Annual Report 2021 A HOLISTIC SET OF FINANCIAL PRODUCTS AND SERVICES Annual Report 2021 A HOLISTIC SET OF FINANCIAL PRODUCTS AND SERVICES Our success as a universal bank in Egypt with a leading investment bank franchise in frontier emerging markets (FEM) comes from our ability to gain deep, on-the-ground knowledge of industries and countries, to focus on the needs of our diverse client base, and to then carve out avenues for growth. EFG Hermes Holding at a Glance Chairperson’s Foreword A Note from Our Group CEO Management Discussion & Analysis Sell-Side Platform - Investment Banking - Securities Brokerage - Research Buy-Side Platform - Asset Management - Private Equity NBFI Platform - Tanmeyah - valU - EFG Hermes Corp-Solutions - PayTabs Egypt - Bedaya - Kaf EFG EV Fintech aiBANK Corporate Governance Risk and Compliance Our People Executive Committee Board of Directors Corporate Social Responsibility Financial Statements 04 10 16 20 32 38 46 54 58 62 68 74 80 86 92 98 104 108 114 118 126 132 138 142 150 160 168 Contents 38 Years of success EFG HERMES HOLDING AT A GLANCE EFG Hermes Holding continues to expand its operational footprint not only to match changing dynamics in the market landscape but also to serve the ever-growing needs of its stakeholders 13 countries in our geographic footprint 75 MENA and frontier emerging markets in our coverage EFG Hermes Holding at a Glance EFG Hermes Holding at a Glance EFG Hermes Holding offers its client base a comprehensive suite of financial solutions through its three platforms: the Investment Bank, Non-Bank Financial Institutions (NBFI), and aiBANK A Universal Bank in Egypt with the Leading Investment Bank Franchise in FEM With a robust track record of over 38 years, EFG Hermes Holding continues to be a pioneer in the regions where it operates with its comprehensive suite of tailored financial solutions. From a leading investment bank to a full-fledged universal bank in Egypt, with a leading investment bank arm and an extensive presence in 13 countries across four continents, the Firm continues to expand its operational footprint not only to match changing dynamics in the market landscape but also to serve the ever-growing needs of its stakeholders. EFG Hermes Holding’s holistic business strategy to bolster its operations through organic growth, strategic mergers, and acquisitions, has trans- formed the Firm into a universal bank in Egypt and a leading player in the financial services sector. The Firm offers its clientele a diverse array of products and services through its three verticals: the Investment Bank, the non-banking financial institutions (NBFI) platform, and the recently acquired commercial bank with an eye for driving shareholder value and fortifying its leadership position across its footprint. Institutions its three platforms, the What We Do Investment Through Bank, Non-Bank Financial (NBFI) and aiBANK, the group is perfectly positioned to consistently bring disruptive financial products and services to the market space, offering a wide portfolio that best serves its growing base of clients, including institutional investors, retail cli- ents, individuals, entrepreneurs, large institutions, and SMEs. During 2021, the Firm successfully captured the upside of global markets’ recovery further, and it maintained the strong growth mo- mentum across its core operations. EFG Hermes One application was later launched in November 2021 in Egypt as well, including a roster of new features and tools, such as short-selling, margin trading, same-day trading, among others. The Investment Bank Securities Brokerage EFG Hermes Securities Brokerage, the MEA region’s premier brokerage house, offers its client base an unparalleled coverage across more than 75 MENA and frontier emerging markets (FEMs). At present, the division’s operational footprint spans across four continents in Egypt, Kuwait, the United Arab Emirates (UAE), Saudi Arabia (KSA), Oman, Jordan, Pakistan, Kenya, Nigeria, and Bangladesh. Throughout 2021, EFG Hermes sustained its sub- stantial market shares across its footprint, ranking first on the Egyptian Exchange (EGX), NASDAQ Dubai, the Dubai Financial Market (DFM), and the Nairobi Securities Exchange (NSE). The Firm also ranked second in Abu Dhabi and the Kuwait Stock Exchange (KSE) and fourth in Nigeria. At present, EFG Hermes Holding’s Brokerage division covers 95% of the MSCI Frontier and MSCI Emerging Frontier indices, with the ability to execute in over 75 markets across frontier and emerging markets. In 2021, the Firm launched an updated version of the EFG Hermes One application, its retail-focused online trading platform, by capitalizing on synergies in its business model. To further grow its digital pres- ence, the Firm launched the all-new EFG Hermes One application in Kenya, unlocking a multitude of compelling investment opportunities, with the platform offering online stock trading prospects on the Nairobi Securities Exchange (NSE). The all-new Investment Banking The Firm’s Investment Banking division has cement- ed its leading position in M&A advisory and ECM and DCM deal executions, becoming the regional invest- ment bank of choice for FEM partners and clientele. Investment Banking division continuously The works toward expanding its geographical footprint, leveraging its wide network of MENA clients to raise demand for compelling opportunities, and carrying out the majority of the most prominent transactions in its markets of operations. In 2021, the division delivered a stellar performance, registering a record high of 41 transactions worth an aggregate value of USD 7.9 billion. Throughout the year, EFG Hermes’ Investment Banking division continued to build on its year-on-year track record, successfully closing 16 DCM transactions with a to- tal value of USD 560.4 million, 12 ECM transactions valued at USD 4.9 billion, and 13 M&A transactions worth USD 2.4 billion. Research EFG Hermes’ Research division is the region’s flag- ship provider of in-depth, real-time market insights, offering extensive equity, macro, strategy, and index research that paves the way for the Firm’s divisions and ever-growing client base through financial decision-making processes. Boasting a team of experienced professionals and an ex- pansive presence in numerous markets, including Egypt, UAE, Pakistan, Kenya, Nigeria, KSA, Oman, and the UK, the division provides unrivalled market 6 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 7 EFG Hermes Holding at a Glance intelligence and insights on 319 stocks in 40 indus- tries across 26 markets. Asset Management EFG Hermes’ Asset Management division, the MENA region’s flagship asset manager, offers its client base a diverse suite of mutual funds and discretionary portfolios comprising both country-specific and regional mandates. The division’s mandates include equity, money market, fixed income, indexed, and Sharia- and UCTIS-compliant mandates. At year-end 2021, the division recorded USD 2.6 billion in regional AUM and EGP 23.5 billion in Egypt. Private Equity Boasting a track record of over two decades, EFG Hermes’ Private Equity division is a regional leader in the Private Equity field that is dedicated to driving accretive investments in strategic, high-demand sectors, with a specific focus on renewables, education, and healthcare. The division manages its renewables investments through its Vortex Energy platform, which was launched in 2014 with an eye for investing in high-impact renewable energy projects. On the education front, EFG Hermes’ Egypt Educa- tion Fund (EEF) is a USD 150 million investment fund that was established in 2018, as part of a USD 300 million education platform in collaboration with Dubai-based education provider GEMS Education. In the healthcare sector, Rx Healthcare Manage- ment was established to manage a wide spectrum of investments across the healthcare sector to meet the rapidly-growing demand for healthcare solutions across Egypt, the MENA region, and Africa. EFG EV Fintech EFG EV Fintech was established in 2017 as a joint venture between EFG Hermes Holding and startup accelerator Egypt Ventures. Leveraging EFG Hermes Holding’s world-class industry and financial know-how, EFG EV Fintech has worked its way to becoming Egypt’s leading fintech-focused startup accelerator and micro-VC firm, continuously seeking out strategic fintech startups backed by innovative concepts and entrepreneurs. At present, the company boasts the country’s largest fintech portfolio that encompasses renowned companies operating in key sectors, such as Insurance-tech, Regulatory-tech, Digital Banking, and SME lending. EFG EV Fintech offers two separate investment programs, having operated an accelerator for seed- stage startups in collaboration with Falak Startups, which invested up to EGP 1 million in cash and EGP 300,000 worth of support functions in up to 10 companies per year. Simultaneously, the micro-VC arm invests up to EGP 5 million per company in later-stage startups, bridging the gap between seed finance and series-A funding. By the end of 2021, EFG EV Fintech had invested a total of USD 1 million to fund seven startup com- panies, including Fintech Galaxy, Mozare3, Dayra, Fatura, Raseedi, Yashry/Edfa3ly, and Zvendo. Non-Bank Financial Institutions Tanmeyah Established in 2009 and acquired by EFG Hermes Holding in 2016, Tanmeyah Microenterprise Services is Egypt’s number one microfinance solutions provid- er, offering funding solutions to lower-income, small and micro enterprise owners with limited access to capital. Tanmeyah offers a myriad of innovative financial solutions targeted at governorates where business owners typically lack access to funding from conventional banking channels, with an eye for driving financial inclusion in Egypt and bolstering the development of surrounding communities. By year-end 2021, Tanmeyah had a total of 300 op- erational branches serving over 381,000 borrowers in 25 of the 27 Egyptian governorates. EFG Hermes Corp-Solutions Established in 2020 as an integral part of EFG Hermes Holding’s NBFI platform, EFG Hermes Corp-Solutions was launched with an eye for consolidating the Group’s factoring and leas- ing businesses, EFG Hermes Leasing and EFG Hermes Factoring, into one integrated entity. The company offers its client base a wide array of top-notch, disruptive leasing and factoring tools and advisory services that help bolster business growth and development and create sustainable value for stakeholders. By year-end 2021, EFG Hermes Corp-Solutions reg- istered an aggregate value of leasing and factoring bookings amounting to a record high of EGP 8.1 billion versus the EGP 4 billion booked at year-end 2020, reflecting a twofold Y-o-Y increase. valU Launched in 2017, valU is EFG Hermes Holding’s leading Buy-Now, Pay-Later (BNPL) lifestyle- enabling fintech platform, offering convenient and customizable financing solutions to its client base. With over 5,000 points of sale and 300 websites, valU provides unrivaled access to a vast network of stores, service providers, and e-commerce platforms across a diverse array of categories, including home appliances, electronics, home finishing, furniture, residential solar solutions, healthcare, education, travel, and fashion, among others. valU grants customers the ability to use their smartphones to access the company’s financing plans with over 1,657 merchants across Egypt over convenient install- ments from six to 60 months. In 2021, valU delivered an outstanding performance, recording over 96,000 transacting customers and over 452,000 transactions completed through the company’s application. PayTabs Egypt Established in KSA in 2014, PayTabs is an award- winning global fintech solutions platform with a presence spanning over seven countries. In 2019, EFG Hermes Holding partnered with PayTabs to es- tablish PayTabs Egypt as part of the Firm’s growing NBFI platform, collaborating to build a cutting-edge platform that drives financial inclusion and serves the digital payment needs of multiple consumer segments. Today, PayTabs Egypt is Egypt’s most innovative provider of digital payment solutions. Bedaya Bedaya Mortgage Finance (Bedaya) was es- tablished in 2019 as a joint venture between Talaat Moustafa Group (TMG), Egypt's leading developer of premium real estate communities; Ghabbour Auto’s NBFI arm, GB Capital; and EFG Hermes Holding’s NBFI platform. Bedaya cur- rently stands as Egypt’s sole non-bank online mortgage provider, offering clients a compre- hensive suite of superior mortgage financing solutions on residential, commercial, and ad- ministrative properties in Egypt. The company finances up to 90% of the current property value for residential units and up to 80% for commer- cial units, capped at EGP 28 million and EGP 56 million, respectively. In 2021, Bedaya’s operational capital registered sig- nificant Y-o-Y growth, with the company recording a total of five banks, with facilities worth EGP 1.5 billion. The company also substantially grew its portfolio to record EGP 1,150 million, with a client base of 437. Kaf Kaf, the Firm’s insurance arm, was established in 2020 after a 75% stake acquisition of Tokio Marine Egypt Family Takaful by EFG Hermes Holding and Ghabbour Auto (GB Auto). In the time following the acquisition, the company has begun positioning itself as a leading tech-enabled insurance provider that aims to offer bespoke life, savings, health, and car insurance services to individuals, businesses, and communities at large. In 2021, Kaf’s operations registered significant growth on the back of the increase in cross- selling synergies with GB Auto and EFG Hermes Holding. By the end of the year, the company had moved from less than 0.1 million to over 1 million individuals insured, making it one of the largest life insurers in the Egyptian market by the num- ber of people covered. Commercial Banking aiBANK In 2021, EFG Hermes Holding concluded the acqui- sition of a 51% majority stake in the Arab Investment Bank (aiBANK), marking the Firm’s strategic entry into the Egyptian commercial banking sector, and trans- forming EFG Hermes Holding into a full-fledged uni- versal bank in Egypt. The acquisition was executed in line with the Firm’s strategy to continue providing clients with a comprehensive suite of innovative fi- nancial solutions. In partnership with The Sovereign Fund of Egypt (TSFE), EFG Hermes Holding aims to unify the country’s public and private sectors, playing a pivotal role in leading the drive for financial inclusion and digitization across the country. 8 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 9 CHAIRPERSON'S FOREWORD We continue to break new ground in the markets in which we operate, connecting global investors with opportunities across numerous MENA and FEMs Chairperson's Foreword A Holistic Approach With an investment bank, a commercial bank, and a fast-growing non-banking financial institutions (NBFI) platform, we are very well positioned to provide a holistic set of financial products and services The past year has been one of the most active and significant years in EFG Hermes Holding’s history. The many milestones that were achieved are the culmination of a long and successful journey that has led us to where we are today. Long before I became Chairperson, EFG Hermes Holding had a dream and an objective to one day acquire a com- mercial bank in our home market of Egypt. 2021 is the year that we have come full circle to achieve this goal and, today, we are finally a universal bank in Egypt. The Firm now has the ability to provide customers with a full roster of banking and non- banking financial services with a market-leading investment bank franchise that is continuing to grow market shares and capture opportunities in frontier emerging markets (FEM). The acquisition of a 51% majority stake in the Arab Investment Bank (aiBANK) in November 2021 marked an important new milestone for our Firm. It is a strategic entry into the Egyptian commercial banking sector, which has consis- tently shown remarkable growth and resilience throughout the volatility of the past years. The transaction is also very significant as it marks the beginning of a new strategic alliance between EFG Hermes Holding and The Sovereign Fund of Egypt (TSFE), which owns a 25% stake in the bank through its fully-owned sub-fund TSFE Fi- nancial Services. The remaining 24% of the bank is owned by our government partner, the National Investment Bank (NIB). The successful comple- tion of this transaction has set a new precedent and sent a clear message that the Egyptian pri- vate sector, represented by EFG Hermes Hold- ing, can work effectively with the public sector to create new models of cooperation. This is, in my opinion, an example of a public-private partner- ship (PPP) at its best. The role of TSFE as a catalyst for encouraging the private sector to participate in major trans- actions of this nature, which will support the sustainable economic development of Egypt, should be recognized and encouraged. We must also acknowledge and applaud the im- portant role that the Central Bank of Egypt (CBE) has played with its adoption of a new vision and approach to encourage the private sector. Permit- ting EFG Hermes Holding to acquire a majority stake of the Bank was a turning point, and we are honored that they have placed their trust in us. We fully intend to continue writing this success story with our partners and to make all stakeholders proud of aiBANK in the coming years. With an investment bank, a commercial bank, and a fast-growing NBFI platform, we are very well positioned to provide a holistic set of finan- cial products and services to both retail and cor- porate clients alike. We are also in a much better position to withstand the cyclicality of capital markets. In Egypt and across our footprint of 13 markets, the Firm has proven its resilience. Despite the suboptimal conditions brought about by the prolonged impact of COVID-19, we have had a record year in terms of the number of deals that our advisory team has closed. Whether it is in Egypt, the UAE, KSA, or Pakistan, the Firm contin- ues to capture an impressive deal flow. Over the years, we have been ramping up our business in all the new countries we have expanded into, and our efforts continue to bear the fruit. This past year, we saw our Investment Banking team close their first M&A transaction in Pakistan with advisory to TPG’s Evercare Group on the sale of its 50% stake in Islamabad Diagnostic Centre to Integrated Di- agnostics Holding (IDH). We are also very proud of our team in Pakistan who have just been named the Best International Brokerage Firm in Pakistan by Asiamoney for the first time. In Kenya, our bro- kerage business has held a first-place ranking for the second consecutive year. All of these achieve- ments are an indication that we are now gaining grounds and making a strong name for ourselves outside our traditional markets. Closer to home in KSA and the Gulf, we have start- ed deepening our reach with active roles in several significant transactions in 2021, such as the IPOs of ACWA Power on Tadawul and Fertiglobe on ADX, 12 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 13 Chairperson's Foreword among many others. It is not just the number of deals executed that we are proud of but also the significance of those deals. It is both the breadth and depth of our operations that are impactful. We are extremely pleased with the exception- ally active year that our NBFI platform has had. We have continued to expand the platform and, today, we are able to offer our clients in Egypt a diverse and comprehensive product offering, including Buy-Now, Pay-Later (BNPL) fintech through our award-winning platform, valU; micro- finance through Tanmeyah; leasing and factoring through EFG Hermes Corp-Solutions; insurance through Kaf; e-payments through PayTabs Egypt; and mortgage finance through Bedaya. With hard work, innovation, and successful partnerships with local businesses in Egypt, our NBFI platform is growing and making a difference in the lives of Egyptians from all socioeconomic groups. The commercial success of our business is a tremendous source of pride, but our responsibility toward the sustainable development of our home market is equally important. The EFG Hermes Foundation has a well-established track record as a leader in sustainable development in Egypt, and it has instilled this sense of social responsibility throughout the Group. Our microfinance company, Tanmeyah, for example, is the largest contributor to the social responsibility activities of the Egyptian Microfinance Federation. In fact, all our subsidiar- ies are very conscious of the principles of respon- sible investing and aware that their work must be socially and environmentally sound. It is extremely gratifying to witness the positive impact that the Foundation has had on the mindset of the manage- ment and employees of EFG Hermes Holding. As the importance of addressing climate change becomes more and more evident, green and social- ly impactful investments are becoming increasingly vital to our business across the board. Vortex Energy, the global renewable energy platform managed by our private equity arm, remains actively engaged in making new investments in renewables through its newly launched USD 200 million Vortex Energy IV Fund. In addition to their London office, they have also established a permanent presence in Spain and Abu Dhabi to explore regional opportunities in energy transition verticals, including generation from solar, wind, hydropower, and biomass. I look forward to seeing our green investments continue to expand across sectors and geographies, includ- ing Egypt and the MENA region. I am cautiously optimistic about the year ahead. We will continue to be alert looking after our employees and customers while working ag- gressively as we look forward to a brighter future. Egypt has been relatively resilient; we succeeded in staying both open and agile, which has helped our businesses significantly, the economy, and ultimately our people. We see strong growth po- tential in Egypt in terms of GDP, and GCC markets will continue to outperform. I would like to take this opportunity to thank our es- teemed Board of Directors. EFG Hermes Holding’s Board houses the region’s most prominent busi- ness experts, who have been a great source of sup- port and guidance, and an integral component to our success in 2021. Our board has been extremely committed and generous, consistently providing the necessary time and effort, and providing us with a 360-degree view that is becoming increasingly important to us as we expand our business into new areas. I truly believe that our strong Board constitu- tion and contribution is one of the major factors of our ongoing success. I would also like to thank the Firm’s senior management and all employees for their hard work and dedication through a tough year, one that deserves to be celebrated. I am proud of each and every one of them and wish them all the best for the coming year. May we continue to suc- ceed, break new ground, and create positive impact. Mona Zulficar Chairperson, EFG Hermes Holding 14 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 15 A NOTE FROM OUR GROUP CEO EFG Hermes Holding consistently safe- guards the interests of all its stakeholders A Note from Our Group CEO A Note from Our Group CEO The challenges that we have all been hand ed from a business perspective were too many to recount, but EFG Hermes Holding stepped up, took them on, and delivered on almost every single front This was another tough year through which our resolve as a business was once again tested. De- spite all our hopes, the pandemic continues to live with us, which is an unfortunate but real circum- stance. Adapting to life where new variants are becoming a common occurrence is something we must all learn to live with. This is certainly not an easy endeavor, but it is also the reason I am filled with a sense of gratitude and pride when I look back at 2021. The challenges that we have all been handed from a business perspective were too many to recount, but EFG Hermes stepped up, took them on, and delivered on almost every single front. While they continue to be the pillars of all of our strategic decisions, I will not bore you with our accomplishments broken down along our 6Ps of People, Products, Presence, Positioning, Profitability, and Public responsibility. However, I would like to stress that, other than deliberately pressing pause on geographical expansions and my desire to see better profitability metrics (both in terms of growth and return metrics) than the ones we have so far realized, I am gen- erally happy with what we have achieved when it comes to the remaining 6Ps. It was another year where our sell-side, buy-side, and NBFI platforms pushed the bar higher in terms of our expectations and those of our different stake- holders. At the same time, our extraordinary support functions kept our machine flawlessly running throughout another tough year. As for the future, it is always tough to predict what the new year will bring; however, I am cau- tiously optimistic. The sell-side business should see increased operational leverage on the bro- kerage front (inclusive of research and products) if the growth in volumes we are currently seeing in some of our core markets is sustained, and as the Investment Banking division continues the phenomenal gain of market share in debt, eq- uity, and M&A transactions in Egypt, UAE, and KSA. I also see some upside risks in our buy- side business with the potential second close of the Vortex IV fund and the FIM SPAC, among many others. Apart from the continued growth we are seeing across the different segments, the NBFI platform promises to have a bright 2022 with a number of positive developments on Tanmeyah, EFG Hermes Corp-Solutions, and our BNPL platform, valU. The acquisition of a majority stake in the Arab Investment Bank (aiBANK) comes with its own set of challenges, but promises to be another trans- formational step in our journey. We have hired an excellent, young, and highly energetic CEO and are in the final stages of bringing on board a number of other high-caliber senior hires, which should help us considerably upgrade the operations and returns profile of the bank during the coming years. More importantly, our teams are already in constant dialogues, trying to explore opportunities to cross- sell and to cooperate on business ventures that are equally beneficial to both institutions. The impact of this acquisition might not be felt in the short term, but I remain highly confident that it should become an integral contributor to EFG Hermes’ revenues and profits in the medium term, while immediately expanding the suite of products we offer our clients. All in all, I am proud of the massive and very difficult pivot in our Firm’s business model. In 2013, EFG Hermes was a largely Egypt-focused investment bank with an investment in a Lebanese commercial bank. Today, we have an FEM-focused business with a growing track record across most markets we operate in. Our Lebanese bank investment has been swapped for an investment in a bank in a core market that promises to hold significant revenue synergies with our existing investment bank and NBFI business. As we go into the new year, I am increasingly hopeful that the years ahead should bring more growth in our different financial indica- tors, as well as multiple opportunities for realizing massive value on some of the great brands our Firm has built during the past few years. However, as we have witnessed many times before, our plans can be easily derailed by factors that we have little to no control over. This is unfortunate, but it is another characteristic of the environments we currently operate in. We therefore have to stay vigilant, proactive, and multiple steps ahead of our competition in different markets and across our product segments. It is this distinguishing DNA that has helped us grow and achieve so much during the past period, and it is the one that should drive our actions going forward. I remain proud that EFG Hermes has a team of employees that take every step while ensuring the best interests of its stake- holders are safeguarded. EFG Hermes will remain well-prepared to meet and deal with the challenges of the coming period, just as we always did during the past years. Karim Awad Group Chief Executive Officer EFG Hermes Holding 18 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 19 6.1EGP BN Consolidated Group revenues in 2021 MANAGEMENT DISCUSSION AND ANALYSIS Exceptional growth during the year driven by the stellar results delivered by the Investment Banking, Brokerage, and Asset Management divisions, in addition to the NBFI platform Management Discussion and Analysis Management Discussion and Analysis EFG Hermes Holding delivered a stellar performance during 2021, showcasing an increase in revenues with strong performance across most operations, in addition to the consolidation of aiBANK’s revenues 12% Group revenue growth in 2021 EFG Hermes Holding recorded an increase of 12% Y-o-Y in operating revenues to EGP 6.1 billion in FY21, driven by the exceptional growth across its Investment Banking, Brokerage, and Asset Man- agement divisions, and the NBFI platform. 2021’s performance is a testament to the Firm’s ability to grow revenues, despite the strong realized/ unrealized gains on investments and the Private Equity division’s exceptional incentive fees of EGP 342 million booked in the comparable year. The NBFI platform, which stood at 33% of total Group turnover, reported revenues worth around EGP 2 billion, climbing 41% Y-o-Y, with outstand- ing portfolios up a significant 39% Y-o-Y to EGP 13 billion. Tanmeyah, which accounts for 72% of the platform’s revenues, reported a top line of EGP 1.4 billion during the year, up 31% Y-o-Y on the back of strong sales and geographical expansion across Egypt. valU also delivered a remarkable performance this year, with revenues surging 171% Y-o-Y to EGP 302 million due to numerous partnerships signed with leading merchants in vital sectors, as well as the innovative products launched during the year. The platform’s factor- ing business, which falls under EFG Hermes Corp-Solutions, also gained significant ground this year, with revenues surging 117% Y-o-Y to EGP 58 million as the business further capitalized on synergies with the Investment Bank. The leas- ing business, which also falls under EFG Hermes Corp-Solutions, reported revenues of EGP 215 million, up 16% Y-o-Y. EFG Hermes’ Investment Bank vertical recorded EGP 3.8 billion in revenue on the back of the strong performance from the Group’s sell-side operations. On the buy-side front, despite a de- cline in revenues from the Private Equity division, Asset Management performed well, growing its revenues by 45% in FY21. Sell-side operations had a very good year with revenues jumping 44% and the Brokerage arm boasting a lead in Egypt, Dubai, and Kenya in terms of market share. The Investment Banking division successfully concluded 41 ECM, M&A and DCM transactions worth an aggregate of USD 7.9 billion—the highest number of transactions the division has recorded in a single year. Group operating expenses grew 9% Y-o-Y to EGP 3.9 billion after the consolidation of Group Revenues (EGP mn) 6,089 5,432 4,802 4,006 4,008 3,630 Group Net Profit (EGP mn) 1,456 1,378 1,305 1,580 1,225 1,012 2021 2020 2019* 2018* 2017 2016 2021 2020 2019* 2018* 2017 2016 * Revenues and net profit figures for 2018 and 2019 are adjusted to reflect IFRS 16. 