financial
decisions. This has proved particularly invaluable
considering the unprecedented circumstances
seen in 2020 and the subsequent impact on global
markets. The team’s ability to constantly expand
its coverage and product offering, while remain-
ing at the forefront of an increasingly competitive
industry has earned the team multiple accolades
in recent years, with EFG Hermes Research being
named the leading Frontier Research House and
the second-ranked MENA Research House in
Institutional Investor’s 2020 poll.
2020 Operational Highlights
Despite the impact of the COVID-19 pandemic
on overall market conditions, and in line with
the division’s coverage expansion and product
diversification strategy, 2020 saw EFG Hermes Re-
search continue to build out its research coverage
and improve the quality of its products. During
the year, the division initiated coverage on 20
new stocks from key MENA and frontier markets.
On the product diversification front, the division
continued to tailor its offering to meet clients’
evolving needs and interests, with increased fo-
cus on fintech stocks, such as Fawry.
2020 also saw EFG Hermes Research, as a result of
the pandemic, host two successful virtual investor
conferences for the first time, which replaced the
flagship One-on-One Conference. The first Virtual
Investor Conference, held in June over a span of
three weeks, facilitated more than 6,500 meet-
ings, bringing together executives at 72 companies
from 14 countries, with 480 institutional investors
representing 160 institutions managing assets in
excess of USD 15 trillion. The second Virtual Inves-
tor Conference in September saw an even greater
and more diverse turnout, with 157 companies
from 25 countries around the world holding direct
meetings with more than 650 institutional inves-
tors from 240 global institutions managing assets
more than USD 17 trillion.
The department’s unmatched ability to adapt to
changing market dynamics and react to the evolv-
ing needs of its increasingly diverse client base
has earned EFG Hermes several accolades over
the years. EFG Hermes Research was, once again,
named the top Frontier Research House and
ranked second in MENA in the Institutional Inves-
tor 2020 Poll. The division continues to lead the
way in terms of quality, frequency, and breadth
of coverage with five analysts from the division
ranking amongst the top 15 MENA analysts in the
poll. Analysts from the frontier division ranked
second and third in the poll for the year.
Following the introduction of MIFID II, EFG Her-
mes Research’s ability to stand out from its com-
petition, thanks to its deep and comprehensive
analysis, has allowed the Firm to thrive, even given
the new regulatory framework. After the sell-side
decoupled research from brokerage commissions
for European clients, the EFG Hermes Research
team sells their research on an account-by-account
basis to clients across Europe and the UK.
EFG Hermes Research was, once again, named the top Frontier
Research House and ranked second in MENA in the Institutional Investor
2020 Poll.
Evolution of Companies Under Active Coverage (Number of Companies at Year-End)
287
299
263
225
133
141
154
120
2013
2014
2015
2016
2017
2018
2019
2020
Egypt
UAE
Kuwait
Qatar
KSA
Oman
Other
Pakistan
Vietnam
Kenya
Nigeria
Bangladesh
EFG Hermes Research Digital Portal
In today’s increasingly digital world, and with the
acceleration of the digital transformation brought
on by the COVID-19 pandemic, EFG Hermes under-
stands that instant access to high-quality research
products has become a necessity for investors,
analysts, as well as the Firm’s other departments.
As such, the department continued to work on
enhancing EFG Hermes’ digital research portal in
2020, striving to further improve the overall user
experience by ensuring a greater degree of per-
sonalization and access. The improved platform
not only gives users access to one of the most
comprehensive research libraries available in the
region, encompassing all historical news, reports,
and commentaries produced by the Firm’s research
team, but also allows for reports to be saved and
archived for a later time, while also allowing clients
to tailor their mailing preferences to receive only the
coverage that most interests them.
Outlook
The COVID-19 pandemic led to unprecedented
circumstances around the globe, impacting all
markets. In 2021, the division expects a signif-
icant recovery in earnings as markets recover
following vaccine rollouts. At this time of partic-
ular uncertainty, clients, investors, and analysts
are looking for incisive, accurate, and timely
research to help them navigate volatile markets.
EFG Hermes Research is ideally positioned to
capture this demand. Over the next year, the
division will look to broaden the variety of its
products, to provide more diversified insights
for the Firm’s client base and divisions. EFG Her-
mes Research will start to analyze ESG for its
stock coverage, which will be a consideration
as to how stocks are valued. The division will
continue to expand its frontier coverage, with
a particular focus on Asian stocks, with an aim
of reaching 360 stocks under coverage in 2021.
2020 Annual Report BUY-SIDE OVERVIEW
The buy-side division was key to the Firm’s success in 2020
as it worked to expand into new and compelling verticals
58
2020 Annual Report
Buy-Side Overview
2020 Annual Report
59
Buy-Side
Overview
Despite dwindling investor
appetite for emerging markets
and the instability onset by the
year, EFG Hermes continued
to outperform its regional
benchmarks and peer institutions.
EFG Hermes prides itself on being a regional fi-
nancial services powerhouse able to weather the
most unexpected of circumstances. The events of
the year, which saw slumps in global economic
activity and adverse market conditions across the
world, put our resilience as an institution and
ability to navigate challenging conditions to the
test. Yet, in spite of dwindling investor appetite
for emerging markets and the instability onset by
the year, EFG Hermes continued to outperform
its regional benchmarks and peer institutions,
generating positive results while adding value to
its stakeholders. The year further saw our divi-
sions capitalize on opportunities in the market,
introduce new products, and contribute to total
Group revenues.
During 2020, the asset management division’s
total revenues amounted to EGP 413 million, in-
creasing by 28% Y-o-Y. Additionally, the division’s
local and regional assets under management
(AUMs) both witnessed considerable increase,
with Egypt AUMs increasing by 17.2% to EGP
19.1 billion and regional AUMs increasing 40% to
USD 2.1 billion. The division has also embarked on
creating the framework to launch new investment
products in anticipation of renewed interest in
the region and demand in the emerging market
asset class in the wake of market recovery later
in the year.
Our renewable energy platform Vortex Energy
witnessed strong results during the year, with the
divestment of its solar platform (Vortex III) for a
total of c. GBP 500 million following the divest-
ment of Vortex Wind in 2019. The platform has
also laid the groundwork in order to launch Vor-
tex IV, which will see it begin to invest in a variety
of renewable assets ranging from solar and wind
to storages, distribution, and other asset classes
across the entire transition theme. This will see
us poised to position ourselves at the helm of
renewables investments, given the ever-growing
interest in sustainable energy investments and
responsible investment strategies.
Building on the strides made in the pharmaceu-
ticals sector following the acquisition of United
Pharma in 2019, Rx Healthcare Management con-
tinued to expand on its investments through the
company. During 2020, we were able to enhance
our offering, adding over 30 new products to our
portfolio while exploring potential opportunities
for exports across the region. With the onset of
the COVID-19 pandemic, the company addition-
ally experienced increased demand for medical
solutions in the face of heavy hospital traffic and
will see the company continue to expand on its
offering in order to meet that demand.
On the education front, EFG Hermes continued
to leverage its partnership with GEMS Education
in order to broaden its offering of leading educa-
tional solutions across the country. The closures
caused by the COVID-19 pandemic resulted in the
company adapting its offering in order to contin-
ue to benefit its students, becoming the first in
Egypt to launch online schooling while supporting
other institutions in their transition to e-learning.
The company is also currently in the process of
establishing a K-12 school in the Rehab district
of Greater Cairo, marking the fifth institution in
its portfolio. Additionally, the company has paved
the way for a new venture through its acquisition
of a majority stake in Option Travel, a transpor-
tation solutions provider as it seeks to introduce
specialized school buses with child safety at the
core of its design.
In spite of the challenges posed by the year re-
sulting from market slumps, declined economic
activity, and global closures and uncertainty,
our division was able to overcome them and
capitalize on new market opportunities in an
innovative manner. This has allowed EFG Her-
mes not only to provide its shareholders with
gains but also to instigate positive impact that
will benefit local communities at large. As mass
vaccination rolls out and markets stabilize, we
expect to see the recovery initiated at the end of
the year continue into 2021. The milestones we
have achieved during the year will leave us well
poised to capitalize on new opportunities, further
our investments offerings and create increased
value for our stakeholders, which will cement our
position as the leading financial services group in
the region, generating investment opportunities
that are equally lucrative and sustainable.
Karim Moussa
Co-Chief Executive Officer, EFG Hermes
Investment Bank
2.1USD
BN
Regional AUMs in 2020
ASSET MANAGEMENT
With funds consistently outperforming regional
benchmarks, the division is the only regional asset
manager with this kind of track record we have managed
to amass since inception
62
2020 Annual Report
Asset Management
63
Asset
Management
Overview
EFG Hermes Asset Management is the only asset
manager in the MENA region with an established
track record as an investment manager, with the
division’s funds consistently outperforming regional
benchmarks. Throughout its decades-long track
record in the industry, the division has offered its
diverse client base a wide spectrum of mutual funds
and discretionary portfolios with both country-spe-
cific and regional mandates. The division’s mandates
range from equity, money market, fixed income,
and indexed to Sharia- and UCTIS-compliant man-
dates. The team serves a growing roster of clients,
with a specific focus on long-term and institutional
investors, offering tailored products accounting for
individual needs, unique financial objectives, and
risk appetites.
2020 Operational Highlights
2020 saw the MENA region face unprecedented chal-
lenges, including lockdowns that impacted economic
activity and a general slump in investor appetite for
the emerging market asset class. Despite challenging
market conditions due to the COVID-19 pandemic and
dwindling sentiment, EFG Hermes Asset Management’s
fund and portfolio performance continued to beat peer
averages, allowing the division to maintain its standing
as the region’s asset management house of choice.
During the year, Egypt’s AUM rose 17.2% Y-o-Y to
EGP 19.1 billion on the back of MMFs and stronger
performance from equity markets as sentiment
picked up toward the end of the year. In terms of
regional performance, the division saw AUM up 40%
in FY20 to USD 2.1 billion, with strong performance
across all funds and managed accounts as markets
recovered towards the end of the year, recovering
from the sell-off seen in March due to COVID-19.
In 2020, the Credit team laid the groundwork to
launch new investment products to cover the emerg-
ing market asset class, considering the expected
pickup in inflows in the region with an eye to satisfy-
ing the unique and evolving needs of its clients and
solidify its position at the forefront of the competitive
asset management space.
Egypt AUM (EGP bn)
13.1
13.7
13.4
13.0
14.0
14.2
15.6
16.3
15.5
19.1
16.9
17.4
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
Egypt Equity Funds
MMFs and Fixed Income
Portfolios
Regional AUM (USD bn)
2.5
2.4
2.3
2.3
2.1
1.6
1.6
1.5
1.4
2.1
1.7
1.7
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
Regional Funds
Regional Portfolios
Local Funds Managed by EFG Hermes Asset
Management in Egypt
8
9
1
1
MMR
Equity
Fixed Income
Balanced
2020 Financial Highlights
Asset Management revenue rose 28% Y-o-Y in
FY20 to EGP 413 million compared to the EGP 321
million reported in FY19 largely due to strong incen-
tive fees booked by the regional asset management,
FIM in the final quarter of the year.
Awards
Due to its continued resilience in the face of the cur-
rent market climate and its comparatively superior
performance to regional peers, EFG Hermes Asset
Management was named Best Asset Manager in
Egypt and Pan-Africa by the EMEA Finance African
Banking Awards 2020 for the second year running,
as well as the Best Asset Manager in the UAE by the
EMEA Finance Middle East Banking Awards.
Outlook
We are optimistic about what the year ahead
holds for both emerging and frontier markets,
expecting to see solid inflows continue from
their pickup toward the end of 2019 as markets
began to find their footing once again. The
division enters the new year confident that its
solid fundamentals and decades of experience
navigating macroeconomic and geopolitical
headwinds will see it continue to grow and
deliver value to its stakeholders regardless of
the operating environment. As such, in the new
year, the division will press on with product
diversification strategy to solidify its position as
the region’s leading asset management house
by continuing to provide clients with a breadth
of service offerings catered to their needs.
2020 Annual Report PRIVATE EQUITY
EFG Hermes Private Equity has managed to achieve an
asset configuration that offers exposure to some of the
most exciting global market opportunities and sectors
66
2020 Annual Report
Private Equity
67
Private
Equity
Overview
With a successful track record spanning two de-
cades, EFG Hermes Private Equity is a leading player
in the field today. Rather than adopting a generalist
approach to its investments, the division embraces
a specialized approach focusing on specific themes
and verticals, allowing them to create dedicated
teams who have gained expert knowledge of their
respective fields. EFG Hermes Private Equity believes
in impactful, responsible investment strategies and
has specifically chosen to focus on education,
renewables, and healthcare. The division seeks to
continue driving investments in these fields, which
have recently gained traction among global inves-
tors. Being a pioneer in these verticals, EFG Hermes
Private Equity cemented its presence and expertise
years prior, thus remaining at the forefront of strate-
gic and high-impact investments across the region.
The division manages its renewables investments
through its Vortex Energy platform, which was
established in 2014 to invest in renewable energy
projects. The platform has witnessed immense
success, completing the entire investment lifecycle
from origination through to divestment. Vortex En-
ergy has previously divested Vortex I and Vortex II,
which held a 49% stake in a 998 MW pan-Europe-
an portfolio, including 56 operational windfarms in
Belgium, France, Portugal, and Spain. In 2020, the
platform additionally divested its managing stake
in Vortex Solar, a 100% shareholder of a 365 MW
solar PV farm in the United Kingdom.
The EFG Hermes Egypt Education Fund is a USD
150 million investment fund launched in 2018, as
part of an education platform in partnership with
Dubai-based education provider GEMS Education.
The fund targets investments in Egypt’s K-12 private
education sector, in line with the Firm’s aim to make
investments that are impactful across areas of key
development for Egypt.
Rx Healthcare Management was established to
manage diverse investments across the healthcare
sector in order to meet the ever-growing demand
for healthcare products and services across Egypt as
well as the MENA and Africa regions at large. The
Firm has acquired a stake in leading medical solu-
tions provider United Pharma, which will enable it
to make strides in covering the shortage of IV solu-
tions and injectables’ availability in Egypt and other
neighboring markets while further propagating its
impactful investment strategy across the entirety of
the healthcare value chain.
2020 Operational Highlights
Vortex
2020 saw a year of positive returns for Vortex En-
ergy, attesting to the strength of the Firm’s focused
strategy. The division divested its managing stake in
Vortex Solar (Vortex III) in the third quarter of the
year, at a total enterprise value of c. GBP 500 million.
This comes following divestments of Vortex Wind
(Vortex I and Vortex II) in 2019. Throughout the year,
Vortex has sought to adopt a more active investment
approach, focusing on investing in renewable assets
including both solar and wind, batteries, and other
products across the entire renewable energy spec-
trum in preparation for Vortex IV. This comes as a
natural progression as interest increases from global
investors and as the division develops as a fund
manager, focusing from wind and solar assets to a
comprehensive approach towards the entirety of the
renewable energy sector.
RX Healthcare Management
In 2020, the division further specialized its invest-
ments to focus on the pharmaceuticals sector
following its acquisition of United Pharma the
previous year. The company’s product offering
includes a diverse range of generic categories
specifically catering to underserved therapeutic
areas as well as IV products. During the year,
the company sourced more than 30 different
products to add to its portfolio. In addition, it will
seek to expand its business by exporting prod-
ucts to countries across the region. The company
continued to perform well throughout the year,
with medical solutions witnessing heavy demand
particularly in the face of increased hospital
traffic. The division is currently exploring further
acquisitions to enhance its offering and expand
its pharmaceuticals platform.
Egypt Education Fund
Upon the onset of the COVID-19 pandemic, the
division was poised for growth due to its track
record of innovation in the education space,
introducing new solutions and benefiting from
new opportunities in the market. The company
was the first in Egypt to launch online schooling
and was well positioned to assist other institutions
in their transition to e-learning in the face of
government-imposed lockdowns and restrictions.
The year also allowed the company to enhance its
educational service offering to consistently offer
best-in-class services, supported by its qualified
management team and an expanded capital base.
In 2020, the platform additionally set into motion
several plans to further diversify its investments
and broaden its activities in the sector. Its portfo-
lio currently consists of four schools in East Cairo,
serving more than 6,000 students. In addition, it
is currently in the process of establishing a K-12
school in the Al Rehab City in New Cairo that will
see it leverage its premium educational resources.
The company had also acquired a majority stake
in Option Travel, a leading transport provider in
Egypt. This latest acquisition will enable the com-
pany to offer specialized buses that will center on
the health and safety of children. This will serve
to support its educational platform, replacing the
multi-purpose buses currently in use across Egypt.
2020 Financial Highlights
Revenues for the division in 2020 amounted to EGP
468 million, marking a 37% increase from the EGP
341 million recorded in 2019.
Outlook
In the coming year, the EFG Hermes Private
Equity division will seek to expand on its
existing verticals, further driving impactful in-
vestment strategies across Egypt and regional
markets. The three sectors have garnered
increased attention from global investors,
attesting to their relevance to the investment
world as well as shifting investment trends
towards a more impact-centric approach. The
division will continue to seek out additional
investments to complement its existing ones,
allowing it to adopt a more comprehensive
approach to its fund management.
2020 Annual Report
NBFI PLATFORM
We are always ready to push the boundaries and challenge
the status quo
70
2020 Annual Report
NBFI Platform
71
NBFI Platform
We are confident that our
companies will continue to
grow and innovate to generate
increasingly valuable services to our
clients and stakeholders.
2020 saw no shortage of unprecedented events
that had a resounding impact on business opera-
tions the world over. Yet despite the challenges,
I could not be prouder of the strides our NBFI
platform has achieved, delivering outstanding
financial and operational results while continuing
to generate value for our stakeholders. Through
our diversification strategy and robust operations,
EFG Hermes Finance has been able to weather the
instability caused by the onset of the COVID-19
pandemic, while continuing to expand on its
service offering and product portfolio with a full
suite of non-banking financial services ranging
from microfinance, leasing, and factoring to con-
sumer financing, mortgage, payment solutions,
and insurance. Collectively, the Group’s NBFI
platform has successfully generated growth in
excess of EGP 1.4 billion in 2020, an increase of
13% from the EGP 1.2 billion posted in 2019.
Building on the successes it achieved in the pre-
vious year, Tanmeyah continued to expand on its
branch network, growing to a total of 285 physical
branches with 335,000 clients served, down 7%
from 2019. Additionally, the company embarked
on the first ever securitization program issued
by a microfinance provider, with the help of EFG
Hermes’ Investment Banking team. The first tranche
was disbursed in May 2020, amounting to a total
of EGP 545 million, and was oversubscribed more
than once. This overwhelming success attests to the
strength of Tanmeyah’s portfolio, risk management
capabilities, and the robustness of its operations.
The company expects to launch the program’s
second tranche upon the maturity of the first in the
second quarter of the upcoming year.
During the year, EFG Hermes Finance consolidated
its leasing and factoring arms into one entity, EFG
Hermes Corp-Solutions, to offer its corporate and
SME clients a comprehensive range of financing
solutions and value-added services. The company’s
leasing arm saw a 15% increase in its client base,
with a number of new industries witnessing in-
creased activity, including digital, education, health-
care, and real estate. Meanwhile, our factoring arm
focused on expanding awareness of factoring facil-
ities across the market, successfully leveraging the
merger in order to offer more than EGP 819 million
in factoring facilities for the year. Corp-Solutions’
merger successfully contributed a total of EGP 209
million in revenues to the NBFI platform.
valU, our consumer financing platform continued
on the trajectory it had embarked on the previous
year to expand its operations and engage an ev-
er-growing base of users. During 2020, the com-
pany added a number of strategic new retailers to
its roster of partnerships and continued to grow
its client base. The year also saw valU venture into
new sectors including healthcare, education, and
sporting club memberships. At the same time, the
company entered into a key partnership with EFG
Hermes Corp-Solutions to offer valU merchants
bespoke financing services as part of the plat-
form’s strategy to uncover key cross selling op-
portunities throughout the Group. The success of
the company throughout the year only serves to
underscore valU’s drive to continually expand its
service offering to add value to its stakeholders
and empower them to meet their financial needs.
Total GMV more than tripled during the year, and
the company was able to turn profitable.
Our latest venture, PayTabs Egypt, is already well
on its way to cementing its position as a leading
payment solutions provider, offering unique
selling points and making a number of strategic
partnerships in its first year of operations. The
company was able to capitalize on new market
opportunities and venture into several new sectors
including retail, tourism, hospitality, education,
and real estate. Additionally, the company was
able to launch a number of initiatives during the
year targeting SMEs in line with national financial
inclusion efforts. Additionally, a total of 300 new
partner merchants were added for the year.
At the same time, we continued to build out our
latest additions to the EFG Hermes Finance portfo-
lio, our insurance and mortgage finance offerings.
In 2019, we established Bedaya in partnership
with GB Capital, to create a mortgage finance
venture serving Egypt’s large, growing population
of homebuyers. Later in the year, we deepened
our partnership with GB Capital, entering into a
definitive sale and purchase agreement to acquire
a 75% stake in life insurance player Tokio Marine
Egypt Family Takaful that was concluded in June.
The year to come will see us continue to develop
these arms as we work to offer clients a fully inte-
grated service offering in the non-bank financial
institution space and enhance our cross-selling
abilities throughout the Group.
Each of our companies has surpassed our expecta-
tions in terms of performance, innovation, and abil-
ity to overcome the most unexpected of obstacles,
while capturing new opportunities and adapting
to the external environment. Their performance
and achievements throughout the year serve as
the biggest testament to EFG Hermes’s adaptabil-
ity and strength as an institution as well as to the
ever-growing demand for non-banking financial
services in the Egyptian market.
With the onset of the new year, and with it hope-
fully an end to the pandemic and improved market
conditions, we are confident that our companies
will continue to grow and innovate to generate
increasingly valuable services to our clients and
stakeholders. We look forward to the triumphs our
subsidiaries will achieve in the coming year as they
continue on their upward growth trajectories.
Walid Hassouna
Chief Executive Officer, EFG Hermes Finance
Group Head of Debt Capital Markets
13%
Growth across the NBFI platform
2020 Annual Report TANMEYAH
Tanmeyah is the nation’s leading microfinance solution
platform, providing Egyptians with access to vital financing
to support their livelihoods
74
2020 Annual Report
Tanmeyah
75
Tanmeyah
Overview
Tanmeyah Microenterprise Services, Egypt’s pi-
oneer in microfinance solutions provider, offers
financing solutions to lower-income, small, and
micro enterprise owners to support their business
goals and growth aspirations. Established in
2009, the company was acquired by EFG Hermes
in 2016 as part of the Firm’s efforts to grow
their NBFI platform. The company is focused on
offering its solutions to businesses located in
high-need areas, wherein individuals typically
lack access to support from traditional banks,
with a view towards promoting financial inclusion
and offering support to the development of these
communities. In addition to financing solutions,
Tanmeyah offers a range of complementary
services to support small businesses including
microinsurance. The company extends credit fa-
cilities of up to EGP 50,000 for microenterprises
and between EGP 50,000 and EGP 100,000 for
small businesses. Tanmeyah’s operations and stra-
tegic objectives not only serve to contribute to
the CBE’s efforts to promote nationwide financial
inclusion, but also offer underserved segments of
the population the support they need to launch
their businesses, allowing for community devel-
opment, increased economic growth, and an
improved standard of living.
2020 Operational Highlights
Tanmeyah witnessed a robust start to 2020, leav-
ing the company poised to build on the successes
it had witnessed in the previous year. During the
year, Tanmeyah further expanded its branch net-
work, adding 14 extra branches in 2020, bringing
the total to 285 branches across the country. The
company’s total number of employees increased
by over 650 throughout the year, bringing total
staff to 5,075 employees. At year-end 2020, Tan-
meyah’s total number of clients had reached over
346,000 and the company’s portfolio reached EGP
3.1 billion. Although the onset of the COVID-19
pandemic posed challenges to Tanmeyah, the
company was able to quickly regroup and carry
forward with its strategy for the year. These
expansions and operational successes attest to
Tanmeyah’s solid operations and the team’s tireless
efforts throughout the year, even in the face of a
challenging and uncertain global environment.
Although there are several healthy and uninterrupted
funding sources available to Tanmeyah, diversification
of funding sources continues to be a key priority for
the company to allow it to achieve its strategic objec-
tives and grow its operations unhindered. As such,
Tanmeyah securitized a portfolio of EGP 545 million,
the first tranche of an EGP 3 billion program, making
it the largest securitization transaction amongst mi-
crofinance companies in Egypt. Tanmeyah received
a Prime1 (sf) credit rating in spite of the outbreak,
a reflection of its exceptional crisis management
stemming from its rebound following Egypt’s 2011
revolution. Launched in May 2020, the transaction
was oversubscribed by several banks.
Upon the onset of the COVID-19 pandemic, Tan-
meyah’s management team issued a set of guide-
lines prioritizing the health and safety of employees.