22 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 23 Management Discussion and Analysis aiBANK, whose operating expenses came in at EGP 156 million and accounted for 50% of the total increase. Additionally, employee expenses climbed 20% Y-o-Y to EGP 2.8 billion on the back of a scale-up in the NBFI businesses and variable expenses related to the increase in rev- enues from core operations. Meanwhile, other G&A expenses were largely flat, mainly due to lower operating expenses at the Investment Bank, and particularly lower ECL and provisions at the NBFI platform. EFG Hermes Holding’s net profit after tax and minority interest came in at EGP 1.5 billion, up 12% Y-o-Y largely driven by the continued up- ward trajectory of the NBFI platform as well as aiBANK, which contributed EGP 38 million to the bottom line. Revenue Contribution by Platform NPAT Contribution by Platform 2021 2020 2019 62% 33% 5% 2021 74% 24% 3% 74% 74% 26% 26% 2020 2019 100% 91% 9% Investment Bank NBFIs aiBANK Group Financial Highlights In EGP million Group Operating Revenue Investment Bank NBFIs aiBANK Group Operating Expenses Group Net Operating Profit Group Net Operating Profit Margin Group Net Profit after Tax & Minority Interest Investment Bank NBFIs aiBANK FY21 6,089 3,794 1,989 306 3,920 2,169 36% 1,456 1,074 344 38 FY20 5,432 4,019 1,413 0 3,597 1,836 34% 1,305 1,378 -73 0 Change 12% -6% 41% N/M 9% 18% N/M 12% -22% N/M N/M 3.8EGP BN Investment Bank revenues in 2021 The Investment Bank Securities Brokerage EFG Hermes Securities Brokerage completed USD 71 billion in executions, up 28% Y-o-Y on the back of higher executions in Abu Dhabi, Qatar, Dubai, and Kuwait. The Group was able to maintain its leading position as the broker of choice across multiple markets, retaining its po- sition as the leading brokerage house in Egypt with a market share of 33.8% in FY21. The Group successfully retained 42% of the 13% of foreign participation in the market during the year and 22% of the retail business in Egypt. In parallel, EFG Hermes ranked first on the DFM and sec- ond on the ADX, hitting market shares of 35.8% and 13.7%, respectively, in FY21. In Saudi Arabia, the Group delivered a seventh-place finish among pure brokers (non-commercial banks) at a 2.0% market share in FY21. Moreover, the Firm held a solid second place in the Kuwait Exchange, closing out the year with a market share of 29.6% in FY21. In Oman, the Group came in fourth, with a market share of 16.6% in FY21. EFG Hermes improved its ranking in Jordan, coming in at 11th place from 13th place last year with a market share of 6.1% in FY21, in addition to a 3.6% market share in Pakistan. The Group successfully ranked first in Kenya for the second consecutive year, recording a market share of 60.8% in FY21 up from 51.6% in the previous year, and ranked fourth in Nigeria with a market share of 5.7% in FY21. Securities Brokerage recorded revenues of EGP 1.3 billion, representing a significant increase of 29% Y-o-Y in FY21 on the back of higher revenues booked across multiple markets. Egyptian equities continued to represent the highest contribution to the Brokerage com- mission pool, contributing 27.2%, followed by Kuwait and UAE markets (Dubai and Abu Dhabi) both coming in second place with c.17.2%, and Frontier Markets, including Nigeria, Kenya, Paki- stan, and other Frontier executions, coming in fourth with an 11.8% contribution in FY21. Research EFG Hermes’ Research team had a successful year covering 319 stocks spread across 26 mar- kets by the end of 2021. Additionally, the team added a new market by initiating coverage on e- commerce play and the largest bank in Kazakh- stan, expanded small and mid-cap coverage in GCC, continued to build out its utilities cover- age, and initiated coverage on two supermarket chains in Sri Lanka and Morocco. Moreover, in the 2021 Institutional Investor poll for MENA and Frontier, the team ranked 1st in Frontier and 2nd in MENA, and was awarded the highest ranked international research provider for Pakistan in Asia Money’s prestigious poll. MIFID and CSA payments came higher Y-o-Y in FY21, with this being mirrored in research revenues. Going forward, the division will continue to ramp up its coverage, with more focus on growth sectors, small and mid-cap coverage, thematic research, and building out its frontier coverage in Vietnam. 24 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 25 Management Discussion and Analysis Group Revenue by LOB (EGP mn) Group Revenue by LOB (EGP mn) FY21 EGP mn Securities Brokerage Investment Banking Asset Management Private Equity Leasing Tanmeyah valU Factoring Holding & Treasury Activities FY21 1,341 494 528 109 215 1,427 302 58 1,323 Investment Banking Throughout the year, EFG Hermes’ Investment Banking division successfully concluded a total of 41 ECM, M&A, and DCM transactions worth an aggregate value of USD 7.9 billion, marking the department’s highest number of transactions in a single year. Additionally, the team successfully concluded the advisory on the USD 143 million follow-on sale of Abu Qir Fertilizers and Chemical Industries Com- pany’s shares on the Egyptian Exchange (EGX), underlining EFG Hermes’ commitment to spur private investment in key state-owned assets as part of Egypt’s economic reform agenda. Backed by 43 of some of the region’s highest caliber investment banking professionals, the division concluded advisory on a multitude of cross-border transactions throughout the year. Solidifying its position as the leading MENA ECM advisor, the Investment Banking division success- fully advised on several milestone offerings across the regional ECM space. The team successfully concluded advisory on Fertiglobe’s USD 795 mil- lion initial public offering (IPO) on the Abu Dhabi Exchange (ADX), marking one of the largest list- ings on the exchange and the first listing of a free zone company onshore in the UAE. The division also acted as joint bookrunner and underwriter on the USD 1.2 billion IPO of Saudi-based ACWA Power on the Tadawul Exchange, which marks EFG Hermes’ third IPO on the exchange in 2021. Continuing its journey with Theeb Rent a Car and its shareholders following the company’s suc- cessful IPO earlier in the year, the department acted as joint bookrunner and broker on the sale of a 21% stake in the car rental company through a USD 127.6 million accelerated equity offering. In the M&A space, the team successfully con- cluded the advisory to UAE-based Agthia Group on its strategic acquisition of a 100% stake in UAE health snacks company BMB Group for a total value of USD 172 million. The transaction marks the third M&A deal completed for the group in 2021 alone, cementing EFG Hermes’ leading role in the MENA M&A space. Building on its longstanding relationship with Sixth of October for Development and Investment Company (SO- DIC), the team successfully advised the leading real estate developer on the sale of 85.5% of its EGX-listed shares through a mandatory tender offer (MTO) to a consortium comprising UAE real estate Development Company Aldar Properties and Abu Dhabi Developmental Holding Company (ADQ). The landmark transaction worth USD 388 million marks the largest foreign direct invest- ment in the Egyptian real estate sector to date. The team also advised EFG Hermes Holding S.A.E on the acquisition of a 51% stake in Arab In- vestment Bank (aiBANK), transforming the group into a universal banking platform in Egypt offering a full spectrum of financial services. Lastly, the FY20 EGP mn Securities Brokerage Investment Banking Asset Management Private Equity Leasing Tanmeyah valU Factoring Holding & Treasury Activities FY20 1,039 237 363 468 186 1,092 111 27 1,912 department successfully advised TPG’s Evercare Group on the sale of its 50% stake in Islamabad Diagnostic Centre (IDC) to Integrated Diagnostics Holding (IDH) in a deal worth USD 72.4 million. as financial advisor on the lease financing for real estate development firm Madinet Nasr for Housing and Development (MNHD) worth USD 44.6 million. On the debt front, EFG Hermes continued to grow its debt capital markets (DCM) franchise on the back of the successful execution of sev- eral milestone transactions comprising diversi- fied financing options. The team successfully concluded a series of securitization issuances, unlocking new opportunities for a multitude of clients. The department concluded the advi- sory to EFG Hermes Holding’s wholly-owned subsidiary, EFG Hermes Corp-Solutions, on the first issuance of its EGP 3 billion securitization program, through a bond offering worth USD 50.3 million. Additionally, the division suc- cessfully advised Misr Italia Properties, one of Egypt’s leading real estate developers, on its first securitization issuance, worth USD 50.6 million, as part of an EGP 2.5 billion securitiza- tion program. The department also concluded the USD 40 million securitization issuance for Pioneers Development Company. Continuing to expand its service offerings in the ever- growing DCM space, the division also advised on the USD 12 million debt arrangement for Mac Beverages Limited, as well as the issuance of a senior unsecured short-term note for the Hermes Securities Brokerage Company (HSB) worth USD 35 million. Lastly, the team acted The Group’s Investment Banking Division re- corded revenues of EGP 494 million, up 108% Y-o-Y in FY21. Asset Management EFG Hermes Egypt’s AUM rose 23% Y-o-Y, driven by net inflows and markets’ strong performance in FY21. Net inflows represented 11% of the in- crease in AUM, and was driven by strong inflows in the MMFs, followed by inflows in equity and fixed income portfolios. Markets’ appreciations represented the remaining 12% of the increase in total AUM and is attributed to MMF's positive performance, together with equity/FI/balanced portfolios' appreciation during the year. How- ever, equity portfolios’ strong performance was the key driver. In parallel, EFG Hermes’ regional asset manage- ment arm Frontier Investment Management “FIM” saw its AUM rising 25% over the year, triggered by its strong performance and mar- kets appreciation in part and net inflows, which reflects largely a SPAC for USD 200 million. The Group’s Asset Management Division rev- enues rose 45% Y-o-Y to EGP 528 million. 26 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 27 Management Discussion and Analysis Private Equity Vortex Energy IV, a global renewable energy plat- form managed by the private equity arm of EFG Hermes, injected its first tranche in relation to its investment in Ignis Energy Holdings, parent com- pany of Spanish independent integrated renew- able player Ignis Group. Vortex Energy will inject over EUR 625 million through its newly launched Vortex Energy IV Fund and its co-investors into Ignis via a series of capital injections, which will be deployed over the coming few years subject to certain conditions. This will allow Ignis to fund its growth plans and transform into a fully integrated, renewable independent power pro- ducer (IPP) in Spain and other geographies. This capital contribution from Vortex Energy IV and its co-investors will allow Ignis to own and operate a growing share of the projects that it develops. The division’s education platform, (Egypt Edu- cation Platform – EEP) continued expanding its operations during the year after entering into definitive agreements to acquire a recently built state-of-the-art mega campus located in Sheikh Zayed city, West Cairo. The new campus will host EEP’s recently acquired Hayah brand under the name “Hayah West” and will mark Hayah’s first expansion into the west side of Cairo. The new campus will be able to house more than 1,700 students. EEP also executed its first management agreement with The Sover- eign Fund of Egypt (TSFE) and Mobica to man- age and operate two new premium national schools that will be developed in 6th of October City with a combined capacity of c.5,000 stu- dents. The new schools are expected to start operations in September 2023. With these new developments, the EEP is set to enter 2022 with a diversified portfolio comprising 10 schools spread out across Cairo and Alexandria under various stages of development and with a com- bined capacity approaching c.20,000 students. The Private Equity division continues to explore potential growth opportunities in the market through future acquisitions or development of new schools, with plans to close at least two new investments in 2022. On the healthcare front, United Pharma (“UP”) has successfully closed FY2021 realizing out- standing revenue growth, exceeding its Egyptian market peers. During FY21, UP continued to ramp up its sales, almost doubling its yearly output on an annual basis. The Company has diversified its distribution network, with its largest client seg- ment contributing only c. 30% of total sales. UP successfully increased its market share and mar- ket ranking as per IMS estimates, and it is now a market leader in the Hospital Solutions space. During FY21, UP has almost doubled its sales Y-o-Y, with a realized EBITDA margin, exceed- ing several established market peers. UP’s full facility upgrade plan is in its final stages and on track to be finalized in the early months of 2022, setting up the necessary capabilities to drive the company’s upcoming growth plans. In parallel to the ongoing value creation pro- cess within UP, Rx Healthcare platform has progressed with a number of promising acquisi- tion opportunities in the B2B and B2C pharma segments, currently at advanced stages of negotiation and execution, and with potential aggregate deal values exceeding EGP 1 billion, supporting EFG Hermes’ healthcare platform strategy of expanding its investments in the pharmaceuticals sector. Private Equity revenues were adversely affect- ed by the comparable year’s high, non-recurring revenue of USD 342 million from Vortex III exit. Yet, 4Q21 revenues grew by 140% Y-o-Y to EGP 33 million, driven partially by higher manage- ment fees as AUM grew Y-o-Y. Tanmeyah Tanmeyah, the Firm’s microfinance arm, wit- nessed an increase of 24% Y-o-Y in total loans issued to reach EGP 5.2 billion in FY21. This was reflected on the number of active borrowers and Non-Bank Financial Institutions 2.0EGP BN NBFI Platform Revenues in 2021, up 41% Y-o-Y processed applications, which grew 14% Y-o-Y and 18% Y-o-Y, respectively. Consequently, Tan- meyah’s outstanding portfolio climbed 22% Y-o- Y to stand at EGP 3.7 billion at the end of the year. In efforts to further grow its portfolio, Tanmeyah changed its MEL product structure to start from EGP 7,000 instead of EGP 5,000 and up to EGP 50,000, which contributed to the increase in the average ticket size, reaching EGP 14,500 in FY21. Sales from the Women In Business (WIB) product ramped up by 619% Y-o-Y in FY21, as the company rolled out the product across all its branches, and further enhanced the product’s pricing. Alongside its product development efforts, Tanmeyah continues to expand its geographi- cal presence. By the end of 2021, the company had marked the milestone of hitting the 300 branch mark. The 16 new branches that started operating in 2021 contributed 5% to the increase in sales, and 6% to the value of the company’s outstanding portfolio. In 2021, Tanmeyah’s revenues grew by 31% Y-o- Y to record EGP 1.4 billion, up from EGP 1.1 billion recorded at year-end 2020. valU valU is a leading Buy-Now, Pay-Later (BNPL) lifestyle-enabling fintech platform offering con- sumers payment-on-installment programs. The Group’s BNPL platform delivered an exceptional performance, with the total number of transac- tions and Gross Merchandise Value (GMV) growing twofold in FY21; growing 131% Y-o-Y and 138% Y-o-Y to 452 thousand and EGP 2.4 billion, respectively. valU’s network grew to 1,657 merchants in FY21, as the platform continued expanding its market reach and offering a wider variety of goods and services to satisfy customers’ different lifestyle needs. The most notable additions of the year were valU’s partnerships with digital marketplaces Jumia and Noon, two of the three biggest e-commerce busi- nesses in Egypt. valU’s customer-base grew sig- nificantly, hiking by 134% Q-o-Q, and 108% Y-o-Y. By year-end 2021, valU’s total number of custom- ers had reached 190,000. This pool of customers comes as a strong testament to valU’s success in increasing its penetration, and its leading position in the BNPL market in Egypt. Shedding light on the app business, the outstand- ing portfolio increased 148% Y-o-Y, reaching EGP 1.96 billion at the end of FY21. In terms of the non-app business, the B2B outstanding portfolio declined by 8% Q-o-Q and 23% Y-o-Y, as valU shifts its focus to the growth of its B2C operations. valU’s revenues grew by a remarkable 171% Y-o- Y to record EGP 302 million, as sales and mar- gins continued to improve. valU’s ranking in the Egyptian market also jumped to second place during the year, with a market share of 23.8%. EFG Corp-Solutions Leasing EFG Hermes Corp-Solutions’ leasing business re- corded a total value of bookings amounting to EGP 3.9 billion in FY21, up 63% Y-o-Y, primarily driven by the significant ramp up in activity during the year. These new bookings were spread across 86 con- tracts in FY21 compared to 78 contracts in FY20. The leasing business’s outstanding portfolio regis- tered a stable value of EGP 4.7 billion at the end of FY21, as the division securitized EGP 780 million of the portfolio, in addition to the terminations carried out by a number of the business’s clients. 28 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 29 Management Discussion and Analysis EFG Hermes Corp-Solutions’ leasing team contin- ues to capitalize on cross-selling capabilities, with an eye for offering bundled financial solutions to its clients. At present, Corp Solutions has seven Joint clients utilizing Leasing and Factoring facilities. Factoring revenues reported EGP 58 million, up 117% Y-o-Y, driven by strong bookings and draw- downs. During the year, the factoring business topped the FRA ranking in FY21, coming in at first place with a market share of 22.8%. In 2021, leasing revenues increased by 16% Y-o- Y to register EGP 215 million, on the back of the securitization gains during the year. EFG Hermes Corp-Solutions’ leasing business was ranked 3rd in FY21, with a market share of 10.4%. aiBANK The acquisition of a 51% majority stake of aiBANK was completed in 4Q21, and thus the Group’s P&L reflects the Bank’s November and December P&L figures. Factoring 2021 was an exceptional year for EFG Hermes Corp- Solutions’ factoring business, with the business recording total bookings of EGP 4.2 billion, up from EGP 1.6 billion in 2020. The factoring business’s portfolio doubled Y-o-Y to reach EGP 1.9 billion by the end of FY21, with the number of approved clients increasing by 73% Y-o-Y from 44 clients at the end of FY20 to 76 clients at the end of FY21. The tables below show aiBANK’s two-month performance and the standalone balance sheet as at the end of December 2021. As primary shareholder, EFG Hermes Holding will support aiBANK to improve its financial the market, indicators, competitiveness and compliance with the CBE’s regulations, leveraging the Firm’s experience and that of in aiBANK P&L in EGP million Net Interest Income Net Fees and Commissions Other Revenues Total Net Revenues Employees Expenses Other Operating Expenses* Total Operating Expenses Net Operating Profit (Loss) Other Expenses Net Profit (Loss) After Tax Net Profit (Loss) After Tax & Minority Interest *Includes Other G&A and Provisions & ECL Nov & Dec 21 221 21 63 306 93 63 156 150 29 75 38 The Sovereign Fund of Egypt (TSFE). The Firm will also refocus the bank’s strategy toward financing small- and medium-sized companies, upgrading the product portfolio and utilizing fintech to optimally reach and serve a wider segment of society. Entering the banking sector is in line with EFG Hermes Holding’s strategy to diversify its products and services offering, solidifying the Firm’s position as the leading financial institution in Egypt offering integrated financial services, by becoming a universal bank. This model benefits all of the Firm's business sectors as they become more capable of providing almost any financial service to individual, retail, and corporate clients through one single platform. This business model also supports the Egyptian government's efforts to drive economic growth and succeed in its digital transformation and financial inclusion agenda. aiBANK Balance Sheet in EGP million Cash & Due from Central Bank Due from Banks Net Loans & Advances Financial Investments Other Assets Total Assets Due to Banks Customer Deposits Other Liabilities Total Liabilities Total Shareholder's Equity Entering the banking sector is in line with EFG Hermes Holding’s strategy to diversify its products and services offering Dec-21 1,041 18,756 9,567 14,008 2,089 45,461 1,056 38,730 804 40,590 4,871 30 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 31 1.8EGP BN Sell-Side revenues in 2021 SELL-SIDE PLATFORM OVERVIEW EFG Hermes’ sell-side division was able to continue capitalizing on the groundwork laid in 2020 to deliver outstanding operational and financial results Sell-Side Platform Overview Sell-Side Platform Overview Our activity in GCC markets in particular stands as a testament to the division's resilience and execution capabilities, as we continued to capture significant opportunities across our product range With widespread vaccine administration, strong fiscal and monetary policy support, and resur- facing investor optimism, markets were primed for a recovery. Despite residual economic turbulence across our footprint, EFG Hermes’ sell-side division was able to continue capital- izing on this gradual return to normal and on the groundwork laid in 2020 to deliver outstanding operational and financial results. Our Securities Brokerage arm performed soundly throughout the year, leveraging a boom in retail trading activity and the concurrent increase in volumes. The division continued to maintain its leading rankings across its regional footprint, with EFG Hermes Securities Broker- age ranking first on the Egyptian Exchange, Dubai Financial Market, and NASDAQ Dubai. The division also held its second-place posi- tion in Abu Dhabi. Our strength across MENA markets mirrors our performance in the frontier emerging markets (FEM) space despite a range of macroeconomic difficulties across our Sub- Saharan African and Southeast Asian market coverage. The division held onto its first-place ranking in Kenya for the second year running, while continuing to tap into its solid on-ground track records and experience in the foreign institutional space in the market to make further strides in Pakistan and Nigeria in the coming year. We have also worked on updating EFG Hermes One, introducing a fresh user interface with a range of new features, even propelling the platform across Egyptian borders to Kenya where users can now experience online stock trading on the Nairobi Securities Exchange (NSE). We also facilitated the third and fourth iterations of the EFG Hermes Virtual Investor Conference, setting up over thousands of meet- ings and bringing hundreds of regional and global investors closer to unlocking formidable investment opportunities in the region. In 2021, our Investment Banking division deliv- ered outstanding results in the face of fears of inflationary pressures, Omicron-induced sup- ply chain hurdles impacting our clients, and a reduced risk appetite amongst investors. Our activity in GCC markets in particular stands as a testament to the division’s resilience and ex- ecution capabilities, as we continued to capture significant opportunities across our product range—ECM, DCM and M&A—throughout the year. This has culminated in a series of success- ful transactions, including our first deal close in Pakistan. The division played a pivotal role in facilitating seven ECM transactions across the GCC, six of which were IPOs. It acted as joint bookrunner on the USD 1.2 billion IPO of KSA’s ACWA Power on the Tadawul, as well as on the highly successful public debuts of ADNOC Drilling for USD 1.1 billion and Fertiglobe for USD 795 million on the Abu Dhabi Exchange. Other prominent deals for the year included our advisory on Abu Qir Fertilizers’ USD 143 million follow-on share sale transaction as part of the Egyptian government’s privatization agenda, as well as our advisory on Integrated Diagnostics Holding’s (IDH) listing on the EGX, marking the country’s first dual listing between the Egyptian bourse and the London Stock Exchange (LSE). This year, we booked an impressive 41 deals with a cumulative value of over USD 7.9 billion. Our Research division maintained its position as the leading provider of fundamental-based research in the region, facilitating sound fi- nancial decision-making for our own teams and clients alike. During the year, the division played key roles in supplying the Firm’s various departments with valuable insights and power- ing transactions across the board. The division industry maintained polls, once again being named the leading Fron- tier Research House and second-ranked MENA Research House in the Institutional Investors’ 2021 poll, among other accolades. Having sig- nificantly expanded the Firm’s coverage across its position across key 34 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 35 Sell-Side Platform Overview the MENA and frontier markets over the course of the year, our Research division was crucial to the enhancement and expansion of our product and services roster this year. Despite growing uncertainty around the emer- gence of new COVID-19 variants, our outlook in 2022 remains highly optimistic as we forecast more sustained recovery throughout the year. Operationally, we will continue to monitor global market conditions, which will enable us to seek compelling ECM and M&A propositions in key MENA and FEM markets, particularly in fast-growing economies such as Vietnam and Indonesia. We will continue to fortify our broker- age business in efforts to expand our market share with the backing of our robust portfolio of institutional investors and retail-focused tech of- ferings. On the Investment Banking front, we are looking to capitalize on growing DCM activity in both our Egyptian home market and abroad by introducing a myriad of new products and ser- vices to meet heightened demand. Building on our efforts in 2021, we are also keen on resuming IPO activity in the coming year, having already established a substantial transaction pipeline for the DFM and ADX. The strength and expansion of our one-of-a-kind Research arm will also work to develop its offering, looking to effectively posi- tion EFG Hermes to meet constant demand for market-leading insights services in the face of economic uncertainty and market volatility. Looking back on the last two years, and then widening the lens to look at the last two decades and beyond, cements one thing for me: that our performance lays on the foundation of resilience, which rests on the shoulders of our exceptional sell-side teams’ steadfast commitment. It is this commitment—to the clients we serve, the mar- kets we operate in, and the communities where we do business—that gives me confidence that 2022 will be another milestone year for the Firm. Mohamed Ebeid Co-CEO of the Investment Bank EFG Hermes 36 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 37 494EGP MN Investment Banking revenues in 2021 INVESTMENT BANKING Through exceptional financial management, we create value not only for shareholders but our entire stakeholder base 108% revenue growth in 2021 7.9USD BN value of total Investment Banking transactions in 2021 Investment Banking Investment Banking In 2021, we successfully concluded a total of 41 equity, debt, and M&A deals, the highest number of transactions in a single year Overview EFG Hermes’ Investment Banking division has fortified its regional flagship position in Merg- ers and Acquisitions (M&A) advisory, Equity Capital Markets (ECM), and Debt Capital Markets (DCM) deal executions, becoming the regional investment bank of choice for frontier emerging markets’ (FEM) partners and clientele. The Invest- ment Banking division continuously works toward expanding its geographical footprint, carrying out the majority of the largest, most prominent transactions in its focus markets. The division’s team houses the region’s most renowned profes- sionals who provide knowledge on key economic, industry, market, and company-focused insights through their extensive global and regional ex- pertise. Boasting a robust business model and a plethora of innovative, value-added product and service offerings, the Group’s Investment Banking division continues to steer the region with its solid on-the-ground presence and its exceptional track record. By 2021, ECM, DCM, and M&A transac- tions across the division’s footprint recorded a total of 41 deals, with an aggregate value of over USD 7.9 billion. Operational Highlights of 2021 2021 was a turnaround year for global markets. As the world continued to navigate through the global pandemic, financial stability risks were sustained, on the back of the ongoing monetary and fiscal policy support, and the significant re- covery in global economic activity. ECM activity in emerging markets was relatively stagnant in the last few months of 2021, with extremely minimal early month gains. Market expectations for Fed policy tightening and tapering, paired with the uncertainty over the outlook for growth, supply- chain disruptions, and inflation created by the new Omicron variant, heavily weighed on investors’ risk appetite and dampened deal activity. However, in the GCC region, equity markets began signifi- cantly picking up in the third quarter of the year, with the region witnessing a substantial increase in IPOs, particularly in the UAE and KSA. Throughout the year, EFG Hermes’ Investment Banking division successfully captured the sub- stantial ramp up in GCC market activity, playing an active role in ECM, DCM, and M&A transactions. As a result, the division completed a record high of 41 transactions at year-end 2021. Backed by 43 of some of the region’s highest caliber investment banking professionals, the division concluded advisory on a multitude of cross-border transactions throughout the year, having managed to successfully close 16 DCM transactions valued at USD 560.4 million, 12 ECM transactions valued at USD 4.9 billion, and 13 M&A transactions worth USD 2.4 billion. The division’s performance was commemorated by numerous awards and accolades, including the “Best Debt Bank in Africa” and “Best Investment Bank in Frontier Markets” awards from Global Fi- nance under the Best Investment Banks of 2021, the “Sukuk Deal of the Year” award from Global Finance under the World's Best Islamic Financial Institutions of 2021, “Most Notable Listing: Main Market” from the Saudi Capital Markets Award (SCMA), “Best Cor- porate Investment Bank in Egypt” from Asiamoney, “Egypt’s Best Investment Bank” from the EMEA Fi- nance African Banking Awards for 2021, and “UAE’s Best Equity House” from the EMEA Finance Middle East Banking Awards for 2021. As part and parcel of its strategy to further expand its footprint in the GCC region, EFG Hermes acted as joint bookrunner on the landmark USD 144 mil- lion IPO of KSA’s water desalination company “Alk- horayef Water and Power Technologies”, as well as a joint bookrunner on the IPO of the Saudi-based car rental company “Theeb Rent a Car” worth USD 138 million. In the UAE, the Firm successfully completed advisory to Mubadala–owned “Al Yah leading Satellite Communications” (Yahsat), a fixed and mobile satellite services operator, on its AED 2.7 billion IPO on the Abu Dhabi Exchange (ADX), marking the first on the exchange since 2017. Another IPO in the UAE that gained high trac- tion was that of “Fertiglobe”, the world’s largest seaborne exporter of urea and ammonia and the MENA’s largest producer by production capacity at 6.5 million tons of urea and merchant ammonia. EFG Hermes advised the company on its USD 795 million IPO on the ADX, which was deemed one of the largest ever listings on the bourse, and the first ever listing of a free zone company onshore in the country. The Firm also completed advisory to “Abu Dhabi National Oil Company” (ADNOC) on the IPO of ADNOC Drilling Company PJSC (AD- NOC Drilling), the largest national drilling company in the Middle East by rig fleet size, on its USD 1.1 billion offering on the ADX. In the Egyptian equity market, EFG Hermes successfully acted as finan- cial advisor and bookrunner on the dual listing of “Integrated Diagnostics Holdings” (IDH) on the Egyptian Exchange (EGX) in the second quarter of 2021. The offering, which marked the first of its kind on the exchange, comprised an accelerated equity offering portion worth USD 30 million, and it aimed to increase the stock’s liquidity and to unlock untapped value. 40 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 41 Investment Banking In the M&A space, 2021 was an exceptional year for EFG Hermes’ Investment Banking division, with the Firm participating in landmark transac- tions across its regions of operation. The division successfully advised the UAE’s “Agthia Group” on two acquisitions, namely the cross-border acquisition deal of "Al Faysal Bakery & Sweets”, one of Kuwait’s leading industrial bakeries, and Egypt-based “Atyab”, for a total value of USD 153 million. The division also concluded advisory to Bank Audi S.A.L. on the sale of 100% of its wholly- owned Egyptian subsidiary, Bank Audi S.A.E., to First Abu Dhabi Bank PJSC (FAB), marking the largest M&A transaction in Egypt in the last five years. In the third quarter of 2021, the Firm acquired a 51% stake in the Arab Investment Bank (aiBANK), officially marking its strategic entry into the rapid-growing Egyptian commercial banking sector and transforming it into a universal bank in Egypt. Another high-profile cross-border M&A transaction for the year was EFG Hermes’ suc- cessful conclusion of advisory to American private equity platform “TPG” on the sale of a 50% stake in Base Consultancy FZ, the holding company of Pakistani diagnostics provider “Islamabad Diag- nostic Center” (IDC), worth USD 72.35 million in December 2021, marking the Firm’s first ever M&A transaction in Pakistan. issuances. Securitization In addition to the stellar performance across regional equity markets and the M&A space, the Firm’s Investment Banking division focused heav- ily on growing and developing its DCM capabilities and product offering in 2021, especially through in par- securitization ticular is a new and nascent asset class in Egypt that has recently been gaining high interest from investors. EFG Hermes focused on offering key se- curitization issuances for clients in 2021, and suc- cessfully closed 11 securitization transactions with a combined value of USD 401 million. Landmark securitization transactions for the year included issuances worth USD 24.3 two securitization million for “Premium International for Credit Ser- vices”, a USD 44.7 million securitization issuance for “Amer Group” and “Qasatli”, three securitization issuances for “Talaat Moustafa Group” (TMG), the first securitization issuance worth USD 40 million for “Pioneers Properties” for Urban Development, and the first securitization issuance of USD 51 mil- lion for “Misr Italia Properties”. The team also acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and arranger on valU’s first USD 20.5 million securitization issu- ance, EFG Hermes Corp-Solutions’ first USD 50 million securitization issuance, and SODIC’s USD 21.8 million securitization transaction. 2021 Deals Throughout 2021, EFG Hermes booked an out- standing number of landmark deals across MENA and non-MENA frontier emerging markets. ECM Deals Theeb Rent a Car IPO – Joint bookrunner on the USD 138 million initial public offering on Tadawul. Alkhorayef Water IPO – Joint bookrunner on the USD 144 million initial public offering on Tadawul. Integrated Diagnostics Holding (IDH) Acceler- ated Offering – Financial advisor and bookrunner on the dual listing on the EGX, with an accelerated equity offering worth USD 29.6 million Fawry Capital Increase/Rights Issue – Sole bookrunner and financial advisor on the USD 25.5 million capital increase through a rights issue on the Egyptian Exchange. Al Yah Satellite Communications IPO – Joint bookrunner on the USD 731 million initial public offering on the Abu Dhabi Exchange. Fawry Accelerated Offering – Sole financial advi- sor and joint bookrunner on the USD 80 million accelerated equity offering of a 4.3% stake. Geopost Accelerated Offering – Co-financial advisor and sole bookrunner on the USD 383.2 million accelerated equity offering. Fertiglobe IPO – Joint bookrunner on the USD 795 million initial public offering on the Abu Dhabi Exchange. ACWA IPO – Joint bookrunner on the USD 1.2 bil- lion initial public offering on Tadawul. China Three Georges (CTG) Sale – Buy-side advi- sor to China Three Gorges Corporation for the ac- quisition of 100% of Dubai-based wind and solar developer, Alcazar Energy Partners (AEP), worth USD 485 million. ADNOC Drilling IPO – Joint bookrunner on the USD 1.1 billion initial public offering on the Abu Dhabi Exchange. Raya Contact Center Stake Sale – Buy-side advi- sor to Raya Contact Center’s acquisition of 100% of Bahrain-based Gulf CX in a deal worth USD 12.2 million. Abu Qir Fertilizers Accelerated Offering – Joint bookrunner on the USD 143 million accelerated equity offering of a 10% stake. Agthia Acquisition – Buy-side advisor to UAE- based Agthia Group on the cross-border acquisi- tion of 70% of Atyab with a value of USD 153.4 million. Theeb Rent a car Accelerated Offering – Joint bookrunner on the USD 127.6 million accelerated equity offering of a 21% stake. M&A Deals Hilal Cement MTO – Advisor to Heidelberg Ce- ment on the sale of a 100% stake in its subsidiary Hilal Cement through a mandatory tender offer (MTO) on the EGX worth USD 10 million. Agthia Acquisition – Buy-side advisor to UAE- based Agthia Group on the cross-border acquisi- tion of Al Faysal Bakery & Sweets. aiBANK Acquisition – Concluded the acquisition of a 51% stake in aiBANK by EFG Hermes Holding alongside The Sovereign Fund of Egypt which acquired 25% of the bank. SODIC MTO – Sell-side advisor to Sixth of October for Development and Investment Company (SO- DIC) in the sale of 85.5% of its shares through a mandatory tender offer (MTO) to UAE real estate development company Aldar Properties and Abu Dhabi Developmental Holding Company (ADQ) worth USD 388 million. Foundation Holdings Sale – Buy-side advisor to Foundation Holdings on the acquisition of Saudi- based Shifa Al Munthaza Polyclinic Company. Agthia Sale – Buy-side advisor to UAE-based Agthia Group on the cross-border acquisition of 100% in UAE health snacks company BMB Group at a value of USD 172 million. ADES Take Private – Take-private and delisting of ADES International from the London Stock Ex- change in a transaction worth USD 178 million. First Abu Dhabi Bank Sale – Sell-side advisor to Bank Audi S.A.L (Bank Audi) on its sale of 100% of the share capital of its Egypt-based subsidiary, Bank Audi S.A.E, to First Abu Dhabi Bank PJSC (FAB). TPG Stake Sale – Sell-side advisor to TPG’s Ever- care Group on the sale of its 50% stake in Islam- abad Diagnostic Centre to Integrated Diagnostics Holding for a total consideration of USD 72.4 million. DCM Deals ADES Investments Debt Arrangement – Worth USD 43.0 million. Hayah International Academy Sale – Sell-side advisor on Hayah International Academy’s sale to the Egypt Education Platform (EPP). Premium Card Securitization Program – The division acted as financial advisor, MLA, and 42 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 43 Investment Banking underwriter on the USD 10.8 million fourth is- suance and USD 13.4 million fifth issuance of a securitization program for Premium Card. first issuance worth USD 20.5 million of a securi- tization program for valU, EFG Hermes’ Buy-Now, Pay-Later (BNPL) fintech platform. worth USD 50 million, of a securitization program for EFG Hermes Corp-Solutions, EFG Hermes’ leasing and factoring arm. Amer Group/Qasatli Securitization Program – The division acted as financial advisor, MLA, and underwriter on the USD 44.7 million first issuance of a securitization program for Amer Group. TMG Holding Securitization Program – The division acted as financial advisor, MLA, and underwriter on the USD 71.3 million second issu- ance, USD 28.3 million third issuance, and USD 49 million fourth issuance of a securitization program for TMG Holding. National Printing Lease Financing – The division secured a lease financing for National Printing Company, a large Egyptian paper and packaging company, worth USD 24.8 million. SODIC Securitization Bond – The division acted as financial advisor, arranger, manager, promoter, and co-underwriter of a USD 21.8 million securi- tized bond for Sixth of October for Development and Investment Company (SODIC). Hermes Securities Brokerage Unsecured Bond – The division acted as sole financial advisor, sole transaction manager and book-runner, underwrit- er, and arranger on the third issuance for Hermes Securities Brokerage, EFG Hermes’ wholly-owned subsidiary, in a USD 35 million senior unsecured short-term note. Misr Italia Properties Securitization Program – The division acted as sole financial advisor, sole transaction manager and book-runner, underwrit- er, and sole arranger on the first issuance, worth USD 51 million, in Misr Italia Properties’ securitiza- tion program. Pioneers Securitization Program – The division acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and sole arranger on the first issuance, worth USD 40 million, in Pioneers Properties for Urban Develop- ment’s EGP 3.0 billion securitization program. valU Securitization Program – The division acted as sole financial advisor, sole transaction manager and book-runner, underwriter, and arranger on the EFG Hermes Corp-Solutions Securitization Pro- gram – The division acted as sole financial advi- sor, sole transaction manager and book-runner, underwriter, and arranger on the first issuance, Key Financial Highlights of 2021 EFG Hermes’ Investment Banking division re- ported total revenues of EGP 494 million in FY21, reflecting a 108% increase compared to EGP 237 million in FY20. Investment Banking fees and commissions contributed approximately 9% of EFG Hermes Holding’s total revenue in FY21. Outlook Regional equity markets are expected to ramp up their activity next year, and the division aims to cap- ture the upside of this recovery, both in the MENA region and in FEMs. As the GCC region strengthens its IPO activity, EFG Hermes Investment Banking grows more optimistic about the potential pros- pects in KSA, the UAE, and Kuwait. In the MENA region, Egypt’s ECM activity is also looking to pick up, which is expected to develop and rejuvenate the movement of capital flow in the market and raise trading levels on the EGX. EFG Hermes’ Investment Banking division has significantly expanded both its product offer- ing and geographic footprint over the years, breaking ground in some of the world’s most rapidly growing markets across various regions and filling the gap between Egypt and the GCC region by providing a plethora of compelling investment opportunities. In 2022, the division aims to continue building on its robust track record of successful achievements, with an eye to remain the regional investment bank of choice not only for its existing base of intra- regional clients but also for international clients looking to access opportunities in compelling FEM markets. A constituent element to the division’s growth strat- egy in 2022 is to capture a larger share of the DCM space and expand its footprint into more frontier markets. In Egypt specifically, the division aims to continue capitalizing on the high demand present in the market and growing its DCM activities, partic- ularly through introducing more pre-funding deals, securitization transactions, and leasing products into the local market. EFG Hermes Holding also aims to continue capitalizing on the cross-selling deals between its other lines of business, with an eye to grant clients access to a broad range of fund- ing solutions. Additionally, the Firm’s recent acquisi- tion of aiBANK will enable EFG Hermes Holding to further offer its clientele a holistic range of financial products, targeted toward individual consumers, SMEs, and large corporations. 44 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 45 1.3EGP BN Securities Brokerage revenues in 2021 SECURITIES BROKERAGE Our Brokerage division is the premier brokerage house in MENA and in frontier emerging markets with on-the-ground teams that make us the partner of choice for international institutions 71USD BN total value of executions in 2021 33.8% market share in Egypt Securities Brokerage Securities Brokerage In 2021, EFG Hermes Securities Brokerage registered a significant 29% Y-o-Y rise in Brokerage revenues, primarily driven by the increase in retail activity in markets such as Egypt, Kuwait, and Jordan Overview EFG Hermes Securities Brokerage, the MEA region’s premier brokerage house, offers its cli- ent base a comprehensive offering of innovative products and services, in addition to an unrivaled coverage across more than 75 MENA and frontier emerging markets (FEMs). The division continues on its upward trajectory, with its operational foot- print spanning across four continents in Egypt, Kuwait, the UAE, KSA, Oman, Jordan, Pakistan, Kenya, Nigeria, and Bangladesh, with regional offices in the US and the UK. Throughout its years of operations, the Brokerage division’s client base has rapidly grown to house regionally and globally renowned institutional and individual investors. Backed by EFG Hermes’ unrivaled in- house research capacities, EFG Hermes Securi- ties Brokerage continues to provide its clientele with secure multi-platform trading tools, market intelligence and insights, and unparalleled execu- tional capabilities, ensuring maximum generated returns that best serve different investor prefer- ences and risk profiles. Operational Highlights of 2021 After a long year of market instability in 2020, capital markets performed solidly in 2021 and con- tinued on the upswing as the year closed out. Vol- umes expanded significantly in 2021 throughout the division’s markets due to a pickup in retail trad- ing activity. While this resulted in an increasingly competitive environment for brokerages across the region, EFG Hermes Securities Brokerage suc- cessfully captured the upside of market recovery, leveraging its decades-long, on-the-ground expe- rience across its regional footprint. In 2021, the company registered a significant 29% Y-o-Y rise in Brokerage revenues to EGP 1.3 billion, primarily driven by the increase in retail activity in markets such as Egypt, Kuwait, and Jordan. In terms of pure commissions registered in regional markets, Egypt remained the leading contributor to the company’s Brokerage commissions, at 27.2%. Frontier markets booked an 11.8% contribu- tion, while UAE markets (Dubai, Abu Dhabi, and Nasdaq Dubai) recorded a contribution of 17.1%, in addition to Kuwait’s commissions contribution coming in at 17.2%. Despite the solid increase in revenues, the rise in volumes spurred competition in the markets where the division operates. EFG Hermes Securities Brokerage’s regional market shares fell flat for the year, with its market share in the Egyptian market hitting 33.8%, down 2.6% from the 36.4% in 2020. However, the division still successfully managed to maintain its first-place ranking on the EGX, having capitalized on its foreign institutional base. Foreign participation came in at 13.3% during the year, with EFG Hermes successfully capturing 41.7% of these institutional inflows. the Kuwaiti market, doubling its revenues during the year, securing a solid market share of 30% in 2021, and capturing 62.9% of foreign institutional inflows for the year. In the UAE, EFG Hermes Securities Brokerage successfully managed to grow its market share on the DFM to 36% in 2021 and sustain its leading market position, despite flat trading vol- umes in the market. On the ADX, EFG Hermes’ market share stood at a solid 13.7%, fortifying its ranking on the exchange in second place. On Nasdaq Dubai, the division’s market share remained flat on the back of stagnant trading volumes. However, despite the challenging circumstances, EFG Hermes Securities Broker- age successfully managed to maintain its lion’s share on the exchange. In KSA, despite the increase in market volumes of around 7%, EFG Hermes Securities Brokerage’s trading volumes increased by 11%, with the division maintaining its market share of 2%. Jordan proved to be a promising market in 2021. EFG Hermes Se- curities Brokerage registered a 6% market share, maintaining the share captured in 2020. Kuwait was one of the regions that witnessed a substantial ramp up in total traded volumes, number of deals, and total traded values. The high liquidity position in the market enabled EFG Hermes’ Brokerage division to record the highest number of executions ever traded since inception, with total executions recording an 11% increase to USD 13.9 billion against the USD 12.5 billion booked at year-end 2020. The division ranked second in The Firm’s Direct Market Access (DMA) trading platform made progress throughout the year, au- tomatically linking foreign institutional investors to the system’s database and granting them access to directly submitting their orders into the market. With this significant development in the digital brokerage space, EFG Hermes continues to intro- duce innovative financial solutions to its investors and expand its product and service offerings. 48 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 49 Securities Brokerage Brokerage Rankings (Percent of Total Market Executions) FY21 FY20 Market Share Rank Market Share Rank Egypt UAE – DFM UAE – ADX UAE – NASDAQ Dubai Kuwait Kenya Nigeria Oman KSA Jordan Pakistan 33.8% 35.8% 13.6% 34.1% 29.6% 60.8% 5.7% 16.6% 2% 6% 3.6% 1st 1st 2nd 1st 2nd 1st 4th 4th 7th* 11th n/a 36.4% 32.5% 27.6% 58.3% 34.1% 51.6% 19.8% 24.5% 2.2% 6% 3.8% Frontier Markets The Pakistani market witnessed yet another year of hurdles because of macroeconomic and political uncertainties, including a 10% further devaluation of the currency, interest rate hikes, and delays surrounding the resumption of the IMF program. As such, investors were bearish on the market during the year, but due to the Firm’s solid footing in the foreign institutional space in the market, the division’s market share stood at 3.6%. inflows and In Kenya, foreign local asset manager positioning for the post-pandemic recovery buoyed the market for another year. As such, the division reported a third year of solid performance, with EFG Hermes continuing to hold onto its first-place position with a 60.8% market share. Meanwhile in Nigeria, volumes continued to taper as the year progressed, with the decline in liquidity attributed to a generally weak mac- roeconomic environment, with the currency at the forefront, and the allocation of flows from equities toward the fixed income market. In saying this, EFG Hermes leveraged the strides made in the previous year, with the Firm stand- ing as the fourth leading broker in the country with a 5.7% market share. Online Trading Platforms EFG Hermes One In 2021, the division launched an updated version of the EFG Hermes One application, by leverag- ing synergies inherent in its business model at a critical juncture in the Egyptian capital market story, as equity market retail activity picked up and fintech solutions expanded in scope and importance. Today, EFG Hermes One is a one- stop-shop digital brokerage solution and, in turn, continues to maintain its position at the helm of the Egyptian fintech space. The EFG Hermes One application now allows investors to tap into a wealth of investment knowledge, execute informed trades, and monitor their portfolios in real time, all through a simpler, user-friendly It also offers a simplified digital interface. onboarding process, permitting users to create an account faster than ever before. The app now also features a roster of tools and trading op- tions, such as margin trading, short selling and same-day trading, among others. Moreover, EFG Hermes One users can utilize the application’s new "Learn" tab, a knowledge hub where they can access unparalleled investor intelligence from EFG Hermes Research, to boost their trad- ing knowledge. Users will also have access to the EFG Hermes One Virtual Simulator, allowing them to simulate the trading experience on the application and build their knowledge and skills prior to executing real trades. Also, during the year, EFG Hermes extended the EFG Hermes One platform beyond Egyptian borders, launching the all-new EFG Hermes One application in Kenya. The expansion unlocked a myriad of investment opportunities for retail investors, with the online platform offering seam- less online stock trading on the Nairobi Securities Exchange (NSE). The launch of the application came on the heels of the NSE’s introduction of day trading for retail investors, allowing them to buy and sell stocks and settle trades in a single day. The move formed an integral part of the Firm’s frontier strategy to open up the market to further retail participation, see more equities listed on the NSE, and grow the value of equity markets to 50% of Kenya’s GDP. OLT Investments International B.S.C. With demand for seamless and integrated digital solutions gaining significant traction in all industries, the need to provide digital access to the Firm’s brokerage services became apparent. One of the major milestones for the Firm in 2021 was the stellar performance delivered by EFG Hermes’ Bahraini subsidiary, OLT Investments International. The Firm’s online platform, in col- laboration with Saxo Bank, has managed to sig- nificantly grow its global client base, with AUM growing twofold by year-end 2021, placing EFG Hermes amongst the region’s most prominent players for online trading. Since its inception, the digital platform has quickly gained traction, and the Firm was successfully able to rapidly increase its client acquisitions. Structured Products The Structured Product Desk was launched in 2016 as an integral part of the Firm’s strategy to grow its capital market business and deliver a suite of diverse products to the franchise. 2021 saw EFG Hermes Securities Brokerage’s Structured Product Desk’s revenues grow by 33% to record EGP 79 million versus the EGP 59 million booked at year-end 2020. Unique Corporate Access In efforts to honor its commitment of unlocking lucrative investment prospects for global and regional investors across key sectors in the world’s most promising markets, and in light of the unprecedented conditions imposed by the onset of COVID-19, EFG Hermes continued to hold its investor conferences virtually through- out 2021. In March, EFG Hermes’ Third Virtual Investor Conference facilitated over 12,000 meetings, bringing together over 197 companies with more than 700 Investors from 253 global institu- tions, with a combined market cap of USD 898 million. The Fourth Virtual Investor Conference held in September saw an even more diverse turnout, with the conference facilitating 14,800 meetings with 215 companies representing 35 countries, as well as over 720 investors from over 260 institutions, with a combined market cap of USD 3.02 billion. Key Financial Highlights 2021 EFG Hermes Securities Brokerage’s revenues climbed by 29% y-o-y to EGP 1.3 billion in 2021, on higher revenues generated by favorable market conditions resulting in higher volumes across multiple of the Firm’s markets of operation. 50 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 51 Commission Breakdown by Market FY21 Egypt DFM* ADX KSA Kuwait Qatar Frontier Structured Products Others** Total FY21 27.2% 6.8% 10.3% 9.6% 17.2% 7.9% 11.8% 3.4% 5.7% 100% *DFM includes Nasdaq Dubai’s share of 0.04% in 4Q21 & 0.02% in FY21 ** Others include Oman, Jordan, Lebanon, UK (GDRs), Bonds, and EFG Hermes One Egypt UAE KSA Kuwait Pakistan Kenya Nigeria Frontier Structured Products Fixed Income Others** Total Revenue FY21 652 187 97 155 24 66 17 29 79 0 35 1,341 FY20 484 123 96 144 17 49 37 34 59 (30) 26 1,039 *Brokerage revenues highlighted above represent operations and not markets **Others include Jordan, Oman, and Bahrain Brokerage Revenue* EGP million 2021 2020 Average Daily Commissions (USD ‘000) 2021 2020 282 231 Awards In 2021, the team’s success garnered recogni- tion from numerous international ranking insti- tutions and awarding bodies, including Best Brokerage Services by Africa Global Funds; Best Broker in Egypt and Kenya by the EMEA Finance African Banking Awards; Best Broker in the Middle East, UAE, KSA, Kuwait, and Oman by the EMEA Finance Middle East Banking Awards; in addition to being ranked first for Best Interna- tional Brokerages, third for Best Brokerages for Sales, Best Brokerages for Corporate Access, and Best Brokerages for Execution, in Pakistan in the Asiamoney International Brokers Poll. Outlook Going forward, the division aims to capitalize on the rapid recovery witnessed across regional markets and the myriad of achievements made during 2021. In its local market, EFG Hermes Securities Brokerage will continue to leverage its substantial portfolio of institutional investors, with an eye to further increase its market share. In the UAE, the significant pick-up in equity mar- kets, evident from the rapidly growing number of IPOs, unlocks numerous opportunities for investors looking to expand trading prospects. With its leading market position in the DFM and on the ADX, EFG Hermes Securities Brokerage is well-positioned to capture an even larger share of the market, as well as higher foreign institutional flows. In Kuwait, the division is working toward obtaining a Qualified Broker License, which will enable it to introduce margin trading into the market and offer investors a multitude of com- pelling opportunities with lucrative prospects. Jordan’s market conditions remain promising, and the Brokerage division aims to continue expanding its product and service offerings in the market, capturing a larger market share. To further build on its solid achievements made in Sub-Saharan Africa, the division continues to work toward developing and growing an East and West financial hub through its Kenya and Nigeria bases. Simultaneously, it will also work to grow its presence in Southeast Asia, building on the remarkable achievements made in Pakistan and Vietnam. Alongside the division’s regional expan- sions and developments, EFG Hermes Securities Brokerage is undergoing processes to refurbish its online platforms, strengthen its technological infrastructure, and expand its online presence to become perfectly positioned to capture larger market shares and increase its client acquisition, in addition to more expected success for the DMA trading platform. All in all, the division will continue to work toward cementing its solid posi- tion as a broker of choice throughout its footprint. 52 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 53 319 Covered stocks RESEARCH Our research division is the leading provider of in-depth, real-time market insights, guiding the Firm’s divisions and client base when making key financial decisions 40 industries 26 markets Research Research As the world began gradually returning to normalcy, 2021 saw EFG Hermes Research actively track market developments, extend its research coverage, and enhance the quality of its products 25 new stocks covered in 2021 Overview EFG Hermes’ Research division continues to be the region’s leading provider of in-depth, real-time market insights, guiding the Firm’s various divi- sions and ever-growing client base when making financial decisions. The division’s research efforts bring together the perspectives of a diverse range of expert analysts, from fundamental and quan- titative to economic and strategy research. Their common focus is identifying opportunities and delivering better investment solutions and results for the division’s client base. This has proved par- ticularly invaluable considering the unprecedented circumstances seen over the past couple of years and the subsequent impact on global markets. The division’s growing ability to constantly expand its coverage and product offering, while remain- ing at the forefront of an increasingly competitive industry, has cemented its status in the past couple of years as the region’s frontrunner in equity and strategy research. The team covers 319 stocks in 40 industries, across 26 markets, as of the end of 2021. Operational Highlights of 2021 As the world began gradually returning to nor- malcy and health and travel restrictions slowly eased post the initial outbreak of the COVID-19 pandemic, 2021 saw more recovery and senti- ment trickle back into the markets under the division’s coverage. EFG Hermes Research was quick to track any market developments, and it continued to extend its research coverage and enhance the quality of its products. The division, which currently has an on-ground presence in Egypt, KSA, the UAE, Kenya, Nigeria, Bangladesh, and Pakistan, was also a key driver of the Firm’s IPO executions, as ECM activity picked up across markets during the year. In 2021, the division initi- ated coverage on 25 new stocks from key MENA and frontier markets. Evolution of Companies Under Active Coverage * (Number of Companies at Year-End) 326 299 287 263 225 154 141 133 2021 2020 2019 2018 2017 2016 2015 2014 Egypt UAE Kuwait Qatar KSA Oman Other Pakistan Vietnam Kenya Nigeria Bangladesh This year witnessed a shift in the research focus of the division from Africa to Asia. The research team are looking to expand their existing footprint in at- tractive Asian markets with promising prospects, rolling out a substantial push on coverage in Vietnam, while looking at other potential markets. At the same time, Environmental, Social, and Governance (ESG) received increased attention this year, as regulatory bodies begin to codify ESG reporting standards and investors turn to more sustainable investment solu- tions as part of their investment strategies. Analysts at EFG Hermes Research are now progressively integrating ESG aspects in their models and, hence, valuation metrics, adapting to the evolving needs of the division’s ever growing and diverse client base. The department’s ability to adapt to changing market dynamics and react to the developing needs of its increasingly varied client base has earned EFG Hermes numerous accolades over the years. EFG Hermes Research maintained its ranking in the Institutional Investor 2021 Poll, once again named the Top Frontier Research House and ranked second in MENA. The division also secured three out of five in the Top Analysts in the Frontier Markets category, including the number one position, in the same poll. Additionally, the team secured the Number 1 Research House position in the African EX-SA Equities by Financial Mail Top Analyst Awards 2021. The Firm’s Asian foothold also gained recognition, with a third-place ranking for the Best Brokerage for Research in Pakistan by the 2021 Asiamoney Brokers Poll. Outlook The unprecedented circumstances witnessed over the past couple of years have impacted all markets around the globe. However, during 2021, significant recovery was witnessed in earnings, as markets recovered following vaccine rollouts and reduced restrictions. Clients, investors, and analysts contin- ued to look to research houses for incisive, accurate, and timely research to help them navigate volatile markets, and EFG Hermes Research is ideally posi- tioned to capture this demand. With a positive global outlook, the division is planning a considerable push in 2022, broadening the variety of its products, and providing more diversified insights for the Firm’s client base and divisions. EFG Hermes Research will further incorporate ESG metrics in its stock cov- erage in the upcoming year, which is of increasing importance to the division’s clients. The division is additionally anticipating a wave of initiations, on the expected rollout of IPOs in the UAE, KSA, Kuwait, amongst others. EFG Hermes Research will con- tinue to expand its frontier coverage, with a particular focus on Asian stocks. 56 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 57 BUY-SIDE PLATFORM OVERVIEW EFG Hermes Holding successfully captured the upside of market recovery in 2021, infusing markets with compelling value-add opportunities and products 636EGP MN Buy-Side revenues in 2021 EFG Hermes Holding ● Annual Report 2021 ● 59 Buy-Side Platform Overview Buy-Side Platform Overview EFG Hermes Asset Management booked a consolidated revenue of EGP 528 million, reflecting a 45% Y-o-Y climb Throughout the years, EFG Hermes Holding has relentlessly worked its way toward becoming a regional pioneer of innovative financial services, consistently raising the bar for excellence in the markets it operates in. In 2021, The Firm con- tinued to build on its track record of success, surpassing regional benchmarks and peers and delivering a stellar performance across its core operations. During the year, global and regional markets continued on their upward trajectory, with global economic activity ramp- ing up significantly. EFG Hermes Holding man- aged to successfully capture the upside of this recovery, infusing markets with compelling value-add opportunities and new products, all while significantly contributing to the Group’s consolidated top-line growth. At year-end 2021, EFG Hermes Asset Manage- ment booked a consolidated revenue of EGP 528 million, reflecting a 45% y-o-y climb. The division’s local and regional AUM registered a remarkable increase, with Egypt AUM hiking by 23% to record EGP 23.5 billion and regional AUM increasing by 25% to reach USD 2.6 billion. In terms of EFG Hermes Private Equity’s perfor- mance, the division’s renewables platform, Vor- tex Energy, reported solid results for the year. In 2021, Vortex Energy successfully concluded the first close for its “Vortex Energy IV” fund worth c. USD 200 million, with an eye on extending its renewables product portfolio beyond its cur- rent verticals, in addition to expanding its geo- graphical footprint. Additionally, the strategic agreement Vortex Energy entered this year with Spain’s Ignis Energy Holdings worth EUR 625 million aims to position our renewable energy platform to better serve the growing traction that is being garnered in the landscape of sus- tainable and responsible investing, and to help pave the way for the global transition toward a net-zero emissions environment. 