In parallel, the company worked in the early months
of lockdown to increase its technological capabil-
During 2020, a key priority for Tanmeyah was to invest heavily in its
technological infrastructure, both as the company sought a smooth
transition to remote working and as a means of streamlining its operations.
ities to offer the team the necessary systems and
infrastructure to work from home. In addition, the
company employed several measures to support the
team and ensure their health and safety. It provided
facemasks and sanitizers on site and decreased
physical employee presence to 25% capacity. In
addition, the company offered 4,500 antibody tests
beginning in early April for early detection among
Tanmeyah employees, which worked to manage
the spread of the virus across the company. Tan-
meyah additionally implemented a policy to cover
employees’ medical and treatment expenses with
regards to the pandemic. To provide around-the-
clock medical care, the company worked with its
insurance providers to offer support and create
a nationwide database of medical professionals
across the country as well as set up a separate dedi-
cated phone line to answer queries from employees
seeking medical advice.
During 2020, a key priority for Tanmeyah was to
invest heavily in its technological infrastructure,
both as the company sought a smooth transition to
remote working and as a means of streamlining its
operations. The data science unit supported its digi-
talization efforts, helping Tanmeyah make use of key
data with ease through its dashboards, resulting in
optimizing operational synergies across the company.
The year was not without its challenges for the
company with sales slowing down as a result of the
lockdown. In addition, the company adopted IFRS 9
early in the year, which predicts risk using expected
credit loss. This caused Tanmeyah to approach its risk
management prudently, focusing on collections rath-
er than sales throughout the year. As the company
adapted to the challenges of the year and stabilized
its risk, it resumed its focus on issuance, with sales
picking up in 4Q20.
To alleviate financial burden of its customers, the
company offered a partial payment or extension
program on installments due. The offers were valid
for April, May, and June as the company choose to
follow the FRA directive to banks extending a six-
month postponement to installments to support the
company’s stakeholders, benefiting a total of over
85,000 clients.
Throughout the year, Tanmeyah launched two new
products after reassessing its product portfolio. It in-
troduced its Women in Individual Lending program,
which extends loans to individual women seeking
to launch or expand their home-based businesses.
This followed a decision to halt its Group Lending
program launched in December 2018. Tanmeyah
also formed a partnership with tricycle manufacturer
Pullman in August to offer facilities in Assiut, as a
pilot phase. This program comes following the end of
the tuk-tuk light vehicle program previously in place
by the company. On the microinsurance partnership
front, Tanmeyah continued to perform well, selling
more than 103,000 policies during the year, a 10%
Y-o-Y increase.
During the year, Tanmeyah also focused heavily on
its market positioning. The company primarily used
channels such as social media as well as traditional
marketing campaigns to strengthen its corporate
image and increase its customer base. In mid De-
2020 Annual Report 76
2020 Annual Report
Tanmeyah
77
cember, Tanmeyah launched a one-month TV and
radio campaign. Tanmeyah developed a CRM mod-
ule for its in-house call center and outsourced ad-
ditional call center agents to tackle the higher
traffic on its hotline.
2020 Financial Highlights
In spite of the challenges posed by the local and
global environment, Tanmeyah saw increased reve-
nue growth during the year, posting a total of EGP
1.1 billion, a 3% increase from the EGP 1.05 billion
recorded at year-end 2019.
Outlook
In 2021, Tanmeyah will seek to further enhance
its technological capabilities, with the end goal of
completely digitizing its operations. The company has
already taken steps to launch this strategy, disbursing
handheld devices to many of its loan officers, with
more expected to follow in the coming year.
In line with its commitment to promoting financial
inclusion, the company entered into a partnership
with Damen, a leading e-payment network to offer
payments through their points of sale. Early phases
of the partnership were launched in December 2020
across 26 branches with a full roll out to all Tanmeyah
branches expected by January 2021.
Tanmeyah will also seek to expand its footprint by
venturing into a number of sectors. In addition, the
company will leverage new regulations for microfi-
nance providers allowing them to work with SMEs to
diversify its offering and develop a range of products
tailored to their needs, cementing its position as a
pioneer in the microfinancing space.
284
Total branches as of 2020
Tanmeyah will leverage new
regulations for microfinance providers
that allow them to work with SMEs
to diversify its offering and develop
a range of products tailored to their
needs, cementing its position as a
pioneer in the microfinancing space.
2020 Annual Report valU
Our innovative consumer finance platform allows clients to
meet their lifestyle needs with ease and peace of mind as
they buy now and pay later
80
2020 Annual Report
valU
81
valU
EFG Hermes Finance launched valU, its innovative
consumer financing solutions arm, in 2017 as part
of the platform’s efforts to diversify its non-bank
financial services offering and capitalize on global
trends shifting towards fintech solutions and in-
creased smartphone adoption across Egypt. valU
offers clients a range of convenient repayment
options to purchase products and services with
customized installment programs. With authorized
capital of EGP 750 million and paid-in capital of
EGP 175 million, valU is a pioneering fintech solu-
tion provider in the country, empowering custom-
ers to make purchases from over 35 product and
service categories through more than 898 partner
merchants across 3,500 retail and online stores
as well as 134 websites. valU allows customers
to make use of installment payment programs
lasting up to 60 months and brings them a vari-
ety of offers across its retail and online network.
The launch of the company additionally forms
part of EFG Hermes’ wider strategy to promote
nationwide financial inclusion, in line with national
development strategies and global practices.
2020 Operational Highlights
On the operational front, valU made great strides
throughout the year, capitalizing on new opportuni-
ties and providing an expanded scope of services, as
usage increased during the lockdown imposed as a
result of the COVID-19 pandemic. During 2020, valU
witnessed three-fold growth, with the number of
customers growing to more than 170,000 users and
over 265,000 transactions in excess of EGP 1.5 billion
as well as increased shopping limits amounting to
more than EGP 2.2 billion. In addition, the company
doubled its on-ground sales team during the year and
established a tele-sales unit to allow for home visits to
onboard new clients throughout the pandemic.
valU continued to expand on its partnerships
throughout the year, adding several new key
retailers to its roster, including Cairo Festival City,
Majid Al-Futtaim, El Mawardy, Adidas, El Sallab,
Oriental Weavers, and Huawei. In addition, the
company renewed some of its existing strategic
partnerships, including Apple retailers in Egypt,
Samsung, IKEA, and e-commerce platform Souq.
com. valU also successfully partnered with Le
Marché as the exclusive financing partner for
the 2020 edition of its exhibition, empowering
customers to purchase furniture with convenient
installment plans and 5% cashback. It has also
expanded its e-commerce network to include
Homzmart, Rush Brush, and Hapilin. The compa-
ny also teamed with external partners including
Souq.com, 2B, Edfa3ly, Homzmart, and Carrefour
to offer a number of promotions, including the
valU Friday Mega Campaign, where customers
could win a variety of prizes.
During 2020, valU also worked on expanding the
scope of its product offering, embarking on service
financing and establishing solid partnerships in the
process. The company partnered with El Gouna
International School and Dubai-based education
provider, GEMS Education, to offer financing plans
for K-12 education. valU has also ventured into
the medical services sector, teaming up with a
number of aggregated medical services database
providers, including Salamtak, El Nada Hospital,
and Rofayda, to provide installment programs for
their services. Following the extension of its regu-
lation by the FRA, valU additionally ventured into
sporting club membership financing during the
year, signing on a number of clubs including New
Giza Sporting Club, to offer customers plans for
new membership and renewal fees. Finally, valU
During 2020, valU witnessed three-fold growth, with the number
of customers growing to more than 170,000 users and over 80,000
transactions in excess of EGP 1.5 billion.
has ventured into the food and beverages sector,
partnering with a number of caterers like The
Cookery Co. and Chef Sarhan. In addition, valU
worked throughout the year to invest in its plat-
form’s capabilities. The company integrated new
features into the application, allowing customers
to browse online and offline merchants as well as
imbedding deep links to online merchants, redi-
recting customers to checkout using valU through
their respective websites. Moreover, the valU app
now offers an Arabic platform to ensure it serves
a larger customer base and reaches out to new
customer segments.
valU also introduced upgrades to the platform
including increased capacity and performance
to allow customers to conduct their transac-
tions quickly and seamlessly as well as enhance
overall customer experience. Furthermore, valU
launched a new segmentation approach in July
that helped understand customers’ purchasing
behavior and preferences. This along with en-
hanced communication tools allowed for a better
user interface for valU’s targeted users, enabling
us to introduce new notification features such as
segmented push and in-app notifications, seg-
mented geo-locations, as well as targeted in-app
pop-ups. Sending out segmented campaigns has
impacted the business positively, with the funnel
conversion rate increasing 3% Y-o-Y.
COVID-19 Measures
With the onset of the COVID-19 pandemic, valU
immediately adopted a work-from-home policy to
ensure the health and safety of its employees.
However, following the significant increase in
transactions owing to the lockdown, the com-
pany moved to a 50% work-from-office rotation
with all necessary precautions in place to account
for the increased volume of activity and ensure
business continuity. valU continues to operate this
policy and regularly revises its business continuity
plans to align them with all health guidelines and
directives from relevant government authorities
to ensure the wellbeing of its team.
valU additionally availed a number of new programs
and waivers to support both clients and merchants
through the duration of the pandemic. The company
introduced a waiver of upfront and purchase fees for
its Super Hattrick program for the months of May and
June and extended its payment cycle to grant cus-
tomers a grace period of approximately two months.
valU further postponed installment payments for
its Uber joint program with the Saudi Development
Fund, which facilitates vehicle purchases for Uber
drivers, requiring participants to pay the interest
rate for a period of three months, with no further
payments during the postponement period.
170K
valU customers in 2020
2020 Annual Report 82
2020 Annual Report
valU
83
valU also introduced a new product called Waqty
during the height of the pandemic to grant
non-valU customers transactional credit with
instant approval for e-commerce transactions
without any documentation requirements. Waqty
is the first online transactional approval product
in the market, enabling users to pay a 20% down
payment using their credit card and accordingly
receive instant access to finance on their desired
products and receive them at their doorstep. In
addition, the company emphasized e-commerce
in its merchant acquisition strategy, as well as
when advising customers, with promotions
through the application in addition to other com-
munication channels in response to the lockdown
with the aim of meeting consumer demand while
promoting health and safety.
2020 Financial Highlights
valU’s total operating revenues (offsetting inter-
est expense on bank facilities) hit EGP 111 million
in 2020 compared to EGP 25 million in 2019.
Outlook
In the coming year, valU will seek to expand on its
e-commerce service offering, providing increased
support to brick-and-mortar merchants seeking to
develop their online presence, as well as increas-
ing operational synergies and cross-selling oppor-
tunities with partners across the Group, including
PayTabs Egypt and EFG Hermes Corp-Solutions.
This will serve to provide value-added services
to valU’s merchants by granting them access to
immediate liquidity, largely through Corp-Solu-
tions’ factoring arm, as well as supporting them
in expanding their business ventures.
The company is also currently working on ex-
panding into new sectors to broaden its service
offering and meet the ever-evolving needs of its
customers. A key sector of focus for valU is medical
services, with the company working on securing
laboratory services, radiology, and pathology to
its existing roster. The company is currently in the
process of finalizing a partnership with leading
medical diagnostics solutions provider Integrated
Diagnostics Holdings to this effect.
In addition, as the Egyptian government and the
CBE issue more directives to promote financial
inclusion, valU stands poised to capitalize on
greater opportunities across the market, as trends
shift towards fintech and digital platforms. This
will serve to create more business for valU as
well as allow the company to promote a cashless
society, support increased financial inclusion, and
foster sustainable development and prosperity
across the country.
Finally, valU is currently introducing its online shop-
ping platform “Shop’it”, where valU customers can
purchase their desired products from their favorite
vendors in installments, gaining access to multiple
products from various categories all on one platform.
As the Egyptian government and the CBE issue more directives to
promote financial inclusion, valU stands poised to capitalize on greater
opportunities across the market, as trends shift towards fintech and
digital platforms.
FY20
4Q20
4Q19
valU App Customers
91,000
23,000
20,630
Limits Activated Value (EGP mn)
Outstanding Portfolio (EGP mn)
1,224
832
372
832
250
362
Number of Transactions
196,000
69,000
26,684
UBER Cars Delivered
Number of Merchants
13
898
1
898
2
106
2020 Annual Report EFG Hermes Corp-Solutions
The consolidation of our exceptional leasing and factoring
teams has expanded our cross-selling opportunities to
create value for our clients
86
2020 Annual Report
EFG Hermes Corp-Solutions
87
EFG Hermes
Corp-Solutions
Overview
EFG Hermes Corp-Solutions is a leading provider
of leasing and factoring solutions, in addition to
value-added advisory services to a range of clients
including large corporations and SMEs alike. The
Firm’s leasing arm was established in 2015 under
EFG Hermes Leasing, offering its clients a range of
tailored solutions with the fastest turnaround time
in the industry. Seeking to further diversify our NBFI
platform, the Firm introduced EFG Hermes Factoring
in 2018, offering alternative sources of financing
to companies seeking to grow their businesses and
meet their working capital needs. Our factoring arm
was one of the earliest players in the Egyptian market
and has grown to capture a significant market share
of 14% since its establishment. In July 2020, EFG
Hermes consolidated its factoring and leasing arms
to form EFG Hermes Corp-Solutions, offering a full
range of financing solutions to suit clients of all sizes.
2020 Operational Highlights
The successful merger of EFG Hermes Leasing and
EFG Hermes Factoring at the start of the year allowed
for increased bidding capital, enabling the company
to attract bigger tickets and more lucrative business
opportunities as well as increasing operational syner-
gies between the two teams. This in turn allowed for
increased cross-selling to offer comprehensive solu-
tions to clients. The merger was finalized at the height
of the COVID-19 pandemic and accordingly faced a
number of challenges. Among these was merging of
the two business lines’ teams and coordinating their
efforts. Despite having to adhere to social distancing
regulations and, therefore, limiting the number of staff
members operating in person at any given time, the
team continued to offer clients unmatched customer
service across business lines, allowing the company to
hold firm to its leading market position.
Leasing
EFG Hermes Corp-Solutions’ leasing arm witnessed
a considerable increase in business volume during
the year as a result of the COVID-19 pandemic. This
was mainly spurred by the counter-cyclical nature
of leasing, which accounts for increased business
during times where there is a shortage of liquidity
as well as the team’s eagerness to offer support to
existing clients, grow the business, and improve our
ranking in the market. These efforts were heavily
supported by our risk team whose work not only
allowed us to exert stringent controls and mitigate
risks but to also achieve growth.
Furthermore, in 2020, the company was able to
increase its client base by 15% with a number of
industries seeing increased activity, including digital,
healthcare, education, food and beverage as well
as real estate, which in turn feeds into a number of
subsectors such as raw materials and contracting. As
it stands, EFG Hermes Corp-Solutions holds a market
share of 9% in the industry as a result of its exempla-
ry service standard and varied product offering.
Factoring
Factoring continues to be a novel and relatively unfa-
miliar industry in the Egyptian market. Accordingly,
a priority for the company’s factoring arm through-
out the year was to raise awareness regarding the
mechanisms and processes of factoring to allow the
business line to gain traction in the market. A key
tool to promote awareness was cross-selling across
the EFG Hermes Corp-Solutions’ business lines by
offering leasing clients limited factoring facilities,
thereby allowing them to gain a better understand-
ing of the way factoring can support their business.
This bore positive results allowed for increased
familiarity with factoring products in the market
Client Industry
Analysis
Real Estate and Hospitality
Materials
Information Technology
Industrials
Healthcare
Energy
Consumer Staples
Consumer Discretionary
Financial Services
29.4%
13.4%
2.1%
13.2%
9.3%
0.9%
4.7%
26.7%
0.3%
as well as clients seeking to increase limits for their
factoring facilities.
EFG Hermes Corp-Solutions’ factoring arm is able to
work with clients of all sizes and across all industries
offering a range of solutions that are able to meet
the needs of various clients and offer them greater
opportunities for growth. Among these solutions
are debt factoring and export factoring, activities
that offer benefits to clients, particularly SMEs, to
which traditional debtors are often hesitant to offer
their services. As such, the division stands as one of
the leading factoring providers in the industry, with a
market share standing at 14%.
Throughout the year, the company worked to
obtain more facilities to include factoring through
both increasing limits for leasing facilities as well as
allocating sub-limits to factoring operations. These
efforts resulted in the team availing a total of EGP
819 million for its factoring business.
2020 Financial Highlights
EFG Hermes Corp-Solutions’ leasing arm’s total
contribution to group revenues amounted to EGP
184 million, a 17% increase from the EGP 157 mil-
lion recorded in 2019. Meanwhile, the company’s
factoring arm contributed a total of EGP 25 million
to group revenues, marking an increase of 178%
from the EGP 9 million contribution in 2019.
Outlook
In the coming year, EFG Hermes Corp-Solutions will
seek to grow its portfolio both by sector and client size
by continuing to offer the level of service each line of
business has come to be known for. Offering bespoke
solutions tailored to each individual client based on
size, industry, and risk appetites will allow the company
to continue to gain partnership opportunities, facilities,
and clients, a key aim as we move forward. As the
company grows, it plans to further cement its presence
among SME clients and grow its market share to be-
come one of the market’s top three players.
2020 Annual Report PayTabs Egypt
The newest addition to the NBFI platform, PayTabs Egypt
is an up-and-coming payment gateway that contributes
effectively to financial inclusion
90
2020 Annual Report
PayTabs Egypt
91
PayTabs Egypt
Overview
Established in Saudi Arabia in 2014, PayTabs is an
award-winning global fintech solutions platform
with presence in more than seven countries. Follow-
ing the successful replication of its business model
into other countries in the region, the company
began eyeing the Egyptian market, seeking to cap-
italize on the lucrative opportunities available in it
as well as a flexible and ever-evolving market land-
scape poised for digital payment growth. In 2019,
EFG Hermes partnered with PayTabs to establish
PayTabs Egypt as part of the Firm’s growing NBFI
platform, working together to build a cutting-edge
platform to facilitate financial inclusion and catering
to both the online and digital payment needs of
multiple consumer segments.
2020 Operational Highlights
Having entered the market at the onset of the
COVID-19 pandemic, PayTabs Egypt was poised
to capitalize on the increased demand for digital,
contactless, and cashless service offerings. The
company partnered with three of the largest
banks in Egypt to obtain its license for operations
from the Central Bank of Egypt (CBE) in April,
allowing it to begin offering its services at the
height of the imposed lockdown. This proved to
be indispensable to businesses as they quickly
pivoted their models to digital platforms to adapt
to new conditions and in turn, allowed for the
company to kickstart operations with a solid
portfolio base.
The company was also met with challenges, owing
to the transition to work-from-home protocols
in early March, in line with PayTabs Global’s
guidelines. Due to existing operational synergies
between PayTabs Global and PayTabs Egypt, the
technological infrastructure necessary to support
the transition to remote work was already present
and afforded the team flexibility in adapting to
their new environment. In addition, the company
adopted a 100% remote onboarding mechanism
for merchants upon receiving approval from
the CBE to ensure minimal physical interaction
between parties.
A primary focus for the company was increasing
brand awareness and building a solid reputation
through engagement and outreach across social
media platforms. This saw successful results in the
first six months of operations, with PayTabs Egypt
emerging with a sound identity in the Egyptian
market, allowing it to position itself as one of the
top three payment solutions providers in just nine
months in the market.
Since its launch, PayTabs Egypt has worked to
integrate its payments platform across the entire-
ty of EFG Hermes’ NBFI platform, with the aim
of improving synergies across the Group. The
company has done so through an array of roles,
including complementing their payment cycles by
facilitating cash payments and solutions, improv-
ing their digital capabilities, as well as helping
consumer lending, microfinance, and insurance
entities introduce digital platforms. This not only
allowed PayTabs Egypt to serve external entities,
but also to act as a partner to the Group’s subsid-
iaries and allow for increased synergies.
Forming strategic partnerships was a key area of
focus for PayTabs Egypt throughout the year. The
company engaged several external partners to
support our sales team in introducing the PayTabs
platform. This crowdsourcing model for sales al-
lowed for the team to increase their outreach with
outstanding results. Within six months of receiving
PayTabs Egypt made great strides in enhancing its product offering
during the year, having positioned itself as a comprehensive payment
solutions platform, rather than solely a payment gateway.
our licensing, PayTabs Egypt was able to avail its
solutions to a total of 300 merchants across a
variety of industries such as retail, tourism, and
hospitality, among others. In addition, the compa-
ny was able to penetrate new industries as a result
of increased digital presence that ensued due to
the lockdown. This included education, where
the company facilitated online tuition payments,
as well as food and beverage where the company
enabled online payments for goods.
Additionally, PayTabs Egypt partnered with lead-
ing real estate developer IGI to offer a first-of-
its-kind service to the real estate sector. Through
this partnership, PayTabs Egypt will be able to
digitize customers’ expressions of interest and
offer their payment gateway to collect install-
ment payments; moreover, they will avail their
technological capabilities to create a community
management application, which will add value to
customers and residents.
PayTabs Egypt worked throughout the year to
adjust its offering and introduce tailored features
to its platform to accommodate consumers in the
Egyptian market and to promote financial inclu-
sion and accessibility for the unbanked segment
of the population. Recognizing the importance
of integrating local payment tools, the company
partnered with Meeza to integrate its cards and
wallets as a payment option across its platforms.
Additionally, the company introduced a new ac-
ceptance tool utilizing QR codes to offer payment
tools to micro-merchants, who are typically inel-
igible for other payment methods such as bank
points of sale.
PayTabs Egypt also made great strides in enhanc-
ing its product offering during the year. The com-
pany positions itself as a comprehensive payment
solutions platform, rather than solely a payment
gateway. Accordingly, the team built its capacities
to allow for seamless integration with merchants’
existing sales channels. Through this process,
merchants can log into a dashboard and offer ac-
cess to the gateway across their challenges using
a number of forms, including links, QR codes, and
open graphs. This allows PayTabs Egypt to afford
solutions that add value to merchants and meet
local market needs.
As part of its commitment to supporting the en-
trepreneurial ecosystem in the Egyptian market,
PayTabs Egypt has embarked on various initiatives
to support SME growth. The company employs
a segregated pricing model based on client size
and type to afford them solutions that are able
to support them in achieving their business goals.
PayTabs Egypt adopted a subscription model for
SME clients, allowing them to pay a monthly fee
in exchange for full access to the PayTabs plat-
form in lieu of a per transaction fee. The adoption
of this model allowed PayTabs Egypt to partner
with some of the country’s leading accelerators
and venture capital firms to support SMEs. In
addition, the company regularly participates in a
number of startup summits and conferences such
as RiseUp Summit, Career Summit, and the World
Youth Forum. This, combined with their presence
in the GrEEK Campus, a key startup hub, allows
for frequent engagement with SMEs, allowing
PayTabs Egypt to tailor solutions targeting growth
and development for these companies. Following
the CBE initiative to support SMEs, the compa-
ny launched a three-month fee waiver for SME
customers processing more than EGP 100,000
to support businesses impacted by the adverse
impacts of the COVID-19 pandemic.
2020 Annual Report 92
2020 Annual Report
PayTabs Egypt
93
Outlook
In the coming year, PayTabs Egypt will seek to build on
its efforts in increasing brand awareness and estab-
lishing a solid identity in the Egyptian market through
increased partnerships and engagement across the
company’s social media platforms. Furthermore,
the year will see the company establish itself as the
leading payment solutions provider in Egypt.
In line with the CBE’s efforts to promote financial in-
clusion across the country and serve the unbanked
segment of the population, PayTabs Egypt aims to
introduce several initiatives to support microbusi-
nesses. These initiatives will launch quarterly to
offer a blanket of support to an array of businesses
and segments. The company will also seek to adapt
its onboarding process to align with the CBE’s
guidelines and strategies.
In 2021, PayTabs Egypt will also seek to build on
its technical offerings to provide its clients with a
comprehensive digital payment solutions platform,
meeting technological capacities of all scales.
The company will also improve products serving
existing clients, introducing new features and
enhancements to help companies build on their
offerings. In addition, PayTabs Egypt will work to
introduce a range of new products targeting new
industries to meet market needs and cement itself
as the payment solutions provider of choice to
local partners.
300
PayTabs Egypt merchants
As part of its commitment to
supporting the entrepreneurial
ecosystem in the Egyptian market,
PayTabs Egypt has embarked on various
initiatives to support SME growth.
2020 Annual Report 94
2020 Annual Report
95
CORPORATE GOVERNANCE
Sound corporate governance policies and transparent business
practices form the cornerstone of our sustainable success
2020 Annual ReportSection Flag 96
2020 Annual Report
Corporate Governance
97
Corporate
Governance
EFG Hermes stands as a regional leader in the cor-
porate governance realm, a position it has earned
through its rigorous rules and procedures that the
Group’s staff follows during their everyday opera-
tions. The Firm’s prudent management and corpo-
rate frameworks that have been at the heart of its
success over the years will continue to play a central
role as the Group evolves and cements itself as a
leading financial services provider not just in the
MENA region, but also across the entire FEM space.
The Firm’s Board of Directors is committed to providing
EFG Hermes with the needed guidance and support
acquired over decades of cumulative experience. This
expertise has helped EFG Hermes grow sustainably
while delivering value to all its stakeholders.
Since 2017, the Group has implemented a new
Corporate Governance Framework that addresses
new country-specific policies and works to blend
EFG Hermes’ group-wide strategy with the more
focused subsidiary development programs. The new
framework provides the grounds for efficient deci-
sion-making across the entire organization and guar-
antees a high degree of accountability to ensure that
all shareholders and clients have their investments
handled in a responsible and professional manner.
The framework sets out the minimum standards ex-
pected Group-wide while complying with local laws
or regulations for an even higher level of stringency.
Based on the mandate of this framework, the
Board of Directors continues to comply with the
Egyptian Financial Regulatory Authority’s (FRA)
corporate governance regulations released in 2016
and updated in 2020, stipulating the appointment
of a majority of non-executive board members half
of whom (with a minimum of two) should be inde-
pendent for all regulated Egyptian subsidiaries. EFG
Hermes is fully compliant with FRA regulations and
EGX listing rules. Moreover, EFG Hermes Holding
complies with the new FRA mandated regulations
requiring all regulated companies in Egypt to have
at least one female board member.
Management and Control Structure
Board of Directors
EFG Hermes’ Board of Directors is responsible
for providing the Firm with strategic leadership,
financial soundness, governance, management
supervision, and control. The Board is comprised of
12 members, 11 of whom are non-executive.
Without exception, all EFG Hermes’ Directors pos-
sess a broad spectrum of experience and expertise,
directly related to EFG Hermes’ expansive lines of
business and divisions, with a strong emphasis on
competence and integrity. Directors are selected
based on their contributions they can make to the
Board and Management in addition to their ability
to represent the interests of shareholders.
Due to restrictions imposed by the COVID-19 pan-
demic, 2020 saw numerous changes in function and
structure when it came to governance procedures. All
face-to-face interactions, including the Annual Gener-
al Meeting (AGM), committee proceedings, and exec-
utive committee meetings were held virtually, making
EFG Hermes the first EGX-listed company to conduct
an AGM through virtual channels. We collaborated
with an EGX-affiliated company to implement an
e-voting system during the AGM, which was complet-
ed to great success. The year also saw increased levels
of collaboration between divisions, particularly with at
least 50% of staff across our footprint working from
home, to ensure that the challenges posed by the
pandemic did not impact business continuity when it
came to overall governance matters.
The following principles govern the conduct of the
Board of Directors and the Firm:
rectors and employees are required to follow while
conducting their regular daily duties.
Compliance with Laws, Rules, and
Regulations
Adherence to the law is the fundamental principle
on which the Firm’s ethical standards are built. All
directors must respect and obey all applicable laws,
rules, and regulations. The Board complies with the
international best practices, rules, and regulations
of the Firm in addition to laws and regulations of
the markets in which the Firm operates.
Conflicts of Interest
All members of the Board declare their outside busi-
ness interest and board directorships annually. They
also abstain from participating in any discussions
and decisions that might affect their own personal
interests or those of a loosely related person or
company. Business relationships between the Firm
and any of its Board members must be approved by
the Firm’s AGM.
Safeguarding and Proper Use of Company
Assets
All Directors endeavor to protect the Firm’s assets
and ensure their efficient use. All assets must be
used for legitimate business purposes only.
Fair Dealing
Each Director should deal fairly with the Firm’s cli-
ents, competitors, providers, and employees. None
should take unfair advantage of anyone through
manipulation, concealment, abuse of privileged
information, misrepresentation of material facts, or
any other unfair dealing practice.
Code of Conduct
The Code of Conduct defines core values, princi-
ples, and other requirements that all the Firm’s Di-
Standards and Policies
The Firm’s standards and policies comply with
Egyptian as well as international corporate gover-
nance guidelines.
Confidentiality
Directors and officers must ensure the confidenti-
ality of information entrusted to them by the Firm
or its clients, except when disclosure is authorized
or legally mandated. Confidential information
includes all non-public information that might be
of use to competitors, or harmful to the Firm or its
clients if disclosed.
Corporate Opportunities
Directors are prohibited from taking personal ad-
vantage of potential opportunities that are revealed
through corporate information, property, or posi-
tion without the consent of the Board. Directors are
obliged to advance the Firm’s legitimate interests
when the opportunity presents itself.
Audit
Auditing forms an integral part of corporate gov-
ernance at EFG Hermes. Both internal and external
auditors play a key role in providing an independent
assessment of our operations and internal controls.
Furthermore, to ensure independence, Internal
Audit has a direct reporting line to the Audit Com-
mittee, a subcommittee of the Board.
Corporate Governance Committees
Audit Committee
The Audit Committee is comprised of four mem-
bers, all of whom are non-executive. The commit-
tee meets at least once per quarter or as required.
In 2020, the meetings were held virtually. The
2020 Annual Report 98
2020 Annual Report
Corporate Governance
99
committee is responsible for oversight of financial
statements and financial reporting, internal control
and governance systems, compliance with laws
and regulations, whistleblowing and fraud, the
internal audit function, and compliance with the
Code of Conduct established by Management and
the Board. The committee ensures free and open
communication between the committee members,
internal auditors, management, and the external
auditor once a year.
Risk Committee
The Risk Committee is comprised of four members,
all of whom are non-executive. The committee meets
at least once per quarter or as required. In 2020, the
meetings were held virtually. The committee overseas
risk, legal, and operational issues across the Group,
assisting the Board in fulfilling its duties with regards
to the oversight of (1) identification and management
of risks; (2) adherence to risk management policies;
and (3) compliance with risk-related regulatory re-
quirements, advising the Board on risk appetite and
tolerance in accordance with its strategic objectives.
It is responsible for advising the Board on risks asso-
ciated with strategic acquisitions or disposals and to
review comprehensive reporting on Group Enterprise
Risk Management, including reports on credit, invest-
ments, market, liquidity and operational risks, business
continuity, and regulatory compliance.
Remuneration and Compensation
Committee
The Compensation Committee is comprised of five
non-executive board members. The committee
meets once a year to study compensation within
the Group as a whole (and for senior management
in particular) and to assist the Board in fulfilling its
duties with regards to strategic human resources
issues and the remuneration policies of EFG Her-
mes. This not only safeguards shareholder interests,
but also ensures that management’s interests are
fully aligned with those of the Firm. The committee
directly manages the allocations within the Man-
agement Incentive Scheme for Senior Management
as approved by the General Assembly. In 2020, the
meetings were held virtually.
Corporate Governance and Nomination
Committee
The Corporate Governance and Nomination
Committee is comprised of one executive and four
non-executive board members. It assesses and over-
sees the appointment of Board Members, the Group
CEO, and Group Executive Committee members. It is
their responsibility to make sure appointments, which
must be approved by the Annual General Assembly,
align with the Group’s strategic directives and ensure
the independence of directors in accordance with
applicable laws, regulations, and international best
practices. It also conducts regular assessments of
the structure, size, and composition of key executive
positions at the Group level along with reviewing the
Group’s overall corporate governance framework.
The committee meets on an as-needed basis.
Executive Committee
The Executive Committee is appointed by EFG
Hermes’ Board of Directors and is comprised of
eight members, who are strategically selected to
ensure all divisions are represented. Moreover,
the Executive Committee is entrusted with the
implementation of the policy decisions of the
Board and overseeing the Firm’s risk management
structures and policies.
Its purview includes:
1. Developing the Firm’s strategic plans and
goals for Board approval while managing issues
that emerge that are material to the business.
2. Approving transactions within its authority
limit in relations to investments, acquisitions,
and disposals in addition to considering and
approving expansions into new geographies and
product lines.
3. Reviewing the Group’s annual capital, reve-
nue, and cost budgets while monitoring perfor-
mance against financial objectives in addition to
approving cost-cutting measures as needed.
4. Overseeing the management of the Group’s
current and future balance sheet in line with its
business strategy and risk appetite.
5. Considering material joint ventures, strategic
projects or investments, and new businesses from
a capital perspective while monitoring and man-
aging capital and liquidity positions.
6. Aligning
investment spending across the
Group functions with its investment plan and
strategic objectives and consider business com-
mitments for Board approval.
7. Receiving and considering reports on oper-
ational matters material to the Group or have
cross-divisional implications.
8. Promoting the Group’s culture and values
and monitoring overall employee morale and
working environment.
9. Identifying ESG matters that affect the opera-
tions of EFG Hermes, monitoring ESG integration
throughout the Firm and passing ESG resolutions
while suggesting updates to the ESG policy for
Board approval.
The Executive Committee meets once a month to
discuss and follow up on day-to-day operations of
the Firm and address any pressing issues that may
arise. In 2020, most meetings were held virtually.
Shareholder Information
Shareholders
EFG Hermes shares are listed on the Egyptian Ex-
change (EGX) and the London Stock Exchange (LSE)
in the form of USD-denominated GDRs.
Significant Shareholders
EFG Hermes is required by law to notify the Egyptian
Stock Exchange (EGX) and the Financial Regulatory
Authority (FRA) of shareholders whose holdings
reach or exceed 5% of voting rights. Further
notification is made once a multiple of the 5% is
exceeded or reduced by a shareholder.
Shareholder Structure
As of 31 December 2020, a total of 10,999 share-
holders were listed in the Firm’s share register.
Executive Holdings and Management
Transactions
As of 31 December 2020, the EFG Hermes Board
of Directors held a total of 876,788 EFG Hermes
shares, representing 0.11% of the total 768,618,223
shares of EFG Hermes.
Share Ownership Information
All information relating to EFG Hermes Securities
held or transacted by members of the Board of
Directors and other insiders are promptly disclosed
and reported without fail in accordance with rele-
vant local and international regulations.
2020 Annual Report RISK AND COMPLIANCE
Prudent compliance and risk frameworks have been key to
managing challenges and ensuring business continuity
102
2020 Annual Report
Risk and Compliance
103
Risk and
Compliance
Risk and Compliance
As EFG Hermes’ product portfolio continues to
grow and the Firm penetrates new markets, it is
confronted with a growing number of unique rules
and regulations. This has made the need for sound
and prudent compliance and risk policies increas-
ingly important to help guide the decision-making
and day-to-day operations of the entire Group. To
this end, the Risk and Compliance Department has
developed a solid set of frameworks to govern EFG
Hermes’ compliance and risk strategies in accor-
dance with global best practices.
The department’s 38 compliance officers contin-
ued to ensure that each of the Firm’s new and
existing business lines adhered to appropriate
statutory provisions, official regulations, and
internal policies. In parallel, the 45-member Risk
Management team worked to ensure all opera-
tional, market, credit, and liquidity risks were
identified, assessed, and accordingly mitigated
using adequate controls. Both teams report to the
Group Chief Risk and Compliance Officer.
Internal Audit
The Internal Audit function, an independent function
that reports directly to the Audit Committee, covers
the entire EFG Hermes Group including its subsidiaries,
business lines, and support functions. The team is
made of eight auditors and a CIA covering investment
banking and NBFI activities, in addition to 35 auditors
in Tanmeyah Microfinance. In line with the Audit Com-
mittee’s pre-approved strategy for the year, Internal
Audit is in charge of carrying out systematic reviews
and periodic spot checks. To make the review process
as efficient as possible, the frequency of reviews is
based on the function/department risk level and the
previous review’s internal audit score. As such, high-
and medium-risk departments are reviewed annually
and low-risk departments with effective scores are
reviewed every other year. In parallel, the division also
performs quarterly follow-ups on previous audit find-
ings to ensure they have been adequately addressed
and corrected. It also provides a multitude of services
ranging from in-depth assessment of operations, ad-
herence to regulatory requirements, and monitoring
of corporate governance.
2020 Operational Highlights
Risk and Complieance
During 2020, the Risk and Compliance team was
instrumental in ensuring that the Firm’s business
continuity was not at risk. With many offices
working on rotational schedules, 100% of staff
working from home during the first five months of
lockdown, and 50% doing so following the easing
of restrictions, the division had to ensure that the
situation on the ground in each country was con-
tinually assessed to ensure the safety of all staff and
the continuity of operations.
Highlights for the year include:
• Completed the full compliance monitoring annu-
al program despite the logistical impediments.
ISO renewal.
•
• Established a full-fledged disaster recovery site
in Saudi Arabia.
• Early adoption of IFRS 9 new accounting standards.
Internal Audit
As the Firm’s NBFI platform continues to
grow and add to its product offering, the
Internal Audit Department has been working
alongside the new subsidiaries to establish
adequate reporting lines and build monitoring
programs, providing the necessary frame-
works to enhance the Group’s oversight of
both new and existing operations. The team’s
scope is to ensure effective monitoring of new
The Risk and Compliance Department has developed a solid set of
frameworks to govern EFG Hermes’ compliance and risk strategies in
accordance with global best practices.
products and subsidiaries particularly in the early
phases of launch in addition to assessing compli-
ance with regulatory requirements. During 2020,
the full annual plan laid out for the NBFI platform
in terms of compliance, risk, and audit standards
was complete despite overarching challenges
posed by the year. As for Tanmeyah, a new head
of Internal Audit was hired, who was instrumental
in revamping the entirety of the team. At the same
time, intensive training for the company’s field
auditors took place to communicate changes and
challenges posed by the pandemic. Additionally,
a full review of branch operations was conducted
during the year.
TeamMate continued to enhance the Internal Au-
dit team’s processes. The move was particularly
important in light of the COVID-19 pandemic as
more and more systems and processes necessi-
tated a shift to digital channels and automated
functions. The new digital tool also helped the
division store, analyze, and process the vast
quantity of financial data related to various Group
operations across its footprint to allow for a more
accurate and efficient auditing process. The in-
troduction of TeamMate is in line with the wider
digital transformation strategy the Group has
embarked on to ensure it remains at the forefront
of an increasing digital financial services industry.
As the Group transitions to a fully digital system,
the internal audit scope has also been extended
to assess potential cyber-security and data pro-
tection risks ensuring all client and EFG Hermes
internal data is stored safely and well protected
against possible cyber-attacks.
Employee Awareness
Communicating the Group’s strategy, policies,
and procedures to all employees continues to be
the core element binding various geographies and
lines of business as the Firm grows. To guarantee
that all new staff are promptly integrated in the
Group’s operating framework, the team takes part
in the HR onboarding package to orient new em-
ployees on key audit, compliance, and risk issues
at least once a year or on as-needed basis if a
high-risk situation arises. As business partners, the
Internal Audit function continues to serve the Firm
as a consultant by suggesting ways to improve
the business, add value by providing advice when
needed, and enhancing current procedures to help
improve the organization’s daily operations.
The Firm, under the monitoring and guidance of
the Compliance division, continued conducting
five mandatory training courses on Anti-Money
Laundering
(AML), anti-fraud, General Data
Protection Regulation (GDPR), cybersecurity, and
sustainability awareness. To ensure employees
reach the required level of understanding on
various subjects, staff members must pass all
courses with the results reflected in end-of-year
appraisals. The year saw us introduce a new ESG
training module in the arsenal of development
tracks for employees as ESG comes into increased
focus, particularly by responsible investors.
Outlook
In the coming year, the Risk and Compliance
department as well as the Internal Audit division
will continue to work on streamlining operations
in light of growth in the digital sphere, particularly
with current market dynamics associated with the
pandemic still in question. As the Group continues
to expand into new lines of business and geogra-
phies, the departments will continue to work with
other divisions to ensure new products, business
lines, and subsidiaries are promptly integrated into
EFG Hermes’ control framework and that new
regulations and laws related to these expansions
are accurately reflected in operating policies.
2020 Annual Report OUR PEOPLE
Protecting what we value the most: we put our team,
customers, and communities first in everything that we do
and actively propel them forward
106
2020 Annual Report
Our People
107
Our People
Overview
Although 2020 was rife with challenges, it
was also a year of firsts and achievements.
Despite the obstacles, the HR division con-
tinued to deliver on its mandate without
missing a beat. We found new ways of
doing old things and efficient ways of doing
new things. We delivered on pre-set plans,
deferred others, and added new ones based
on the evolving situation. At the heart of
it all, we strived to work closely across the
organization to ensure our employees felt
cared for. If there was ever a time to show
our employees how much we valued them,
2020 was the year. And while the employee
experience has always been part of how we
do things, it took center stage during this un-
usual year. Be it communication, revision of
policies, or changes in our modus operandi,
the impact of every decision on employees
was considered more than ever before.
Catering to a Diverse Workforce
We have always taken the diversity of our
employee base into account when consider-
ing policies, communication, processes, and
other matters; “think global, act local” was
more than a platitude for us. This took on
new meaning throughout 2020, when the
team learned to listen for subtle signs from
constituents and react accordingly, be it those
who wanted constant and regular contact and
updates from a person rather than an email,
those who just wanted to chat, and those who
preferred to proceed as though it was busi-
ness as usual. It was critical that the team stay
abreast of any local legislation that affected
stay-at-home orders, social distancing, quar-
antine requirements, and pandemic-related
issues, and ensure they are captured in any
corporate decisions or policies.
Navigating the Pandemic
The “human” in Human Resources was front
and center in 2020. It was clear to us that we
needed to focus on and address employee needs
on both the individual and professional levels.
in response to
lockdown
Moving quickly
measures, the Firm produced the Go-To Quar-
antine Guide, designed to compile available
resources that would keep employees informed
of pandemic-related developments across our
geographic footprint, relieving them of the over-
whelm of finding credible information sources
themselves. We also included a multitude of
resources aimed at helping employees and their
families navigate the unprecedented situation
we all found ourselves in without warning. We
were painstakingly aware of the challenge of
parents juggling (and struggling) with entertain-
ing children at home, helping with schoolwork,
and doing their own work, and tried to do what
we could to alleviate these pressures.
In anticipation of the inevitability of COVID-19
reaching our workplace, it was essential to
put in place a robust framework that clearly
outlined a protocol for handling cases that was
in line with local regulations and what the Firm
deemed right for the safety and wellbeing of our
employees and their families. We also needed
to ensure that sick employees and their families
were taken care of.
Capitalizing on the acceptance of online learning, we successfully ran
all four pre-planned programs under the umbrella of The Academy,
covering 61 employees from 14 departments across the Firm.
We also worked to impart a sense of nor-
malcy when and where possible, and handle
things as though it was business as usual
even amid these changes. Despite the chaos
and uncertainty, we successfully finalized
the implementation of a major 3-year state-
of-the-art HRIS, handled all interviews and
hiring assessments virtually, and conducted
the onboarding of new hires virtually. The
division also kick-started the Firm’s first ever
Employer Branding project, aimed at redefin-
ing and articulating the Firm’s employee value
proposition, considering the transformation
into a full-service financial institution.
Employee Development
In light of the irregular and unprecedented
circumstances of the year, it was essential for
our commitment to our employees’ growth
and development to remain unwavering. Ac-
cordingly, we needed to find ways to swiftly
adapt, particularly after the world seemingly
switched to virtual processes overnight. As
a result, we pivoted and took our annual
DNA (Development Needs Assessment) event
online. Only in its second year, an event
conceptualized to hand employees control
of their career development, took place, as
scheduled, a mere two weeks after the be-
ginning of lockdown measures, resulting in
learning opportunities for 649 employees.
The newfound focus on virtual posed a golden
opportunity to introduce virtual classroom learn-
ing. The key was to find the right content and
learning partner, and nothing was timelier than
the syndicated Think on Your Feet program. Deliv-
ered to managers navigating their teams through
the unknown only a few weeks after lockdown
commenced, the subject matter was relevant and
actionable, and the delivery dynamic and engag-
ing. We were finally able to bring employees to
see virtual classroom learning as a viable option.
Capitalizing on the acceptance of online learn-
ing, we successfully ran all four pre-planned
programs under the umbrella of The Academy,
covering 61 employees from 14 departments
across the Firm.
Outlook
As we plan for 2021, we are working to
ensure we do not lose sight of the learnings
of 2020. While the world slowly returns to
a semblance of normalcy in some aspects,
we continue to take advantage of the pow-
er of technology and remote interaction.
Rather than simply tweaking programs
and processes originally conceptualized for
in-person interaction, to work virtually, we
are revisiting our offering and re-building
programs and workflows consciously for
the virtual world, focusing on our annual
DNA, promotions, hiring and onboarding
processes, among others. While we look
forward to bringing employees from all over
EFG Hermes together in one classroom in
person, we also plan to capitalize on the
success of our virtual learning trials long
after the pandemic is over.
2020 Annual Report EXECUTIVE COMMITTEE
The stalwart commitment of our executive management
team to see our strategies to fruition have been the
lynchpin of our success throughout the years
110
2020 Annual Report
Executive Committee
111
Executive
Committee
Karim Awad
Group CEO and Chairman
of the Executive Committee
Mr. Karim Awad is Group Chief Executive Officer, Chairman of the
Executive Committee, and a member of the Board of EFG Hermes
Holding. With over 21 years of experience, Mr. Awad started his
career in EFG Hermes in 1998 in the Investment Banking depart-
ment, eventually heading the division in 2007 and leading several
high-profile local and regional transactions. He assumed managerial
roles in the Firm thereafter, first as CEO of the Investment Bank in
2012 and then as Group CEO in 2013.
Since then, Mr. Awad has led a substantial restructuring that included
streamlining its expenses and divesting its non-core assets, they key
being its stake in Lebanese bank Credit Libanais. Working together
with the EFG Hermes senior management, Mr. Awad spearheaded a
major shift in the Firm’s strategy that transformed EFG Hermes from a
MENA-based investment bank to a frontier markets financial solutions
house. To achieve this vision, the Firm focuses on six pillars: hiring the
best people, improving the Firm’s positioning in markets it operates in,
selectively expanding its geographical presence, enhancing its product
offering, increasing profitability metrics, and ensuring that public re-
sponsibility remains front and center in all its operations.
During the past seven years, the Firm was able to enhance its market
share in its core sell-side operations of investment banking, brokerage,
and research while expanding its presence to six new markets that span
sub-Saharan Africa and Asia. The buy-side business was completely
revamped through the consolidation of its regional asset management
business with affiliate Frontier Investment Management (FIM) in 2017
and the re-emergence of an active Private Equity division that is a key
player in renewables, education, and healthcare. The Firm was also able
to significantly increase the suite of products it offers to clients by build-
ing full-fledged non-bank financial institution platform that currently
includes leasing, factoring, microfinance, consumer finance, mortgages,
payment, and insurance in addition to fixed income and structured
products platforms. The strategic shift helped drive growth in the Firm’s
revenues that reached EGP 5.5 billion and profits that topped EGP
1.3 billion in 2020 all while maintaining a strong commitment to the
communities we operate in through an active CSR policy and actively
adopting progressive ESG standards.
Mr. Awad holds a BA in business administration from the American
University in Cairo.
Mohamed Ebeid
Co-CEO of the Investment
Bank, EFG Hermes
With more than two decades of experience with EFG Hermes,
Mr. Mohamed Ebeid is currently the Co-CEO of the Investment
Bank, a position he took up in 2016 with a mandate to grow the
business on the sell-side and to expand its product offering in
multiple continents. Since then, he has successfully built the Firm’s
Frontier business with on-the-ground operations in four different
continents, giving clients access to more than 75 markets around
the world. He has also led the development of the Firm’s Structured
Products Platform, which has pulled in trades worth c. USD 2 billion
in its first two years since inception. In addition to the creation
of the Fixed-Income Desk, which began operations in 2018 and is
performing effectively.
Mr. Ebeid began his career with the Firm in 1999 in the Brokerage
division and has since held numerous positions within the Firm, the
most recent prior to his current post being Co-Head of Brokerage,
where he managed just in over two years to restructure the business
and streamline its activities all while boosting profitability. He held the
post of Head of Institutional Sales beginning 2006 where he managed
to add GCC institutional clients and sovereign wealth funds to the
Firm’s client base. He led the team on every single ECM transaction
during his tenure, raising more than USD 20 billion in ECM transac-
tions across jurisdictions. Mr. Ebeid was also an integral part of EFG
Hermes’ Institutional sales team, heading an endeavor to expand the
Firm’s western institutional client base and further root the business in
its home market of Egypt. During that time, he was part of the team
executing the Firm’s expansion plan in the MENA region and directing
its capabilities in terms of research and corporate access.
2020 Annual Report
112
2020 Annual Report
Executive Committee
113
Karim Moussa
Co-CEO EFG Hermes
Investment Bank, Head of
Asset Management and
Private Equity, and CEO,
Vortex Energy
Mr. Karim Moussa joined EFG Hermes in 2008, with a primary
responsibility of building the Group’s infrastructure Private Equity
(PE) platform. During this time, he closed several flagship PE deals,
such as Nasdaq-Dubai’s USD 445 million take-private of DAMAS
International and later its exit, delivering c. 2x cash-on-cash re-
turns. He led the creation of the Vortex Energy Platform and raised
and deployed over USD 500 million in equity in yielding renewable
energy assets across Europe. In 2019, he completed an exit of a
portfolio of net c. 457 MW in onshore wind assets in France, Spain,
Portugal, and Belgium to funds managed by J.P. Morgan, realizing
attractive divestment returns and paying net cash yields in excess
of 5% p.a. to investors. In 2020, he continued the successful di-
vestment of Vortex assets, selling a controlling stake in its 365 MW
UK solar portfolio to Tanaga Nasional for c. GBP 500 million EV,
delivering c. 13% IRR and 1.4x cash-on-cash returns. Mr. Moussa
recently led the launch of an education fund in partnership with
GEMS Education, dedicated to investing in K-12 schools in Egypt,
closing the fund at commitments of c. USD 150 million.