2021 was a remarkable year for the Private Eq- uity division on the healthcare front. Throughout the year, our healthcare platform Rx Healthcare Management (RxHM) continued to enhance and expand its operational footprint in collaboration with United Pharma, which was acquired in 2019. We have successfully managed to intro- duce a large number of new, superior products to our portfolio during the year in order to con- tinue catering to the ever-growing demand that is present in regional markets, and to continue providing a comprehensive suite of innovative healthcare solutions across various regions. On the education front, our platform, Egypt Education Fund (EEF), began extensively broad- ening its portfolio of offerings in the Egyptian education landscape. In 2021, the platform successfully finalized its investment in Al Hayah International Academy, a leading provider of K-12 education in Egypt. With this acquisition, the platform currently houses a total of five of the country’s most reputable educational insti- tutions, and continues to build on its strategy of providing students across the country with flagship educational solutions. Looking ahead, the EFG Hermes Private Equity and Asset Management arm aims to continue growing investment spectrum to house more investments that create sustainable value to stakeholders and economies at large. Our its record of achievements for the year and the years prior speaks volumes about the Firm’s solid ability to effectively charge regional markets with investment prospects that are not only lucrative but also create meaningful impact across the board. As regional and global markets continue to ramp up in activity, we aim to continue working toward bolstering our financial position through further capitalizing on new opportunities and growing our offer- ings, fortifying the Group’s position in frontier emerging markets as the leading investment bank franchise. Karim Moussa Co-CEO of the Investment Bank EFG Hermes 60 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 61 528EGP MN Asset Management revenues in 2021 ASSET MANAGEMENT Our Asset Management division boasts a track record of 18 years, and our Private Equity portfolio includes prime investments in strategic and defensive sectors in Egypt and abroad 23.5EGP BN value of Egypt AUM 2.6USD BN value of regional AUM Asset Management Asset Management The Asset Management division leverages its team of regional industry experts to provide bespoke financial advisory, lucrative investment prospects, market insights, and other value- added services 23% growth in Egypt AUM 25% growth in regional AUM Overview EFG Hermes’ Asset Management division, the MENA region’s flagship asset manager, boasts a remarkable track record dating back to 1994. Throughout its decades of operations, the division has offered its clients a diverse, comprehensive spectrum of mutual funds and discretionary port- folios comprising both country-specific and re- gional mandates. The division’s mandates include equity, money market, fixed income, indexed, and Sharia- and UCTIS-compliant mandates. Boasting an expansive client base of individual and institutional investors, as well as large gov- ernment entities, the division leverages its team of regional industry experts to provide bespoke financial advisory, lucrative investment prospects, market insights, and other value-added services. EFG Hermes Asset Management offers tailored products and puts capital to work in a manner that best serves individual needs, unique financial objectives, and risk appetites. Operational Highlights of 2021 2021 was an exceptional year for the Firm’s As- set Management division, with regional markets witnessing a rapid recovery in activity after a year of pandemic-driven market turbulence in 2020. Backed by the relaxation of lockdown restrictions, business re-openings, higher vaccine roll-outs, and rising oil prices, economic activity continued to ramp up throughout 2021. Inflation rates witnessed a significant rise throughout the year, as increas- ing demand continued to be matched with major supply chain shocks. Despite the present market volatilities, the MENA region’s capital markets fared remarkably well during the year. In 2021, EFG Hermes Asset Management’s fund and portfolio Egypt AUM (EGP bn) 23.5 9.0 21.7 8.0 13.8 13.0 20.7 7.9 12.1 19.8 7.6 19.1 7.4 17.4 6.8 16.9 6.4 15.5 5.3 16.3 6.0 11.7 11.3 10.1 10.0 9.8 9.7 15.6 6.1 8.9 14.2 5.5 7.9 14.0 5.7 7.6 0.7 0.7 0.7 0.6 0.6 0.5 0.5 0.4 0.6 0.7 0.7 0.7 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 Egypt Equity Funds MMFs and Fixed Income Portfolios performance continued to outperform peer aver- ages, allowing the division to maintain its leading position as the regional asset manager of choice. By year-end 2021, the division’s AUM in Egypt saw robust growth, climbing by 23% Y-o-Y to record EGP 23.5 billion on the back of the strong performance from equity markets during the year, in addition to the rising net inflows in Money Market Funds (MMFs). Regional AUM from the Firm’s regional arm, Frontier Investment Manage- ment (FIM) Partners also grew 25% in FY21 to book USD 2.6 billion, as the division continued to deliver a stellar performance across all its funds and managed accounts, in addition to the higher net inflows from equity portfolios. The major operational milestones for the division included raising funds of USD 200 million for the Firm’s regional Frontier Investment Corporation Special Purpose Acquisition Vehicle (SPAC). The SPAC was launched with an eye to acquire com- panies operating in the technology, digital media, e-commerce, financial technology, and digital services sectors across markets with high growth prospects in the MENA region, Sub-Saharan Africa, and South and Southeast Asia. Additionally, the di- vision launched new investment products targeted at the emerging market asset class, to capture the high-demand present in the asset management space and better serve the unique and evolving needs of its clients, ultimately cementing its lead- ing position across its regional footprint. 64 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 65 Asset Management Regional AUM (USD bn) 2.6 1.8 2.5 1.8 2.4 1.7 2.4 1.9 2.1 1.6 1.7 1.4 1.7 1.3 1.6 1.3 1.6 1.3 1.4 1.1 1.5 1.1 2.3 1.9 0.8 0.7 0.7 0.5 0.5 0.4 0.4 0.3 0.4 0.4 0.4 0.4 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 Regional Funds Regional Portfolios Local Funds Managed by EFG Hermes Asset Management in Egypt 13.46 bn 734 mn 232 mn 125 mn MMR Equity Fixed Income Balanced Key Financial Highlights of 2021 Asset Management revenues rose by 45% Y-o-Y in FY21 to EGP 528 million, compared to the EGP 363 million reported in FY20, largely due to strong incentive fees booked by the regional asset man- agement arm, FIM, in the final quarter of the year. Awards In 2021, EFG Hermes Asset Management was named Best Asset Manager in Egypt and Pan-Af- rica by the EMEA Finance African Banking Awards for the third consecutive year, as well as the Best Asset Manager in the UAE by the EMEA Finance Middle East Banking Awards. The division was also ranked 17th in the 30 Biggest Asset Managers for 2021 by Forbes Middle East. Outlook In 2022, the Asset Management division remains confident in its ability to continue raising the bar across its regional footprint and expects to continue to grow and deliver long-term value to its investors and other stakeholders. The division will push on with its product expansion strategy, introducing a multitude of innovative products and solutions to its existing offerings that will further solidify its position as the region’s leading asset management house. 66 ● EFG Hermes Holding ● Annual Report 2021 109EGP MN Private Equity revenues in 2021 PRIVATE EQUITY Our Private Equity division is a regional leader in the field, dedicated to driving accretive investments in strategic, high- demand sectors 3 focus sectors Private Equity Private Equity With a robust track record spanning two decades, the Private Equity division implements a specialized theme-centric approach to its investment methodology, investing in fast-growing businesses with untapped prospects investing in companies Overview EFG Hermes’ Private Equity division is a regional lead- er that is dedicated to driving lucrative investments in strategic, high-demand sectors. With a robust track record spanning two decades, the Private Equity division implements a specialized theme-centric ap- proach to its investment methodology, investing in fast-growing businesses with untapped prospects. The division houses the industry’s most prominent professionals, through their strategic insights and expertise. EFG Hermes’ Private Equity investment methodology strongly focuses on high-impact, responsible investments, funding companies operating in key sectors, such as education, renewable energy, and healthcare. With global investors and financial markets increasingly becoming aware of the importance of ESG criteria and a net-zero future, EFG Hermes’ Private Equity division continues to prioritize investments in sec- tors that not only generate financial returns but also create massive impact. Being a pioneer in these ver- ticals, EFG Hermes Private Equity has successfully fortified its expansive presence, consistently adding value to the industries across its footprint. As such, the division manages its renewables investments through its Vortex Energy platform, which was established in 2014 to invest in proj- ects in the rapid-growing renewable energy industry, driving higher sustainable development and laying the foundation for the transition toward clean energy. Since its inception, the investment platform has witnessed great success, complet- ing the entire investment lifecycle from origina- tion to divestment. In previous years, Vortex Energy divested Vortex I and Vortex II, which held a 49% stake in a 998 MW pan-European portfo- lio, encompassing 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 UK, which was later recognized as the winning EMEA Renewables and Energy Transition Solar Deal of the Year in the IJInvestor Awards in 2021. EFG Hermes’ EEF is a USD 150 million investment fund that was launched in 2018 in partnership with Dubai-based education provider GEMS Edu- cation. The education fund targets investments in Egypt’s K-12 private education sector, growing and developing Egypt’s underserved K-12 educa- tional sector, in line with the Firm’s aim to make investments that are socially impactful across areas of strategic development in Egypt. Invest- ments that fall under the fund’s umbrella include the acquisition of existing schools, greenfield de- velopments, and building a vertically integrated platform with GEMS Education to best manage the platform assets’ operations. In 2019, the education platform concluded the acquisition of a majority stake in Option Travel, Egypt’s flagship transportation services provider, to enable the company to provide specialized buses that will center on the health and safety of students. Rx Healthcare Management (RxHM), the Firm’s healthcare-focused investment management, was established to manage diverse investments across the healthcare sector to be able to meet the ever-growing demand for top-notch health- care products and services across Egypt, the MENA region, and Africa. RxHM strongly focuses on investing in healthcare verticals with solid prospects, with an eye to unlock a plethora of compelling and accretive opportunities for inves- tors. The Firm acquired a stake in Egypt’s lead- ing medical solutions provider United Pharma, marking RxHM’s first investment in the pharma- ceuticals landscape. The acquisition concluded through Special Purpose Vehicle (SPV) Nutritius Investment Holdings, which was executed to cater to the substantial demand for medical solutions present in Egypt and the MENA region. Through the acquisition, RxHM aims to continue expanding United Pharma’s product offerings, providing healthcare solutions that create signifi- cant impact for the economy at large. Operational Highlights of 2021 Vortex Energy 2021 was an exceptional year for Vortex Energy. During the year, the platform concluded the first close of USD 200 million for its fourth fund “Vortex Energy IV”, secured by EFG Hermes and several Abu Dhabi-based sovereign institutional investors. The fund, which is situated in the Abu Dhabi Global Markets (ADGM), will target a magnitude of energy transition verticals, such as generation, storage, and electric vehicle charging facilities, among others. The fund’s scope encompasses products across the entire renewable energy spectrum, integrated product including plant operations, policies, development companies, greenfield de- velopments, and commercial and industrial solu- tions. Vortex Energy IV’s geographical footprint is to span countries in Europe, North America, Latin America, and Australia. Later in the year, Vortex Energy entered into a definite agreement with Ignis Energy Holdings, 70 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 71 Private Equity the holding company of the Spanish independent integrated renewable player Ignis Group. Through this agreement, Vortex Energy is expected to inject over EUR 625 million through its Vortex Energy IV Fund, which will enable Ignis to best finance its operation expansion plans. RX Healthcare Management 2021 saw RxHM work toward growing and en- hancing the operations of its healthcare platform with United Pharma. The company’s product offering encompasses a vast range of generic categories specifically catering to underserved therapeutic areas, as well as intravenous (IV) solutions. RxHM substantially expanded the platform throughout the year, sourcing a larger number of products to add to its portfolio and expanding its regional footprint through higher exports to various countries. Medical products and services continue to witness increasing de- mand in regional markets, and the division aims to explore further prospects to push forward its platform expansion. Egypt Education Fund (EEF) In 2021, the education platform began diversify- ing its portfolio of investments to house reputable institutions in the region, with an eye to expand and enhance its activities in the education sec- tor. At present, the platform’s portfolio consists of 10 schools at various stages of development with a combined capacity of c. 20,000 students, offering superior education to more than 9,000 students currently enrolled. One of the major milestones for EFG Hermes’ education platform for the year included the addition of Al Hayah International Academy to the platform, one of Egypt’s premium education providers. The school follows a one-of-a-kind, value-based edu- cation approach, and it joined the EEF Platform in an integration that brings together Al Hayah’s extensive expertise and the platform’s solid track record of immense success. 2021 Key Financial Highlights Revenues for the division in 2021 recorded EGP 109 million. Outlook In 2022, the EFG Hermes Private Equity division plans to continue broadening its investment scope to take on more investments that create meaningful impact across its footprint, providing a comprehen- sive suite of offerings that add sustainable value to investors, other stakeholders, and economies as a whole. Shedding light on EFG Hermes’ renewables platform, Vortex Energy, 2022 will see the Firm invest heavily in renewable energy in collaboration with Ignis, funding the company’s future growth plans in its domestic market Spain and interna- tionally. As the global focus on decarbonizing the environment continues to grow, Vortex Energy continues to work toward ensuring its renewables platform follows the highest sustainability and ESG standards with an eye to significantly reduce car- bon emissions. On the educational front, EEF aims to leverage its acquisition investment in Al Hayah International Academy, as the institution embarks on a journey to launch its first branch in West Cairo. The new branch is set to commence operations in 2022. Additionally, the education platform also aims to diversify its service offerings beyond the K-12 sector, as it is in the process of exploring op- portunities to invest in nurseries, Ed-tech, and other ancillary services. On the healthcare front, RxHM plans to continue expanding its healthcare portfolio by adding more acquisitions to the platform in col- laboration with United Pharma. 72 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 73 NBFI PLATFORM OVERVIEW Our Non-Bank Financial Institutions plat- form continues to offer innovative financing solutions that create long-term value for clients, households, and stakeholders NBFI Platform Overview NBFI Platform Overview The stellar performance delivered by our NBFI platform across the board attests to the effectiveness of our operational strategies and business offerings Institutions (NBFI) Our Non-Bank Financial platform maintained its strong growth mo- mentum this year, saturating the market with groundbreaking financial solutions that con- tinue to generate long-term value for clients, households, and stakeholders. The stellar performance delivered by our platform across the board attests not only to our ability to with- stand present market volatilities but also to the effectiveness of our operational strategies and business offerings. valU, our Buy-Now, Pay-Later (BNPL) fintech platform, delivered an exceptional performance during the year. The platform continued on its aggressive strategies to cement its position as MENA’s leading BNPL platform, bringing the most innovative financing solutions to the mar- ket and forming strategic partnerships to grow its base of services and merchants. In 2021, valU began extending its services into new sec- tors, including healthcare, travel, finishing, and insurance. Simultaneously, the company suc- cessfully onboarded Jumia, one of the region’s leading digital marketplaces, to its platform, with an eye to expand its service offerings to house more retail partners that reach a higher number of customers and help enhance their shopping experiences. In 2021 alone, valU booked over 450,000 transactions, with a total financed amount of EGP 2.3 billion. Another major milestone for our NBFI plat- form this year was the strong performance of our flagship leasing and factoring arm, EFG Hermes Corp-Solutions. The company offers its clientele of corporates and SMEs a comprehensive suite of top-notch leasing and factoring financing solutions, driving the push for financial inclusion across the region. 2021 was a record-breaking year for EFG Hermes Corp-Solutions; the company registered a total value of bookings amounting to a record high of EGP 8 billion versus the EGP 4 billion booked last year, reflecting a twofold Y-o-Y increase. In 2021, the company heavily capitalized on cross- selling prospects with the Group’s Investment Banking division, as well as other players in our NBFI platform, such as valU. Our e-payment solutions platform PayTabs Egypt also fared extremely well this year, as the demand for digital payments and solutions continues to grow rapidly. The company shifted its portfolio to encompass more SMEs and social commerce ventures, which falls in line with its strategy to grant higher financial acces- sibility to Egypt’s unbanked population and to promote financial inclusion across the country. It successfully onboarded a larger number of merchants to its portfolio, with a total of 640 new partner merchants added by year-end 2021. During the year, PayTabs Egypt partnered with our BNPL platform valU to create tailored financing solutions that enable merchants to convert their business models from B2B to more consumer-centric models. The company also partnered with EgyptAir, the country’s leading airline, in collaboration with valU with the purpose of providing convenient payment solutions to customers wishing to purchase local and international flight tickets. Another successful partnership for the year was that of PayTabs Egypt, valU, and Inertia, marking the Egyptian real estate sector’s first ever venture into digital payment solutions, accelerating contactless real estate sales. Throughout the year, EFG Hermes Holding’s NBFI platform began financing startups that operate in various sectors, with a strong focus on SMEs, young entrepreneurs, and freelanc- ers. In January 2021, digital banking platform Oxygen raised a round of funding from EFG Hermes Holding, Runa Capital, S7V, 1984.vc, Rucker Park, Inventures, and other prominent investors. With this funding, the company aims to continue developing innovative financial tools that ensure the best banking experiences for individuals and businesses alike. Later in November, EFG Hermes Holding, along with DFIN Holding and Marakez, invested in Egypt’s KIWE Fintech, the country’s first ever social 76 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 77 NBFI Platform Overview peer-to-peer payment app. Through this fund- ing, KIWE plans to use BNPL platform valU as the application’s key payment method, provid- ing users with seamless and convenient trans- fer options. In December, KlickIt, Egypt’s plug- and-play payment management and digital collection platform for educational institutions, concluded its first investment round. Backed by EFG Hermes Holding’s NBFI platform and Camel Ventures, the company aims to continue developing and enhancing its digital platform, in addition to upscaling its service offerings. Bedaya, our mortgage finance venture and Egypt’s first and only online mortgage pro- vider, has also delivered solid results for the year. In 2021, Bedaya’s operations registered significant growth, with the company recording an aggregate value of bank facilities worth EGP 1.5 billion. The year also saw the company take aggressive measures to expand its footprint and client base. At present, Bedaya’s portfolio has grown to book a total value of EGP 1,150 million and a client base of 437 clients, reflect- ing the strength of its service offering and the high demand that is present for its competitive mortgage financing solutions. Additionally, our insurance arm, Kaf, has con- tributed to the overall success of our NBFI plat- form. The company is determined to provide its clients with superior retail and commercial insurance solutions, with an eye to drive long- term value for individuals, businesses, and communities at large. By the end of the year, the company had moved from less than 0.1 million to over 1 million individuals insured, making it one of the largest life insurers in the Egyptian market by the number of people covered. During the year, our microfinance arm, Tan- meyah, continued on its branch expansion jour- ney with an eye to broaden its roster of clients. The company successfully established 16 new branches in 2021, growing to record a total of 300 branches and serving over 380 thousand clients spanning 25 governorates. Tanmeyah managed to stabilize its risk after the challeng- es caused by the pandemic and booked a total portfolio value of EGP 3.7 billion at year-end 2021—the highest level since the company’s in- ception. In line with the Egyptian government’s financial inclusion and digital transformation strategy, Tanmeyah signed an agreement with Banque Misr to issue co-branded cards to its clients and install ATMs across 250 of its branches. In addition, Tanmeyah fully rolled out its 2020 partnership with Damen, a leading e-payment network. Going forward, we remain optimistic about our ability to continue to grow and build on the successes we have achieved over the years. We look forward to another year of accomplishments and strongly believe that our subsidiaries will continue to drive progress in the ever-growing financial services industry. Walid Hassouna CEO EFG Hermes Holding’s NBFI Platform Group Head Debt Capital Markets CEO valU 78 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 79 1.4EGP BN Total revenues at year-end 2021 TANMEYAH Tanmeyah is one of Egypt’s leading microfi- nance solutions providers, offering funding solutions to lower-income, small- and micro- enterprise own ers 300 branches by year-end 2021 5K employees Tanmeyah Tanmeyah Through its diverse portfolio, Tanmeyah not only complements the CBE’s efforts to promote nationwide financial inclusion but also empowers a multitude of entrepreneurs in Egypt’s underserved areas to grow their businesses 3.7EGP BN portfolio value in 2021 Overview Established in 2009, Tanmeyah Microenterprise Services is one of Egypt’s leading microfinance solutions providers, offering funding solutions to lower-income, small- and micro enterprise own- ers with limited access to capital. Tanmeyah offers innovative financial solutions targeted at governorates where business owners typically lack access to funding from conventional bank- ing channels, with an eye to ensure financial inclusion in Egypt and bolster the development of surrounding communities. Tanmeyah extends credit facilities of up to EGP 50 thousand for mi- cro enterprises, and between EGP 50 thousand and EGP 100 thousand for very small business- es. Through its diverse portfolio, Tanmeyah not only complements the CBE’s efforts to promote nationwide financial inclusion but also empow- ers a multitude of entrepreneurs in Egypt’s underserved areas to grow their businesses, fueling economic growth and community devel- opment. In 2016, EFG Hermes Holding acquired 94% of Tanmeyah, which later increased to 100%, owned by EFG Finance Holding, in 2021 in efforts to expand its NBFI platform. Operational Highlights of 2021 Tanmeyah started off 2021 on a high note on the back of its successful implementation of a robust recovery strategy in the previous year. Although the microfinance sector was heavily impacted by the COVID-19 pandemic, the com- pany was able to confidently navigate through the crisis by adopting IFRS9, which predicts risk using a probability of default technique. This prudent risk management approach, along with a dedicated remedial taskforce to mitigate risk in high-risk branches, enabled Tanmeyah to sta- bilize its risk and focus on its growth, with sales substantially picking up in 1Q21. dashboards were rolled out to allow for the live tracking of performance metrics by field staff that were then used to cascade actions from management to front liners easily and swiftly. During 2021, Tanmeyah proceeded with its branch expansion strategy to broaden its cli- ent base and increase its sales. The company inaugurated 16 additional branches, bringing its total to 300 branches in 25 governorates. This expansion was guided by extensive research to determine and serve areas where there is high demand for microfinance. Next to expanding its branch network, Tanmeyah actively worked toward enhancing the efficiency and work environment of its existing branches to comple- ment its corporate image. By the end of 2021, the company had refurbished 25 of its branches, recruited high-caliber talent, and enhanced branch operations. As a result, Tanmeyah’s total number of clients grew to a record of 381 thousand in 2021, and the company’s portfolio reached almost EGP 3.7 billion—its highest level since inception. Moreover, Tanmeyah launched a new position at the end of 2020—Governorate Manager—to streamline operations in each governorate, ensure ease of communication, and subse- quently hold managers accountable for the performance in their respective governorate. This organizational restructuring started to reap fruit and contributed to a strong comeback in 2021. At present, Tanmeyah has 18 governorate managers, mostly promoted from within the company. The new post resulted in the ascen- sion of several area managers, loan officers, supervisors, and branch managers to higher po- sitions, creating healthy competition between employees and motivating them to outperform. This led the company’s portfolio at risk 30+ to significantly decline to 5.2% at year-end 2021, compared to 7.1% in the previous year. At present, Tanmeyah’s team comprises around 5,000 employees, of which over 2,700 are field loan officers. In 2021, the company focused heavily on the development of its people by of- fering them several learning and development opportunities, including trainings on money laun- dering and programs for top calibers to obtain various certifications. As such, a key priority for Tanmeyah was to enhance internal communica- tion to ensure higher levels of transparency and accountability. As part of its efforts to improve its technological infrastructure and by means of capitalizing on its data analytics, internal In line with the government’s digital transforma- tion strategy, Tanmeyah became the first micro- finance company in Egypt to acquire an agency banking license from the Central Bank of Egypt (CBE). Following the licensing, the company entered into an agreement with Banque Misr to issue co-branded cards and host the bank’s ATM machines in 250 branches and points of sales starting 2022, enabling clients to eas- ily withdraw and deposit cash. Tanmeyah also completely rolled out its 2020 partnership with “Damen”, a leading e-payment network, to offer payments through their points of sale. 82 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 83 Tanmeyah To further diversify its product offering, Tan- meyah employed geo-based marketing to provide unique bespoke products in each governorate based on insights obtained from market research. The company fully rolled out its Women in Business product across all its branches, which extends loans to women seek- ing to launch or expand their home-based busi- nesses to more branches, raising the portfolio of women empowered. Financial Highlights Driven by increased sales, enhanced margins, and a record portfolio growth, Tanmeyah re- corded a revenue increase of around 30% Y-o-Y to EGP 1.4 billion in 2021, up from EGP 1.1 billion recorded at year-end 2020. Forward-Looking Strategy In 2022, Tanmeyah aims to further optimize its operations to ensure efficiency and accountabil- ity. The company will relocate all its operations to a single centralized headquarters and launch an upgraded and a more robust Core Banking System to enhance operational efficiencies and accommodate for its increased business demand. Tanmeyah will also continue its efforts to enhance its technological capabilities and completely digitize its operations. Stemming from its firm belief that develop- ing human capital is a long-term investment, Tanmeyah plans to invest EGP 10 million in the development of its human capital. In addition to recruiting high-caliber talent, the company expects to upskill its employees that need to acquire more qualifications by enabling them to join open universities to receive undergraduate degrees. Moreover, the company will launch the Tanmeyah Champions League, an eight-month competition among the governorates for the best performance, in terms of sales, risk and overall efficiency KPIs. Building on the overwhelming success of the first tranche of its securitization program that delivered a net gain of EGP 24 million, Tanmeyah is assessing the launch of a second tranche in 2022, securing additional funding to diversify its funding lines. However, it is worth noting that Tanmeyah has sufficient existing funding lines to cover its growing operations and is perfectly positioned to sustain its flagship position in the Egyptian market. The company will also implement its agreement with Banque Misr, issuing the co-branded cards and introducing the Bank’s ATM machines in 250 of its branches and points of sales. Tanmeyah is also exploring wallets and other digital payment methods with key players in the market, in paral- lel to its existing partnership with Damen and Banque Misr. Tanmeyah will further diversify its offerings by providing tailor-fit products to the SMEs sec- tor. In addition, Tanmeyah aims to introduce consumer finance services as a new line of business. Following its decision to halt its light vehicle program, the company will develop new segment-based products, including a medical product targeted at doctors and pharmacists. 