Since 2017, he has been appointed Co-CEO of EFG Hermes Investment
Bank, responsible for the entire buy-side business of the Group. Karim
sits on the Investment Committee of several EFG Hermes’ sponsored
funds and on InfraMed’s Investors Board, with combined AUM of
c. USD 3.5 billion. He is also a member of the board of directors of
various portfolio companies.
Prior to joining EFG Hermes, Mr. Moussa was Vice President at
Deutsche Bank’s Global Banking division, with responsibilities for
M&A, ECM, and DCM advisory in the MENA region. In this role, he
advised on the USD 4.2 billion Dubai Ports World IPO, the USD 670
million sale of Sokhna Port to Dubai Ports World, and the USD 1.4
billion LBO of the Egyptian Fertilizers Company by Abraaj Capital.
He joined Deutsche Bank in 2001 as an Analyst in the M&A exe-
cution team in Frankfurt, advising on several mid-cap transactions
in Continental Europe. He moved to Dubai in 2005 with the CEO
of Deutsche Bank MENA to help establish the bank’s regional busi-
ness. Prior to Deutsche Bank, Mr. Moussa worked as an Investment
Analyst at Berlin Capital Fund, a venture capital fund managed by
the Berliner Bank.
He holds an MBA and a degree in mechanical engineering (Diplom
Wirtschaftsingenieur) from the Technical University of Berlin.
Mr. Mohamed El Wakeel is the Group Chief Operating Officer at EFG
Hermes. Following three years at HSBC, Mr. El Wakeel joined the Firm in
2000 as part of the operations team of the Brokerage division. Through
his efforts in streamlining the Brokerage division’s operations to ensure
best-in-class practices and efficiency, he has since moved up the ranks,
first heading brokerage operations for Egypt then becoming the Securi-
ties Brokerage Group’s Head of Operations. As Head of Operations, Mr.
Wakeel played a pivotal role in setting up, and integrating the opera-
tions of the Firm’s newly launched offices in new markets. Furthermore,
his role included strengthening the IT infrastructure, upgrading the
Firm’s security framework, and enhancing in-house app development
to encompass the requirements of all lines of business.
Prior to becoming Group COO, he was Group Head of Market Operations
at the Firm, where his hands-on experience has been key to the enhance-
ment of EFG Hermes’s operations across multiple lines of business.
Mr. Abdel Wahab Mohamed Gadayel is EFG Hermes Holding’s
Group Chief Risk and Compliance Officer, a post he has held since
2013. Prior to this, he served as Group Head of Compliance for
three years, where he played a key role in initiating and evolving
the Group’s policies and procedures and enhancing the Group’s
compliance framework.
Mr. Gadayel joined EFG Hermes in 1998 as Operations Officer, later
being promoted to Deputy Head of Operations, a role he held until
2004.
He also worked on integrating newly acquired offices in the lower
GCC region as the Group rapidly expanded into new markets during
his tenure as Managing Director of Operations at EFG Hermes UAE
between 2004 and 2009.
Mr. Gadayel is a Cairo University graduate, where he majored in
economics and minored in political science.
Mohamed El Wakeel
Group Chief Operating
Officer, EFG Hermes
Abdel Wahab Mohamed
Gadayel
Group Chief Risk and
Compliance Officer, EFG
Hermes
2020 Annual Report 114
2020 Annual Report
Executive Committee
115
Mohamed Abdel Khabir
Group Chief Financial
Officer, EFG Hermes
Walid Hassouna
Chief Executive Officer, EFG
Hermes Finance and Group
Head of Debt Capital
Markets, EFG Hermes
Mr. Mohamed AbdelKhabir is EFG Hermes’ Group Chief Financial
Officer, and a board member in several EFG Hermes subsidiaries.
Prior to his current post, Mr. AbdelKhabir joined EFG Hermes’ In-
vestment Banking division in early 2008, where he remained until
March 2016 as a Director.
Mr. AbdelKhabir’s notable transactions during his investment
banking tenure include the IPO of Integrated Diagnostics Holding
(IDH) through a secondary offering worth USD 334 million in the
LSE. He was also involved in the sale of Cleopatra Hospital in Egypt
to the Abraaj Group, the merger of Al Borg and Al Mokhtabar labo-
ratories, ENPC’s USD 1.05 billion syndicated loan, and the issuance
of ODH EDRs worth USD 1.8 billion.
Previously, he held the position of Financial Planning Manager at
Procter and Gamble in the Corporate Finance division with a focus
on financial planning, budgeting, corporate restructure, integra-
tion, and profit forecasting.
Mr. AbdelKhabir holds a BA in business administration from the
American University in Cairo with a concentration in finance and a
minor in economics and psychology. He is also a CFA charter-holder.
Mr. Walid Hassouna is the Chief Executive Officer of EFG Hermes
Finance, the Non-Bank Financial Institution platform and a member of
the Executive Committee of EFG Hermes. He is also the Head of DCM
and Chairman of PayTabs Egypt and EFG-EV Fintech.
Mr. Hassouna is also a Non-Executive Board Member of valU, Tan-
meyah Microenterprises, EFG Hermes Corp-Solutions, Tokio Marine
Life Insurance, and Bedaya for Mortgage — all subsidiaries of EFG
Hermes Finance. He is also a Board Member at Karm Solar and previ-
ously the CEO of valU.
Prior to joining EFG Hermes in 2016, Mr. Hassouna was General
Manager and Head of Structured Finance and Investment Banking at
Bank Audi. Over a 17-year banking career that began at Misr Inter-
national Bank, he closed structured and project finance transactions
in excess of USD 15 billion. He also structured and executed several
award-winning deals in project finance and M&A within Egypt and
GCC, in addition to several investment banking transactions. He has
also been the Head of Structured Finance and Syndication in Banque
Misr where he successfully managed to top the league table of the
MENA region in syndicated loans.
Mr. Hassouna is a B.B.A holder from Cairo University, where he
graduated with highest honors. He also holds an MBA from J. Mack
Robinson College of Business, Georgia State University as well as an
Islamic Finance Qualification from CISI- UK.
Ms. Inji Abdoun joined the Human Resources department at EFG
Hermes in June 2007 as HR Manager for the UAE with a mandate
to establish HR for the Group’s operations, while contributing to the
department’s Group-wide initiatives with a focus on talent manage-
ment. Her mandate saw an expansion in early 2008, as she took on
an active role in the integration of the then-newly acquired Oman
operation, as well as the enhancement of the HR offering in the KSA
operation and later the integration of the Kuwait operation.
In 2009, Ms. Abdoun became the Group Head of Human Resources,
overseeing the full spectrum of the department’s functions across
the Group while working closely with the Firm’s management team
providing HR insight to business issues. As of 2017, Inji became the
Group’s Chief Human Resources Officer, continuing to oversee the
Group’s HR activities and working with the executive team as part
of the group’s Executive Committee.
Prior to joining EFG Hermes, Ms. Abdoun assumed HR manage-
ment roles at LINKdotNET (an OT subsidiary), Fayrouz International
(a Heineken subsidiary), as well as a role in career advising and
placement at the American University in Cairo’s Career Advising
and Placement office (CAPS), accumulating more than 19 years of
experience in the field.
Ms. Abdoun is a SHRM Senior Certified Professional and a certified
Myers-Briggs practitioner, and holds an MBA from the MIT Sloan
School of Management.
Inji Abdoun
Group Chief Human
Resources Officer, EFG
Hermes
2020 Annual Report BOARD OF DIRECTORS
A diverse, world-class Board of Directors have been the guiding
post of the institution in both headwinds and tailwinds
118
2020 Annual Report
Board of Directors
119
Board of
Directors
Mona Zulficar
Chairperson, EFG Hermes
Ms. Mona Zulficar has served as non-executive Chairperson of EFG
Hermes Holding since April 2008. Ms. Zulficar is a Founding Part-
ner and Chairperson of Zulficar & Partners Law Firm, a specialized
law firm consisting of 11 partners and more than 50 associates,
established in June 2009. The Firm has since grown into one of the
top ranked law firms in Egypt. Ms. Zulficar was previously Senior
Partner at Shalakany Law Firm and Chair of its Executive Commit-
tee for several years.
Ms. Zulficar is recognized in local and international legal circles as
the precedent setter and one of Egypt’s most prominent corporate,
banking, and project finance attorneys. As an M&A and capital mar-
kets transactions specialist, Ms. Zulficar has led negotiations on some
of Egypt and the Middle East’s largest and most complex successful
transactions over the past three decades.
Ms. Zulficar also played an instrumental role in modernizing and
reforming economic and banking laws and regulations, both in her
capacity as former board member of the Central Bank of Egypt during
the banking reform program from 2003 to 2011 and as a prominent
member of national drafting committees. Ms. Zulficar is a leading hu-
man rights activist recognized locally and internationally and has initi-
ated several successful campaigns for new rights legislation including
women’s rights, freedom of opinion, and family courts. Ms. Zulficar
served as VP of the Constitutional Committee, played a key role in
drafting the 2014 Egyptian Constitution, and is currently member of
the National Council for Human Rights.
Ms. Zulficar was recently elected President of the first Egyptian
Microfinance Federation, currently the Egyptian Federation for
Financing Medium, Small and Micro Enterprises, and chairs several
NGOs active in social development and microfinance for underpriv-
ileged women. Internationally, Ms. Zulficar served two terms as
an elected member of the United Nations Human Rights Council
Advisory Committee until 2011.
Ms. Zulficar holds a Bachelor of Science in Economics and Political Science
from Cairo University and an LLM from Mansoura University, as well as an
honorary doctorate degree in law from the University of Zurich.
Yasser El Mallawany
Vice Chairman of the
Board, EFG Hermes
Karim Awad
Group CEO and Chairman
of the Executive Committee
Mr. Yasser El Mallawany is the Non-Executive Vice Chairman of EFG
Hermes’ Board of Directors. Since his appointment as Chief Exec-
utive Officer of the Firm in 2003, Mr. El Mallawany has played a
key role in driving the consolidation of Egypt’s investment banking
sector and facilitated the emergence of EFG Hermes as the leading
Arab investment bank.
Mr. El Mallawany began his career at Commercial International Bank
(CIB), formerly Chase National Bank, for 16 years, last serving as the
General Manager of the Corporate Banking Division. Mr. El Malla-
wany joined EFG Hermes at the time of the Firm’s merger with CIIC.
Mr. El Mallawany holds a bachelor’s degree in accounting from
Cairo University.
Mr. Karim Awad is Group Chief Executive Officer, Chairman of the
Executive Committee, and a member of the Board of EFG Hermes
Holding. With over 21 years of experience, Mr. Awad started his
career in EFG Hermes in 1998 in the Investment Banking depart-
ment, eventually heading the division in 2007 and leading several
high-profile local and regional transactions. He assumed managerial
roles in the Firm thereafter, first as CEO of the Investment Bank in
2012 and then as Group CEO in 2013.
Since then, Mr. Awad has led a substantial restructuring that included
streamlining its expenses and divesting its non-core assets, they key
being its stake in Lebanese bank Credit Libanais. Working together
with the EFG Hermes senior management, Mr. Awad spearheaded a
major shift in the Firm’s strategy that transformed EFG Hermes from a
MENA-based investment bank to a frontier markets financial solutions
house. To achieve this vision, the Firm focuses on six pillars: hiring the
best people, improving the Firm’s positioning in markets it operates in,
selectively expanding its geographical presence, enhancing its prod-
uct offering, increasing profitability metrics and ensuring that public
responsibility remains front and center in all its operations.
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During the past seven years, the Firm was able to enhance its market
share in its core sell-side operations of investment banking, brokerage,
and research while expanding its presence to six new markets that span
sub-Saharan Africa and Asia. The buy-side business was completely
revamped through the consolidation of its regional asset management
business with affiliate Frontier Investment Management (FIM) in 2017
and the re-emergence of an active Private Equity division that is a key
player in renewables, education, and healthcare. The Firm was also able
to significantly increase the suite of products it offers to clients by build-
ing full-fledged non-bank financial institution platform that currently
includes leasing, factoring, microfinance, consumer finance, mortgages,
payment and insurance in addition to fixed income and structured prod-
ucts platforms. The strategic shift helped drive growth in the Firm’s
revenues that reached EGP 5.5 billion and profits that topped EGP
1.3 billion in 2020 all while maintaining a strong commitment to the
communities we operate in through an active CSR policy and actively
adopting progressive ESG standards.
Mr. Awad holds a BA in business administration from the American
University in Cairo.
Mr. Arapoglou’s consulting career began in International Capital
Markets and Corporate & Investment banking and later in managing,
restructuring and advising publicly listed Financial Institutions and
Corporates, primarily in Southeast Europe and the Middle East.
Mr. Arapoglou’s most recent executive assignments include Managing
Director and Global Head of the Banks and Securities Industry for Citi-
group, Chairman and CEO of the National Bank of Greece, Chairman
of the Hellenic Banks Association, and CEO of Commercial Banking at
EFG-Hermes Holding SAE.
Mr. Arapoglou currently holds a number of non-executive board
positions, including Chairman of Bank of Cyprus Group, Chairman of
Titan Cement International S.A., Chairman of Tsakos Energy Naviga-
tion (TEN) Ltd, Independent board member of EFG-Hermes Holding
SAE, and a member of the Board of Directors of Bank Alfalah Ltd.
representing the International Finance Corporation (IFC).
Mr. Arapoglou is a member of the International Board of Advisors of
Tufts University, Boston, Ma., and the Business Advisory Council for
the International MBA program at the Athens University of Economics
and Business.
Mr. Arapoglou has degrees in mathematics, engineering, and man-
agement from Greek and British universities.
Efstratios Georgios
(Takis) Arapoglou
Non-Executive Board
Member, EFG Hermes
Holding
Marwan Elaraby
Partner – Shearman &
Sterling LLP
Jean Cheval
Senior Advisor, Natixis
Mr. Marwan Elaraby is a non-executive member of the EFG Hermes
board. He is based in Dubai, where he serves as partner in the Cap-
ital Markets and Mergers & Acquisitions practices at Shearman &
Sterling LLP, where he also currently serves as Head of the Dubai
Office and Corporate Business Unit leader. His practice focuses on
advising governments and private capital clients on a variety of cor-
porate and capital market transactions across several industries. Mr.
Elaraby first joined Shearman & Sterling in New York in 1995, and
became a partner in 2004. He previously served as Managing Direc-
tor at Citadel Capital, one of the leading private equity firms in the
Middle East and Africa. Mr. Elaraby also served as Executive Director
in EFG Hermes’ investment banking group, where he worked as an
investment banker advising clients on numerous capital markets and
M&A transactions in the Middle East.
Mr. Elaraby is a New York-qualified lawyer.
Mr. Elaraby holds a bachelor’s degree in economics from the Amer-
ican University in Cairo and a Juris Doctor (J.D.) from Columbia
University School of Law.
Mr. Jean Cheval is a non-executive member of the EFG Hermes
board. He joined Natixis in June 2009, leading the Debt and Finance
Department (Structured Finance) until 2012, and the European Area
between 2011 and 2012. Mr. Cheval became Head of Finance and
Risk, member of Natixis Senior Management Committee, and second
Senior Manager of Natixis in September 2012, until October 2017.
Mr. Cheval spent the majority of his career at Credit Agricole lndo-
suez from 1983 to 2001, where he was successively Chief Econo-
mist, Head of Strategic Planning and Budget, Head of Structured
Financing and Head of the Middle East and Asia, before being
appointed General Manager. Mr. Cheval also served as Director of
Al Bank Al Saudi Al Fransi in Saudi Arabia, WAFA Bank in Morocco,
and Banque Libano-Française in Lebanon.
Mr. Cheval was also Head of Banque Audi France, Chairman of
Banque Audi Switzerland from 2001 to 2005, and member of the
board of Audi-Saradar Bank from 2002 to 2006. Mr. Cheval pre-
viously worked for the French Ministry of Industry and the French
Planning Agency.
Mr. Cheval graduated from the Ecole Centrale de Paris’ Engineering
School and the University of Berkeley.
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Zubyr Soomro
Chairman of the National
Bank of Pakistan
Mr. Zubyr Soomro is a non-executive member of the EFG Hermes
board. Mr. Soomro was previously startup Chairman of the Pakistan
Microfinance Investment Company, a market-based entity majority
owned by KfW, and a DFID subsidiary. The company was estab-
lished to be the apex for the 45 microfinance lenders in Pakistan.
His engagement with the microfinance sector extends over 20 years
and has involved board roles in the Pakistan Poverty Alleviation
Fund, Acumen Pakistan, and Grameen Foundation USA. Mr. Soom-
ro served on the boards of all three of Pakistan’s financial services
regulators, namely, the State Bank of Pakistan, the Securities and
Exchange Commission and the Karachi Stock Exchange, of which
he was Chairman. Mr. Soomro is on the board of governors of the
Layton Rahmatulla Benevolent Trust, a leading eye-care provider
handling one million patients per year, the Shaukat Khanum Me-
morial Trust, which is Pakistan’s leading oncology services provider,
and the Indus Valley School of Art and Architecture.
In April 2019, Pakistan’s current government appointed him as
Chairman of the National Bank of Pakistan, one of the largest banks
in the country. It is majority government owned, with a global
network and over 1,500 domestic branches. Mr. Soomro was also
appointed to the board of Sarmaya Pakistan, a sovereign fund set
up in March 2019 to oversee the country’s 204 government-owned
corporate entities.
Mr. Soomro spent the majority of his career at Citibank in interna-
tional corporate, investment, consumer, and private banking. Over
the span of his 33-year career at the bank, Mr. Soomro worked across
the Middle East, Turkey, Africa, the UK, and Pakistan. Mr. Soomro
retired in 2008 as Managing Director and Country Head for Pakistan.
In the midst of his Citibank career, Mr. Soomro took a three-year
leave of absence to become the Chairman and President of United
Bank Ltd., a 1,800-branch government-owned institution with pres-
ence in 10 countries. Mr. Soomro was tasked with restructuring the
bank for privatization. In 2004, the Central Bank awarded him the
Quaid-E-Azam Centenary Gold Medal for his work in restructuring
United Bank Ltd. and his contribution to the financial sector reform
as Chairman of the Pakistan Bank’s Association.
Mr. Soomro was a member of the government’s Economic Advisory
Council from 1997 to 2000 and again from 2013 to 2018. Mr. Soomro
also served as President of the American Business Council and the
Overseas Chamber of Commerce and Industry, in addition to being
Chairman of the Pakistan Banks’ Association.
Mr. Soomro holds a Bachelor of Science degree from the London
School of Economics, a master’s degree from the School of Oriental
and African Studies, and completed the Executive Education Program
for Financial Inclusion in 2015 and 2017, as well as the Leadership in
Uncertain Times program in 2020 from the Harvard Business School and
Harvard Kennedy School.
Mr. Abdulla Khalil Al Mutawa is a non-executive member of the EFG
Hermes board. He is a competent and dedicated investment profes-
sional with more than 35 years of experience and a comprehensive
background in Finance and Administration. Mr. Al Mutawa holds a
Bachelor of Science in Business Administration from the University of
North Carolina, USA. Mr. Al Mutawa is currently the General Manager
of the Private Office of H.E. Sheikh Suroor Bin Mohammad Al Nahyan.
Mr. Al Mutawa has been a member of the board of directors of ADCB
since 1997, as well as member of the bank’s BRCC. Mr. Al Mutawa
also served on the board of directors of Bank Alfalah Limited, Pakistan
since 1997, with membership posts on the bank’s Board Audit Com-
mittee (BAC), Remuneration & Nomination Committee (BHR&NC),
Board Risk Management Committee (BRMC), Board Compensation
Committee (BCC), and Board Information Technology Committee
(BITC), in addition to serving as Chairman of the Board Strategy &
Finance Committee (BS&FC).
Mr. Al Mutawa is also Chairman of Makhazen Investment Company Abu
Dhabi and member of the board of Abu Dhabi National Hotels Company.
Mr. Khalid Mana Saeed Al Otaiba is a non-executive member of
the EFG Hermes board. Mr. Al Otaiba has been Office Manager for
His Excellency Dr. Mana Saeed Al Otaiba, the personal advisor to
His Highness the President of the UAE Sheikh Khalifa bin Zayed Al
Nahyan, since 2005. Mr. Al Otaiba also holds the post of Deputy
Chairman of the Al Otaiba Group of Companies. Mr. Al Otaiba
leverages his over 20-year career, spanning numerous industries,
to serve as Director of Alfalah Insurance Company Limited, Paki-
stan, Chairman of Liwa International Investment Tourism and Royal
Mirage Hotel & Resort Ltd, Morocco, and Chairman of Ghantout
International and Bank Alfalah as well as Director of Royal Mirage
Masdar, Abu Dhabi.
Mr. Al Otaiba holds a bachelor’s degree in international economics
from Suffolk University in Boston, Massachusetts.
Abdulla Khalil Al Mutawa
General Manager - The Pri-
vate Office of H. E. Sheikh
Suroor Bin Mohammed Al
Nahyan
Khalid Mana Saeed Al
Otaiba
Office Manager for His
Excellency Dr. Mana Saeed
Al Otaiba
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Ramsay Zaki
Founder, Wafra Export
Timothy C. Collins
CEO and Senior MD of
Ripplewood Advisors LLC
Mr. Ramsay Zaki is a non-executive member of the EFG Hermes
board. In 2014, Mr. Zaki founded Wafra Export, a fruit export
company which owns a state-of-the-art packing house and grows
it produce on a 360-acre plot. Mr. Zaki was part of the EFG Her-
mes team for 18 years, starting as Head of Operations Brokerage in
1995 and ending his tenure as Chief Operating Officer. As COO, Mr.
Zaki was responsible for managing operational matters, including
compliance-related functions. Mr. Zaki’s contribution to EFG Hermes
included growing the Firm’s backbone in all countries and lines of
business, rapidly growing it while maintaining the highest degree of
corporate governance and ethics, and weathering major economic
and political events in the region. He was also member of the Firm’s
board until 2013.
Prior to joining EFG Hermes, Mr. Zaki worked for five years at Com-
mercial International Bank (CIB), where he headed the team responsible
for extending credit to the Egyptian pharmaceutical industry. During his
time at CIB, Mr. Zaki successfully more than doubled loans to the sector
and captured a 70% market share of all private sector pharmaceutical
companies operating in Egypt. Mr. Zaki was also heavily involved in the
merger negotiations between the two biggest private sector pharma-
ceutical companies in the country.
Mr. Zaki holds a Bachelor of Commerce from Cairo University.
Mr. Timothy Collins is a non-executive member of the EFG Hermes
board. Mr. Collins is the CEO and senior managing director of Rip-
plewood Advisors, the successor to Ripplewood Holdings, which
he founded in 1995. Ripplewood has successfully invested in and
built companies globally, including in Asia, Europe, and the Middle
East. It has consistently delivered superior returns from investments
totaling more than USD 40 billion in enterprise value.
Ripplewood played an instrumental role in transforming and
strengthening prominent financial institutions such as AS Citadele
Banka of Latvia, Commercial International Bank of Egypt, and Shin-
sei Bank of Japan, and has invested in a broad range of industries
including automotive, chemicals, consumer electronics, food, real
estate, and telecommunications. Ripplewood’s investment in Inter-
net provider Gogo began the revolution in in-flight connectivity.
Prior to founding Ripplewood, Mr. Collins worked for Onex, Lazard
Frères, Booz Allen Hamilton, and Cummins. Mr. Collins formerly
served on several public company boards, including Advance Auto
Parts, Asbury Automotive, Citigroup (after it accepted public funds),
Commercial International Bank, Gogo, Rental Services Corporation,
and Shinsei Bank. Mr. Collins also served as an independent direc-
tor at Weather Holdings, a large private emerging-markets telecom
operator that was sold to VimpelCom.
Mr. Collins sits on the board of directors of Banque Saudi Fransi and
SODIC. Mr. Collins is Chairman of AS Citadele Banka and is involved
in several non-for-profit and public sector activities, including the
Trilateral Commission and the Council on Foreign Relations, NEOM,
McKinsey, and Yale Divinity School’s Advisory Boards. Mr. Collins is
Chairman of the Advisory Board for the Yale School of Management,
Co-Chair of the Advisory Council of the NYU Global Institute for Ad-
vanced Study, and a member of the Investment Advisory Committee
to the New York State Common Retirement Fund.
Mr. Collins has a bachelor’s degree in philosophy from DePauw
University and MBA in public and private management from Yale
University’s School of Management. Mr. Collins received an honor-
ary Doctorate of Humane Letters from DePauw University in 2004,
and has been an Adjunct Professor and Visiting Fellow at New York
University. Mr. Collins has served as a visiting lecturer at the Yale
Law School and is Senior Fellow and Director of the Henry P. Becton
Fellowship Program at the Yale School of Management.
Ms. Elizabeth Critchley is a non-executive member of the EFG
Hermes board. Ms. Critchley is a partner at Ripplewood Advisors
Limited, running the company’s day-to-day operations. Before join-
ing Ripplewood, Ms. Critchley was a Founding Partner at Resolution
Operations, which raised GBP 660 million via a listed vehicle at the
end of 2008 and went on to make three acquisitions in financial ser-
vices, namely Friends Provident PLC for USD 2.7 billion, most of AXA
UK Life’s businesses for USD 4 billion, and Bupa for USD 0.3 billion.
This consolidation strategy was financed through a combination of
debt and equity raisings, as well as structured vendor financing. Prior
to establishing Resolution Operations, Ms. Critchley was Managing
Director at Goldman Sachs International, where she ran the Euro-
pean FIG Financing business. Ms. Critchley has structured, advised,
and invested in transactions with more than fifty global financials
and corporates. Mrs. Critchley has a First-Class Honors Degree in
Mathematics from University College London.
Elizabeth Critchley
Partner, Ripplewood
Advisors Limited
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127
CORPORATE SOCIAL
RESPONSIBILITY
Public responsibility has been core to the Firm since
inception. As market leaders, we recognize that it is our
duty to act as catalysts for change within our industry and
within the communities where we do business
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Corporate Social
Responsibility
EFG Hermes is committed to the belief that the
Firm’s success is not only defined by the profitability
of our business but also by the impact we are capa-
ble of creating to improve lives across the communi-
ties in which we operate. As a pioneer in promoting
impact investment strategies and incorporating sus-
tainability into the fabric of our operations, we aim
to instigate change across the markets in which we
operate to pave the way for increasingly sustainable
business practices among corporations.
EFG Hermes aims to integrate best responsible prac-
tices aligned with those undertaken globally, across
the environmental, social, and governance (ESG)
spheres and throughout its operations. The Firm
further seeks to align its development frameworks
with the UN Sustainable Development Goals (SDGs)
and has been a member of the UN Global Compact
(UNGC) since 2011, working to further integrate its
internal policies with the 10 principles of human
rights, labor, the environment, and anti-corruption
as well as Egypt’s Vision 2030.
As part of its efforts to weave sustainability across
all Group operations, EFG Hermes launched its
Social Purpose in 2014, which seeks to ensure that
all products and services offered by the Firm are
able to generate value for all stakeholders and lead
various efforts to overcome global, social, econom-
ic, and environmental challenges. This was further
supported by the issuance of our 2017 ESG policy,
which seeks to align EFG Hermes’ operations with
sound and ethical practices. The Firm’s Corporate
Social Responsibility (CSR) department additionally
spearheads several initiatives to ensure sound ESG
practices in addition to overseeing the work of
the EFG Hermes Foundation for Social Develop-
ment, which seeks to support the most vulnerable
segments of our community through projects, in
collaboration with policymakers and other partners
in order to promote sustainable development and
economic prosperity.
In 2018, the Firm became the first financial services
corporation in Egypt to commit to the United Nations
Principles for Responsible Investment (UNPRI), an in-
ternational initiative developed by investors seeking
to promote sustainable finance and a more inclusive
financial system at the global level. In October
2020, EFG Hermes was included among 30 regional
companies in Refinitiv and the Arab Federation of
Exchanges’ Low Carbon Select Index, which provides
investors with access to low-carbon equities in the
MENA region. These commitments form the basis by
which the Firm approaches citizenship, allowing it to
take measured and consistent steps to build out inte-
grated sustainable business operations and initiatives
that drive value for all stakeholders.
Responsible Investment Strategies
A core pillar of ESG integration at the Group level
is the deployment of responsible investment strate-
gies in order to define clear objectives and develop
ever-evolving policies and practices capable of in-
stigating positive change. In addition, our ESG con-
siderations are integrated into the full investment
cycle of all four business lines, working closely with
the Group’s investment professionals to account for
the accurate determination of appropriate risks and
opportunities throughout our operations.
EFG Hermes manages a large responsible invest-
ment portfolio that includes initiatives that directly
align to meet goals set by the SDGs, across a range
of sectors. The Group manages a number of invest-
ments in renewable energy through its platform,
Vortex Energy, which has successfully achieved a
C-o-C of 1.4x and blended returns of c. 13% to its
EFG Hermes aims to integrate best responsible practices aligned with
those undertaken globally, across the environmental, social, and
governance (ESG) spheres and throughout its operations.
investors from 2015 to 2020. In 2020, the platform
divested its controlling and managing stake in
Vortex Solar, a 365 MW solar PV portfolio (Vortex
III), acquired in 2017 from TerraForm Power, at an
enterprise value of c. GBP 500 million. Today, Vortex
Energy is establishing Vortex Energy IV, which will
provide investors with access to a portfolio of ener-
gy transition assets and investments, providing dou-
ble-digit returns on investments in a sustainable and
growing sector. Vortex Energy IV will target various
portfolios and businesses, ranging from solar and
wind generation assets to IPPs, battery storage and
distributed generation, which are forecast to con-
tinue to grow and attract capital in the next decade.
The project pipeline is targeting clean energy transi-
tion businesses that fall along a strategic investment
spectrum from traditional businesses to growth and
technology-led businesses. Vortex Energy IV is set
to contribute to reducing global carbon emissions
and achieving net zero policies.
It also manages the EFG Hermes Egypt Education
Fund, a USD 150 million investment fund launched
in 2018 in partnership with Dubai-based education
provider GEMS Education, which aims to provide
quality K-12 education and build capacities across
the sector in Egypt. It is one of the fastest grow-
ing education platforms in the Egyptian market,
having deployed almost USD 100 million in the
market since establishment. In 2019, the platform
acquired a majority stake in leading transportation
service provider Option Travel, marking its third
investment in the Egyptian market after acquiring
four operational schools in the cities of Al Rehab
and Madinaty earlier this year and kicking off the
development of a fifth international school in Al
Rehab, which brought the platform’s total capacity
to c. 10,000 students.
EFG Hermes also operates Rx Healthcare Man-
agement, which manages investments across the
healthcare sector in order to increase the availability
of quality healthcare products and services across
the MENA and Africa regions. It invests in highly
selective targets, with a clear growth trajectory
across healthcare verticals, giving investors access
to unique opportunities across the sector’s value
chain. The Firm’s investment approach is predicated
on providing growth capital through investing in
controlling stakes (and on selective basis, in con-
trolled minority stakes) in companies operating in
the segments of pharmaceuticals manufacturing
and other complimentary healthcare sub-segments.
RxHM places a high value on ESG investment con-
siderations, with target investments having to com-
bine both financial viability and fulfil ESG criteria
to ensure sustainable value add that fills a tangible
healthcare gap in this highly underserved region. Its
acquisition is a leading Egyptian medical solutions
provider U Pharma through Nutritius Investment
Holdings, a special purpose vehicle set up for the
acquisition. The transaction attracted significant
interest from prominent investors, with proceeds
being used to expand the company’s product of-
fering to cover essential categories in underserved
therapeutic areas and ramp up production for
existing products.
In addition, the Firm operates a rapidly growing
NBFI platform, EFG Hermes Finance, which has de-
veloped a range of products and services aimed at
promoting financial inclusion through its subsidiar-
ies Tanmeyah, valU, PayTabs Egypt, EFG EV Fintech
and EFG Hermes Corp-Solutions. Through these
activities, EFG Hermes can ensure that each and
every one of its activities are capable of generating
positive impact on all stakeholders.
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131
Global Recognition and Reporting
In 2020, the Firm was named Sustainability Cham-
pion by the Egyptian Financial Regulatory Author-
ity’s (FRA) first publication, recognizing players
championing sustainable development
in the
non-bank financial service industry. The Firm also
disseminates updates through regular reports on
its progress in the ESG space, including the UNGC
Communication on Progress, UNPRI Transparency
Report, and the Firm’s own annual sustainability
report. The Firm has also been recognized as a
Community Honoree in the Global Finance Out-
standing Crisis Leadership 2020 Awards.
to
launched
initiatives
Learning and Development
As part of its commitment to ensuring that sus-
tainability remains at the core of all operations
across the Firm’s business lines, the department
has
further promote
sustainable practices among its employees. The
Firm has instated policies to conserve energy by
reducing electricity usage, minimize waste, and
increase efficiency across our entire supply chain.
Additionally, the Firm has partnered with Thomson
Reuters to provide new e-learning materials during
the year to introduce CSR and ESG Investigation
courses and certifications at EFG Hermes. The Firm
also regularly engages with stakeholders through
social media campaigns to promote awareness on
relevant sustainability matters and a deeper under-
standing of the SDGs.
EFG Hermes Foundation for Social
Development
The EFG Hermes Foundation for Social Development
was established in 2006 in order to positively impact
the communities in which the Firm operates. The
Foundation believes that partnerships are the true
driving force behind realizing tangible impact and
promoting sustainable development. Accordingly, it
adopts a participatory approach to empower local
communities and allow for its ESG programs to have
maximum impact on the lives of its residents.
Naga’ El Fawal and El Deir Integrated
Development Project
In 2017, the Foundation launched a EGP 70 mil-
lion sustainable integrated development project,
in partnership with several actors, including civil
society associations, government entities, and the
private sector to benefit the Naga’ El Fawal and El
Deir villages in the Luxor governorate. The project
aims to build a developed base in order to revitalize
the local economy and serve the village’s 75,000
residents. The project marks the Foundation’s
third integrated development project in Upper
Egypt, following its success with similar projects in
Ezbet Yacoub village in Beni Sweif and Al Makhzan
village in Qena.
To date, the project has had a number of achieve-
ments in the development of Naga’ El Fawal,
including the establishment of a health unit in the
village, with all necessary medical equipment as
well as the establishment of a new water network
to replace the asbestos-contaminated one previ-
ously in place. The project has also seen a total
of 94 houses rebuilt, featuring individual units for
each resident family to replace the shared living
quarters previously in place.
A key pillar of the project has been the develop-
ment of a fully equipped community center, in-
cluding a Montessori preschool, a center catering
to children with disabilities, as well as a training
facility, all of which are powered by solar energy.
The Young Scholars Academy preschool seeks
to offer quality education to the village’s 150
children as well as the necessary social skills to
provide them with solid foundations to continue
their education. In addition, the preschool fea-
tures a dedicated section to provide the village’s
50 children with special needs with the necessary
support to advance their learning and prepare
for their integration into public schools in the
future. In addition, the preschool has successfully
created more than 40 sustainable jobs, including
38 teaching positions and six volunteers. The
teachers additionally receive specialized training,
including four who have successfully completed
training on the Montessori philosophy of early
education and 20 who have received training on
early childhood development for children with
special needs.
COVID-19 Pandemic
Recognizing the adversities faced by many people
as a result of the onset of the COVID-19 pandemic,
the Foundation mobilized several resources, engag-
ing with EFG Hermes employees and partnering
with a number of entities to deploy a coordinated
response plan to cushion the most at-risk members
of our society from the worst of the crisis.
The Firm partnered with the Egyptian Food Bank
to support a total of 10,000 families through
the pandemic. Additionally, the Foundation has
partnered with the Ministry of Social Solidarity’s
local administrative unit in the Luxor governorate
to benefit an additional 1,500 families with cash
donations. The Foundation also commissioned
a group of women to produce 600 special EFG
Hermes Foundation branded bags containing
detergents which were later disseminated along
with 1,700 flyers containing safety measures as
per WHO and Ministry of Health guidelines to
families across the Naga’ El Fawal and El Deir
villages. In addition to sharing crucial information
and offering supplies to families in need, this
initiative also created work opportunities for
local women who support families with children
with special needs in their care. In addition, the
Foundation partnered with local officials in Luxor
to create a quarantine unit with a capacity of 70
patients to curb the impact of the pandemic.
Outlook
In the coming year, EFG Hermes will continue
to build on the foundations it has estab-
lished thus far in integrating responsible ESG
practices into its operations and becoming a
wholly sustainable enterprise. More specifi-
cally, it will further engage local actors and
key stakeholders to catapult greater action
and generate maximum impact. As respon-
sible investing gains momentum across the
world, the Firm will seek to further focus its
efforts to broaden the reach of its programs,
deepening the integration of ESG practices
into its operations as well as working hard
to mitigate risks in order to generate shared
value for all stakeholders and promote na-
tion-wide sustainability and prosperity.
2020 Annual Report FINANCIAL STATEMENTS
Our sound financial performance is what allows us to build a
sustainable institution that drives economic value for all stakeholders
134
2020 Annual Report
135
Auditor’s Report
To the shareholders of EFG – Hermes Holding Company
We have audited the accompanying consolidated financial statements of EFG – Hermes Holding Company which
comprise the consolidated statement of financial position as at 31 December 2020, and the consolidated state-
ments of income, comprehensive income, changes in equity and cash flows for the financial year then ended, and
a summary of significant accounting policies and other explanatory notes.
Management’s Responsibility for the Financial Statements
These consolidated financial statements are the responsibility of Company’s management. Management is re-
sponsible for the preparation and fair presentation of these consolidated financial statements in accordance with
the Egyptian Accounting Standards and in the light of the prevailing Egyptian laws, management responsibility
includes, designing, implementing and maintaining internal control relevant to the preparation and fair presenta-
tion of financial statements that are free from material misstatement, whether due to fraud or error; management
responsibility also includes selecting and applying appropriate accounting policies; and making accounting esti-
mates that are reasonable in the circumstances.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with the Egyptian Standards on Auditing and in the light of the prevailing
Egyptian laws. Those standards require that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of
the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made
by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion on the financial statements.
Opinion
In our opinion, the consolidated financial statements referred to in the first paragraph above present fairly, in all
material respects, the consolidated financial position of the company as of December31 , 2020 and its consolidat-
ed results of its operations and its consolidated cash flows for the year then ended in accordance with Egyptian
Accounting Standards and comply with applicable Egyptian laws and regulations relating to the preparation of
these financial statements.
Emphasis of Matter
Without qualifying our opinion, as detailed in note No. (37) of the consolidated interim financial statements,
most of the world countries, including Egypt, were exposed during 2020 to the new Covid-19 pandemic, causing
disruption to most of commercial and economic activities in general and to the financial investments activities in
Egypt in particular.
The Company has adjusted the assumptions used in calculating the expected credit loss, thus, it is possible that
this will have a significant impact on the pre-defined operational and marketing plans, future cash flows associated
with it , the associated elements of assets, liabilities and business results in the consolidated financial statements
of the company during the following periods.
As indicated in the above-mentioned clarification, the company’s management is currently taking several proce-
dures to counter this risk and reduce its impact on its financial position and support its ability to continue. However,
in light of the instability and the state of uncertainty as a result of the current events, the magnitude of the impact
of that event depends mainly on the time period of the continuation of those effects at which the event is expected
to end and its related effects and the company’s ability to achieve its plans to confront this danger, Which it is
difficult to determine at the present time.
KPMG Hazem Hassan
Cairo, March 17, 2021
2020 Annual ReportConsolidated financial statements 136
2020 Annual Report
137
Consolidated Statement of
Financial Position
(in EGP)
Note no.
31/12/2020
Assets
Non - current assets
Investments at fair value through OCI
Equity accounted investees
Investment property
Fixed assets
Goodwill and other intangible assets
Deferred tax assets
Loans receivables
Total non - current assets
Current assets
Cash and cash equivalents
Loans receivables
Investments at fair value through profit and loss
Investments at fair value through OCI
Accounts receivables
Other assets
Assets held for sale
Total current assets
Total assets
Equity
Share capital
Legal reserve
Share premium
Other reserves
Retained earnings
Equity attributable to owners of the Company
Non - controlling interests
Total equity
Liabilities
Non - current liabilities
Deferred tax liabilities
Loans and borrowings
Total non - current liabilities
Current liabilities
Due to banks and financial institutions
Loans and borrowings
Accounts payable - customers credit balance
Accounts payable - customers credit balance at
fair value through profit and loss
Short term bonds
Creditors and other credit balances
Current tax liability
Provisions
Total current liabilities
Total liabilities
Total equity and liabilities
(11)
(12)
(13)
(14)
(15)
(21)
(10)
(7)
(10)
(8)
(11)
(9)
(16)
(6)
(24)
(25)
(21)
(23)
(17)
(23)
(18)
(19)
(20)
(22)
31/12/2019
Restated *
3,074,949,208
55,000,000
205,498,422
524,799,639
999,077,802
93,647,802
2,777,895,325
7,730,868,198
9,984,123,272
3,147,441,793
5,745,442,237
12,664,375,755
4,533,115,955
529,278,412
-
36,603,777,424
44,334,645,622
3,843,091,115
803,102,208
1,922,267,826
2,758,679,077
4,330,582,531
13,657,722,757
362,757,134
14,020,479,891
179,492,675
103,095,770
132,074,502
651,958,068
984,353,914
24,995,255
4,242,390,964
6,318,361,148
7,397,790,093
3,947,288,179
5,744,078,663
9,918,149,380
4,734,488,970
621,212,320
59,640,898
32,422,648,503
38,741,009,651
3,843,091,115
833,933,867
1,922,267,826
791,823,872
6,235,979,897
13,627,096,577
310,846,608
13,937,943,185
301,270,105
3,564,494,432
3,865,764,537
211,537,049
2,451,620,265
2,663,157,314
9,235,466,908
1,033,616,102
5,486,303,627
10,427,808,365
1,432,435,583
7,677,341,560
2,022,981,775
5,086,573,832
500,000,000
1,927,757,515
164,219,351
566,956,651
20,937,301,929
24,803,066,466
38,741,009,651
400,000,000
1,868,337,640
189,128,550
569,382,887
27,651,008,417
30,314,165,731
44,334,645,622
* See note (34) from the accompanying notes and accounting policies.
The accompanying notes and accounting policies from page (141) to page (183) are an integral part of these
financial statements and are to be read therewith.
“ Auditor’s report attached “
Mona Zulficar
Chairperson
Karim Awad
Group Chief Executive Officer
Consolidated income statement
(in EGP)
Revenues
Fee and commission income
Securities gains
Revenues from leasing activities
Interest and dividend income
Changes in the investments at fair value through
profit and loss
Other income
Total revenues
Expenses
Fee and commission expense
Interest expense
General administrative expenses
Provisions
Depreciation and amortization
Impairment loss on assets
Share of profit of equity-accounted investees
Foreign currencies exchange differences
Total expenses
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Owners of the Company
Non - controlling interests
Note no.
31/12/2020
31/12/2019
For the year ended
(32)
2,922,038,065
3,066,836,823
371,758,025
490,547,721
485,380,880
523,562,579
2,247,248,364
2,576,352,851
576,420,133
11,232,779
(27)
156,912,385
76,313,533
6,764,924,693
6,739,679,445
(31)
(22)
(13,14,15)
(28)
(237,680,811)
(329,069,400)
(1,102,679,260)
(1,289,194,772)
(3,217,700,365)
(2,933,133,961)
(42,554,818)
(171,143,524)
(303,872,865)
(4,237,980)
(15,282,497)
(160,605,066)
(109,832,178)
(82,632,630)
-
(309,982,969)
(5,095,152,120)
(5,214,450,976)
1,669,772,573
1,525,228,469
(29)
(329,046,528)
(128,067,515)
1,340,726,045
1,397,160,954
(25)
35,322,916
19,057,999
1,305,403,129
1,378,102,955
1,340,726,045
1,397,160,954
The accompanying notes and accounting policies from page (141) to page (183) are an integral part of these
financial statements and are to be read therewith.
2020 Annual ReportConsolidated financial statements
138
2020 Annual Report
139
Consolidated statement of
comprehensive income
(in EGP)
Profit for the period
Other comprehensive income:
Items that are or may be reclassified to profit or loss
Foreign operations - foreign currency translation differences
Foreign currency translation differences - reclassified to profit or loss
Investments at fair value through OCI - net change in fair value
Investments at fair value through OCI - net change in fair value - reclassi-
fied to profit or loss
Investment at FVTOCI - reclassified to Retained Earnings
Actuarial loss re-measurement of employees’ benefits obligations
Related tax
Other comprehensive income, net of tax
Total comprehensive income
Total comprehensive income attributable to:
Owners of the Company
Non - controlling interests
For the year ended
31/12/2020
1,340,726,045
31/12/2019
1,397,160,954
(96,787,059)
(32,212,643)
(678,272,788)
(869,066,150)
88,869,430
36,724,275
(474,568,773)
(436,794,148)
(2,176,473)
(2,002,429)
12,221,624
-
-
32,014,376
(1,273,798,541)
(1,148,252,217)
66,927,504
248,908,737
34,980,736
31,946,768
66,927,504
267,862,247
(18,953,510)
248,908,737
The accompanying notes and accounting policies from page (141) to page (183) are an integral part of these
financial statements and are to be read therewith.
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2020 Annual ReportConsolidated financial statements
140
2020 Annual Report
141
Consolidated statement
of cash flows
Notes to the consolidated
financial statements
for the year ended 31 December, 2020
(in EGP)
Cash flows from operating activities
Profit before income tax
Adjustments for:
Depreciation and amortization
Provisions formed
Provisions used
Provisions reversed
Gains on sale of fixed assets
Gains on sale of investment at FVTOCI
Changes in the fair value of investments at fair
value through profit and loss
Share of profit of equity-accounted investees
Impairment loss on assets
Foreign currency translation differences
Foreign currencies exchange differences
Operating profit before changes in current
assets and liabilities
Changes in:
Other assets
Creditors and other credit balances
Accounts receivables
Accounts payable
Accounts payable - customers credit balance at
fair value through profit and loss
Investments at fair value through profit and loss
Income tax paid
Net cash (used in) provided from operating
activities
Cash flows from investing activities
Loans receivables
Payments to purchase fixed assets and other
intangible assets
Proceeds from sale of fixed assets
Proceeds from sale of assets held for sale
Proceeds from sale of investment FVTOCI
Payments to purchase investment FVTOCI
Payments to purchase equity accounted investees
Acquisition of subsidiary (net of cash acquired)
Net cash provided from (used in) investing
activities
Cash flows from financing activities
Dividends paid
Proceeds from short term bonds
Payments for short term bonds
Proceeds from loans and borrowings
Payment for loans and borrowings
Net cash provided from financing activities
Note no.
31/12/2020
31/12/2019
For the year ended
(In the notes all amounts are shown in EGP unless otherwise stated)
(13,14,15)
(22)
(22)
(22)
(28)
1,669,772,573
1,525,228,469
171,143,524
42,554,818
(8,684,029)
(35,255,180)
(836)
(474 568 773)
109,832,178
160,605,066
(30,774,632)
-
(1,312,253)
(436,794,148)
(576,420,133)
(11,232,779)
4,237,980
303,872,865
(27,818,033)
15,282,496
-
82,632,630
(290,871,047)
309,982,970
1,084,117,272
1,417,296,454
(53,187,325)
94,960,732
(258,963,589)
(1,995,952,225)
169,821,624
81,797,760
(2,889,353,659)
5,587,368,506
(3,063,592,057)
4,102,638,104
2,208,024,926
(173,872,403)
(3,909,802,860)
(188,929,693)
(2,158,464,669)
4,370,836,236
(2,477,553,478)
(101,158,922)
152,699
-
17,567,402,835
(14,767,315,832)
(52,333,749)
-
(479,670,207)
(125,857,883)
1,449,760
313,425,000
6,361,664,555
(12,316,939,303)
(50,000,000)
(1,360,716)
169,193,553
(6,297,288,794)
(132,802,448)
500,000,000
(400,000,000)
1,538,044,191
(981,195,693)
524,046,050
(614,008,582)
400,000,000
-
1,003,034,395
(554,805,028)
234,220,785
Background
Incorporation
1.
1.1.
EFG-Hermes Holding S.A.E “the company” is an Egyptian Joint Stock Company subject to the provisions of the
Capital Market Law No.95 of 1992 and its executive regulations. The company’s registered office is located in
Smart Village building No. B129, phase 3, KM 28 Cairo / Alexandria Desert Road, 6 October 12577 Egypt.
1.2. Purpose of the company
EFG Hermes is a premiere financial services corporation that offers diverse investment banking services including
securities brokerage, investment banking, Asset management and private equity. In addition to its non-bank finance
products, which include leasing and micro-finance, installment services, factoring, securitization, and collection.
The purpose of the company also includes participation in the establishment of companies which issue securities
or in increasing their share capital, custody activities, margin trading and tasquek.
Basis of preparation
Statement of compliance
2.
2.1.
These consolidated financial statements have been prepared in accordance with Egyptian Accounting Standards
and relevant Egyptian laws and regulations.
2.2. Authorization of the financial statements
The financial statements were authorized for issue in accordance with
a resolution of the board of directors on March 16, 2021.
Functional and presentation currency
3.
These consolidated financial statements are presented in Egyptian pounds (EGP) which is the Company’s func-
tional currency.