84 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 85 302EGP MN Total operating revenues at year-end 2021 valU valU is the MENA region's leading Buy- Now, Pay-Later (BNPL) fintech platform offering convenient and customizable financing plans 2.3EGP BN total financed in 2021 450K+ transactions completed valU valU Today, valU is ranked second in the consumer financing space in Egypt with a significant 20% increase in market share 5K+ points of sale 330+ websites 96K+ transacting customers A subsidiary of EFG Hermes Holding’s NBFI platform established in December 2017, valU is the MENA region’s leading Buy-Now, Pay-Later (BNPL) fintech platform offering convenient and customizable financing plans up to 60 months. With more than 5,000 points of sale and over 330 websites, valU offers access to a wide network of retail, service, and e-commerce providers across a diverse array of categories, including home appliances, electronics, home finishing, furniture, residential solar solutions, healthcare, education, travel, fashion, and nu- merous others. As the first platform of its kind in the MENA region, valU customers are able to receive instant credit decisions and gain access to the ever-growing platform’s partners. valU disrupted the fintech space by offering efficient and swift financing for both banked and un- banked customers. valU’s launch is part of EFG Hermes Holding’s wider strategy to promote nationwide financial inclusion through digital in- termediation, in line with national development strategies to move to a cashless society. 2021 Operational Highlights valU made tremendous progress throughout the year, having not only brought to market several innovative and disruptive financing solutions but also forging and building partnerships to expand its scope of services and merchants. As a result, valU witnessed outstanding growth on all key metrics, seeing over 96,000 transacting customers and over 450,000 transactions com- pleted through the app. With an average ticket size of EGP 5,024 (+2.4x Y-o-Y) and an average of five transactions per customer (+2.3x Y-o-Y), valU ended the year having financed a total of EGP 2.3 billion, up 2.4x compared to figures reported in 2020. Today, valU is ranked second in the consumer financing space in Egypt with a significant 20% increase in market share. Throughout the year, valU received several accolades that were a testament to its swift development as a leader in the industry. It was recognized as the Fintech Company of the Year at Entrepreneur Middle East’s Tech Innovation Awards 2021, as well as Fintech company of the Year at the Gulf Business Tech Awards 2021, and it won Best Buy-Now, Pay-Later Platform at the Leaders in Fintech Awards 2021 by Entrepreneur Middle East. valU also ranked 5th on Forbes Middle East's Top Fintech apps in the Middle East 2021. In 2021, valU extended its services to new key sectors, such as travel, through a partnership with EgyptAir in collaboration with PayTabs Egypt, allowing travelers to afford both do- mestic and international travel. Another key partnership forged this year was with Misr Insurance Company, allowing clients to benefit from convenient installment plans with an eye toward making insurance more accessible to a wider range of customers as part of valU’s efforts to boost financial inclusion and, in turn, social impact. It also further cemented its of- ferings in the healthcare space, partnering with Saudi German Hospital (SGH), the first and only healthcare facility in Africa to become a mem- ber of the Mayo Clinic Care Network, to offer convenient financing plans for SGH’s patients across all medical services. At the same time, valU expanded its partner- ship network in key sectors throughout the year, onboarding Jumia, one of the key online marketplaces in the region, and began talks to partner with leading e-commerce player, noon that went live in November 2021. As part of the efforts to expand its footprint in the real estate space, the company partnered with SODIC, offering convenient financing plans for potential Club S members at the SODIC East, SODIC West, and Allegria branches of the club. valU also partnered with Misr Italia Properties, providing clients with its home improvement financing solutions. valU also grew its partner network in the education space, working with the American University in Cairo’s (AUC) School of Business to offer convenient financing and af- fordable installment plans for individuals seek- ing to pursue the school’s undergraduate and executive education programs. valU also added more new retail partners to the roster, including Lulu Hypermarket and Azadea. Visibility and brand equity also skyrocketed once valU was able to execute promotions and campaigns at the mall level, not only stores and 88 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 89 valU brands. These campaigns allowed the company to benefit from the high footfall at malls and, in turn, to provide the malls with data insights on the purchase behavior of customers. Some of these malls include Mall of Arabia, Mall of Egypt, Cairo Festival City, and City Stars, to name a few. Furthermore, as part of valU’s plan to expand into more governorates, it launched a strategic partnership with MARAKEZ’s Mall of Tanta that saw valU offer its BNPL services to shoppers. valU introduced "Sha2labaz", a first-of-its-kind redemption program available exclusively for shoppers at MARAKEZ’s flagship Mall of Arabia. The program allowed customers to receive cash reimbursements equivalent to the purchases made in cash, credit or debit cards, or through other BNPL and payment solutions subject to their approved valU limit. This unique product permitted valU to access merchants that are not part of its network, including international merchants and others, such as utility payments. Additionally, through youth financing program "Ma3ak", valU was able to target the age group between 18 and 21, making it the only player offering a credit line to this age bracket. The pro- gram onboarded 3,000 students after the pilot phase, and it will continue to work toward finan- cial inclusion for this group through promoting financial literacy. Another key factor in the company’s success this year was its ability to leverage partnerships across the Group’s different lines of business. valU partnered with EFG Hermes Holding’s other NBFI platforms, mainly PayTabs Egypt and EFG Hermes Corp-Solutions. These partner- ships enhanced synergies across the Firm’s NBFI platform and promoted cross-selling op- portunities by utilizing its multitude of services to provide clients and partners alike with com- prehensive financing solutions. The partnership with EFG Hermes Corp-Solutions is available to merchants who have worked with valU for over one year, offering eligible partners access to finance with a pre-approved limit ranging from EGP 50 thousand to EGP 10 million. With PayTabs Egypt acting as the payment aggrega- tor in partnerships with EgyptAir, Inertia, and Lulu Hypermarket, this lent further attraction to a collaboration with valU to clients. In terms of marketing efforts, valU carried out its first celebrity advertising campaign this year. This successful promotion created a dra- matic effect in the figures, with a 40% pickup in daily run rates. Another successful campaign launched by valU was early access to Black in November. This move Friday promotions resulted in a dramatic uptick in transactions, sig- nifying a 200.6% increase in transactions com- pared to November 2020 and a 151% increase from October 2021 to November 2021. 2021 Key Financial Highlights valU’s total operating revenues (offsetting inter- est expense on bank facilities) hit EGP 302 mil- lion in 2021 compared to EGP 111 million in 2020. Forward-Looking Strategy In the coming year, valU will seek to further de- velop its operational synergies and cross-selling opportunities with partners across the Group, including PayTabs Egypt and EFG Hermes Corp-Solutions, among others. This will serve to provide value-added services to valU’s mer- chants by granting them access to immediate liquidity, largely through EFG Hermes Corp- Solutions’ factoring arm, as well as supporting them in expanding their business ventures. It will also capitalize on its relationship with Pay- Tabs Egypt, having already laid the groundwork to forge a partnership between the BNPL player, payment gateway, and Mazadat—the first X2C online-offline auctioning and e-commerce mar- ketplace in the MEA region. valU is also planning to expand its regional foot- print in the year ahead, replicating the success it has seen in its home market in others with similar underlying fundamentals. The company is in the final stages of launching its offering FY21 FY20 Sectors Electronics E-Commerce Mega Stores Fashion Retail Furniture Other Total FY21 768,151 299,767 368,096 143,046 204,351 489,766 2,273,177 % 33.8% 13.2% 16.2% 6.3% 9.0% 21.5% 100.0% FY20 336,869 156,720 133,059 58,037 120,906 145,833 951,424 % 35.4% 16.5% 14.0% 6.1% 12.7% 15.3% 100.0% in KSA, having laid the groundwork to forge a partnership with Al Hokair Group in 2022, while simultaneously eyeing additional markets. The company is also currently working on expand- ing into more governorates in Egypt outside of Cairo, Giza, and Alexandria, with plans in the works to launch the service in Mansoura through a partnership with a flagship mall in the area. valU’s flagship stores are now set to launch, signifying a shift from the booth structures it currently employs to offer a bespoke set of ser- vice offerings in-store as well as boost visibil- ity and adoption in the market. Additionally, the company is looking to onboard more merchants in numerous other sectors, including leading e-commerce platform Amazon, as well as club membership financing in Al Ahly Sporting Club. At the same time, the company will also launch its Sha2labaz product more broadly, having al- ready set in motion plans to launch it at Majid Al Futtaim’s anchor malls in Cairo. 125.8% 442,379 195,946 Number of Transactions 138.9% 2,273,177 951,424 Financed Amounts (EGP '000) FY21 FY20 %change 119% 96,499 43,982 Transacting Customers 90 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 91 8EGP BN Total value of new bookings in 2021 EFG HERMES CORP-SOLUTIONS We firmly believe in the complementary effects of leasing and factoring in providing corporations and SMEs with financial leverage 3.9EGP BN value of new bookings from the leasing business 4.2EGP BN value of new bookings from the factoring business EFG Hermes Corp-Solutions EFG Hermes Corp-Solutions 109EGP MN net profit at year-end 2021 22.9% market share in the factoring market in 2021 Overview Established in 2020 as part of EFG Hermes Holding’s NBFI platform, EFG Hermes Corp- Solutions was formed with an eye to consolidate the Group’s factoring and leasing businesses, EFG Hermes Leasing and EFG Hermes Factor- ing, into one bundled entity. The company offers its client base a multitude of top-notch, disrup- tive leasing and factoring tools that help push forward business growth and development and create long-term value across the board. Backed by a team of highly experienced individuals, EFG Hermes Corp-Solutions continues to offer large corporates and SMEs cut-to-fit financing solutions that are prompt, effective, and impactful. Aside from the company’s leasing and factoring service offerings, EFG Hermes Corp-Solutions presents its clientele with regional market insights and intel- ligence and financial advisory services, leveraging EFG Hermes Holding’s decades of expertise and exceptional in-house research capabilities. Today, EFG Hermes Corp-Solutions has worked its way toward becoming a one-stop-shop, consistently raising the bar in the Egyptian leasing and factor- ing markets, and playing a pivotal role in driving financial inclusion across the country. 2021 Operational Highlights 2021 was a year full of record-breaking achieve- ments for EFG Hermes Corp-Solutions. Despite the challenges faced by the company following the onset of the COVID-19 pandemic, which created liquidity shortages for many clients and a highly competitive market environment, EFG Hermes Corp-Solutions continued to expand its service offerings across the Egyptian market, delivering exceptional results across its leasing and factoring operations. At year-end 2021, the company contributed a stellar EGP 8.1 billion to the Group’s NBFI platform. The year also saw EFG Hermes Corp-Solutions take strategic measures to grow its roster of clients, expanding its portfolio to house even more prominent clients in the coun- try’s key industries, such as the real estate and retail sectors. By the end of the year, EFG Hermes Corp-Solutions had a total of 236 active clients utilizing its leasing and factoring services. On the leasing front, 2021 saw EFG Hermes Corp- Solutions provide clients with more financing solu- tions that enabled them to capitalize on compelling market opportunities, enrich and expand product offerings, reengineer technological infrastructure, and much more. The division focused heavily on pioneering leasing tools that add long-term value to its clientele, all while safeguarding their assets and laying the foundation for them to explore ac- cretive business growth and scaling prospects. At the end of the year, EFG Hermes Corp-Solutions’ leasing business attained a total value of bookings amounting to EGP 3.9 billion, reflecting a remark- able 62.5% increase from the EGP 2.4 billion booked at year-end 2020. The leasing business’s exceptional performance enabled EFG Hermes Corp-Solutions to capture a larger market share of 10.39%, coming in at third place in the market at the end of 2021. On the factoring front, EFG Hermes Corp- Solutions continued to offer its client base of companies a vast range of debt and export fac- toring tools, which enabled them to expand their regional footprint, bolster liquidity positions, and maintain healthy and lucrative relationships with suppliers and creditors alike. By the end of 2021, EFG Hermes Corp-Solutions had successfully grown its factoring portfolio by 53%, recording a total value of bookings amounting to EGP 4.2 billion versus the EGP 1.6 billion booked one year previously. The company’s factoring business cemented its first-place ranking in the Egyptian factoring market, maintaining the lion’s share of 22.82% of the market. leading Additionally, the year witnessed EFG Hermes Corp-Solutions substantially capitalize on the cross-selling prospects with EFG Hermes Hold- ing’s other lines of business, particularly with the Investment Banking division. Group’s During the year, the company also signed an EGP 750 million sale and leaseback agreement with real estate powerhouse Misr Italia Properties to refinance and accelerate the construction of its state-of-the-art property Garden 8 Mall in New Cairo. In addition to Misr Italia and Marakez, EFG Hermes Corp-Solutions also acted as the lender 94 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 95 EFG Hermes Corp-Solutions on a sale and leaseback agreement amounting to EGP 750 million with real estate developer Madi- net Nasr for Housing and Development (MNHD), while EFG Hermes’ Investment Banking division acted as the financial advisor for the transaction, which is expected to encompass several follow- on securitization issuances. These two transac- tions have garnered significant traction, attesting to EFG Hermes Corp-Solutions’ ability to develop robust business models and innovative solutions that enable companies to access funding that best serves their ever-growing needs. By cross- selling with the Group’s flagship Investment Bank, EFG Hermes Corp-Solutions continues to bridge the gap for securitization transactions. As part and parcel of the Group’s strategy to continue leveraging its successful products and bringing them to the market, the Firm’s Invest- ment Banking division concluded EFG Hermes Corp-Solution’s issuance of a securitization bond worth EGP 790 million and backed by a receiv- ables portfolio of EGP 815.1 million, representing 47 lease contracts. This transaction marked the first issuance in the bond program with a value of EGP 3 billion. Parallel to cross-selling with the Firm’s Invest- ment Banking division, 2021 saw EFG Hermes Corp-Solutions leverage cross-selling prospects with other flagship players in the Group’s NBFI platform. As such, the company formed a part- nership with the BNPL lifestyle enabling fintech platform valU, accessing a larger number of valU’s merchants and providing factoring ser- vices in the BNPL sphere. Through this partner- ship, merchants received access to financing with a pre-approved limit ranging from EGP 50 thousand to EGP 10 million. Additionally, EFG Hermes Corp-Solutions partnered with the NBFI platform’s Fintech accelerator and micro-VC arm, EFG EV Fintech, unlocking opportunities for startups to access financing methods, and ulti- mately elevating entrepreneurial activities in the Fintech industry across the region. In 2021 spe- cifically, EFG Hermes Corp-Solutions partnered with EFG EV Fintech to offer financing solutions for startups, such as Dayra, Cayesh, and Edfa3ly. Key Financial Highlights In 2021, EFG Hermes Corp-Solutions delivered exceptional results across its core operations, recording 1,308 new bookings in 2021 compared to 729 bookings recorded in 2020. Consequently, the total value of new bookings grew twofold to record EGP 8 billion, up from the EGP 4 billion booked at year-end 2020. The company recorded a net profit of EGP 109 million at year-end 2021, reflecting a 92% increase from the EGP 57 million booked one year previously. Forward-Looking Strategy Going forward, EFG Hermes Corp-Solutions aims to continue capitalizing on cross-selling prospects with EFG Hermes Holding’s entities, especially the Firm’s Investment Banking division, leveraging the division’s intellectual credibility to launch a com- prehensive suite of bespoke financial products and services that best serve clients’ different sizes, operational sectors, and risk appetites. Ad- ditionally, the company will continue expanding its operational footprint, and growing its portfolio to house a wider range of clients and sectors. As such, EFG Hermes Corp-Solutions continuously explores market opportunities, with an eye to launch new products and services that will per- fectly position the company to capture a larger share in its markets of operations, cementing its position as one of Egypt’s leading leasing and factoring service providers. 96 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 97 PAYTABS EGYPT PayTabs is an award-winning fintech com- pany that aims to transform the e-payments sector and drive financial inclusion in Egypt 70% of PayTabs Egypt's portfolio comprises SMEs and social commerce entities PayTabs Egypt PayTabs Egypt In just under a year and a half of launching, PayTabs Egypt was awarded "Best E-Payment Solution" by Entrepreneur Middle East at the "Leaders in Fintech Awards 2021" Overview Established in KSA in 2014, PayTabs is an award- winning fintech company with presence in over seven markets. In 2019, EFG Hermes Holding partnered with PayTabs to establish PayTabs Egypt as part of the firm’s growing NBFI vertical. The aim was to work together to build a cutting- edge platform that facilitates financial inclusion and caters to the online and digital payment needs of multiple consumer segments. The company innovative is now Egypt’s most provider of digital payment solutions, offering e-commerce merchants the market’s leading online payment gateway. Operational Highlights of 2021 Despite the challenges that faced sectors and economies in 2020, 2021 was a year of opportuni- ties for PayTabs Egypt. Propelled by the demand for digital payment solutions, the need to go cash- less, and the regulatory support for financial inclu- sion and digital intermediation channels, PayTabs Egypt was able to expand its product offering, optimize its client mix, and capitalize on the syner- gies between EFG Hermes’ NBFI subsidiaries to come out a stronger, more streamlined operation. In just under a year and a half of launching, PayTabs Egypt was awarded "Best E-Payment Solution" by Entrepreneur Middle East at the "Leaders in Fintech Awards 2021", an event that paid tribute to entrepreneurs and enterprises shaping the future of the fintech industry. This year saw PayTabs Egypt utilize its resources to leverage on the Central Bank of Egypt’s (CBE) initiatives that were aimed at supporting pay- ment solution companies. One such initiative was the mandate to waive subscription fees, which the company approached by creating a "‘CBE Bundle" that offered merchants a one-stop-shop for all their needs to shift their businesses to the digital sphere. Another game changer for PayTabs Egypt was the flexibility granted by the CBE in terms of the ability to provide services for micro -companies and freelancers with a simplified due diligence. This has unlocked an entirely new base of direct channels for the company, in social com- merce and freelancer partnerships, which were previously challenging. 2021 marked a significant shift in PayTabs Egypt’s portfolio, from being mostly based in large corporates to what is now a healthy 70% majority SMEs and social commerce entities. This portfolio optimization strategy similarly fell in line with the company’s objectives to en- able financial accessibility for the unbanked by working with smaller merchants who could not previously offer digital payment solutions to their customers. In line with this strategy, the com- pany created PayTabs Marketplace, a unified platform that features solutions using paylinks and QR codes to facilitate online payments via WhatsApp, SMS, E-mail, and other social platforms. PayTabs Egypt has also effectively streamlined client onboarding, slashing the time to be completed to only 3–5 days, down from 15 days. This development has not only helped in acquiring more merchants but has also signifi- cantly increased the accessibility and attractive- ness of the service for freelancers and social commerce players, a key pillar in the company’s strategy to drive financial inclusion and bring micro businesses into the economic eco system. The company also benefited greatly from syner- gies with other EFG Hermes Holding platforms, kicking off the year with a few strategic partner- ships with corporate and enterprise merchants that had not yet expanded their businesses on- line by creating a tailored solution with its sister company, the leading BNPL fintech player, valU. In particular, PayTabs Egypt has approached clients with conventional B2B models to trans- form their service offering into more consumer- centric B2C models. A prime example of this was Universal Group, where the client launched a bespoke e-commerce platform to serve customers directly using PayTabs Egypt to process payments and valU’s convenient pay- ment plans. A partnership with EgyptAir marked another major success for EFG Hermes’ NBFI platforms, with PayTabs Egypt acting as the payment gateway and aggregator for domestic and international flight bookings and allowing customers to utilize valU’s BNPL services to pay for travel. Pioneering a first-of-its-kind solution to maximize convenience within the real estate sector, PayTabs Egypt and valU also partnered with Inertia Real Estate to process scheduled maintenance and unit reservation costs through PayTabs Egypt’s payment gateway. Another milestone achievement for the com- pany took place at the very end of 2021, which saw PayTabs Egypt launch PayTabs Touch. This breakthrough platform merges POS software with mobile phone compatibility, delivering contactless tap and pay options directly on mobile devices using contactless cards. This enables merchants to accept card payments on smartphones and tablets without the need to 100 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 101 PayTabs Egypt obtain a separate card reader, transforming the e-payments sector in Egypt. In alignment with its commitment to best serve its clients, PayTabs Egypt’s team took steps to ensure that clients are maximizing the benefits of the services offered to them and, in turn, cascading knowledge of new and upcoming trends in digital payment solutions down the value chain. The company conducts training sessions for teams to instruct them on how to use their dashboards, digital tools, and other features. The company also utilizes its social media accounts to answer FAQs and queries from prospective and existing clients, as well as to offer short tutorial videos to showcase features on the dashboard optimizing its portfolio to cater to different cycles through more collaborations that will cement its status as the payment solutions provider of choice to local partners. Another constituent element of the company’s plans is the growth and development of its human capital. The company places high im- portance on employing new high caliber talents from diverse backgrounds, as well as retaining its current workforce, as it continues to heavily invest in fintech training for its teams. Weekly interactive workshops are also hosted by the region’s most renowned industry experts to inspire knowledge and help the company in its mission to upscale the market. Forward-Looking Strategy In the coming year, PayTabs Egypt plans to ex- pand its geographical footprint. 2022 will see the company shift its focus from Cairo and Alexandria to new governorates, particularly expanding into markets where payment options are still not prevalent. The company will also continue to find innovative methods to pave the way for e- payments in new industries, with an eye for break- ing the Egyptian population’s overreliance on cash payments. PayTabs Egypt is looking forward to 102 ● EFG Hermes Holding ● Annual Report 2021 BEDAYA MORTGAGE FINANCE Bedaya is Egypt's first and only non-bank on- line mortgage provider, offering clients a multi- tude of superior mortgage financing solutions on residential, commercial, and administrative properties 30 employees growing from only nine last year 80% Contribution by the retail profile, mainly SME business owners, to the company’s overall growth Bedaya Mortgage Finance Bedaya Mortgage Finance 1.2EGP BN total portfolio value at year-end 2021 Overview Bedaya Mortgage Finance (Bedaya) was es- tablished in 2019 as a joint venture between Talaat Moustafa Group (TMG), Egypt's leading developer of premium real estate communities, Ghabbour Auto’s Non-Banking Financial Institu- tions (NBFI) arm GB Capital, and EFG Hermes Finance, EFG Hermes Holding’s NBFI platform. Today, Bedaya stands as Egypt’s first and only online mortgage provider, offering clients a mul- titude of superior mortgage financing solutions on residential, commercial, and administrative properties in Egypt. Its diverse mortgage financ- ing plans are offered over 10-year repayment pe- riods at competitive interest rates and the fast- est turnaround time in the country. The company funds up to 90% of the current property value for residential units and 80% for commercial units, capped at EGP 28 million and EGP 56 million, re- spectively. It also allows clients to refurbish their properties through its Ijarah program. The com- pany’s tailored mortgage financing solutions are backed by innovative, tech-led solutions and the on-ground acumen of decades in the industry, in addition to the necessary support services for expediting loan approval processes and ensur- ing the best quality service for clients when purchasing or even renovating properties. 2021 Operational Highlights 2021 was an exceptional year for Bedaya, with the company maintaining strong growth mo- mentum across its core operations. Bedaya’s operational capital registered significant Y-o-Y growth, with the company having started with two banks with a facilities value of EGP 500 mil- lion, to reach a total of five banks with facilities worth EGP 1.5 billion at year-end 2021. The com- pany continues to take aggressive measures to expand its footprint and client base. In its first two years of operations, Bedaya has grown its portfolio to EGP 1,150 million and its client base to 437, attesting to the strength of its service offering and real demand for its long-term and competitive mortgage financing programs. As part and parcel of its expansion strategy and to keep up with its growth trajectory, Bedaya invested heavily in recruiting more local and regional talent to join its team of industry profes- sionals, growing the team to 30 employees, up from nine employees in the previous year. Bedaya’s unique value proposition, as the only online non-bank mortgage player in the coun- try, has been key to its performance in 2021. As the structure of the Egyptian mortgage market continues to evolve, mortgage finance compa- nies continue to rise in importance, primarily driven by major progressions in the sector’s information and communications technology. As such, Bedaya began expanding its online presence and growing its value proposition, first-of-its-kind non-bank introducing mortgage finance application in Egypt and de- ploying digital marketing methods to increase client outreach. The company’s application is the To date, the company has signed agreements with five banks with facilities worth a total of EGP 1.5 billion at year- end 2021 a unique, user-friendly fintech platform that offers a comprehensive suite of mortgage services and enables clients to connect with mortgage loan consultants and finalize their loan applications promptly and efficiently. With access to a myriad of financing solutions, us- ers of Bedaya’s application are presented with opportunities to finance properties for initial purchases, refinance pre-owned properties, refurbish and finish pre-owned properties, con- duct eligibility checks, track loan processes, upload required documents, and much more. The application implements the highest secu- rity measures and standards to ensure data retainment and safeguarding. 106 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 107 Bedaya Mortgage Finance developers and work steadfastly toward deliver- ing a larger number of units to capture a larger share in the Egyptian market. To further grow its operations, Bedaya aims to continue growing its base of employees, with an eye to onboard a larger number of talented sales representatives and brokers. Additionally, the company continues to work toward enhancing the efficiency of its online mortgage platform and creating more seamless customer experiences. As such, Bedaya is in the process of introducing new features and languages to the application, positioning it to be a catalyst that will increase visibility and spur higher growth prospects for the company. Key Financial Highlights Bedaya’s portfolio recorded loans with EGP 850 million at year-end 2021, reflecting an 183% increase against the EGP 300 million booked one year previously. The company’s retail profile, mainly comprising SME business owners, was the largest contributor to the company’s overall growth, representing approximately 80%. Forward-Looking Strategy Looking ahead, Bedaya aims to continue leverag- ing its extensive industry expertise and market position, expand its footprint, and provide the best mortgage experiences for Egyptians locally and abroad, as well as non-Egyptians living and working in Egypt. The company’s plans for 2022 feature aggressive targets to grow and scale its portfolio value, to be equally split between returns from portfolio acquisitions and the company’s rapid growing retail profile. On the retail front, the company continues to undergo extensive processes to effectively analyze and capture retail prospects’ needs and demographics, with an eye to ensure better reach, and to become the flagship provider of choice for mortgage facilities. On the portfolio acquisition front, the company will con- tinue to capitalize on its solid network of reputable 108 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 109 1MN Individuals insured by year-end 2021 KAF Kaf is set to become a prominent tech- enabled insurance player in Egypt, delivering innovative solutions that drive value for individuals and businesses in the life, sav- ings, and medical arenas 900K new individuals insured in 2021 Kaf Kaf Led by a team of prominent industry professionals, Kaf aims to create social value for society and to drive progress in Egypt’s insurance sector. Overview Kaf was established in 2020 following the acqui- sition of a 75% stake in Tokio Marine Egypt Family Takaful by EFG Hermes and Ghabbour Auto (GB Auto). In the time following the acquisition, the company has rebranded as Kaf and been putting in place the foundation from which to become the leading tech-enabled insurance player in Egypt delivering insurance solutions that drive value for individuals and businesses in the life, savings, and medical arenas. Led by a team of prominent industry professionals, Kaf aims to create social value for society and to drive progress in Egypt’s insurance sector. 