Use of estimates and judgments
4.
In preparing these consolidated financial statements, management has made judgements, estimates and assump-
tions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to estimates are recognized prospectively.
• Estimates and assumptions about them are re-viewed on regular basis.
• The change in accounting estimates is recognized in the period where the estimate is changed whether the change affects
only that period, or in the period of change and the future periods if the change affects them both.
Net change in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
(30)
(30)
(1,465,225,066)
(333,600,555)
(1,798,825,621)
(1,692,231,773)
1,291,482,285
(400,749,488)
The accompanying notes and accounting policies from page (141) to page (183) are an integral part of these
financial statements and are to be read therewith.
2020 Annual ReportConsolidated financial statements 142
2020 Annual Report
4.1. Fair value measurement
• The fair value of financial instruments are determined based on the market value of the financial instrument or similar
financial instruments at the date of the financial statements without deducting any estimated future selling costs.
• The value of financial assets are determined by the values of the current purchase prices for those assets, while the value of
financial liabilities is determined by the current prices that can be settled by those liabilities.
• In the absence of an active market to determine the fair value of financial instruments, the fair value is estimated using
various valuation techniques, taking into consideration the prices of the transactions occurred recently, and guided by the
current fair value of other similar tools substantially - discounted cash flow method - or any other evaluation method to get
resulting values that can rely on.
• When using the discounted cash flow method as a way to evaluate, the future cash flows are estimated based on the best
estimates of management. And the discount rate used is determined in the light of the prevailing market price at the date of
the financial statements that are similar in nature and conditions.
5.
Change in accounting policies
• On March 18, 2019, the Minister of Investment and International Cooperation introduced amendments to some provisions of
the Egyptian Accounting Standards issued thereby by virtue of Decree No. 110 of 2015 , which include some new accounting
standards as well as introducing amendments to certain existing standards published in the official gazette on 25 April 2019.
• As per the Financial Regulatory Authority (FRA) decree on April 12,2020, the implementation of the new Egyptian Account-
ing Standards and the accompanied amendments issued in decree No.69 of 2019 was postponed for the interim financial
statements of year 2020, due to the outbreak of COVID-19 pandemic. This was issued in view of the current circumstances
and the resulting economic and financial implications as well as the application of precautionary measures including restric-
tions on the presence of human resources with its full capacity on regular basis in face of the widespread of the pandemic.
• As per the Prime minister decision No 1871 for the year ended 2020 dated
• 20 September 2020 the application of the accounting standards No. (47) “Financial Instruments”, No. (48) - “Revenue from
Contracts with Customers” and No (49) “ Lease Contracts” have been postponed till1 January 2021.
• The group has early adopted the new standards EAS 47 (Note no.38-11, 38-14), EAS 48 (Note no. 38-4) and EAS 49 (Note
no. 38-21) including any consequential amendments to other standards as it’s also required to apply EAS (1),(25),(26),and
(40) at the same date.
• Changes in accounting policies resulting from the adoption of EAS 47 and EAS 49 have been applied using the modified
retrospective approach, and therefore the comparative information has not been restated.
• The following tables show the effects of applying the new standards on the opening balances on 1 January 2020:
A.
The following table shows the effect of applying the new standards on retained earnings opening balance.
Balance as at December 31, 2019
Effect of applying EAS 47
Effect of applying EAS 49
Balance as at January 1,2020
Retained
Earnings
4,330,582,531
680,784,118
(9,042,470)
5,002,324,179
143
B.
financial instruments on January 1, 2020:
The following table shows the settlement between the items of the balance sheet and the classification of
Financial assets
Cash and Cash
equivalents
Loans Receivables
FVTOCI -debit
Instrument FVTOCI -Equity
FVTPL -debit
Instrument
FVTPL -Equity
Amortized
Cost
Total
--
--
--
--
--
--
--
--
9,984,123,272
9,984,123,272
5,925,245,600
5,925,245,600
Investments
12,704,250,778
898,748,229
5,450,713,122
2,430,202,287
-- 21,483,914,416
Accounts Receivables
Other assets
Total
--
--
--
--
--
--
--
--
4,521,946,503
4,521,946,503
524,534,183
524,534,183
12,704,250,778
898,748,229
5,450,713,122
2,430,202,287 20,955,849,558 42,439,763,974
The following table shows the classifications and book value of the financial assets according to old and
C.
new standards on January 1, 2020:
Financial assets
Cash and Cash equivalents
Old
classification
EAS No. (26)
Held to Maturity
New
classification
EAS No. (47)
Amortized Cost
Book Value EAS
No. (26)
Book Value EAS
No. (47)
9,984,123,272
9,984,123,272
Loans Receivables
Held to Maturity
Amortized Cost
5,925,337,118
5,925,245,600
Investments
Investments
Available for sale
Trading
FVTOCI
FVTPL
15,739,324,963
13,602,999,007
5,745,442,237
7,880,915,409
Accounts Receivables
Held to Maturity
Amortized Cost
4,533,115,955
4,521,946,503
Other assets
Held to Maturity
Amortized Cost
529,278,412
524,534,183
Total Financial assets
42,456,621,957
42,439,763,974
The following table shows the settlement between the book value of the financial assets according to EAS
D.
No. (26) and EAS No. (47) on January 1, 2020:
Financial Assets
Amortized Cost
Cash and Cash
equivalents
Loans Receivables
Accounts Receivables
Other assets
Total Amortized Cost
FVTOCI
Investment equity /debt
instrument
Total FVTOCI
FVTPL
Investment equity /debt
instrument
Total FVTPL
Total Financial assets
Book Value EAS
26
31-Dec-19
9,984,123,272
5,925,337,118
4,533,115,955
529,278,412
20,971,854,757
Reclassification
Impairment loss
on assets
Book Value EAS
47
1-Jan-20
--
--
--
--
--
--
9,984,123,272
(91,518)
(11,169,452)
(4,744,229)
(16,005,199)
5,925,245,600
4,521,946,503
524,534,183
20,955,849,558
15,739,324,963
(2,135,473,172)
(852,784)
13,602,999,007
15,739,324,963
(2,135,473,172)
(852,784)
13,602,999,007
5,745,442,237
2,135,473,172
--
7,880,915,409
5,745,442,237
42,456,621,957
2,135,473,172
--
--
(16,857,983)
7,880,915,409
42,439,763,974
2020 Annual ReportConsolidated financial statements 144
2020 Annual Report
6.
Assets held for sale
• On 29 December 2020, EFG – Hermes UAE Limited, (one of the subsidiaries) committed to a plan to sell its investment
property (Index Tower) which has been classified as an asset held for sale, Efforts to sell the disposal group have started and
a sale is expected by March 2021.
• The fair value of the asset as at 31 December 2020 has been determined by in pursuance of a Sale and Purchase Agreement
(“the Agreement”) signed on 5th January 2021. According to the Agreement, the sale price of the property has been
determined at
• USD 3,790,334 equivalent to EGP 59,640,898. (note 13).
7.
Cash and cash equivalents
Cash on hand
Cheques under collection
Banks - current accounts
Banks - time deposits
Balance
Impairment loss
Balance
31/12/2020
34,596,734
465,001
6,062,014,232
1,301,851,385
7,398,927,352
(1,137,259)
31/12/2019
43,812,994
5,960,252
8,860,641,238
1,073,708,788
9,984,123,272
--
7,397,790,093
9,984,123,272
8.
Investments at fair value through profit and loss
Mutual fund certificates
Equity securities
Debt securities
Treasury bills
Structured notes
Balance
9.
Accounts receivables
Accounts receivables
Other brokerage companies
Balance
31/12/2020
2,786,033,100
128,071,075
660,445,570
146,547,143
2,022,981,775
5,744,078,663
31/12/2019
266,399,637
28,329,478
815,671
185,874,315
5,264,023,136
5,745,442,237
31/12/2020
4,115,936,535
31/12/2019
Restated
7,318,317,170
618,552,435
(2,785,201,215)
4,734,488,970
4,533,115,955
10.
Loans receivables
Micro finance receivables
Vortex Solar Investments Sarl
Finance lease receivables
Consumer finance receivables
Factoring receivables
Other loans
Balance
Current
Non-current
Balance
11.
Investments at fair value through OCI
Non-current investments
Equity securities *
Mutual fund certificates
Debt instruments
Current investments
Debt instruments
Impairment loss
Balance
145
31/12/2019
Restated
1,911,963,284
108,208,650
3,033,094,455
305,948,541
331,442,135
234,680,053
5,925,337,118
3,147,441,793
2,777,895,325
5,925,337,118
31/12/2020
1,472,517,097
--
4,681,487,371
678,470,013
765,476,795
591,727,867
8,189,679,143
3,947,288,179
4,242,390,964
8,189,679,143
31/12/2020
31/12/2019
33,933,001
59,012,925
86,546,749
1,153,515,079
1,880,706,322
40,727,807
179,492,675
3,074,949,208
9,919,679,373
12,664,375,755
(1,529,993)
9,918,149,380
10,097,642,055
--
12,664,375,755
15,739,324,963
* As the economic situation in Lebanon continued to worsen in 2020, in addition to potential additional defaults on debt, an overvalued
currency, an economy that continues to contract by double digits and followed by a public health crisis with the outbreak of the COVID-19;
management further assessed the situation in Lebanon and took a prudent decision to write-down 100% of the remaining investment in the
Lebanese Bank Credit Libanais amounted to EGP 753,511,936 as at 31 December 2019.
12.
Equity accounted investees
Interest in joint venture
EFG- EV Finech
Bedaya Mortgage Finance Co
Interest in associate
Tokio Marine Egypt Family Takaful S.A.E
Balance
Percentage %
31/12/2020
31/12/2019
50
33.34
37.50
12,955,277
54,848,370
35,292,123
103,095,770
5,000,000
50,000,000
--
55,000,000
2020 Annual ReportConsolidated financial statements 146
2020 Annual Report
13.
Investment property
Particular
Cost
Balance as at 1/1/2019
Foreign currency translation differences
Total cost as at 31/12/2019
Reclassification to assets held for sale
Foreign currency translation differences
Total cost as at 31/12/2020
Accumulated depreciation
Accumulated depreciation as at 1/1/2019
Depreciation for the year
Foreign currency translation differences
Accumulated depreciation as at 31/12/2019
Depreciation for the year
Reclassification to assets held for sale
Impairment loss
Foreign currency translation differences
Accumulated depreciation as at 31/12/2020
Carrying amount
Net carrying amount as at 31/12/2019
Net carrying amount as at 31/12/2020
Buildings
256,628,710
(9,068,720)
247,559,990
(76,148,076)
(1,872,096)
169,539,818
33,702,500
9,467,141
(1,108,073)
42,061,568
9,085,335
(16,507,178)
3,384,491
(558,900)
37,465,316
205,498,422
132,074,502
Investment property net carrying amount amounted EGP 132,074,502 as at 31 December 2020, represents the
following:-
• EGP 126,111,854 the book value of the area owned by EFG – Hermes Holding Company in Nile City building, and with a fair
value of EGP 404,820,000.
• EGP 3,223,213 the book value of the area owned by Hermes Securities Brokerage, one of the subsidiaries, in Elmanial branch
and with a fair value of EGP 9,750,000.
• EGP 2,739,435 the book value of the area owned by Hermes Securities Brokerage, one of the subsidiaries, in Elharam branch
and with a fair value of EGP 11,292,450.
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148
2020 Annual Report
149
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15. Goodwill and other intangible assets
Goodwill
Customer relationships
Licenses
Software
Balance
(15-1)
31/12/2020
890,091,108
46,024,888
10,550,653
37,687,265
31/12/2019
896,012,911
54,151,875
11,049,814
37,863,202
984,353,914
999,077,802
15.1. Goodwill is relating to the acquisition of the following subsidiaries:
EFG- Hermes Oman LLC
EFG- Hermes IFA Financial Brokerage Company Kuwait – (KSC)
IDEAVELOPERS – Egypt
EFG- Hermes Jordan
Tanmeyah Micro Enterprise Services S.A.E
EFG - Hermes Pakistan Limited
Frontier Investment Management Partners LTD
Balance
16. Other assets
Deposits with others
Down payments to suppliers
Prepaid expenses
Employees’ advances
Accrued revenues
Taxes withheld by others
Payments for investments
Settlement Guarantee Fund
Due from Ara Inc. Company
Due from Egypt Gulf Bank- Tanmeyah Clients
Receivables-sale of investments
Securitization surplus
Sundry debtors
Total
Deduct: Impairment loss
Balance
(16-1)
(16-2)
(16-3)
31/12/2020
--
179,148,550
1,600,000
8,639,218
365,398,862
9,503,738
325,800,740
890,091,108
31/12/2019
5,921,803
179,148,550
1,600,000
8,639,218
365,398,862
9,503,738
325,800,740
896,012,911
31/12/2020
38,910,748
89,543,602
60,270,163
56,309,877
31/12/2019
42,270,033
37,048,024
60,145,356
67,812,584
257,587,316
172,093,322
19,983,975
1,623,856
21,480,174
553,794
23,306,020
9,826,622
15,331,670
47,511,555
642,239,372
(21,027,052)
621,212,320
35,542,115
11,623,856
27,213,955
564,705
14,290,786
36,242,640
9,363,743
15,067,293
529,278,412
--
529,278,412
2020 Annual ReportConsolidated financial statements
150
2020 Annual Report
16.1. Deposits with others include an amount of EGP 15,052,172 in the name of the subsidiaries, Financial
Brokerage Group Company and Hermes Securities Brokerage Company which represents blocked deposits for
same day trading operations settlement takes place in the Egyptian Stock Exchange. Both companies are not
entitled to use these amounts without prior approval from Misr Clearance Company.
16.2.
Payments for investments are represented in the following:
AAW Company for Infrastructure
IDEAVELOPERS
Paytabs Egypt Solutions
EFG Hermes for Sukuk
Balance
31/12/2020
1,348,856
25,000
250,000
--
1,623,856
31/12/2019
1,348,856
25,000
250,000
10,000,000
11,623,856
Securitization surplus amounted to EGP 15,331,670 related to the surplus of securitization transactions
16.3.
executed by Tanmeyah Micro Enterprise Services S.A.E .
20. Creditors and other credit balances
Accrued expenses
Dividends payable (prior years)
Deferred revenues
Suppliers
Clients’ coupons - custody activity
Tax authority
Social Insurance Association
Medical takaful insurance tax
Deposits due to others –finance lease contracts *
Sundry creditors
Balance
151
31/12/2019
Restated
1,280,583,052
229,732,294
73,702,962
111,183,920
12,685,918
34,590,794
10,285,853
11,136,578
11,976,990
92,459,279
1,868,337,640
31/12/2020
1,324,420,865
212,075,506
38,914,452
160,997,015
11,696,426
25,486,546
16,109,322
9,605,682
14,639,821
113,811,880
1,927,757,515
17. Due to banks and financial institutions
* Deposits due to others amounted to EGP 14,639,821 as at 31 December 2020 versus EGP 11,976,990 as at 31 December 2019 represents
the deposits collected from the lessees of EFG Hermes Corp Solutions.
Financial institutions
Bank overdraft
Balance
31/12/2020
4,242,605,354
4,992,861,554
9,235,466,908
31/12/2019
6,806,369,720
3,621,438,645
10,427,808,365
18. Accounts payable - customers credit balance at fair value through profit
and loss
This amount represents payable to customers against the structured notes issued by one of group companies.
19.
Short term bonds
• During December, 2019 Hermes Securities Brokerage (a subsidiary -100%) issued short-term bonds with a value of EGP 400
million that are tradable and non-convertible to shares and it’s for the period of 12 months at a par value of EGP 100 (one
hundred egyptian pounds only) for the bond to be paid at the end of the period with a fixed rate of 12.6 % that will be paid
at the end of the issuance period. And it’s non-expedited payment, within a two-year issuance program with a total value
of EGP 2 billion, the bonds proceeds used to finance different company activities and pay it’s financial obligations and the
bond is fully paid during December 2020.
• During December, 2020 Hermes Securities Brokerage (a subsidiary -100%) issued short-term bonds with a value of EGP 500
million (Second issuance) that are tradable and non-convertible to shares and it’s for the period of 12 months at a par value
of EGP 100 (one hundred egyptian pounds only) for the bond to be paid at the end of the period with a fixed rate of 11.38
% that will be paid at the end of the issuance period. And it’s non-expedited payment, the bonds proceeds will be used to
finance different company activities and pay it’s financial obligations.
2020 Annual ReportConsolidated financial statements
152
2020 Annual Report
153
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22.
Provisions
Claims provision
Severance pay provision
Financial guarantee for contingent liabilities
(22-1)
(22-1)
(22-1)
Balance
22.1.
31/12/2020
312,567,570
213,356,835
41,032,246
566,956,651
31/12/2019
344,922,430
193,507,962
30,952,495
569,382,887
Claims provision
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provision*
Financial
guarantee for
contingent
liabilities
Total
344,922,430
193,507,962
30,952,495
569,382,887
5,182,810
27,292,257
10,079,751
42,554,818
(526,103)
(2,518,171)
(1,756,387)
(6,927,642)
--
2,002,429
(35,255,180)
--
--
--
--
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(3,044,274)
(8,684,029)
2,002,429
(35,255,180)
312,567,570
213,356,835
41,032,246
566,956,651
Balance at the
beginning of the year
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differences
Amounts used during
the year
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benefits obligations
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Balance at the end of
the year
* Related to group entities outside Egypt.
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R
l
2020 Annual ReportConsolidated financial statements
154
2020 Annual Report
155
23.
Loans and borrowings
The borrower
EFG Hermes Corp-Solutions *
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EFG – Hermes Pakistan Limited
Tanmeyah Micro Enterprise Services
S.A.E
,,
,,
,,
Valu
Credit
Limit
250 million
Contract
date
10/6/2015
Maturity
date
10/6/2023
150 million
4/6/2015
4/6/2022
31/12/2020
31/12/2019
74,473,883
77,230,237
34,989,495
92,310,061
500 million
14/7/2015
14/9/2022
464,514,612
430,517,065
400 million
4/11/2015
4/11/2022
354,726,305
239,586,874
1 billion
9/8/2015
9/8/2023
638,994,688
159,899,712
200 million
30/9/2015
30/9/2025
33,305,064
62,790,183
325 million
14/3/2016
14/3/2023
250,074,996
187,516,809
50 million
1/6/2016
1/6/2023
200 million
12/6/2017
12/6/2025
100 million
28/11/2016
31/10/2021
120 million
15/12/2016
30/9/2021
39,618,461
78,310,630
39,823,216
1,061,181
40,989,880
81,980,207
42,358,582
3,208,767
450 million
12/2/2017
28/2/2022
375,701,258
158,366,708
250 million
19/2/2017
30/8/2024
200 million
15/12/2016
30/9/2021
20 million
24/4/2017
24/4/2023
195,170,136
129,412,374
2,044,979
250 million
25/5/2017
25/5/2022
109,383,304
63,916,082
75,705,687
2,862,971
85,383,750
200 million
29/5/2017
29/5/2024
139,283,053
152,647,995
35.4 million
19/10/2017
19/10/2022
90 million
1/12/2017
175 million
7/2/2018
1/6/2022
7/2/2023
14,161,500
22,375,602
21,660,750
43,681,257
140,000,000
160,000,000
500 million
24/9/2018
24/9/2025
140,730,595
165,876,506
600 million
5/9/2018
5/9/2028
296,740,523
360,180,671
100 million
3/5/2020
19/9/2021
100 million
26/11/2020
26/11/2027
36.8 million
12/5/2017
11/5/2023
98,796,378
2,057,775
36,833,250
--
--
38,859,750
100 million
30/3/2019
30/9/2020
--
36,012,019
50 million
1/6/2018
31/10/2021
34,358,483
500 million
18/6/2017
18/6/2022
81.3 million
10/3/2020
12/12/2022
140 million
10/11/2017
9/11/2023
--
54,208,666
24,340,549
36,166,173
14,814,753
81,313,000
69,121,051
EFG-Hermes Int. Fin Corp
802 million
7/11/2019
6/10/2020
--
561,575,000
EFG Finance Holding
Lease liabilities**
Balance
Current
Non-current
Balance
1 billion
8/11/2020
27/10/2027
250,000,000
--
480,378,836
379,764,090
4,598,110,534
3,884,055,848
1,033,616,102
1,432,435,583
3,564,494,432
2,451,620,265
4,598,110,534
3,884,055,848
* EFG Hermes Corp Solutions (wholly owned subsidiary), is committed to settle the credit granted by waiving the rental value of the finance
lease contracts to the banks within the credit amount.
** Lease liabilities include an amount of EGP 320,184,603 in the name of EFG-Hermes Holding and Tanmeyah Micro Enterprise Services S.A.E
that represents sale and lease back agreement.
24.
Share capital
• The company’s authorized capital amounts EGP 6 billion and issued capital amounts EGP 3,843,091,115 distributed on
768,618,223 shares of par value EGP 5 per share which is fully paid.
25. Non - controlling interests
Share capital
Additional paid-in capital
Legal reserve
Other reserves
Retained earnings
Profit for the year
Balance
31/12/2020
173,095,207
120,463,104
20,012,721
8,243,820
(46,291,160)
35,322,916
310,846,608
31/12/2019
173,443,584
137,607,690
16,960,569
11,619,967
4,067,325
19,057,999
362,757,134
26. Contingent liabilities
The holding company guarantees its subsidiary EFG- Hermes UAE LLC against the Letters of Guarantee issued from
banks amounting to:
AED
Equivalent to EGP
Group off-financial position items:
Assets under management
31/12/2020
83,670,000
358,425,546
31/12/2019
83,670,000
365,487,294
55,489,735,019
54,780,900,131
- Securitization and Sukuk transactions
The group has entered into some securitization and Sukuk transactions, the assets and liabilities related to those
transactions do not qualify for the recognition criteria under Egyptian accounting standards, accordingly the group
has not recognized those assets or liabilities.
The assets and liabilities related to those transactions represents in :
Client portfolios related to securitization transactions
Balances with custodians
Land and Buildings related to Sukuk transactions
Total Assets
Bonds
Sukuk
Total liabilities
27.
Other income includes rental income, and non-recurring income.
Other income
308,043,699
242,216,718
2,600,000,000
3,150,260,417
480,937,181
2,600,000,000
3,080,937,181
2020 Annual ReportConsolidated financial statements
156
2020 Annual Report
28.
Impairment loss on assets
Accounts receivables
Loans receivables
Cash and cash equivalents
Other Debit Accounts
Investment Through OCI
Good will
Investment property
Total
29.
Income tax expense
Current income tax
Deferred tax
Total
For the year ended
31/12/2020
63,234,718
213,211,453
918,321
16,540,748
661,330
5,921,804
3,384,491
31/12/2019
16,139,267
66,493,363
--
--
--
--
--
303,872,865
82,632,630
For the year ended
31/12/2020
(164,296,068)
31/12/2019
(201,050,305)
(164,750,460)
72,982,790
(329,046,528)
(128,067,515)
30.
For the purpose of preparing the statement of cash flows, cash and cash equivalents are represented in the
following :
Cash and cash equivalents
Cash and due from banks
Due to banks and financial institutions
Treasury bills less than 90 days
Effect of exchange rate
Cash and cash equivalents
31. General administrative expenses
Wages , salaries and similar items *
Consultancy
Travel , accommodation and transportation
Leased line and communication
Rent and utilities expenses
Other expenses
Total
For the year ended
31/12/2020
7,398,927,352
(9,235,466,908)
37,713,935
--
(1,798,825,621)
31/12/2019
9,984,123,272
(10,427,808,365)
42,935,605
67,148,933
(333,600,555)
For the year ended
31/12/2020
2,326,480,742
132,583,223
16,443,710
136,288,932
57,693,419
548,210,339
3,217,700,365
31/12/2019
2,144,181,550
78,495,164
68,516,047
123,136,658
115,421,571
403,382,971
2,933,133,961
* In 2018 the group based on the compensation committee recommendation approved enrolling a number of employees in a three years
retention program whereby these employees would receive a cash bonus during the company’s annual bonus cycle that is based on the share
price of EFG- Hermes Holding at the end of the relevant year. The line item (Wages, salaries and similar items) includes an amount of EGP
180,185,535 relevant to this program for the period ended December 31, 2020.
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2020 Annual Report
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(b)
Geographical segments
• The Group operates in three main geographical areas: Egypt, GCC and Lebanon. In presenting the geographic information,
segment revenue has been based on the geographical location of operation and the segment assets were based on the
geographical location of the assets. The group’s operations are reported under geographical segments, reflecting their
respective size of operation.
• The revenue analysis in the tables below is based on the location of the operating company, which is the same as the location
of the major customers and the location of the operating companies.
Total revenues
Segment assets
Egypt
5,678,667,673
28,170,967,092
GCC
910,836,902
10,093,748,380
Lebanon
--
1,354,003
Other
175,420,118
474,940,176
Total
6,764,924,693
38,741,009,651
December 31, 2020
Total revenues
Segment assets
Egypt
4,942,337,465
26,168,809,351
GCC
1,448,694,530
16,959,809,628
Lebanon
69,758,255
754,676,026
Other
278,889,195
451,350,617
Total
6,739,679,445
44,334,645,622
December 31, 2019
33.
Tax status (the holding company)
• As to Income Tax, the years till 2017 the competent Tax Inspectorate inspected the parent company’s books and all the
disputed points have been settled with the Internal Committe. And as to years 2018/2019, have not been inspected yet.
• As to Salaries Tax, the parent company’s books had been examined till 2017 and all the disputed points have been settled
with the Internal committee and as to years 2018/2020 have not been inspected yet.
• As to Stamp Tax, the parent company’s books had been examined from year 1998 till 2018 and all the disputed points
have been settled with the competent Tax Inspectorate and as to years 2019/2020 had been examined and the settlement
procedures are currently taking place.
• As to Property Tax, for Smart Village building and Nile City building the company paid tax till December 31,2020.
Corresponding figures
34.
Certain reclassification and adjustments have been made to some comparative figures in order to conform with
the current period presentation as following:
(As reported)
for the
year ended
31/12/2019
EGP
Reclassifications
EGP
(Restated) for
the year ended
31/12/2019
EGP
5,287,946,442
5,211,753,787
637,390,676
(678,637,832)
5,925,337,118
4,533,115,955
Balance sheet
Assets
Loans receivables
Account receivables
liabilities
Creditors and other credit balances
1,909,584,796
(41,247,156)
1,868,337,640
2020 Annual ReportConsolidated financial statements
160
2020 Annual Report
35. Group’s entities
The parent company owns the following subsidiaries:
Financial Brokerage Group
Egyptian Fund Management Group
Egyptian Portfolio Management Group
Hermes Securities Brokerage
Hermes Fund Management
Hermes Corporate Finance
EFG - Hermes Advisory Inc.
EFG- Hermes Financial Management (Egypt) Ltd.
EFG - Hermes Promoting & Underwriting
Bayonne Enterprises Ltd.
EFG- Hermes Fixed Income
EFG- Hermes Management
EFG- Hermes Private Equity
EFG- Hermes UAE LLC.
Flemming CIIC Holding
Flemming Mansour Securities
Flemming CIIC Securities
Flemming CIIC Corporate Finance
EFG- Hermes UAE Ltd.
EFG- Hermes Holding - Lebanon
EFG- Hermes KSA
EFG- Hermes Lebanon
Mena Opportunities Management Limited
Mena (BVI) Holding Ltd.
EFG - Hermes Mena Securities Ltd.
Middle East North Africa Financial Investments W.L.L
EFG- Hermes Oman LLC
EFG- Hermes Regional Investment Ltd.
Offset Holding KSC **
EFG- Hermes IFA Financial Brokerage
IDEAVELOPERS
EFG- Hermes CB Holding Limited
EFG- Hermes Global CB Holding Limited
EFG - Hermes Syria LLC *
Sindyan Syria LLC *
Talas & Co. LLP *
EFG - Hermes Jordan
Mena Long-Term Value Feeder Holdings Ltd. **
Mena Long-Term Value Master Holdings Ltd. **
Mena Long-Term Value Management Ltd.**
EFG - Hermes CL Holding SAL
EFG - Hermes Investment Funds Co.
Direct
ownership
%
99.87
Indirect
ownership
%
0.09
88.51
66.33
97.58
89.95
99.42
100
--
99.88
100
99
96.3
1.59
--
100
--
--
--
100
99
73.1
99
--
--
--
--
--
100
--
--
--
--
100
49
97
--
100
--
--
--
--
99.998
11.49
33.67
2.42
10.05
0.48
--
100
--
--
1
3.7
63.41
100
--
99.33
96
74.92
--
--
26.9
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95
95
100
100
51
--
50
63.084
52
100
--
20.37
--
97
--
50
45
45
100
--
Financial Group for Securitization
Beaufort Investments Company
EFG Hermes-Direct Investment Fund
Tanmeyah Micro Enterprise Services S.A.E
EFG – Hermes Frontier Holdings LLC
EFG – Hermes USA
EFG Capital Partners III
Health Management Company
EFG – Hermes Kenya Ltd.
EFG Finance Holding
EFG - Hermes Pakistan Limited
EFG - Hermes UK Limited
OLT Investment International Company (B.S.C)
Frontier Investment Management Partners LTD **
EFG-Hermes SP limited
Valu
EFG Hermes Corp-Solutions
Beaufort Asset Managers LTD
EFG Hermes Bangladesh Limited
EFG Hermes FI Limited
EFG Hermes Securitization
EFG Hermes PE Holding LLC
Etkan for Inquiry and Collection and Business Processes
RX Healthcare Management
FIM Partners KSA **
Egypt Education Fund GP Limited
EFG Hermes Nigeria Limited
EFG-Hermes Int. Fin Corp
FIM Partners UK Ltd
EFG Hermes Sukuk
161
Indirect
ownership
%
--
100
--
93.518
--
--
65
52.5
100
0.18
51
100
--
50
100
100
100
100
100
100
100
--
95.196
52.5
50
80
100
--
50
10
Direct
ownership
%
100
--
64
--
100
100
--
--
--
99.82
--
--
99.9
--
--
--
--
--
--
--
--
100
0.002
--
--
--
--
100
--
90
* Due to the political situation in Syria, the Group lost its control on the Syrian entities. In 2016, the Group deconsolidated the Syrian companies
and changed them to a fully impaired investments at fair value through OCI.
** The Holding Company has the power to govern the financial and operating policies of the mentioned companies then the investees
Companies is classified as investments in subsidiaries.
2020 Annual ReportConsolidated financial statements 162
2020 Annual Report
163
Financial instruments and management of related risks:
36.
The Company’s financial instruments are represented in the financial assets and liabilities. Financial assets include
cash balances with banks, investments and debtors while financial liabilities include loans and creditors. Notes to
financial statements includes significant accounting policies applied regarding basis of recognition and measure-
ment of the important financial instruments and related revenues and expenses by the company to minimize the
consequences of such risks.
36.1. Market risk
Market risk is defined as the potential loss in both on and off financial position resulting from movements in
market risk factors such as foreign exchange rates, interest rates, and equity prices.
Market risk is represented in the factors which affect values, earnings and profits of all securities negotiated in
stock exchange or affect the value, earning and profit of a particular security.
According to the company’s investment policy, the following procedures are undertaken to reduce the effect of
this risk.
• Performing the necessary studies before investment decision in order to verify that investment is made in potential securities.
• Diversification of investments in different sectors and industries.
• Performing continuous studies required to follow up the company’s investments and their development.
36.2. Foreign currencies risk
• The foreign currencies exchange risk represents the risk of fluctuation in exchange rates, which in turn affects the company’s
cash inflows and outflows as well as the value of its assets and liabilities in foreign currencies.
• The company has revaluate assets and liabilities at the financial position date as disclosed in foreign currency accounting policy.
36.3. Risk management
In the ordinary course of business, the Group is exposed to a variety of risks, the most important of which are
liquidity risk, interest rate risk, currency risk, credit risk and market risk. These risks are identified, measured and
monitored through various control mechanisms in order to price facilities and products on a risk adjusted basis and
to prevent undue risk concentrations.
The independent risk control process does not include business risks such as changes in the environment, technol-
ogy and industry. They are monitored through the Group’s strategic planning process.
36.4. Credit risk
Credit risk is the risk of a person or an organization defaulting in the repayment of their obligations to the Group
in respect of the terms and conditions of the credit facilities granted to them by the Group. The management
minimizes this risk by spreading its loan portfolio overall economic sectors and by adopting appropriate procedures
and controls to evaluate the quality of the credit facilities granted and the creditworthiness of the borrowers.
The credit risk of connected accounts is monitored on a united basis. In addition, the effective credit appraisal
procedure for examining applications for credit facilities followed by the Group, adopts as the main criteria the
repayment capability and obtaining sufficient collateral. The continuous monitoring of credit accounts and the
timely preventive action further minimize, to a large extent, the exposure to credit risk.
36.5. Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its payment obligations when they fall due under
normal and stress circumstances. To limit this risk, management has arranged diversified funding sources in addi-
tion to its core deposit base, manages assets with liquidity in mind and monitors future cash flows and liquidity
on daily basis. This incorporates an assessment of expected cash flows and the availability of high grade collateral
which could be used to secure additional funding if required.
The Group maintains a portfolio of high marketable and diverse assets that can be easily liquidated in the event of an
unforeseen interpretation of cash flow. In addition, the Group maintains statutory deposits with the Central Banks.
The liquidity position is assessed and managed under a variety of scenarios, giving due consideration to stress
factors relating to both the market in general and to the Group in specific. The Group maintains a solid ratio of
high liquid net assets in foreign currencies to deposits and commitments in foreign currencies taking markets
conditions into consideration.
36.6. Interest rate risk
Interest rate risk stems from the sensitivity of earnings to future movements in interest rates applied on assets and
liabilities.
The Group’s management closely monitors interest rate fluctuations on a continuous basis and ensures that assets
and liabilities are matched and re-priced in a timely manner. The Group is exposed to interest rate risk as a result of
mismatches or gaps in the amounts of assets and liabilities that mature or are re-priced in a given period. The most
important source of interest rate risk derives from the lending, funding and investing activities, where fluctuations
in interest rates are reflected in interest margins and earnings.
36.7. Equity price risk
Equity price risk is the risk that the value of a portfolio will fall as a result of change in stock prices. Risk factors
underlying this type of market risk are a whole range of various equity (and index) prices corresponding to different
markets (and currencies/maturities), in which the Group holds equity-related positions.
The Group sets tight limits on equity exposures and the types of equity instruments that traders are allowed to
take positions in. Nevertheless, depending on the complexity of financial instruments, equity risk is measured in
first cash terms, such as the market value of a stock/index position, and also in price sensitivities, such as sensitivity
of the value of a portfolio to changes in the underlying asset price. These measures are applied to an individual
position and/or a portfolio of equity products.
36.8. Operational risk
Operational risk is the risk of direct or indirect loss due to an event or action causing failure of technology, process
infrastructure, personnel, and other risks having an operational risk impact. The Group seeks to minimize actual or
potential losses from operational risk failure through a framework of policies and procedures that identify, assess,
control, manage, and report those risks. Controls include effective segregation of duties, access, authorization and
reconciliation procedures, staff education and assessment processes.
36.9. Fair value of financial instruments
The fair value of the financial instruments does not substantially deviated from its book value at the financial
position date. According to the valuation basis applied, in accounting policies to the assets and liabilities.
36.10. Derivative financial instruments and hedge accounting
• Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently
• re-measured at their fair value, according to the valuation basis applied, in accounting policies to derivative financial instru-
ments.
• In accordance with an arrangement between the subsidiary, EFG- Hermes Mena Securities Limited Co. and its customers
(“the customers”), the Company from time to time enters into fully paid Shares Swap Transaction Contracts (“the contracts”)
with the customers. Under the contracts the customers pay to the Company a pre-determined price, which is essentially
the market price at the trade date, in respect of certain reference securities. In return for such shares swap transactions the
Company pays to the customers the mark to market price of the reference securities at a pre-determined date (normally after
one year). However, the contracts can be terminated at any time by either of the parties, which shall be the affected party.
In order to hedge the price risks with respect to the reference securities under the contracts, the Company enters
into back-to-back fully paid Share Swap Transaction Contracts with other subsidiaries, MENA Financial Investments
W.L.L. (“MENA-F”) and EFG-Hermes KSA.
Accordingly, the Share Swap Transactions are measured at fair value based on underlying reference securities under
the contracts.
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36.11. Accounting classifications and fair values
The following table shows the settlement between the items of the balance sheet and the classification of financial
instruments as at 31 December 2020:
Financial assets
Cash and Cash
equivalents
Loans Receivables
FVTOCI
- debit
Instrument
FVT OCI -
Equity
FVTPL -debit
Instrument FVTPL -Equity
Amortized
Cost
Total
--
--
--
--
--
--
--
--
7,397,790,093
7,397,790,093
8,189,679,143
8,189,679,143
Investments
10,004,696,129
92,945,926
2,829,974,488
2,914,104,175
--
15,841,720,718
Accounts Receivables
Other assets
--
--
--
--
--
--
--
--
4,734,488,970
4,734,488,970
621,212,320
621,212,320
Total Financial assets
10,004,696,129
92,945,926
2,829,974,488
2,914,104,175
20,943,170,526
36,784,891,244
Significant events
37.
With the outbreak of COVID-19 pandemic all over the world, including Egypt, year 2020 witnesses a slowdown in
the economic activities. The Egyptian government introduced a number of precautionary measures to prevent the
spread of the pandemic. These measures include:
First: Procedures from Central bank of Egypt and Financial regulatory authority
• The central bank of Egypt “CBE” has applied exceptional measures in response to the pandemic situation such as:
1)- lowering interest rates by 3%;
2)- instructing all banks to postpone due instalments for 6 months with no delay penalties, when applicable.
• The financial regulatory authority “FRA” has taken exceptional procedures to relief the financial burden of its clients dealing
with companies under its supervision by postponing all due installment for six months without any delay penalties, when
applicable. This applies to the Leasing and Factoring businesses only. Other directive measures were applied to the Micro-fi-
nance which included grace periods for repayments.
Second: Precautionary procedures from the Group
Business continuity
• The Group approved a plan to split the employee work force whereby 50% of the employees will work from the office in
different locations, while the remaining 50% will work remotely from home. The management is closely monitoring the
situation to ensure the safety of the Group’s employees.
Business decisions
In response to the COVID-19 pandemic, the Group’s NBFIs platform has offered various financial relief solutions
to different businesses, as follows:
• Pricing adjustment in-line with the CBE rate cut; where applicable;
• Offer new products & programs with different tenors and reduced or without admin fees;
• Postpone & reschedule due instalments for 6 months, after receiving clients’ consent;
• Waive delay & early settlement penalties/fees;
• Grace period for new loans issued.
Expected Credit Losses
The outbreak of pandemic COVID-19 all over the world has stifled economic activities and shaken financial mar-
kets. Moreover, the spread of the virus and the heighten uncertainties continued to be an overhang on markets.
Amid that, the assumptions used in models to calculate the Expected Credit Loss “ECL” are adjusted to reflect a
judgement of what the future economic conditions might convey and taking into consideration measures taken
by governments and policy makers in an attempt to mitigate and relief industries. This has resulted in businesses
taking a more prudent approach, which was reflected in the level of impairment loss on assets (ECL) booked by
different segment amid the current ambiguity of what the future might hold.
The Group is currently closely monitoring and evaluating all developments related to the spread of the emerging
virus considering our current knowledge and available information, we do not expect that the new (COVID-19)
virus to be a threat to the continuance in the upcoming future.
Significant accounting policies applied
38.
38.1. Basis of consolidation
38.1.1. Business combination
• The Group accounts for business combinations using the acquisition method when control is transferred to the Group.
• The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired.
• Any goodwill that arises is tested annually for impairment, any gain on a bargain purchase is recognized immediately in profit
or loss.
• Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.
• The consideration transferred doesn’t include amounts related to the settlement of pre-existing relationships. Such amounts
are generally recognized in profit or loss.
• Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consid-
eration that meets the definition of a financial instrument is classified as equity, then it is not re measured and settlement is
accounted for within equity. Otherwise, other contingent consideration is re measured at fair value at each reporting date
and subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.
38.1.2. Subsidiaries
• Subsidiaries are entities controlled by the Group.
• The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
• The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control
commences until the date on which control ceases.
38.1.3. Non-controlling interests
NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisi-
tion. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for
as equity transactions.
38.1.4. Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any
related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest
retained in the former subsidiary is measured at fair value when control is lost.
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38.1.5. Interests in equity-accounted investees
The Group’s interests in equity-accounted investees comprise interests in associates and a joint venture. Associates
are those entities in which the Group has significant influence, but not control or joint control, over the financial
and operating policies. A joint venture is an arrangement in which the Group has joint control, where by the Group
has rights to the net assets of the arrangement. Rather than rights to its assets and obligations for its liabilities.
Interests in associates and the joint venture are accounted for using the equity method. They are initially recognized
at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements
include the Group’s share of the profit or loss and OCI of equity accounted investees, until the date on which
significant influence or joint control ceases.
38.1.6. Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising fromintra-group transac-
tions, are eliminated. Unrealised gains arising from transactions with equity accounted investees are eliminated
against the investment to the extent of the Group’s interest in the investee. Unrealised losses are eliminated in the
same way as unrealised gains, but only to the extent that there is no evidence of impairment.
38.2. Foreign currency
38.2.1. Foreign currency transactions
Transactions in foreign currencies are translated into the respective functional currencies of Group companies at
the exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at
the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a
foreign currency are translated into the functional currency at the exchange rate when the fair value was deter-
mined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the
exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss
and presented within finance costs.
However, foreign currency differences arising from the translation of the following items are
recognised in OCI:
• An investment in equity securities designated as at FVOCI (except on impairment, in which case foreign currency differences
that have been recognised in OCI are reclassified to profit or loss);
• A financial liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is
effective and
• Qualifying cash flow hedges to the extent that the hedges are effective.
38.2.2. Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition,
are translated at the exchange rates at the reporting date. The income and expenses of foreign operations are
translated at the exchange rates at the dates of the transactions.
Foreign currency differences are recognized in OCI and accumulated in the translation reserve, except to the extent
that the translation difference is allocated to NCI.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint
control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to
profit or loss as part of the gain or loss on disposal. If the Group disposes of part of its interest in a subsidiary but
retains control, then the relevant proportion of the cumulative amount is reattributed to NCI. When the Group
disposes of only part of an associate or joint venture while retaining significant influence or joint control, the
relevant proportion of the cumulative amount is reclassified to profit or loss.
38.3. Discontinued operation
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be
clearly distinguished from the rest of the Group.
Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria
to be classified as held-for-sale.
When an operation is classified as a discontinued operation, the comparative statement of profit or loss and OCI is
re-presented as if the operation had been discontinued from the start of the comparative period.
38.4. Revenue
38.4.1. Gain (loss) on sale of investments
Gain (loss) resulting from sale of investments are recognized on transaction date and measured by the difference
between cost and selling price less selling commission and expenses. In case of derecognizing of investments
in associates, the difference between the carrying amount and the sum of both the consideration received and
cumulative gain or loss that had been recognized in shareholders’ equity shall be recognized in income statement.
38.4.2. Dividend income
Dividend income is recognized when declared.
38.4.3. Custody fee
Custody fees are recognized when the service is provided and the invoice is issued.
38.4.4. Interest income and expenses
Interest income and expenses are recognized in the income statement under “Interest income” item or “Interest
expenses” by using the effective interest rate method of all instruments bearing interest other than those classified
held for trading or which have been classified at inception “fair value through income statement”.
38.4.5. Fee and commission income
Fee related to servicing the loan or facility are recognized in income when performing the service while the fees
and commissions related to non-performing or impaired loans are not recognized, instead, they are to be recorded
in marginal records off the financial position. Then they are recognized within the income pursuant to the cash
basis when the interest income is collected. As for fees which represent an integral part of the actual return on the
financial assets, they are treated as an amendment to the rate of actual return.
38.4.6. Brokerage commission
Brokerage commission resulting from purchase of and sale of securities operations in favor of clients are recorded
when operation is implemented and the invoice is issued.
38.4.7. Management fee
Management fee is calculated as determined by the management contract of each investment fund & portfolio
and recorded on accrual basis.
38.4.8. Incentive fee
Incentive fee is calculated based on certain percentages of the annual return realized by the fund and portfolio,
however these incentive fee will not be recognized until revenue realization conditions are satisfied and there is
adequate assurance of collection.
38.4.9. Investment property rental income
Rental income from investment property is recognized as revenue on a straight-line basis over the term of the
lease. Lease incentives granted are recognized as an integral part of the total rental income, over the term of the
lease. Rental income from other property is recognized as other income.
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38.4.10.
Revenue from micro-finance services
• Revenue from micro-finance services is recognized based on time proportion taking into consideration the rate of return on
asset. Revenue yield is recognized in the income statement using the effective interest method for all financial instruments
that carry a yield, the effective interest method is the method of measuring the amortized cost of a financial asset and
distributing the revenue over the life of time the relevant instrument. The effective interest rate is the rate that discounts
estimated future cash receipts during the expected life of the financial instrument to reach the book value of the financial
asset.
• When classifying loans to customers as irregular, no income is recognized on its return and it is recognized in marginal
records outside the financial statements and are recognized as revenue in accordance with the cash basis when it is collected.
• The commission income is represented in the value of the difference between the yield of the financing granted micro-en-
terprises and the accruals of the company’s bank by deducting the services provided directly from the amounts collected
from the entrepreneurs.
• The benefits and commissions resulting from the performance of the service are recognized, according to the accrual basis
as soon as the service is provided to the client unless those revenues cover more of the financial period are recognized on a
time proportion basis.
• An administrative commission of 8% of the loan granted to customers is collected on contracting in exchange for the
issuance of the loan service and administrative commission revenue are proven in the income statement upon the issuance
of the loan to the client.
• A commission delay in payments of premiums is collected at rates agreed upon within the contracts and are recognized as
soon as customers delayed payment on the basis of the extended delay.
Gains from securitization
38.4.11.
Gains from securitization is measured as the difference between the fair value of the consideration received or
is still due to the company at the end of securitization process and the carrying amount of the securitization
portfolios in the company’s books on the date of the transfer agreement.
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences
to the extent that it is probable that future taxable profits will be available against which they can be used. Future
taxable profits are determined based on business plans for individual subsidiaries in the Group. Deferred tax assets
are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has
become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they
reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the
Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. For this
purpose, the carrying amount of investment property measured at fair value is presumed to be recovered through
sale, and the Group has not rebutted this presumption.
Deferred tax assets and liabilities are offset only if certain criteria are met.
38.6. Property, plant and equipment
38.6.1. Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated
impairment losses. The cost of certain items of property, plant and equipment . If significant parts of an item of
property, plant and equipment have different useful lives, then they are accounted for as separate items (major
components) of property, plant and equipment. Any gain or loss on disposal of an item of property, plant and
equipment is recognized in profit or loss.
38.5. Income tax
Income tax expense comprises current and deferred tax. It is recognized in profit or loss except to the extent that
it relates to a business combination, or items recognized directly in equity or in OCI.
38.6.2 Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the
expenditure will flow to the Group.
38.5.1. Current tax
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any
adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or
receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to
income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current
tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
38.5.2. Deferred tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabili-
ties for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognized for:
• Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
• Temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group
is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the
foreseeable future.
• Taxable temporary differences arising on the initial recognition of goodwill.
38.6.3 Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives, and is generally recognized in profit
or loss. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably
certain that the Group will obtain ownership by the end of the lease term. Land is not depreciated. The estimated
useful lives of property, plant and equipment for current and comparative periods are as follows:
Buildings
Office furniture, equipment & electrical appliances
Computer equipment
Transportation means
Estimated useful life
33.3 - 50
2-16.67
3.33 - 5
3.33 - 8
years
years
years
years
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
38.6.4. Reclassification to investment property
When the use of a property changes from owner-occupied to investment property.
38.7. Projects under construction
Projects under construction are recognized initially at cost, the book value is amended by any impairment con-
cerning the value of these projects cost includes all expenditures directly attributable to bringing the asset to a
working condition for its intended use. Property and equipment under construction are transferred to property and
equipment caption when they are completed and are ready for their intended use.
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38.8. Intangible assets and goodwill
- Goodwill
Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses.
- Research and development
Expenditure on research activities is recognized in profit or loss as incurred.
Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process
is technically and commercially feasible, future economic benefits are probable and the Group intends to and has
sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognized in profit or
loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated
amortisation and any accumulated impairment losses.
- Other intangible assets
Other intangible assets, are measured at cost less accumulated amortisation and any accumulated impairment losses.
38.9. Investment property
Investment property is measured at cost on initial recognition.
Subsequent to initial recognition investment property is measured at cost less accumulated depreciation and im-
pairment loss, if any. Investment property is depreciated on a straight line basis over is useful life. The estimated
useful life of investment property is 33 years.
38.10. Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly
probable that they will be recovered primarily through sale rather than through continuing use.
Such assets, or disposal groups, are generally measured at the lower of their carrying amount and fair value less
costs to sell. Any impairment loss on a disposal group is allocated first to goodwill, and then to the remaining
assets and liabilities on a pro rata basis, except that no loss is allocated to inventories, financial assets, deferred
tax assets, employee benefit assets, investment property or biological assets, which continue to be measured in
accordance with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale or
held-for distribution and subsequent gains and losses on remeasurement are recognised in profit or loss.
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or
depreciated, and any equity-accounted investee is no longer equity accounted.
38.11. Financial instruments
Policy applicable from 1 January 2020
38.11.1 Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial
assets and financial liabilities are initially recognised when the Group becomes a party to the contractual provisions
of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is
initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to
its acquisition or issue. A trade receivable without a significant financing component is initially measured at the
transaction price.
Classification and subsequent measurement
38.11.2.