2021 Operational Highlights Conversion In 2020, management at Kaf took the decision to transform the company from the previous takaful offering to a commercial insurance scope. The aim of this conversion is to better enable the company to offer innovative products that build on initiatives arising from the Central Bank of Egypt and Egyptian Financial Regulatory Author- ity (FRA) Fintech and Innovation strategies. The conversion process is governed by the 2019 FRA-issued guidelines for takaful transi- tion, which mandate three stages of licensing conversion: the initial approval stage, the busi- ness plan approval stage, and the product and governance approval stage. In 2021, Kaf marked a significant milestone by becoming the first in the market to receive approval for the first stage of the process, and it is actively pursuing the remaining approvals in 2022. be the long-term driver of establishing a digital portfolio, driving higher levels of operational ef- ficiency, and securing customer satisfaction. Kaf is considered the largest life insurer in the Egyptian market by the number of people covered Growth In 2021, Kaf’s operations registered significant growth on the back of the increase in cross- selling synergies with GB Auto and EFG Hermes. By the end of the year, the company had moved from less than 0.1 million to over 1 million indi- viduals insured, making it one of the largest life insurers in the Egyptian market by the number of people covered. Accordingly, the number of claims administered also grew in line with new business volumes, attesting to the company’s ability to successfully capture and operationally administer new business prospects. Kaf management also undertook a strategic re- view to refine outreach methods and product of- ferings that, post takaful conversion, will be key gamechangers to the life, savings, medical, and bancassurance spheres, with a particular focus on harnessing key technological initiatives that are shaping the future of the insurance industry. Moves to reengineer processes and strengthen the company’s technological infrastructure are thus well underway and will be the bedrock from which Kaf aims to deliver unmatched, tech- enabled services to its customer base. Forward-Looking Strategy In 2022, Kaf aspires to continue expanding its operational footprint and enhancing its distribu- tion capabilities. Building on its work in 2021, post conversion, Kaf will be launching innova- tive insurance solutions with the aim of boosting demand in the retail and corporate markets and bridging the "insurance-gap" in Egypt. Allied to this, the company will take its first steps toward having a meaningful digital presence that will 112 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 113 24 Portfolio companies to date EFG EV FINTECH EFG EV Fintech is Egypt’s flagship fintech- focused startup accelerator and micro-VC firm 7 new startup investments in 2021 1EGP MN value of new investments in 2021 EFG EV Fintech EFG EV Fintech The company adheres to a defined and tested investment methodology that enables it to efficiently expand its operational footprint Overview EFG EV Fintech was established in 2017 as a joint venture between EFG Hermes Holding’s wholly- owned subsidiary EFG Finance and the Govern- ment-backed venture capital fund Egypt Ventures. Throughout the years, the company has worked its way to become Egypt’s flagship fintech-focused startup accelerator and micro-VC firm, continuously seeking out strategic fintech startups backed by innovative concepts and entrepreneurs through its solid track record and robust network of connec- tions. Boasting over three decades of investment and regional expertise, and in collaboration with EFG Hermes’ world-class industry and financial know- how, EFG EV Fintech houses the country’s largest fintech portfolio that encompasses some of the region’s most renowned companies operating in key sectors, such as Insurance-tech, Regulatory-tech, Digital Banking, and SME lending. The company not only provides the necessary funds to put these start- ups in gear but also offers legal advisory, commercial mentorship, and other support services through its cut-to-fit accelerator programs, in collaboration with startup accelerator Falak Startups, with an eye to bolster progress and agility in Egypt’s fintech space. 2021 Operational Highlights EFG EV Fintech’s investment strategy encompass- es providing the initial financing needed for start- ups through its accelerator programs and financing post-acceleration pre-series A stage companies through its micro-VC arm. The company adheres to a defined and tested investment methodology that enables it to ef- ficiently expand its operational footprint and maximize its value-add for stakeholders. In the initial startup screening and selection stage, EFG EV Fintech seeks out investment opportunities through leveraging key metrics, such as scalability prospects, presence in the Egyptian market, po- tential exit strategies, fintech and/or technological concentration, how the investment complements the company’s existing portfolio, and potential synergies. Once applications are reviewed and startups are selected, EFG EV Fintech conducts interviews to meet entrepreneurs face-to-face, in addition to hosting three-day bootcamps to further narrow down the startups eligible to enroll into the company’s accelerator program. The final steps of the company’s investment process entail selected startups entering the Investment Committee, finalizing funding transactions, and gaining full access to EFG EV Fintech’s accelera- tor program services. Despite the challenges that global financial markets have faced during 2021, EFG EV Fintech managed to successfully capture the upside of market recovery, displaying solid resilience in the face of unprec- edented conditions, and adding even more record- breaking milestones to its list of achievements. Throughout the year, EFG EV Fintech invested a total of USD 1 million to fund seven startup compa- nies, providing them with either initial investments or follow-on rounds of funding. Investments for the year included Fintech Galaxy, Mozare3, Dayra, Fatura, Raseedi, Yashry/Edfa3ly, and Zvendo. In March 2021, EFG EV Fintech, Tanmiya Capital Ventures (TCV), and several other prominent angel investors participated in raising USD 3 million in a pre-seed round for Dayra—a fintech startup based in Cairo that enables companies of different sizes to provide financial services to their unbanked Despite the challenges that global financial markets have faced during 2021, EFG EV Fintech managed to successfully capture the upside of market recovery personnel through Application Programming In- terfaces (APIs) and through its mobile application. During the same month, zVendo, a Software as a Service (SaaS) platform that enables small busi- nesses to build and develop online stores in Arabic through its freemium offerings, landed a USD six- figure investment in a funding round led by EFG EV Fintech and several other angel investors. investors participated Later in May 2021, EFG EV Fintech and various other angel in raising USD 1 million in a pre-seed round for Egyptian Agri-Fintech startup “Mozare3”, which was led by Algebra Ventures and Disruptech. Mozare3 aims to serve over 20 million small farmers in Egypt by providing them with access to new markets and credit facilities. It also aims to establish the first digital platform for farmers, offering them agronomy support services through its wide network of industry experts. 116 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 117 EFG EV Fintech A month later, Fatura, a B2B digital marketplace that brings together wholesalers and manufactur- ers operating in the FMCG industry with retailers through a mobile application, secured a USD 3 million Pre-Series A fund. The funding round was co-led by Sawari Ventures and Arzan VC, with a collective participation from Egypt Ventures, The Cairo Angels, Khwarizmi Ventures, and a follow-on investment by EFG EV Fintech. portfolio is the only one to include three Fintech startups, Dayra, Oxygen and Nowpay, that have joined the leading US-Based accelerator Y com- binator. It is also worthy to mention that EFG EV Fintech has 12 startups that were featured in the last Cen- tral Bank of Egypt report on the fintech ecosystem in Egypt. Later in October 2021, UAE-based Fintech Galaxy raised USD 2 million in a seed funding round man- aged by Ahli Fintech in Jordan, joined by EFG EV Fintech, Raz Holding Group, OMQ Investments, and INSEAD Saudi Angel Investors. Fintech Gal- axy is a platform that provides integrative financial services between fintech startups and financial institutions. The platform provides unparalleled ac- cess to customer data from affiliate banks through its open banking APIs, while allowing developers to create and build new apps and services. Another milestone investment for EFG EV Fintech was in December 2021. The company and Falak Startups, along with other high-profile investors, collectively participated in raising a USD 850 thou- sand pre-series A round to further scale Raseedi, a multi-purpose fintech application that enables dual SIM card users to optimize their spending by automatically detecting which card will make cheaper calls. The app later expanded to providing advance credit and digital bill payment services, offering Egypt’s unbanked population with digital access to credit. EFG EV Fintech’s portfolio also includes Paynas, the only startup in Egypt to be granted a bank agency licence. The licence enabled the company to issue its own prepaid cards in partnership with Visa and Banque Misr. The company’s portfolio also houses Digified, one of only two reg-tech startups that provide digital identity verification services in Egypt. Additionally, EFG EV Fintech’s By the end of 2021, EFG EV Fintech’s portfolio had ramped up significantly, registering a total of 24 companies. At present, 50% of the company’s portfolio falls under the accelerator program, while the other 50% falls under the company’s micro-VC arm. Forward-Looking Strategy Looking ahead, EFG EV Fintech will continue supporting upcoming fintech startups in the country and building a strong, supportive, and coherent community across the fintech land- scape. EFG EV Fintech also seeks to continue extending its network of partners beyond Egyp- tian borders, forming lucrative partnerships with leading regional fintech players and taking part in some of the region’s most highly anticipated Fintech-related events. In 2020, EFG EV Fintech partnered with Startup World Cup and Africa Fintech Summit, and it was deemed a major contributor to Africa Fintech’s “State of the In- dustry” report for the year. In 2021, EFG EV Fin- tech continued to leverage the groundbreaking success of this partnership, participating as the flagship knowledge partner for the summit that was held in Egypt, and significantly contributing to Africa Fintech’s “State of the Industry” report for the second year in a row. All in all, EFG EV Fin- tech aims to continue working on strengthening its position in the entrepreneurship ecosystem as the leading fintech accelerator and micro- venture capital fund in Egypt. 118 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 119 aiBANK EFG Hermes Holding concluded the acqui- sition of a majority stake of 51% in the Arab Investment Bank (aiBANK) 221EGP MN net interest income in 2021 38EGP MN net profit in 2021, amounting to 3% of Group total aiBank aiBANK The acquisition of aiBANK marked EFG Hermes Holding’s strategic entry into the rapidly-growing commercial banking sector in Egypt, laying the foundation for the Firm’s transformation into a full-fledged universal bank The Transformation to a Universal Bank in Egypt In November 2021, EFG Hermes Holding concluded the acquisition of a majority stake amounting to 51% in the Arab Investment Bank (aiBANK), along with The Sovereign Fund of Egypt (TSFE)—the Firm’s valued partner—which acquired the second-largest stake of 25%. EFG Hermes Holding continues to substantially expand its operational footprint, consistently adding new products and services to its roster of market offerings and providing clients with a holistic set of innovative financial solutions, with an eye to becoming a one-stop-shop for individual, retail, and corporate clients alike. As such, the acquisition of aiBANK marked EFG Hermes Holding’s strategic entry into the rapidly-growing commercial banking sector in Egypt, laying the foundation for the Firm’s transformation into a full-fledged universal bank in the country. Additionally, the Firm continues to leverage the strategic partnership with TSFE, bringing together the public and private sector and playing a pivotal role in leading the drive for financial inclusion and digitization in Egypt. EFG Hermes Holding’s relentless efforts to diversify its business offerings throughout the years have bolstered the Firm’s regional presence to span over 13 countries across 4 continents, operating in some of the world’s most upsurging frontier emerging markets. With the conclusion of the acquisition of aiBANK, EFG Hermes Holding now houses three verticals: the leading invest- ment bank in frontier emerging markets (FEM); With 31 branches spread out across Egypt, the Bank continues to work toward expanding its regional footprint to serve a larger number of individual clients, corporations, and SMEs a substantial Non-Banking Financial Institutions (NBFI) platform offering a wide range of financial services, such as factoring, leasing, Buy-Now, Pay-Later (BNPL) lifestyle enabling fintech ser- vices, mortgage finance, insurance, e-payment solutions, and microfinancing; and, last but not least, a commercial bank. Arab Investment Bank (aiBANK) The Arab Investment Bank (aiBank) was founded in 1974 as an investment and commercial bank in Egypt, supervised by the Central Bank of Egypt (CBE). The Bank offers its clientele a myriad of top- notch retail banking, Islamic banking, Investment banking, and treasury products and services, in addition to funding some of the nation’s most prominent megaprojects, with an eye to bolster economic development across the country. With 31 branches spread out across Egypt, the Bank continues to work toward expanding its regional footprint to serve a larger number of individual clients, corporations, and SMEs. Financial Highlights – aiBANK Since EFG Hermes Holding and TSFE’s acquisi- tion of aiBANK, the bank’s net interest income recorded EGP 221 million. Additionally, the bank’s net fees and commissions’ income recorded EGP 21 million for November and December 2021. aiBANK also reported a net profit of EGP 38 million, contributing 3% to EFG Hermes Hold- ing’s total net profit after tax. 122 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 123 6 Committees actively managed by the Board of Directors CORPORATE GOVERNANCE The Firm’s Board of Directors is commit- ted to providing EFG Hermes Holding with the needed guidance and support acquired over decades of cumulative experience 10,764 registered shareholders Corporate Governance Corporate Governance EFG Hermes Holding's rigorous processes, policies, and procedures ensure transparent and ethical running throughout the organization EFG Hermes Holding upholds the highest levels of corporate governance on the group and sub- sidiary level, with rigorous processes, policies, and procedures in place that ensure transparent and ethical running throughout the organization. The Firm’s prudent management and governance frameworks, which have been at the heart of its success over the years, will continue to play a cen- tral role as the Group evolves and further cements itself as a universal bank in Egypt with a leading investment bank franchise across the entire FEM space and a dedicated commercial banking arm. The Firm’s Board of Directors is committed to providing EFG Hermes Holding with the needed guidance and support acquired over decades of cumulative experience. This expertise has helped EFG Hermes Holding grow sustainably while de- livering value to all its stakeholders. The Group’s Corporate Governance Framework addresses country-specific policies and works to blend EFG Hermes Holding’s group-wide strategy with the more focused subsidiary development programs. The framework provides the grounds for efficient decision-making across the entire organization and guarantees a high degree of accountability to ensure that all shareholders and clients have their investments handled in a responsible and professional manner. The frame- work sets out the minimum standards expected group-wide while complying with local laws and 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 independent of all regulated Egyptian subsidiar- ies. EFG Hermes Holding is fully compliant with FRA regulations and EGX listing rules. Moreover, the Firm complies with the new FRA mandated regulations requiring all regulated companies in Egypt to have at least two female board members. Management and Control Structure Board of Directors EFG Hermes Holding’s Board of Directors is responsible for providing the Firm with strategic leadership, financial soundness, governance, and management supervision and control. The Board comprises 12 members, 11 of whom are non-executive members. Without exception, all EFG Hermes Holding’s Di- rectors possess a broad spectrum of experience and expertise, directly related to the Group’s expansive lines of business and divisions, with a strong emphasis on competence and integrity. Directors are selected based on the contribu- tions they can make to the board and Manage- ment, as well as their ability to represent the interests of shareholders. Due to restrictions imposed by the COVID-19 pandemic, 2021 saw the Group continue to adapt in the face of region-wide restrictions and the evolving challenges posed by the pandemic when it came to precautionary procedures. All face-to-face interactions, including the Annual General Meeting (AGM), committee proceedings, and executive committee meetings, continued to be held virtually, and the Firm collaborated with an EGX-affiliated company to implement an e-voting system during the AGM, which was completed Due to restrictions imposed by the COVID-19 pandemic, the Firm collaborated with an EGX-affiliated company to implement an e-voting system for Annual General Meetings, which was completed with great success with great success. The year also saw increased levels of collaboration between divisions with a portion of staff across its footprint continuing to work from home to ensure that the challenges posed by the pandemic did not impact employee health and safety or business continuity when it came to overall governance matters. The following principles govern the conduct of the Board of Directors and the Firm: 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 business interest and board directorships annually. 126 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 127 Corporate Governance All members of the board declare their outside business interest and board directorships annually, and also abstain from participating in any discussions and decisions that might affect their own personal interests They also abstain from participating in any discus- sions and decisions that might affect their own personal interests or those of a loosely related per- son 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 clients, competitors, providers, and employees. None should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of mate- rial facts, or any other unfair dealing practice. Code of Conduct The Code of Conduct defines core values, prin- ciples, and other requirements that all the Firm’s directors and employees are required to follow while conducting their regular daily duties. Standards and Policies The Firm’s standards and policies comply with Egyptian and international corporate governance 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 information includes all non-public information that might be of use to competitors or harmful to the Firm or its clients if disclosed. legally mandated. Confidential Corporate Opportunities Directors are prohibited from taking personal advantage of potential opportunities that are re- vealed through corporate information, property, or position without the consent of the board. Direc- tors are obliged to advance the Firm’s legitimate interests when the opportunity presents itself. Audit Auditing forms an integral part of corporate gover- nance at EFG Hermes Holding. Both internal and external auditors play a key role in providing an independent assessment of the Firm’s operations and internal controls. Furthermore, to ensure inde- pendence, Internal Audit has a direct reporting line to the Audit Committee, a subcommittee of the board. Corporate Governance Committees Audit Committee The Audit Committee comprises five members, all of whom are non-executive. The committee meets at least once per quarter or as required. In 2021, the meetings were held virtually. The com- mittee is responsible for the oversight of financial statements and financial reporting, internal con- trol 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 comprises five members, all of whom are non-executive. The committee meets at least once per quarter or as required. In 2021, the meetings were held virtually. The com- mittee overseas risk, legal, and operational issues across the Group, assisting the board in fulfilling its duties with regards to the oversight of (1) iden- tification and management of risks, (2) adherence to risk management policies, and (3) compliance with risk-related regulatory requirements, advising the board on risk appetite and tolerance in accor- dance with its strategic objectives. It is responsi- ble for advising the board on risks associated with strategic acquisitions or disposals and to review comprehensive reporting on Group Enterprise Risk Management, including reports on credit, in- vestments, market, liquidity and operational risks, business continuity, and regulatory compliance. Remuneration and Compensation Committee The Compensation Committee comprises 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 is- sues and the remuneration policies of EFG Hermes Holding. 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 Management Incentive Scheme for Senior Management as approved by the General Assembly. In 2021, the meetings were held virtually. Corporate Governance Committee The Corporate Governance Committee com- prises three non-executive board members and holds one meeting per year. The committee’s responsibilities include periodically evaluating the Firm's corporate governance structure, review- ing and monitoring the implementation of the company’s corporate governance framework, documenting and following up on the board’s per- formance evaluation reports, reviewing the regula- tor's observations related to the implementation of corporate governance, and ensuring that they are appropriately handled and addressed. Nomination Committee The Nomination Committee comprises one ex- ecutive and three non-executive board members. It assesses and oversees the appointment of Board Members, the Group Chief Executive Officer, and Group Executive Committee members. It is the committee’s responsibility to make sure appoint- ments, 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 the best international practices. The committee 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 nomination committee’s meetings are scheduled and held on an as-needed basis. Both internal and external auditors play a key role in providing an independent assessment of the Firm’s operations and internal controls 128 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 129 Corporate Governance Executive Committee The Executive Committee is appointed by EFG Hermes Holding’s Board of Directors and com- prises 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 manage- ment structures and policies. Its purview includes: 1. Developing the Firm’s strategic plans and goals for board approval while managing ma- terial issues to the business that emerge. 2. Approving transactions within its authority limit in relation 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, revenue, 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 managing capital and liquidity positions. 6. Aligning investment spending across the Group functions with its investment plan and strategic objectives and considering business commitments for Board approval. 7. Receiving and considering reports on opera- tional matters that are 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 Holding, 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 2021, most meetings were held virtually. Shareholder Information Shareholders EFG Hermes Holding’s shares are listed on the Egyptian Exchange (EGX) and the London Stock Exchange (LSE) in the form of USD-denominated GDRs. Significant Shareholders EFG Hermes Holding is required by law to notify the Egyptian Stock Exchange (EGX) and the Finan- cial 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 2021, a total of 10,764 share- holders were listed in the Firm’s share register. Executive Holdings and Management Transactions • As of 31 December 2021, the EFG Hermes Holding Board of Directors held a total of 1,052,146 shares, representing 0.11% of the total 973,070,671 shares of EFG Hermes Holding. Share Ownership Information All information relating to EFG Hermes Holding’s Securities held or transacted by members of the Board of Directors and other insiders are promptly disclosed and reported without fail in accordance with relevant local and international regulations. 130 ● EFG Hermes Holding ● Annual Report 2021 RISK AND COMPLIANCE The Risk and Compliance Depart- ment has developed a solid set of frameworks to govern EFG Hermes Holding’s compliance and risk strat- egies in accordance with global best practices 94 risk and compliance officers 42 internal audits completed across 10 jurisdictions Risk and Compliance Risk and Compliance In light of Covid-19, the division had to continually assess the situation on the ground in each country to ensure the safety of all staff members and the continuity of operations As EFG Hermes Holding continues to expand into new business lines and geographies, it is faced with a growing number of unique regulations and shifting regulatory mandates, which the Firm was well-positioned for with sound and prudent com- pliance and risk policies that guide the Group’s decision-making and day-to-day operations. As such, the Risk and Compliance department has developed a solid set of frameworks to govern EFG Hermes Holding’s compliance and risk strat- egies in accordance with global best practices. The department’s 42 compliance officers actively worked to ensure that each of the Firm’s new and existing business lines adhered to appropriate statutory provisions, official regulations, and in- ternal policies. At the same time, the 52-member Risk Management team continued to ensure all operational, 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 is an independent appraisal function that is authorized by the Board of Direc- tors and the Audit Committee, with the role of monitoring and assessing the adequacy and effectiveness of the Firm’s operational, financial, information systems, and administrative controls. It provides objective risk assessment and evalu- ation of the effectiveness of risk management practices and internal control and corporate governance processes across the Group’s subsid- iaries, business lines, and business partners. The team is composed of highly skilled, multilingual in- dividuals with diversified professional experience across different industries. At present, the Group’s Internal Audit team comprises a Chief Internal Auditor and nine centralized auditors covering investment banking and NBFI activities, in addi- tion to 43 auditors providing auditing services for Tanmeyah Microfinance. Internal Audit reports directly to the Audit Com- mittee and is tasked with carrying out systemat- ic reviews and periodic spot checks in line with the Audit Committee’s pre-approved strategy for the year. To maximize the efficiency of the re- view process, the frequency of reviews is based on the function/department’s risk level and the previous review’s internal audit score. To this end, high- and medium-risk departments are re- viewed on an annual basis, and low-risk depart- ments with effective scores are reviewed every other year. Additionally, the division performs quarterly follow-ups on previous audit findings to ensure they have been adequately addressed and corrected. It also provides a wide range of services, including in-depth assessment of op- erations, adherence to regulatory requirements, conformity with the Firm’s strategy, monitoring of corporate governance and ESG policies, and compliance with third party recommendations regarding Anti-Money Laundering (AML) regula- tory requirements. 2021 Operational Highlights Risk and Compliance During 2021, the Risk and Compliance team played a vital role in ensuring that the Firm’s busi- ness continuity was not at risk. The division had to continually assess the situation on the ground in each country to ensure the safety of all staff members and the continuity of operations con- sidering the continuing challenges posed by the COVID-19 pandemic and shifting market dynam- ics. The Firm successfully operated with 50% of its staff working from home on rotational basis until the beginning of September 2021, except for a few countries in its footprint due to local regulations. Most offices resumed operations at full capacity in September 2021 after 97% of staff across the entire Group were vaccinated. The health and safety precautionary measures are still enforced in all offices. Highlights of the year include: • Establishing two new Collective Investment Scheme management companies for the Firm’s private equity line of business in Abu Dhabi, UAE • Completing an enterprise-wide AML and Sanctions Risk Assessment • Renewing ISO 22301:2012 for the sixth year in a row • Setting up two new Disaster Recovery sites in KSA and Pakistan • Executed Disaster Recovery drills Internal Audit As the Firm’s NBFI platform continues to grow and increase its product offering, the Internal Audit department has been working alongside new subsidiaries to establish adequate report- ing lines and develop monitoring programs, providing the necessary frameworks to enhance the Group’s oversight of both new and existing operations. The team’s scope is to ensure new products and subsidiaries are effectively moni- tored, particularly in the early phases of launch, in addition to evaluating compliance with regu- latory requirements. During 2021, Internal Audit completed 42 audit reviews across 10 jurisdictions. In March 2021, the department concluded its first audit of 134 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 135 Risk and Compliance corporate culture, governance, and manage- ment. At the same time, and in coordination with the division, Ernst and Young (EY) concluded the first phase of a full risk assessment and audit of EFG Hermes Holding’s systems, applications, networks, and infrastructure. Results of the full risk assessment were reported to the Audit Committee. Additionally, other ad hoc assign- ments were performed during the year, includ- ing fraud investigations, handling complaints re- ceived through Voice-It, overseeing the renewal process of the Group’s insurance policies, and ensuring insurance coverage is appropriate to mitigate risks. tool has proved to be significantly important in the wake of the COVID-19 pandemic as a shift to digital and automated functions was required on different fronts. TeamMate was introduced as part of the Group’s wider digital transforma- tion strategy, with the aim of solidifying EFG Hermes Holding’s position at the forefront of an increasing digital financial services industry. As the Group transitions to a fully digitized system, the team’s scope has extended to assess po- tential cyber-security and data protection risks, ensuring all clients’ and EFG Hermes Holding’s internal data is stored safely and is well pro- tected against possible cyber-attacks. TeamMate continues to enhance the Internal Audit team’s processes. It helps the division store, analyze, and process the vast quantity of financial data related to various Group opera- tions across its footprint, allowing for a more ac- curate and efficient auditing process. The digital Employee Awareness Communicating the Group’s strategy, policies, and procedures to all employees continues to be key to binding various geographies and lines of business as the Firm’s footprint and product portfolio grow. To guarantee that all new employees are promptly integrated in the Group’s operating framework, the team participates in the HR onboarding process to orient new hires on main audit, compliance, and risk issues at least once a year or when needed if a high-risk situation arises. The Internal Audit function continues to serve the Firm as a consultant by providing advice and suggesting ways to improve the business and add value, in addition to enhancing current pro- cedures to improve the Group’s daily operations. The Firm, under the monitoring and guidance of the Compliance division, continued to conduct five mandatory training courses on Anti-Money Laundering (AML), anti-fraud, General Data Pro- tection Regulation (GDPR), cybersecurity, and sustainability awareness. To ensure employees reach the required level of understanding on various subjects, staff members must pass all the courses with the results reflected in end-of-year appraisals. Given the burgeoning focus on ESG by responsible investors, an ESG training module was introduced in 2020 in the arsenal of development tracks for employees. Outlook Next year, the Risk and Compliance department, along with the Internal Audit division, will continue to work on streamlining operations and increas- ing operational efficiencies to capitalize on the growing digital technologies, particularly with the market disruptions amid the ongoing pandemic. As the Group continues to penetrate new markets and add lines of business, the departments will continue to work with other divisions to ensure new products, business lines, and subsidiaries are swiftly integrated into EFG Hermes Holding’s control framework and that new regulations and laws related to these expansions are accurately reflected in operating policies. 