Financial assets
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI – debt investment;
FVOCI – equity investment; or FVTPL.
Financial assets are not reclassified subsequent to their initial recognition unless the Group changes its business
model for managing financial assets, in which case all affected financial assets are reclassified on the first day of
the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated
as at FVTPL:
• it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
• A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:
• it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial
assets; and
• its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the
principal amount outstanding.
On initial recognition of an equity investment that is not held for trading, the Group may irrevocably elect to present
subsequent changes in the investment’s fair value in OCI. This election is made on an instrument-by-instrument basis.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at
FVTPL. This includes all derivative financial assets. On initial recognition, the Group may irrevocably designate a
financial asset that otherwise meets the requirements to be measured at amortised cost or at FVOCI as at FVTPL if
doing so eliminates or significantly reduces an accounting mismatch that would otherwise arise.
Financial assets – Business model assessment
38.11.3.
The Group makes an assessment of the objective of the business model in which a financial asset is held at a port-
folio level because this best reflects the way the business is managed and information is provided to management.
The information considered includes:
• The stated policies and objectives for the portfolio and the operation of those policies in practice. These include whether
management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, match-
ing the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash
flows through the sale of the assets;
• How the performance of the portfolio is evaluated and reported to the Group’s management;
• The risks that affect the performance of the business model (and the financial assets held within that business model) and
how those risks are managed;
• How managers of the business are compensated – e.g. whether compensation is based on the fair value of the assets
managed or the contractual cash flows collected; and
• The frequency, volume and timing of sales of financial assets in prior periods, the reasons for such sales and expectations
about future sales activity.
Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered
sales for this purpose, consistent with the Group’s continuing recognition of the assets.
Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis
are measured at FVTPL.
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Financial assets – Assessment whether contractual cash flows are solely payments of
38.11.4.
principal and interest
For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recogni-
tion. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the
principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g.
liquidity risk and administrative costs), as well as a profit margin.
In assessing whether the contractual cash flows are solely payments of principal and interest, the Group considers
the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual
term that could change the timing or amount of contractual cash flows such that it would not meet this condition.
In making this assessment, the Group considers:
• Contingent events that would change the amount or timing of cash flows;
• terms that may adjust the contractual coupon rate, including variable-rate features;
• Prepayment and extension features; and
• Terms that limit the Group’s claim to cash flows from specified assets (e.g. non-recourse features).
A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment
amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding,
which may include reasonable compensation for early
termination of the contract. Additionally, for a financial asset acquired at a discount or premium to its contractual
par amount, a feature that permits or requires prepayment at an amount that substantially represents the contrac-
tual par amount plus accrued (but unpaid) contractual interest (which may also include reasonable compensation
for early termination) is treated as consistent with this criterion if the fair value of the prepayment feature is
insignificant at initial recognition.
38.11.5.
Financial assets – Subsequent measurement and gains and losses
Financial assets at FVTPL
These assets are subsequently measured at fair value. Net gains and losses, including
any interest or dividend income, are recognised in profit or loss.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using the effective interest
method. The amortised cost is reduced by impairment losses. Interest income, foreign
exchange gains and losses and impairment are recognised in profit or loss. Any gain
or loss on derecognition is recognised in profit or loss.
Debt investments at FVOCI
Equity investments at FVOCI
These assets are subsequently measured at fair value. Interest income calculated us-
ing the effective interest method, foreign exchange gains and losses and impairment
are recognised in profit or loss. Other net gains and losses are recognised in OCI. On
derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.
These assets are subsequently measured at fair value. Dividends are recognised as
income in profit or loss unless the dividend clearly represents a recovery of part of
the cost of the investment. Other net gains and losses are recognised in OCI and are
never reclassified to profit or loss.
Financial liabilities – Classification, subsequent measurement and gains and losses
38.11.6.
Financial liabilities are classified as measured at amortised cost or FVTPL. A financial liability is classified as at FVTPL
if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial lia-
bilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognised
in profit or loss. Other financial liabilities are subsequently measured at amortised cost using the effective interest
method. Interest expense and foreign exchange gains and losses are recognised in profit or loss. Any gain or loss
on derecognition is also recognised in profit or loss.
38.11.7. Derecognition
Financial assets
The Group derecognises a financial asset when the contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of
the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor
retains substantially all of the risks and rewards of ownership and it does not retain control of the financial asset.
The Group enters into transactions whereby it transfers assets recognised in its statement of financial position, but
retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred
assets are not derecognised.
Financial liabilities
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
The Group also derecognises a financial liability when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new financial liability based on the modified terms is recognised
at fair value.
On derecognition of a financial liability, the difference between the carrying amount extinguished and the consid-
eration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss.
38.11.8.Offsetting
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when, the Group currently has a legally enforceable right to set off the amounts and it
intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
38.11.9 Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not
a financial asset and certain criteria are met.
Derivatives are initially measured at fair value. Subsequent to initial recognition, derivatives are measured at fair
value, and changes therein are generally recognised in profit or loss.
The Group designates certain derivatives as hedging instruments to hedge the variability in cash flows associated
with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates and
certain derivatives and non-derivative financial liabilities as hedges of foreign exchange risk on a net investment in
a foreign operation.
At inception of designated hedging relationships, the Group documents the risk management objective and
strategy for undertaking the hedge. The Group also documents the economic relationship between the hedged
item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging
instrument are expected to offset each other.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair
value of the derivative is recognised in OCI and accumulated in the hedging reserve. The effective portion of
changes in the fair value of the derivative that is recognised in OCI is limited to the cumulative change in fair value
of the hedged item, determined on a present value basis, from inception of the hedge. Any ineffective portion of
changes in the fair value of the derivative is recognised immediately in profit or loss.
The Group designates only the change in fair value of the spot element of forward exchange contracts as the
hedging instrument in cash flow hedging relationships. The change in fair value of the forward element of forward
exchange contracts (forward points) is separately accounted for as a cost of hedging and recognised in a costs of
hedging reserve within equity.
When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as
inventory, the amount accumulated in the hedging reserve and the cost of hedging reserve is included directly in
the initial cost of the non-financial item when it is recognised.
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For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedg-
ing reserve is reclassified to profit or loss in the same period or periods during which the hedged expected future
cash flows affect profit or loss.
Held-to-maturity financial assets
These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they are measured at amortised cost using the effective interest method.
If the hedge no longer meets the criteria for hedge accounting or the hedging instrument is sold, expires, is
terminated or is exercised, then hedge accounting is discontinued prospectively. When hedge accounting for cash
flow hedges is discontinued, the amount that has been accumulated in the hedging reserve remains in equity until,
for a hedge of a transaction resulting in the recognition of a non-financial item, it is included in the non-financial
item’s cost on its initial recognition or,
For other cash flow hedges, it is reclassified to profit or loss in the same period or periods as the hedged expected
future cash flows affect profit or loss.
If the hedged future cash flows are no longer expected to occur, then the amounts that have been accumulated in
the hedging reserve and the cost of hedging reserve are immediately reclassified to profit or loss.
Net investment hedges
When a derivative instrument or a non-derivative financial liability is designated as the hedging instrument in a hedge
of a net investment in a foreign operation, the effective portion of, for a derivative, changes in the fair value of the
hedging instrument or, for a non-derivative, foreign exchange gains and losses is recognised in OCI and presented
in the translation reserve within equity. Any ineffective portion of the changes in the fair value of the derivative or
foreign exchange gains and losses on the non-derivative is recognised immediately in profit or loss. The amount
recognised in OCI is reclassified to profit or loss as a reclassification adjustment on disposal of the foreign operation.
Policy applicable before 1 January 2020
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value
through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets.
The Group classifies non-derivative financial liabilities into the following categories: financial liabilities at fair value
through profit or loss and other financial liabilities category.
Loans and receivables
These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they are measured at amortised cost using the effective interest method.
Available-for-sale financial assets
These assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to
initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign
currency differences on debt instruments are recognised in OCI and accumulated in the fair value reserve. When
these assets are derecognised, the gain or loss accumulated in equity is reclassified to profit or loss.
Non-derivative financial liabilities – Measurement
38.11.12.
A financial liability is classified as at fair value through profit or loss if it is classified as held-for-trading or is
designated as such on initial recognition. Directly attributable transaction costs are recognized in profit or loss as
incurred. Financial liabilities at fair value through profit or loss are measured at fair value and changes therein,
including any interest expense, are recognized in profit or loss.
Other non-derivative financial liabilities are initially measured at fair value less any directly attributable transaction costs.
Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective interest method.
38.11.13.
The Group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Embedded derivatives are separated from the host contract and accounted for separately if certain criteria are met.
Derivative financial instruments and hedge accounting
Derivatives are initially measured at fair value; any directly attributable transaction costs are recognized in profit or
loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are
generally recognized in profit or loss.
38.11.10 Non-derivative financial assets and financial liabilities – Recognition and Derecognition
The Group initially recognises loans and receivables and debt securities issued on the date when they are origi-
nated. All other financial assets and financial liabilities are initially recognised on the trade date when the entity
becomes a party to the contractual provisions of the instrument.
Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair
value of the derivative is recognized in OCI and accumulated in the hedging reserve. Any ineffective portion of
changes in the fair value of the derivative is recognized immediately in profit or loss.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks
and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all
of the risks and rewards of ownership and does not retain control over the transferred asset. Any interest in such
derecognised financial assets that is created or retained by the Group is recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged or cancelled, or expire.
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial posi-
tion when, and only when, the Group currently has a legally enforceable right to offset the amounts and intends
either to settle them on a net basis or to realise the asset and settle the liability simultaneously.
Non-derivative financial assets – Measurement
38.11.11.
Financial assets at fair value through profit or loss
A financial asset is classified as at fair value through profit or loss if it is classified as held for-trading or is designated
as such on initial recognition. Directly attributable transaction costs are recognised in profit or loss as incurred.
Financial assets at fair value through profit or loss are measured at fair value and changes therein, including any
interest or dividend income, are recognised in profit or loss.
The amount accumulated in equity is retained in OCI and reclassified to profit or loss in the same period or periods
during which the hedged forecast cash flows affects profit or loss or the hedged item affects profit or loss.
If the forecast transaction is no longer expected to occur, the hedge no longer meets the criteria for hedge
accounting, the hedging instrument expires or is sold, terminated or exercised, or the designation is revoked, then
hedge accounting is discontinued prospectively. If the forecast transaction is no longer expected to occur, then the
amount accumulated in equity is reclassified to profit or loss.
38.12. Share capital
38.12.1. Ordinary shares
Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity.
Income tax relating to transaction costs of an equity transaction are accounted for in accordance with EAS 24.
38.12.2. Repurchase and reissue of ordinary shares (treasury shares)
When shares recognized as equity are repurchased, the amount of the consideration paid, which includes directly
attributable costs is recognized as a deduction from equity. Repurchased shares are classified as treasury shares and
are presented in the treasury share reserve. When treasury shares are sold or reissued subsequently, the amount
received is recognized as an increase in equity and the resulting surplus or deficit on the transaction is presented
within share premium.
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38.13. Legal reserve
The Company’s statutes provides for deduction of a sum equal to 5% of the annual net profit for formation of
the legal reserve. Such deduction will be ceased when the total reserve reaches an amount equal to half of the
Company’s issued capital and when the reserve falls below this limit, it shall be necessary to resume
Credit-impaired financial assets
38.14.3.
At each reporting date, the Group assesses whether financial assets carried at amortised cost and debt securities at
FVOCI are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset have occurred.
38.14. Impairment
Policy applied from January 1, 2020
38.14.1.
Financial instruments and contract assets
The Group recognises loss allowances for Expected Credit Loss (ECLs) on:
Non-derivative financial assets
• -
• -
• -
Financial assets measured at amortised cost;
Debt investments measured at FVOCI;
contract assets.
The Group also recognises loss allowances for ECLs on loans receivables.
The Group measures loss allowances at an amount equal to lifetime ECLs, except for the following, which are
measured at 12-month ECLs:
• Debt securities that are determined to have low credit risk at the reporting date; and
• Other debt securities and bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the
financial instrument) has not increased significantly since initial recognition.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition
and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and avail-
able without undue cost or effort. This includes both quantitative and qualitative information and analysis, based
on the Group’s historical experience and informed credit assessment, that includes forward-looking information.
The Group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past
due. unless it can be rebutted.
The Group considers a financial asset to be in default when:
• The debtor is unlikely to pay its credit obligations to the Group in full, without recourse by the Group to actions such as
realising security (if any is held); or
• The financial asset is more than 90 days past due unless it can be rebutted.
Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument.
12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after
the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
Evidence that a financial asset is credit-impaired includes the following observable data:
• Significant financial difficulty of the debtor;
• A breach of contract such as a default or being more than 90 days past due;
• The restructuring of a loan or advance by the Group on terms that the Group would not consider otherwise;
• It is probable that the debtor will enter bankruptcy or other financial reorganisation; or
• The disappearance of an active market for a security because of financial difficulties.
38.14.4.
Presentation of allowance for ECL in the statement of financial position
Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of
the asses.
For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI.
Write-off
38.14.5.
The gross carrying amount of a financial asset is written off when the Group has no reasonable expectations of
recovering a financial asset in its entirety or a portion thereof. For individual customers, the Group has a policy of
writing off the gross carrying amount when the financial asset is 180 days past due based on historical experience
of recoveries of similar assets. For corporate customers, the Group individually makes an assessment with respect
to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Group
expects no significant recovery from the amount written off. However, financial assets that are written off could still
be subject to enforcement activities in order to comply with the Group’s procedures for recovery of amounts due.
38.14.6.
Non-financial assets
• At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than, investment property,
contract assets and deferred tax assets) to determine whether there is any indication of impairment. If any such indication
exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.
• For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from
continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising from a business
combination is allocated to CGUs or groups of CGUs that are expected to benefit from the synergies of the combination.
• The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is
based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or CGU.
• An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount.
• Impairment losses are recognised in profit or loss. They are allocated first to reduce the carrying amount of any goodwill
allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
• An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
The maximum period considered when estimating ECLs is the maximum contractual period over which the Group
is exposed to credit risk.
Policy applied before January 1, 2020
Measurement of ECLs
38.14.2.
ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash
flows that the Group expects to receive).
ECLs are discounted at the effective interest rate of the financial asset.
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38.14.7.
Financial assets not classified as at fair value through profit or loss, including an interest in an equity accounted
investee, are assessed at each reporting date to determine whether there is objective evidence of impairment.
Non-derivative financial assets
Objective evidence that financial assets are impaired includes:
• Default or delinquency by a debtor;
• Restructuring of an amount due to the Group on terms that the Group would not consider otherwise;
• Indications that a debtor or issuer will enter bankruptcy;
• Adverse changes in the payment status of borrowers or issuers;
• The disappearance of an active market for a security because of financial difficulties.
• Observable data indicating that there is a measurable decrease in the expected cash flows from a group of financial assets.
For an investment in an equity security, objective evidence of impairment includes a significant or prolonged
decline in its fair value below its cost.
Financial assets measured at amortized cost
The Group considers evidence of impairment for these assets at both an individual asset and a collective level. All
individually significant assets are individually assessed for impairment. Those found not to be impaired are then
collectively assessed for any impairment that has been incurred but not yet individually identified. Assets that are
not individually significant are collectively assessed for impairment. Collective assessment is carried out by grouping
together assets with similar risk characteristics.
In assessing collective impairment, the Group uses historical information on the timing of recoveries and the
amount of loss incurred, and makes an adjustment if current economic and credit conditions are such that the
actual losses are likely to be greater or lesser than suggested by historical trends.
An impairment loss is calculated as the difference between an asset’s carrying amount and the present value of
the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognized in
profit or loss and reflected in an allowance account. When the Group considers that there are no realistic prospects
of recovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently
decreases and the decrease can be related objectively to an event occurring after the impairment was recognized,
then the previously recognized impairment loss is reversed through profit or loss.
Available-for-sale financial assets
Impairment losses on available-for-sale financial assets are recognized by reclassifying the losses accumulated in
the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net
of any principal repayment and amortization) and the current fair value, less any impairment loss previously recog-
nized in profit or loss. If the fair value of an impaired available-for-sale debt security subsequently increases and
the increase can be related objectively to an event occurring after the impairment loss was recognized, then the
impairment loss is reversed through profit or loss. Impairment losses recognized in profit or loss for an investment
in an equity instrument classified as available-for-sale are not reversed through profit or loss.
Equity-accounted investees
An impairment loss in respect of an equity-accounted investee is measured by comparing the recoverable amount
of the investment with its carrying amount. An impairment loss is recognized in profit or loss, and is reversed if
there has been an estimates used to determine the recoverable amount.
38.14.8 Non-financial assets
At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than investment
property and deferred tax assets) to determine whether there is any indication of impairment. If any such indication
exists, then the asset’s recoverable amount is estimated. Goodwill is tested annually for impairment.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows of other assets or CGUs. Goodwill arising
from a business combination is allocated to CGUs or groups of CGUs that are expected to benefit from the
synergies of the combination.
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value
in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset or CGU.
An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.
Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any good-
will allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to
the extent that the asset’s carrying amount does not exceed the carrying amount that would have been deter-
mined, net of depreciation or amortization, if no impairment loss had been recognized.
The provision for doubtful debts is calculated on the investment cost of the leased assets (cost of leased assets in
addition to its return at the date of calculating the provision) which are uncertainly collected i.e. (doubtful rent
value) after deducting the credit deposits held by the Company. The Company’s provisions committee specifies the
provision percentage for each credit class which is calculated according to the risk rates of the doubtful rent values
or according to the negative changes of the credit indicators, this provision is reviewed regularly or whenever there
is a need to do so.
38.15. Provisions
Provisions are recognized when the Group has a legal or constructive current obligation as a result of a past event
and it’s probable that a flow of economic benefits will be required to settle the obligation. If the effect is material,
provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessment of the time value of money and, where appropriate, the risks specific to the liability. Provisions
are reviewed at the financial position date and amended (when necessary) to represent the best current estimate.
38.16. Treasury bills
Treasury bills are recorded at nominal value and the unearned income is recorded under the item of “creditors and
other credit balances”. Treasury bills are presented on the financial position net of the unearned income.
38.17. Trade, and notes receivables, debtors and other debit balances
• Trade, notes receivables, debtors and other debit balances are stated at nominal value less impairment losses.
• The Company’s lessees and the leased assets are regularly classified & evaluated and their obligations are reduced by the rent
value paid in each financial period, and with the assurance of the availability of adequate guarantee to collect the client’s
rent values.
38.18. Cash and cash equivalents
For the purpose of preparing the statement of cash flows, cash and cash equivalents includes the balances, whose
maturity do not exceed three months from the date of acquisition, cash on hand, cheques under collection and
due from banks and financial institutions.
38.19. Profit sharing to employees
The holding company pays 10% of its cash dividends as profit sharing to its employees provided that it will not
exceed total employees annual salaries. Profit sharing is recognized as a dividend distribution through equity and
as a liability when approved by the Company’s shareholders.
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38.20. Micro-enterprises Receivables
38.20.1.
Credit policy
Funding Consideration
• Funding are granted to clients who have previous experience not less than one year in his current activity which is confirmed
by the client with adequate documentation and field inquiry.
• Funding are granted to the client which it’s installment is suitable according to his predictable income activity and this
done throw analyzing client’s revenues and expenses and his foreseeable marginal income, and this done by the branches
specialists of the company on the prepared form for this purpose(financial study form and credit decision).
• Before grant funding, a client activity field inquiry is done.
• Recording inquiries results about client and guarantor with inquiring forms of the company which reveal client’s activity (visit
form & Inquiry form).
• The company prohibit grant funding for new client unless the activity is existing with previous one year experience where
the granted funds be within a minimum 1 000 EGP and maximum
• 30 000 EGP with loan duration of 12 months.
• Inquiries for clients are performed by I-Score Company before granting and in case of approval on granting. The credit limit
of the client is considered when calculating the client’s revenue and expenses.
date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to
the end of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of
the lease term or the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that
case the right-of-use asset will be depreciated over the useful life of the underlying asset, which is determined on
the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by
impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commence-
ment date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the
Group’s incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing
sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
Client’s Life Insurance
The insurance process on the client is performed with the authorized companies from insurance supervisory authority.
fixed payments, including in-substance fixed payments;
Client’s Following up
The company keeps specialists in branches from following up all regular clients, and irregular with continuous
application of that during finance period with judging on their commitment in paying the remaining installments
and this done through recording visits for clients with daily basis and also with data base provided by computer
system for all branches all over the republic.
Impairment loss of micro financed loans
The company at the date of the financial statements estimates the impairment loss of micro financed loans, in the
light of the basis and rules of granting credit and forming the provisions according to the Board of Directors decision
of the Financial Supervisory Authority No. (173) issued on December 21, 2014 to deal with the impairment loss.
38.21. Leases
The Group has applied EAS 49 using the modified retrospective approach and therefore the comparative informa-
tion has not been restated and continues to be reported under EAS 20. The details of accounting policies under
EAS 20 are disclosed separately.
Policy applicable from 1 January 2020
At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains,
a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group
uses the definition of a lease in EAS 49.
This policy is applied to contract entered in to, or after 1 Jan 2020.
As a lessee
38.21.1.
At commencement or on modification of a contract that contains a lease component, the Group allocates the
consideration in the contract to each lease component on the basis of its relative stand-alone prices. However, for
the leases of property the Group has elected not to separate non-lease components and account for the lease and
non-lease components as a single lease component.
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease
payments made at or before the commencement
variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the
commencement date;
amounts expected to be payable under a residual value guarantee; and the exercise price under a purchase option
that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is
reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group
is reasonably certain not to terminate early.
The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there
is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group’s
estimate of the amount expected to be payable under a residual value guarantee, if the Group changes its assess-
ment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance
fixed lease payment.
When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount
of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
The Group presents right-of-use assets that do not meet the definition of investment property in ‘property, plant
and equipment’ and lease liabilities in ‘loans and borrowings’ in the statement of financial position.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low – value assets and
short-term leases, including IT equipment. The Group recognises the lease payments associated with these leases
as an expense on a straight-line basis over the lease term.
38.21.2.
At inception or on modification of a contract that contains a lease component, the Group allocates the consider-
ation in the contract to each lease component on the basis of their relative stand- alone prices.
As a lessor
When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an
operating lease.
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To classify each lease, the Group makes an overall assessment of whether the lease transfers substantially all of
the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance
lease; if not, then it is an operating lease. As part of this assessment, the Group considers certain indicators such
as whether the lease is for the major part of the economic life of the asset.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separate-
ly. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head
lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies
the exemption described above, then it classifies the sub-lease as an operating lease.
If an arrangement contains lease and non-lease components, then the Group applies EAS 11 to allocate the
consideration in the contract.
The Group applies the derecognition and impairment requirements in EAS 47 to the net investment in the lease.
The Group further regularly reviews estimated unguaranteed residual values used in calculating the gross invest-
ment in the lease.
The Group recognises lease payments received under operating leases as income on a straight- line basis over the
lease term as part of ‘other revenue’.
Policy applicable before 1 January 2020
For contracts entered into before 1 January 2020, the Group determined whether the arrangement was or con-
tained a lease based on the assessment of whether:
fulfilment of the arrangement was dependent on the use of a specific asset or assets; and
the arrangement had conveyed a right to use the asset. An arrangement conveyed the right to use the asset if one
of the following was met:
the purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant
amount of the output;
the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more
than an insignificant amount of the output; or
facts and circumstances indicated that it was remote that other parties would take more than an insignificant
amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current market
price per unit of output.
As a lessee
38.21.3.
In the comparative period, as a lessee the Group classified leases that transferred substantially all of the risks and
rewards of ownership as finance leases. When this was the case, the leased assets were measured initially at an
amount equal to the lower of their fair value and the present value of the minimum lease payments. Minimum
lease payments were the payments over the lease term that the lessee was required to make, excluding any
contingent rent. Subsequent
to initial recognition, the assets were accounted for in accordance with the accounting policy applicable to that asset.
Assets held under other leases were classified as operating leases and were not recognised in the Group’s statement
of financial position. Payments made under operating leases were recognised in profit or loss on a straight-line
basis over the term of the lease. Lease incentives received were recognised as an integral part of the total lease
expense, over the term of the lease.
38.21.4 .As a lessor
When the Group acted as a lessor, it determined at lease inception whether each lease was a finance lease or an
operating lease.
To classify each lease, the Group made an overall assessment of whether the lease transferred substantially all
of the risks and rewards incidental to ownership of the underlying asset. If this was the case, then the lease was
a finance lease; if not, then it was an operating lease. As part of this assessment, the Group considered certain
indicators such as whether the lease was for the major part of the economic life of the asset.
38.22. Operating segment
A segment is a distinguishable component of the Group that is engaged either in providing products or services
(business segment) or in providing products or services within a particular economic environment (geographical
segment), which is subject to risks and rewards that are different from those of other segments. The Group’s
primary format for segment reporting is based on business segment.
2020 Annual ReportConsolidated financial statements efghermes.com
Africa | Asia | Europe | North America