136 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 137 6.5K+ Employees at EFG Hermes Holding OUR PEOPLE EFG Hermes Holding's success is built on the strength of our highly dedicated people Our People Our People We were challenged to think outside the proverbial box and continue to balance flexibility, employee wellness, and business as usual Overview of 2021 Not to be outdone by 2020, 2021 succeeded in bringing with it its own set of challenges and triumphs, with COVID-19 still impacting much of what we do and how we do it. We were challenged to think outside the proverbial box and continue to balance flexibility, employee wellness with its many levels, and business as usual with the many meanings it now carries. And while agility and collaboration have always been key to how we do things as a firm, they have proven to be exceptionally critical during the past year. Navigating the Pandemic…Still The volatility of the pandemic and its waves kept us on our toes, unable to relax our guard. Lower infection numbers and loosening restric- tions in one country did not necessarily mean the same in many others, and it was up to us, in coordination with our co-workers in other parts of the firm, to stay on top of the changes and ensure we always had reliable, up-to-date data we could base decisions on. Adjusting our return-to-work strategies (and everything else) to mirror each specific country’s circumstances and our particular situation in that country was key, as was how quickly we did so. Messaging continued to be critical, ensuring employees were always well informed. We continued to keep our ears to the ground. When we found that COVID-related hospitaliza- tions in Egypt were mainly due to oxygen defi- ciency, the team immediately sought approval to purchase 8 oxygen cylinders to be made available to employees and their family members. When we saw that schools continued to teach online, we made sure that parents—mothers and fathers alike—felt able to work from home at a mo- ment’s notice when school closures required that. We made sure that our corporate policy was ex- plicitly flexible and applied fairly and consistently. When we found that managers needed help adapting to the new state of things, be it ex- tended isolation working from home, managing remote teams, or even being unable to travel to see family and loved ones, we offered mental resilience training. And, in acknowledgement of our stoic and reserved culture when it comes to asking for help, we modified our enrollment process, allowing employees to decide for themselves whether they felt comfortable participating. The success of the program has cemented its place on our roster of regular of- ferings since its benefits extend beyond the COVID-19 era. Employee Development in the time of COVID The circumstances of 2020 pushed us to try different learning mediums and learn what works for our people, and we carried that learn- ing into 2021, using it to further refine how we selected our learning partners, what subject matter best lent itself to virtual learning, and which employee groups benefited best from this learning methodology. When the circumstances allowed it, we gradu- ally brought employees back to a real classroom, kicking off our in-person learning with a unique offering for our non-officer population in Egypt. Stemming from our belief that learning should empower the learner, we piloted a financial literacy program for our most vulnerable popula- tion. While the firm will always step in and assist when the need arises, we saw it as our respon- sibility to create a more sustainable solution; we wanted to arm them with the necessary knowledge that would help them make informed decisions that would impact their financial well- being in the long term. Employees were invited to enroll themselves, and it was rewarding to see 40+ choose to attend of their own accord. This is the first time we address less traditional learning requirements, and we were encouraged by the participation to consider further roll out of the program and other similar topics. Work on the programs under the umbrella of The Academy continued rigorously behind the scenes, in preparation for when we could bring together participants from across the EFG Hermes map to convene in a physical class- room once more. We have worked to refine our assessment and selection methodologies and revisited and reworked the outlines of some of our programs. HR Tech We have been working down an ambitious tech- enablement roadmap for HR for a number of years, and our 2021 milestone included the completion of our digital Promotions tool. Conceptualized to streamline the promotions process for both man- agers and HR, and housed on the all-new Talent Central platform, the new tool captures the entire promotions process from nomination to review to approval and cuts down the time needed for each step in the process. Outlook We take our learnings from year to year seriously, and 2021 has added much to our repertoire. We continue our tech enablement into 2022, focus- ing on talent acquisition and learning, ensuring synchronicity across all HR technology tools and platforms. The driving factor continues to be streamlining, facilitating, and simplifying matters for managers, employees, and ourselves, leaving everyone with more time to focus on the business and more substantive activities. Corporate sustainability is also front and center for us; Succession Planning 2.0 is set to roll out during the first half of the year. The enhanced framework is built to capture both strategic and operational roles of note across the firm and provides detailed guid- ance to managers on how to identify those roles and how to identify the talent pipeline for them. This is tightly integrated with The Academy and executive education initiatives, ensuring that the talent of the future is ready when the time comes. 140 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 141 130+ Years served by the executive committee with EFG Hermes Holding collectively EXECUTIVE COMMITTEE Our exceptional executive management team of industry professionals oversees the Group's strategies to fruition Executive Committee Executive Committee Karim Awad Group Chief Executive Officer EFG Hermes Holding 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 22 years of experience, Mr. Awad started his career in EFG Hermes in 1998 as an analyst in the Investment Banking department, eventually heading the division in 2007 and leading several high-profile local and regional transactions. He as- sumed 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 the Firm’s expenses and divesting its non-core assets, the 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 emerging 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, enhanc- ing its product offering, increasing profitability metrics, and ensuring that public responsibility remains front and center in all its operations. During the past eight years, the Firm was able to enhance its market share in its core sell-side operations of investment banking, broker- age, 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 as- set management business with affiliate Frontier Investment Man- agement (FIM) Partners 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 building a full-fledged non- bank financial institutions (NBFI) platform that currently includes leasing, factoring, microfinance, BNPL fintech platform, mortgage finance, 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 prof- its 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 adopting progressive ESG standards. Mr. Awad holds a BA in Business Administration from the Ameri- can University in Cairo (AUC). 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 con- tinents. Since then, he has successfully built the Firm’s Frontier business with on-the-ground operations in four different conti- nents, 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 bil- lion in its first two years since inception in 2017. This is 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 Securities Brokerage division, and he has since held numerous positions within the Firm, the most recent prior to his current post being Head of Bro- kerage, through which he managed to restructure the business and streamline its activities in just over two years, all while boosting profit- ability. He held the post of Head of Institutional Sales beginning 2006 and 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 transactions across jurisdictions. Mr. Ebeid was also an integral part of EFG Hermes’ Institutional sales team, heading an endeavor to ex- pand 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. 144 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 145 Executive Committee Karim Moussa Co-CEO of the Investment Bank, Head of Asset Management and Private Equity, EFG Hermes Chief Executive Officer, Vortex Energy Mr. Karim Moussa joined EFG Hermes in 2008 with a primary responsibility for 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 returns. He led the creation of the Vortex Energy Platform and raised and de- ployed 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 divestment of Vortex assets, selling a controlling stake in its 365 MW UK solar portfolio to Tenaga 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 the 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 execu- tion team in Frankfurt, advising on several mid-cap transactions in Continental Europe. He moved to Dubai in 2005 along with the CEO of Deutsche Bank MENA to help establish the bank’s regional business. Prior to Deutsche Bank, Mr. Moussa worked as an Invest- ment Analyst at Berlin Capital Fund, a venture capital fund man- aged 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 Holding. Following three years at HSBC, Mr. El Wa- keel joined the Firm in 2000 as part of the operations team of the Brokerage division. Through his efforts in streamlining the Securi- ties Brokerage division’s operations to ensure best-in-class prac- tices and efficiency, he has since moved up the ranks, first heading brokerage operations for Egypt then becoming the Securities Brokerage Group’s Head of Operations. As Head of Operations, Mr. El Wakeel played a pivotal role in setting up and integrating the operations 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 enhancement of EFG Hermes’ 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 Compli- ance 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 mar- kets 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 Holding Abdel Wahab Mohamed Gadayel Group Chief Risk and Compli- ance Officer, EFG Hermes Holding 146 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 147 Executive Committee Mohamed AbdelKhabir Group Chief Financial Officer, EFG Hermes Holding Walid Hassouna CEO of the Non-Bank Financial Institutions (NBFI) platform, EFG Hermes Holding Chief Executive Officer, valU Mr. Mohamed AbdelKhabir is EFG Hermes Holding’s Group Chief Financial Officer and a board member in several EFG Hermes subsidiaries. Prior to his current post, Mr. AbdelKhabir joined EFG Hermes’ Investment 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 Hold- ing (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 laboratories, ENPC’s USD 1.05 billion syndicated loan, and the is- suance 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, integration, 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’ Non-Bank Financial Institution (NBFI) platform and a member of the Executive Committee of EFG Hermes. He is also the Head of DCM, Chairman of PayTabs Egypt, and Vice Chairman of EFG- EV Fintech. Mr. Hassouna also sits on multiple boards, including that of valU for BNPL, Tanmeyah Microenterprises, EFG Hermes Corp-Solutions, Kaf Takaful, and Bedaya for Mortgage Finance—all subsidiaries of EFG Hermes’ NBFI platform. He is also a Board Member at Karm- Solar and the CEO of valU. Hassouna’s leadership of the NBFI platform at EFG Hermes over the past five years has seen it grow multiple businesses and launch innovative brands. Today, the NBFI platform contributes to more than 30% of its revenues as of 1H2021. Prior to joining EFG Hermes in 2016, Mr. Hassouna was General Manager and Head of Structured Finance and Investment Bank- ing at Bank Audi. Over a 17-year banking career that began at Misr International 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 the GCC, in addition to several investment bank- ing transactions. He has also been the Head of Structured Finance and Syndication at 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 management. 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 Resourc- es, overseeing the full spectrum of the department’s functions across the Group while working closely with the Firm’s manage- ment team providing HR insight into business issues. As of 2017, Ms. Abdoun 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) and Fayrouz Interna- tional (a Heineken subsidiary), as well as a role in career advising and placement at the American University in Cairo’s Career Advis- ing and Placement office (CAPS), accumulating more than 19 years of experience in the field. Ms. Abdoun is a SHRM Senior Certified Professional and a certi- fied Myers-Briggs practitioner and holds an MBA from the MIT Sloan School of Management. Inji Abdoun Group Chief Human Re- sources Officer, EFG Hermes Holding 148 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 149 12 Board members 11 of whom are non-executive BOARD OF DIRECTORS Our Board of Directors takes neces- sary steps to create a climate of respect, trust, and candor, and it possesses the skills and knowledge to help steer the Group forward Board of Directors Mona Zulficar Chairperson, EFG Hermes Holding 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 corporate law firm comprising 11 partners and more than 50 associ- ates, 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 had served as Chair of its Executive Committee for several years. Ms. Zulficar is recognized in local and international legal circles as the precedent setter and one of Egypt’s most prominent corpo- rate, banking, and project finance attorneys. As an M&A and capital markets 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 human rights activist recognized locally and internation- ally and has initiated several successful campaigns for new human rights legislation, including women’s rights, freedom of opinion, and family courts. Ms. Zulficar served as Vice President of the Consti- tutional Committee, played a key role in drafting the 2014 Egyptian Constitution, and has served as a member of the National Council for Human Rights for many years up until 2020. Ms. Zulficar was recently elected President of the first Egyptian Microfinance Federation, currently the Egyptian Federation for Financing Medium, Small, and Micro Enterprises, and she chairs several NGOs active in social development and microfinance for underprivileged women. Internationally, Ms. Zulficar served two terms as an elected member of the United Nations Human Rights Council Advisory Committee up until 2011. Ms. Zulficar holds a BSc 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 Holding Karim Awad Group Chief Executive Officer and Chairman of the Execu- tive Committee, EFG Hermes Holding Mr. Yasser El Mallawany is the Non-Executive Vice Chairman of EFG Hermes Holding’s Board of Directors. Since his appointment as Chief Executive 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 at the time. Mr. El Mallawany began his career at Commercial International Bank (CIB), formerly Chase National Bank, for 16 years, last serv- ing as the General Manager of the Corporate Banking Division. Mr. El Mallawany joined EFG Hermes at the time of the Firm’s merger with CIIC. Mr. El Mallawany holds a BA 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 22 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 manage- rial 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 at the firm that included streamlining its expenses and divesting its non-core assets, the 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 focused on six pillars: hiring the best people, improving the Firm’s positioning in the markets it operates in, selectively expanding its geographical presence, enhancing its product offering, increasing profitability metrics, and ensuring that public responsibility remains front and center in all its operations. 152 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 153 Board of Directors Throughout the past eight 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 busi- ness was completely revamped through the consolidation of its regional asset management business with affiliate Frontier Invest- ment 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 building a full-fledged non- bank financial institutions (NBFI) platform that currently includes leasing, factoring, microfinance, BNPL fintech platform, mortgage finance, payment, and insurance, in addition to fixed income and structured products platforms. In 2021, EFG Hermes achieved yet another transformative step in its journey through the acquisition of a majority stake in Arab Investment Bank, thereby evolving its Egyptian operations into a universal bank that offers investment and commercial banking under its different brands, in addition to non-banking financial services. 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 communi- ties the Group operates in through an active CSR policy and the active adoption of progressive ESG standards. Mr. Awad holds a BA in Business Administration from the Ameri- can University in Cairo (AUC). Mr. Arapoglou has had an earlier career in International Capital Markets and Corporate and Investment banking based in London and later in managing, restructuring, and advising publicly listed Financial Institutions and Corporates, primarily in SE Europe and the Middle East. His most recent executive assignments include Managing Di- rector and Global Head of the Banks and Securities Industry for Citigroup, Chairman and CEO of the National Bank of Greece, and CEO of Commercial Banking at EFG Hermes Holding SAE. Mr. Arapoglou currently holds the following non-executive board positions: Chairman of Bank of Cyprus Group, Chairman of Tsakos Energy Navigation (TEN) Ltd, Chairman of Titan Cement Interna- tional (TCI) SA, and non-executive Board Member of EFG Hermes Holding SAE. He has degrees in Mathematics, Engineering, and Management 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 Capi- tal Markets and Mergers and 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 corporate and capital market transactions across several industries. Mr. Elaraby first joined Shearman & Sterling in New York in 1995, and he became a partner in 2004. He previously served as Managing Director at Citadel Capital, one of the leading private equity firms in the Middle East and Africa. Mr. Elaraby also served as Executive Di- rector in EFG Hermes’ Investment Banking Group, where he worked as an Investment Banker advising clients on numerous capital mar- kets and M&A transactions in the Middle East. Mr. Elaraby is a New York-qualified lawyer. Mr. Elaraby holds a BA in Economics from the American 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 sec- ond Senior Manager of Natixis in September 2012, up until October 2017. Since then, he has been appointed Senior Advisor to Natixis’ CEO and member of the board of Alpha Bank in Greece. 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 prior to being appointed General Manager. Mr. Cheval also served as Director of Al Bank Al Saudi Al Fransi in KSA, 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 previ- ously worked for the French Ministry of Industry and the French Planning Agency. Mr. Cheval graduated from the École Centrale de Paris’ Engineer- ing School and the University of Berkeley. 154 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 155 Board of Directors Zubyr Soomro Chairman National Bank of Pakistan Mr. Zubyr Soomro is a non-executive member of the EFG Hermes Holding 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 com- pany was established to be the apex for the 45 microfinance lenders in Pakistan. His engagement with the microfinance sec- tor extends over 20 years, and it has involved board roles in the Pakistan Poverty Alleviation Fund, Acumen Pakistan, and Gra- meen Foundation in USA. Mr. Soomro 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 Memorial Trust, which is Pakistan's leading oncology services provider; and the Indus Valley School of Art and Architecture. In 2021, Mr. Soomro was appointed as the Chairman of the United National Bank Ltd, a joint venture incorporated in the UK. In April 2019, Pakistan's government appointed Mr. Soomro as Chairman of the National Bank of Pakistan, one of the largest banks in the country. It is majorly 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 inter- national 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 presence in 10 countries. Mr. Soomro was tasked with restructuring the bank for privatization. In 2004, the Central Bank awarded him the Quaid-E-Azam Cen- tenary 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 Ad- visory 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 BSc from the London School of Economics, an MA from the School of Oriental and African Studies, and com- pleted 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 dedicated investment professional with more than 35 years of experience and a comprehensive background in Finance and Administration. Mr. Al Mutawa holds a BSc 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 also served on the Board of Directors of Bank Alfalah Limited, Pakistan, since 1997, with membership posts on the bank’s Board Audit Committee (BAC), Remuneration and 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 and Finance Commit- tee (BS&FC). Mr. Al Mutawa is also Chairman of Makhazen Investment PJSC (Private Joint-Stock Company), Abu Dhabi, and member of the board of Abu Dhabi National Hotels Company (as member of the Board Audit and Compliance Committee). Mr. Khalid Mana Saeed Al Otaiba is a non-executive member of the EFG Hermes Holding board. Mr. Al Otaiba has been Office Man- ager 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 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 Lim- ited, Pakistan; Chairman of Liwa International Investment Tourism and Royal Mirage Hotel and Resort Ltd, Morocco; and Chairman of Ghantout International and Bank Alfalah and Director of Royal Mirage Masdar, Abu Dhabi. Mr. Al Otaiba holds a BA in International Economics from Suffolk University in Boston, Massachusetts. Abdulla Khalil Al Mutawa General Manager, The Private Office of H. E. Sheikh Suroor Bin Moham- med Al Nahyan Khalid Mana Saeed Al Otaiba Office Manager for His Excellency Dr. Mana Saeed Al Otaiba 156 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 157 Board of Directors 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 Holding board. In 2014, Mr. Zaki founded Wafra Export, a fruit export company that owns a state-of-the-art packing house and grows its produce on a 360-acre plot. Mr. Zaki was part of the EFG Hermes team for 18 years, starting as Head of Operations Brokerage in 1995 and ending his tenure as Chief Operating Of- ficer. As COO, Mr. Zaki was responsible for managing operational matters, including compliance-related functions. Mr. Zaki’s con- tribution to EFG Hermes includes 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 Commercial 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 be- tween the two biggest private sector pharmaceutical companies in the country. Mr. Zaki holds a BCom from Cairo University. Mr. Timothy Collins is a non-executive member of the EFG Hermes Holding board. He is also the CEO and Senior Managing Director of Ripplewood Advisors, the successor to Ripplewood Holdings, which he founded in 1995. Ripplewood has success- fully invested in and built companies spanning across Asia, Eu- rope, and the Middle East. It has consistently delivered superior returns from investments totalling more than USD 40 billion in enterprise value. Ripplewood has played an instrumental role in transforming and strengthening prominent financial institutions, including AS Cita- dele banka of Latvia, Commercial International Bank of Egypt, and Shinsei Bank of Japan, and it has invested in a broad range of industries, including automotive, chemicals, consumer elec- tronics, food, real estate, and telecommunications. Ripplewood’s investment in Internet provider Gogo began the revolution in in- flight connectivity that is now becoming pervasive. Many Ripplewood investments remain public companies. Be- fore founding Ripplewood, Mr. Collins worked for Onex, Lazard Frères, Booz Allen Hamilton, and Cummins. He 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. He also served as an independent director at Weather Holdings, a large private emerging-markets telecom operator that was sold to VimpelCom. Mr. Collins currently sits on the Board of Directors of Banque Saudi Fransi, EFG Hermes, and SODIC. He is the Chairman of AS Cita- dele Banka and is involved in several not-for-profit and public sec- tor activities, including the Trilateral Commission and the Council on Foreign Relations, NEOM, McKinsey and Yale Divinity School Advisory Boards. He was formerly the Chairman of the Advisory Board for the Yale School of Management, and he is currently the Co-Chair of the Advisory Council of the NYU Global Institute for Advanced Study and a member of the Investment Advisory Com- mittee to the New York State Common Retirement Fund. Mr. Collins has a BA in Philosophy from DePauw University and an MBA in Public and Private Management from Yale University’s School of Management. Mr. Collins received an honorary Doctor- ate of Humane Letters from DePauw University in 2004, and he has been an Adjunct Professor and Visiting Fellow at New York University. He has served as a Visiting Lecturer at the Yale Law School, and he is Senior Fellow and Director of the Henry P. Bec- ton Fellowship Program at the Yale School of Management. Ms. Elizabeth Critchley is a non-executive member of the EFG Hermes Holding board. Ms. Critchley is a partner at Ripplewood Advisors Limited, running the company’s day-to-day operations. Before joining Ripplewood, Ms. Critchley was a Founding Part- ner 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 services, 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 European FIG Financing business. Ms. Critchley has structured, advised, and invested in transactions with more than fifty global financials and corporates. Ms. Critchley has a First-Class Honors Degree in Mathematics from University College London. Elizabeth Critchley Partner, Ripplewood Advisors Limited 158 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 159 CSR Sustainable development for a sustainable future Section Flag Corporate Social Responsibility Corporate Social Responsibility EFG Hermes Holding continues to prioritize investments in sectors that not only generate financial returns but also create massive impact 70EGP MN Investment in the Naga' El Fawal and El Deir Integrated Develop- ment Project 4.5MN metric tons carbon dioxide equivalent reduced by Vortex Energy As a leading house of impact promoting positive change and creating shared value, EFG Hermes Holding has made it a long-standing mission to instigate change across the markets in which it operates, paving the way for increasingly sus- tainable business practices. The unprecedented challenges that continue to impose pressure on the globe following the onset of the COVID-19 pandemic demonstrate the importance and the interconnectivity of social issues and the pivotal role that businesses play in creating an inclusive and sustainable society. As such, EFG Hermes Holding continues to honor its commitment to empowering and improving the lives of people in the communities in which it operates, consistent- ly leveraging responsible investment strategies and infusing its operations with sustainability across the Group. Since 2011, EFG Hermes Holding has been mak- ing strides to integrate environmental, social and governance (ESG) considerations into all aspects of its operations. The Firm seeks to align its development frameworks with the best international standards and practices, such as the United Nations’ 17 Sustainable Development Goals (SDGs). The Group has also been an active member of the United Nations Global Compact (UNGC) since 2011, integrating its internal policies with the 10 principles of human rights, labor, the environment, and anti-corruption, as well as with Egypt’s Vision 2030. As part and parcel of its efforts to weave sus- tainability across its operations, EFG Hermes Holding launched its Social Purpose in 2014 to ensure that all of the Firm’s product and service offerings are able to generate value for stakeholders and to overcome global, social, economic, and environmental challenges. This was further supported by the issuance of the Firm’s ESG policy in 2017, which was developed to align EFG Hermes Holding’s operations with sound and ethical practices. The Firm’s Corpo- rate Social Responsibility (CSR) department is responsible for spearheading key initiatives to ensure the implementation of ESG practices, in addition to overseeing the work of the EFG Hermes Foundation for Social Development, which aims to support underprivileged mem- bers of the community. The EFG Hermes Foun- dation for Social Development aims to do this through collaborating with policymakers and partners on projects that promote sustainable development and economic growth. In 2018, the Firm marked the major milestone of becoming the first financial services corpora- tion in Egypt to commit to the United Nations Principles for Responsible Investment (UNPRI), an international initiative developed by inves- tors seeking to promote sustainable finance and a more inclusive financial system across the globe. Another milestone was in October 2020, when EFG Hermes Holding was featured among 30 regional companies in Refinitiv and the Arab Federation of Exchanges’ Low Carbon Select Index, which aims to provide investors with access to low-carbon equities in the MENA region. These achievements align with the Firm’s strategy to build integrated sustainable business operations and take on initiatives that create sustainable value for stakeholders. Responsible Investment Strategies A constituent element of the Firm’s efforts to integrate ESG policies across the Group is the deployment of responsible investment strate- gies, which include defining and developing clear objectives, policies, and practices that promote positive change and create social and environmental impact. In alignment with this, EFG Hermes Holding integrates ESG across all its lines of business and core functions, working closely with the Group’s investment profession- als to account for the accurate determination of appropriate risks and opportunities across its operational footprint. EFG Hermes Holding continues to prioritize investments in sectors that not only generate fi- nancial returns but also create massive impact. The Firm’s substantial portfolio of responsible investments encompasses integral initiatives that fall in line with the UN SDGs, with a strong focus on key sectors, such as education, renew- able energy, and healthcare. On the renewables front, the Firm manages a number of invest- ments in the renewable energy sector through its private equity platform Vortex Energy. Since its inception, Vortex Energy has deployed, man- aged, and harvested capital across three fund EFG Hermes Holding continues to honor its commitment to empowering and improving the lives of people in the communities in which it operates 162 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 163 Corporate Social Responsibility institutional vehicles—Vortex I, II, and III—focusing on ef- ficient portfolio management and maximizing its environmental and social impact. The three fund vehicles boasted a remarkable portfolio of renewable energy generation projects with a total net capacity of 822MW. During the holding period, Vortex Energy delivered 4.6 terawatt hours (TWh) of clean energy, which reduced ap- proximately 4.5 million metric tons of carbon di- oxide equivalent (MTCO2e), all while optimizing the operational and financial performance of these assets. These renewable energy projects align with the best industrial practices that aim to enhance operational efficiency, delivering 1.4TWh of clean energy on an annual basis. In 2021, Vortex IV—Vortex Energy’s flagship fund and fourth investment vehicle—concluded the first close of USD 200 million, which was an- chored by EFG Hermes and several Abu Dhabi- investors and based sovereign family offices, among others. In the course of its first year, it seeded its first investment to ac- quire a stake of 49% in Ignis—a leading Spanish player in the renewable energy landscape—to establish a clean energy platform to be built in the next year. Through this acquisition, Vortex IV is to inject over EUR 625 million into Ignis through a series of capital injections in order to fund its high growth plans for a >20 GW plat- form and to transform it into a fully integrated renewable IPP in Spain and other countries. The platform will construct, hold, and operate approximately 7.5 GW of renewable energy gen- eration projects in Europe, the UK, and the US alongside a pipeline of 15 GW of projects in the same geographies that are developed for third parties. The environmental and social impact of Vortex Energy is set to rise exponentially, as the fund’s first investment alone will represent approximately 5x net capacity versus the sum of all previous platforms since inception. Vortex Energy’s investment in Ignis also supports the direct creation of jobs within the company, which is expected to grow by 50% from the current level in the short term, decreasing sub- sequently but ramping up Y-o-Y in the long term. At year-end 2021, Vortex Energy was awarded the EMEA Renewables and Energy Transition Solar Deal of the Year at the IJInvestor Awards 2021, reflecting the platform’s solid work toward the shared goal of sustainable development and its efforts toward a net-zero future. As the Firm deems education a key pillar to a country’s economic development, the Private Equity division formed an exclusive partnership in 2018 with Global Education Management Systems (GEMS) Education, one of the world’s leading providers of private English-language education for students from kindergarten to twelfth grade (K-12). Together, they established the EFG Hermes Egypt Education Fund (EEF), a USD 200 million platform that focuses on Egypt’s underserved K-12 sector. A year later, the EEF acquired a majority stake in leading transport provider, Option Travel, to provide a high quality and competitive student transpor- tation service to students enrolled in GEMS Education’s schools. At present, the EEF’s portfolio consists of ten schools at various stages of development with a combined capacity of c. 20,000 students, and it offers superior education services to over 9,000 students. In 2021 specifically, EEF began ex- panding its portfolio to house more reputable in- stitutions, concluding the acquisition of Al Hayah International Academy, one of Egypt’s leading education providers. Additionally, The Sovereign Fund of Egypt (TSFE) and EFG Hermes’ Private Equity division signed a memorandum of under- standing (MoU) during the year to launch two premium national schools in West Cairo. The schools are to be built over 30,000 sqm with a combined capacity of 5,000 students. On the healthcare front, EFG Hermes’ Private Equity division operates Rx Healthcare Manage- ment (RxHM), which manages investments in the healthcare sector in order to increase the avail- ability of premium healthcare products and ser- vices across the region. The platform’s investment approach centers around providing growth capital through investing in controlling stakes (and on a selective basis, in controlled minority stakes). RxHM places a high value on ESG due diligence, with target investments having to combine both financial viability and ESG criteria fulfilment to ensure sustainable value add that fills a tangible healthcare gap in underserved areas. The platform’s recent acquisition of leading Egyptian medical solutions provider, United Pharma, through Nutritius Investment Holdings, attracted significant interest from prominent investors, with proceeds being used to expand the company’s product offering to cover essen- tial categories in underserved therapeutic areas and ramp up production for existing products. United Pharma, Egypt’s leading player in the injectables space, has an established track record of supplying medical products to the Egyptian local market and various export mar- kets in Africa and the Middle East. In 2021, RxHM began deploying strategies to further enhance the operational scope of its healthcare platform with United Pharma, as the importance of medi- cal services and hospital essentials continue to grow in demand, particularly after the onset of the COVID-19 pandemic. its responsible In addition to investments through its Private Equity division, EFG Hermes Holding operates a rapidly growing NBFI plat- form, EFG Hermes Finance, which has devel- oped a range of products and services aimed inclusion through its at promoting financial subsidiaries: Tanmeyah for microfinance, valU for BNPL fintech services, PayTabs Egypt for digital payments, Bedaya for mortgage finance, Kaf for insurance services, and EFG Hermes Corp-Solutions for leasing and factoring servic- es. Additionally, the Firm also operates Egypt’s leading fintech startup accelerator EFG EV Fintech. Through these activities, EFG Hermes Holding aims to guarantee that each and every one of its activities are capable of generating positive stakeholder impact. Global Recognition and Reporting EFG Hermes Holding 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. In 2020, the Firm was named Sustainability Champion by the Egyptian Financial Regulatory Authority’s (FRA) first publication, recognizing players championing sustainable development in the non-bank financial service industry. The Firm was also recognized as a Community Honoree in the Global Finance Out- standing Crisis Leadership 2020 Awards. Promoting Sustainability Across the Board As part and parcel of its commitment to ensuring that sustainability remains at the center of the Firm’s operations, EFG Hermes Holding’s CSR department has launched initiatives to promote sustainability and social development practices among its employees. In alignment with this, the Firm has appointed policies to conserve energy by reducing electricity usage, minimize and manage waste, and bolster efficiency across its entire supply chain. Additionally, the Firm has partnered with Thomson Reuters to offer a myriad of e-learning materials during the year to introduce CSR and ESG Investigation courses and certifications. The Firm also regu- larly engages with stakeholders through social media campaigns to promote awareness on key sustainability matters and a deeper understand- ing of the UN SDGs. In 2021, the Firm’s Board of Directors, CSR department, and business line representatives came together to issue an updated Group-wide ESG Policy. The updated policy addresses key issues, such as ESG guidelines for the Firm’s business lines, stewardship and engagement, exclusionary criteria, capacity building, and reporting. Additionally, EFG Hermes Holding issued an array of policies and statements that define the Firm’s proactive approach to human rights, the environment, anti-corruption, and other critical ESG-related issues. 164 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 165 Corporate Social Responsibility 17 students graduated from the Young Scholars Academy in 2021 75K residents served by the Naga’ El Fawal and El Deir Integrated Development Project EFG Hermes Foundation for Social Development Established in 2006, The EFG Hermes Foun- dation for Social Development leverages a personal approach to development, where projects and initiatives are only taken on if they can sustainably improve lives, both in the short and the long term. Since its establishment, the Foundation has adopted a sustainable in- tegrated development approach that focuses on maximizing impact and generating returns on investment of scarce development funds. Partnerships are an integral component of the Foundation’s social development framework, and each project brings together partners from both the public and private sectors, donors, and civil society in synergies that create measurable impact for individuals and communities at large. Naga’ El Fawal and El Deir Integrated Develop- ment Project Launched in 2017 under the EFG Hermes Foun- dation for Social Development, the EGP 70 million Naga’ El Fawal and El Deir Village Inte- grated Development Project works in alignment with the UN SDGs to develop and revamp the rural communities of 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, marking the Founda- tion’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. Over the years, the project has had a number of achievements in the development of Naga’ El Fawal, including the renovation of a health unit in the village and the establishment of a water treatment plant. Additionally, the project has also contributed to the rebuilding of 94 houses, offering residential units to each of the village’s families with a long- term goal to eliminate rural co-living. One of the key pillars to the project’s scope has been the development of a fully equipped com- munity center, including a Montessori preschool, a center catering to children with disabilities, and a training facility, all of which are powered by solar energy. The Young Scholars Academy preschool seeks to offer quality education, as well as the necessary social skills, to the vil- lage’s 150 children, laying the foundation for them to continue their education. The preschool also features a dedicated section to provide the village’s 50 children with special needs with the necessary support to advance their learning and prepare them for enrolment into public schools in the future. At the Young Scholars Academy, training is ongoing for 75 current and potential staff members to build their capacity and raise the standard of service provided to the enrolled children. In 2021, 17 young scholars graduated from the academy, including four scholars from the Special Needs Section. COVID-19 Pandemic 2021 was another year of turbulence, as the world continued to witness new COVID-19 variants emerging. Recognizing the adversities faced by many people as the world continues to navigate the crisis, EFG Hermes Holding continued to provide the necessary support for its employees, in addition to leveraging its Foundation for Social Development to aid the most at-risk members of society. The Firm’s Human Resources (HR) department continued to provide support to its personnel by re-engineering its programs and offerings to facilitate working from home. Above and beyond, EFG Hermes Holding introduced more flexible work policies, equipped offices with the necessary healthcare supplies for COVID-19 emergencies, and conducted mental resilience sessions for employees. Outlook Going forward, EFG Hermes Holding aims to continue building on the foundation it has laid and leveraging its successful track record in the journey toward sustainable development. As a fully integrated financial services provider with presence in 13 markets across four continents, EFG Hermes Holding is fully aware of the sig- nificant ethical responsibility it has toward its shareholders and toward society. In alignment with this, the Firm will continue prioritizing and integrating responsible ESG practices across its operational footprint, with an eye for becom- ing a wholly sustainable enterprise. The Group will continue engaging key stakeholders and forming partnerships across the value chain to catapult greater action and generate maxi- mum impact. As the importance of responsible investing continues to grow on a global scale, the Firm will seek to further focus its efforts on expanding the reach of its programs, deepen- ing the integration of ESG practices into its operations, as well as working diligently to mitigate risks in order to generate shared value for all stakeholders and promote sustainability and prosperity across the board. 166 ● EFG Hermes Holding ● Annual Report 2021 EFG Hermes Holding ● Annual Report 2021 ● 167 FINANCIAL STATEMENTS Auditor's Report To the shareholders of EFG – Hermes Holding Company We have audited the accompanying consolidated financial statements of EFG Hermes Holding which comprise the consolidated statement of financial position as at 31 December 2021, and the consolidated statements 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 the Company’s management. Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Egyptian Accounting Standards and in-light of the prevailing Egyptian laws. Management responsibility includes, designing, implementing and maintaining internal control relevant to the preparation and fair presentation 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 estimates 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-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 , 2021 and its consolidated 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. KPMG Hazem Hassan Cairo, March 24, 2022 170 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 171 Consolidated Financial Statements Consolidated Statement of Financial Position Consolidated Income Statement (in EGP) Assets Cash and cash equivalents Loans and faciltites to customer Accounts receivables Investments at fair value through profit and loss Investments at fair value through OCI Investments at amortized cost Assets held for sale Equity accounted investees Investment property Fixed assets Goodwill and other intangible assets Deferred tax assets Other assets Total assets Liabilities Due to banks and financial institutions Customer Deposits Loans and borrowings Creditors and other credit balances Accounts payable - customers credit balance at fair value through profit and loss Accounts payable - customers credit balance Short term bonds Provisions Current tax liability Deferred tax liabilities Total liabilities Equity Share capital Legal reserve Share premium Other reserves Retained earnings Equity attributable to owners of the Company Non - controlling interests Total equity Total equity and liabilities Note no. 12/31/2021 12/31/2020 For the year ended (6) (9) (8) (7) (10) (12) (5) (11) (13) (14) (15) (22) (16) (17) (18) (24) (21) (19) (20) (23) (22) (25) (26) 30,876,257,819 19,625,924,145 5,611,375,904 8,002,539,778 7,397,790,093 8,189,679,143 4,734,488,970 5,744,078,663 16,820,480,365 10,097,642,055 10,050,278,918 305,541,145 461,315,552 125,529,472 999,401,918 1,107,396,952 47,607,209 2,561,079,667 - 59,640,898 103,095,770 132,074,502 651,958,068 984,353,914 24,995,255 621,212,320 96,594,728,844 38,741,009,651 17,736,580,111 9,235,466,908 38,564,737,371 5,963,333,876 2,695,731,002 - 4,598,110,534 1,927,757,515 3,890,060,348 2,022,981,775 8,537,833,096 550,000,000 690,001,941 363,572,503 296,588,621 5,486,303,627 500,000,000 566,956,651 164,219,351 301,270,105 79,288,438,869 24,803,066,466 4,865,353,355 840,272,556 1,668,623,811 783,420,592 6,390,395,096 14,548,065,410 2,758,224,565 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 17,306,289,975 13,937,943,185 96,594,728,844 38,741,009,651 The accompanying notes and accounting policies from page (177) to page (214) are an integral part of these financial statements and are to be read therewith. Mona Zulficar Chairperson Karim Awad Group Chief Executive Officer Note no. 31/12/2021 For the year ended 31/12/2020 (Restated*) (in EGP) Interest income Interest Expense Net Interest Income Fee and commission income Fee and commission expense Net Fees and commission Income Securities (Loss) Gains Changes in Investments at Fair Value through Profit & Loss Dividend Income Other Revenues Foreign Currencies Exchnage Differences Gains on selling Assets held for sale Share of loss from equity accounted investees Revenue General administrative expenses Financial Guarantee Provision Impairment loss on assets Provisions (33) (33) (33) (28) (11) (32) (23) (29) (23) Depreciation and amortization (13,14,15) Profit before tax Income tax expense Profit for the year Profit attributable to: Owners of the Company Non - controlling interests (30) (26) 4,416,355,205 2,894,539,255 (1,831,314,272) (1,077,889,450) 2,585,040,933 1,816,649,805 3,395,050,747 (344,114,579) 2,742,568,431 (271,609,375) 3,050,936,168 2,470,959,056 (7,302,092) (76,153,571) 31,853,072 235,215,170 234,140,414 3,864,407 (14,173,369) 371,758,025 576,420,133 39,543,674 140,095,176 (15,282,497) - (4,237,980) 6,043,421,132 5,395,905,392 (3,667,378,008) (3,208,561,612) (5,673,313) (154,029,798) (96,968,478) (193,664,511) 1,925,707,024 (350,786,930) (10,079,751) (303,872,865) (32,475,067) (171,143,524) 1,669,772,573 (329,046,528) 1,574,920,094 1,340,726,045 1,456,477,842 118,442,252 1,305,403,129 35,322,916 1,574,920,094 1,340,726,045 The accompanying notes and accounting policies from page (177) to page (214) are an integral part of these financial statements and are to be read therewith. 172 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 173 Consolidated Financial Statements Consolidated Statement of Comprehensive Income (in EGP) Profit for the year 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 - reclassified to profit or loss Investment at Fair Value through OCI - reclassified to Retained Earnings Actuarial gain (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 31/12/2021 31/12/2020 1,574,920,094 1,340,726,045 (15,450,147) (167,306,760) (96,787,059) (32,212,643) 163,022 (678,272,788) 34,043,158 (474,568,773) (15,659) 971,076 (930,181) (2,176,473) (2,002,429) 12,221,624 (148,525,491) (1,273,798,541) 1,426,394,603 66,927,504 1,299,398,696 126,995,907 1,426,394,603 34,980,736 31,946,768 66,927,504 The accompanying notes and accounting policies from page (177) to page (214) are an integral part of these financial statements and are to be read therewith. y t i u q E n I s e g n a h C k c o t s l e e y o p m E y n a p m o C e h t s e v r e s e r r e h t O f o s r e n w o o t e l b a t u b i r t t A y t i u q e l a t o T s t s e r e t n i l a t o T g n i l l o r t n o c - 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, 8 0 6 6 4 8 0 1 3 , , 5 5 6 3 5 5 8 , , 2 5 2 2 4 4 8 1 1 , ) , 5 6 0 9 9 0 4 , ( 2 1 5 , 7 9 9 2 2 6 3 1 , , , 2 4 8 7 7 4 6 5 4 , 1 , , ) 7 8 4 3 6 0 7 5 1 ( , , 2 6 2 0 1 4 6 2 4 , 1 , , 7 0 9 5 9 9 6 2 1 , , 5 5 3 4 1 4 9 9 2 , 1 , , 7 9 8 9 7 9 5 3 2 6 , , , 7 9 8 9 7 9 5 3 2 6 , , ) 5 6 0 9 9 0 4 ( , 2 3 8 0 8 8 , 1 3 2 6 , , 2 4 8 7 7 4 6 5 4 , 1 , 5 3 7 6 8 9 , 7 7 5 4 6 4 , 7 5 4 , 1 - - 2 4 9 6 4 6 9 4 1 - - - ) , 8 5 2 3 7 6 8 2 1 ( , ) , 4 5 2 9 7 4 , 1 ( 2 4 9 6 4 6 9 4 1 - - - ) , 4 0 0 4 9 1 , 7 2 1 ( - ) , 9 2 2 2 1 8 5 9 8 , ( ) , 9 8 6 8 3 3 6 , ( ) , 9 9 3 6 7 8 4 1 4 , ( ) , 4 0 0 7 7 0 8 1 ( , ) , 5 9 3 9 9 7 6 9 3 , ( ) , 5 9 3 9 9 7 6 9 3 , ( , 8 0 3 8 3 9 9 3 3 2 , , , 8 0 3 8 3 9 9 3 3 2 , , - - , 5 7 9 9 8 2 6 0 3 , 7 1 , , 5 6 5 4 2 2 8 5 7 , 2 , , 0 1 4 5 6 0 8 4 5 4 1 , , , 6 9 0 5 9 3 0 9 3 6 , , - - - - - - - - - - - - - - - - - - - - - , 1 9 8 9 7 4 0 2 0 4 1 , , 4 3 1 , 7 5 7 2 6 3 , , 7 5 7 2 2 7 7 5 6 3 1 , , , 1 3 5 2 8 5 0 3 3 4 , , , ) 7 8 3 2 4 4 6 2 , ( ) , 0 2 4 9 7 5 2 3 , ( ) , 8 2 8 5 8 8 5 , ( ) , 2 9 5 3 9 6 6 2 , ( 8 4 6 , 1 4 7 , 1 7 6 , 7 8 3 2 4 4 6 2 , - - - - - - - - - - - - - - - - - - - - - 2 4 9 6 4 6 9 4 1 , 2 4 9 6 4 6 9 4 1 , , ) 7 2 6 7 7 8 4 2 7 ( , - - - - - 5 2 1 , 8 8 7 5 6 6 , , 0 7 0 5 7 1 , 9 1 1 , 2 9 6 2 8 5 1 , , 6 2 8 7 6 2 2 2 9 , 1 , , 8 0 2 2 0 1 , 3 0 8 5 1 1 , 1 9 0 3 4 8 3 , , , ) 2 0 5 9 8 0 9 5 ( , , 0 7 0 5 7 1 , 9 1 1 , 2 9 6 2 8 5 1 , 6 2 8 , 7 6 2 2 2 9 , 1 , , 8 0 2 2 0 1 , 3 0 8 5 1 1 , 1 9 0 3 4 8 3 , , 0 2 0 2 , y r a u n a J 1 t a s a e c n a a B l - - ) , 9 8 8 4 5 9 , 1 4 1 , 1 ( ) , 6 7 0 5 6 4 6 2 1 ( , - - - - - - , ) 9 8 8 4 5 9 , 1 4 1 , 1 ( , ) 6 7 0 5 6 4 6 2 1 ( , - - - - - - - - - - - - - - - - - 9 5 6 , 1 3 8 0 3 , - - - - - - e h t f o s r e n w o h t i w s n o i t c a s n a r T e m o c n i i e v s n e h e r p m o c r e h t O e m o c n i i e v s n e h e r p m o c l a t o T y n a p m o C i s n o i t u b i r t s d d n a s n o i t u b i r t n o C e m o c n i i e v s n e h e r p m o c l a t o T t i f o r P s t s e r e t n i i p h s r e n w o n i s t s e r e t n i i p h s r e n w o n i s e g n a h C s e g n a h C l o r t n o c n i e g n a h c a t u o h t i w e v r e s e r l a g e l o t d e r r e f s n a r T s d n e d v D i i , ) 1 9 3 4 4 0 , 1 0 2 , 1 ( , 4 9 9 9 0 7 , 2 9 9 , 1 9 6 2 8 5 1 , 6 2 8 , 7 6 2 2 2 9 , 1 , , ) 1 9 3 4 4 0 , 1 0 2 , 1 ( , 4 9 9 9 0 7 , 2 9 9 , 1 9 6 2 8 5 1 , 6 2 8 , 7 6 2 2 2 9 , 1 , , 7 6 8 3 3 9 3 3 8 , 5 1 1 , 1 9 0 3 4 8 3 , , 0 2 0 2 r e b m e c e D 1 3 t a s a e c n a a B l , 7 6 8 3 3 9 3 3 8 , 5 1 1 , 1 9 0 3 4 8 3 , , s a , 0 2 0 2 r e b m e c e D 1 3 t a s a e c n a a B l g n i t n u o c c a n i e g n a h c f o t c e ff E d e t r o p e r y s u o v e r p i l - - - - - - , ) 1 9 3 4 4 0 , 1 0 2 , 1 ( , 4 9 9 9 0 7 , 2 9 9 , 1 9 6 2 8 5 1 , 6 2 8 , 7 6 2 2 2 9 , 1 , , 7 6 8 3 3 9 3 3 8 , 5 1 1 , 1 9 0 3 4 8 3 , , - - , 1 0 7 9 8 0 4 2 , ) , 3 2 9 9 3 1 , 2 8 1 ( - - - - - - - - - - - - 1 0 7 , 9 8 0 4 2 , , ) 3 2 9 9 3 1 , 2 8 1 ( ) , 0 9 6 4 5 9 6 7 1 , 1 ( , , 1 7 0 0 7 5 0 1 8 , 1 , - - - - - - - - - 9 6 2 8 5 1 , - - - - ) 5 1 0 4 4 6 3 5 2 ( - - - - - - - - - , 1 1 8 3 2 6 8 6 6 , 1 , , 9 8 6 8 3 3 6 , - - - , 6 5 5 2 7 2 0 4 8 , - - - - - - - 5 2 2 8 1 6 8 6 7 5 1 0 4 4 6 3 5 2 0 2 0 2 r e b m e c e D 1 3 t a s a e c n a a B l e m o c n i i e v s n e h e r p m o c l a t o T t n e m t s u d A j e h t f o s r e n w o h t i w s n o i t c a s n a r T e m o c n i i e v s n e h e r p m o c r e h t O e m o c n i i e v s n e h e r p m o c l a t o T y n a p m o C i s n o i t u b i r t s d d n a s n o i t u b i r t n o C t i f o r P l a t i p a c e r a h s o t d e r r e f s n a r T s d n e d v D i i s e c i i l o p i l n a p p h s r e n w o k c o t s e e y o p m E l ) P O S E ( s t s e r e t n i i p h s r e n w o n i s t s e r e t n i i p h s r e n w o n i s e g n a h C s e g n a h C n i i - d a p s e i r a d s b u s f o i i ) e s a e r c e d ( / e s a e r c n i e h t n i I C N f o e r a h S l o r t n o c n i e g n a h c a t u o h t i w e v r e s e r l a g e l o t d e r r e f s n a r T , 5 5 3 3 5 3 5 6 8 4 , , 1 2 0 2 r e b m e c e D 1 3 t a s a e c n a a B l l a t i p a c . h t i w e r e h t d a e r e b o t e r a d n a s t n e m e t a t s l i a c n a n i f e s e h t f o t r a p l a r g e t n i n a e r a ) 4 1 2 ( e g a p o t ) 7 7 1 ( e g a p m o r f s e c i i l o p g n i t n u o c c a d n a s e t o n g n y n a p m o c c a e h T i f o t n e m e t a t S d e t a d i l o s n o C 1 2 0 2 , 1 3 r e b m e c e D t a s A s a , 9 1 0 2 r e b m e c e D 1 3 t a s a e c n a a B l ) P G E n i ( g n i t n u o c c a n i e g n a h c f o t c e ff E d e t r o p e r y s u o v e r p l i s e c i i l o p 174 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 175 Consolidated Financial Statements Consolidated Statement of Cash Flows Notes to the Consolidated Financial (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 from Securitization (loss) Gains on sale of investment at FVTOCI Gains on sale of Assets held for sale Amortization of premium/ issue discount Changes in the fair value of investments at fair value through profit and loss Share of loss of equity-accounted investees Impairment loss on assets Share-based payment 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 Loans and facilities to customers Due from banks Due to banks Customers deposits Investments at fair value through profit and loss Income tax paid Net cash used in operating activities Cash flows from investing activities 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 investment in subsidiaries Payments to purchase equity accounted investees Dividends collected Net cash provided from investing activities Cash flows from financing activities Dividends paid Proceeds from securitization transactions Proceeds from short term bonds Payment for short term bonds Proceeds from / Payment for financial institutions Proceeds from loans and borrowings Payment for loans and borrowings Net cash provided from (used in) financing activities Net change in cash and cash equivalents Cash and cash equivalents at 1 January Cash from acquisition from subsaidiaries Cash and cash equivalents at 31 December Note no. (13,14,15) (23) (23) (23) (29) (32,20-39) For the year ended 12/31/2021 12/31/2020 1,925,707,024 1,669,772,573 193,664,511 102,641,791 (123,453,932) (54,802,383) (14,668,983) (66,016,939) 34,043,538 (3,864,407) (30,974,345) 76,153,571 14,173,369 154,029,798 149,646,948 (17,442,999) (234,140,414) 171,143,524 42,554,818 (8,684,029) (35 255 180) (836) - (474,568,773) - - (576,420,133) 4,237,980 303,872,865 - (27,818,033) 15,282,496 2,104,696,148 1,084,117,272 (504,813,017) (32,620,974) (916,774,492) 3,047,194,580 (53,187,325) 94,960,732 (258,963,589) (1,995,952,225) 1,867,078,573 (3,063,592,057) (2,935,999,896) (5,583,297,532) (304,852,380) (1,242,670,248) (2,302,120,418) (233,489,679) (7,037,669,335) (2,477,553,478) - - - 2,208,024,926 (173,872,403) (4,636,018,147) (97,448,606) (101,158,922) 19,391,892 120,045,492 24,130,051,252 (20,306,019,053) (2,965,924,996) (17,982,500) 8,583,669 890,697,150 (43,164,735) 1,112,500,000 550,000,000 (500,000,000) 3,619,102,552 2,178,924,870 (904,202,493) 152,699 - 17,567,402,835 (14,767,315,832) - (52,333,749) - 2,646,747,031 (132,802,448) - 500,000,000 (400,000,000) (2,563,764,366) 1,538,044,191 (981,195,693) (31) (31) 6,013,160,194 (2,039,718,316) (133,811,991) 2,465,698,500 2,382,473,653 4,714,360,162 (4,028,989,432) 6,472,769,165 - 2,443,779,733 Statements for the year ended 31 December 2021 (In the notes all amounts are shown in EGP unless otherwise stated) 1. Background Incorporation 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, collection and tasquek. 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 commercial bank activities. 2. Basis of preparation 2.1. Statement of compliance 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 23, 2022. 3. Functional and presentation currency These consolidated financial statements are presented in Egyptian pounds (EGP) which is the Company’s functional currency. 4. Use of estimates and judgments In preparing these consolidated financial statements, management has made judgements, estimates and assumptions 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. The accompanying notes and accounting policies from page (177) to page (214) are an integral part of these financial statements and are to be read therewith. 176 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 177 Consolidated Financial Statements 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. Assets held for sale • Assets held for sale represented in the assets that has been acquired by EFG Hermes Corp-Solutions and Arab Invest- ment Bank (aiBank) amounted to EGP 305,541,145 in exchange of debt account receivables. Assets held for sale is relating to the acquisition of the following assets: • • Machines and equipment. Land and buildings. 6. Cash and cash equivalents Cash on hand Cheques under collection Banks - current accounts Obligatory reserve balance with CBE Banks - time deposits Balance Impairment loss Balance 7. Investments at fair value through profit and loss Mutual fund certificates Equity securities Debt securities Treasury bills Structured notes Balance 31/12/2021 173,138,322 140,001 31/12/2020 34,596,734 465,001 10,740,937,558 6,062,014,232 897,426,113 19,066,529,533 30,878,171,527 (1,913,708) - 1,301,851,385 7,398,927,352 (1,137,259) 30,876,257,819 7,397,790,093 31/12/2021 31/12/2020 3,094,960,043 2,786,033,100 144,330,891 670,915,045 202,273,451 3,890,060,348 8,002,539,778 128,071,075 660,445,570 146,547,143 2,022,981,775 5,744,078,663 8. Accounts receivables Accounts receivables Other brokerage companies Balance Impairment loss Balance 9. Loans and facilities to customers Micro finance Finance lease Consumer finance Factoring Commercial bank ( Arab Investment Bank) Other loans Balance Impairment loss Balance Current Non-current Balance 10. Investments at fair value through OCI Non-current investments Equity securities Mutual fund certificates Debt instruments Current investments Debt instruments Impairment loss Balance 31/12/2021 5,684,065,407 39,939,670 31/12/2020 4,211,281,701 618,552,435 5,724,005,077 4,829,834,136 (112,629,173) (95,345,166) 5,611,375,904 4,734,488,970 31/12/2021 1,669,477,709 4,753,314,394 1,590,233,225 1,884,359,760 11,125,847,297 572,771,302 31/12/2020 1,722,754,659 4,751,487,371 698,970,013 772,009,052 - 591,727,867 21,596,003,687 8,536,948,962 (1,970,079,542) 19,625,924,145 9,723,113,493 9,902,810,652 19,625,924,145 (347,269,819) 8,189,679,143 3947288179 4,242,390,964 8189679143 31/12/2021 31/12/2020 105,064,479 98,972,870 1,836,353,781 2,040,391,130 33,933,001 59,012,925 86,546,749 179,492,675 14,795,809,291 (15,720,056) 9,919,679,373 (1,529,993) 14,780,089,235 9,918,149,380 16,820,480,365 10,097,642,055 178 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 179 Consolidated Financial Statements 11. Equity accounted investees 12. Investment at amortized cost December 31,2021 Com- pany’s location Company’s asset Company’s liabilities Company’s net gain (losses) Com- pany’s total revenue Share- holding Per- cent- age % Shareholding value Egypt 1,099,525,625 910,182,306 19,212,115 45,217,153 33.34 61,253,690 Egypt Egypt UAE 42,810,436 648,333 (2,855,335) 297,245 7,987,835 24,875,887 (9,857,646) 2,270,958 16,512,209 2,811,550 (2,009,341) - 50 51 50 21,081,052 1,459,594 6,850,329 Egypt 251,117,156 185,998,053 (36,676,288) 10,490,848 37.5 21,599,015 Egypt 2,309,385,000 938,992,000 Egypt 47,974,000 192,215,000 - - - - Egypt 2,546,000 176,000 106,550 269,000 20.30 278,655,628 24 20 - 474,060 Egypt 1,379,917,000 1,157,373,000 1,953,331 17,121,000 31.40 69,942,184 December 31, 2020 Com- pany’s location Company’s asset Company’s liabilities Company’s net gain (losses) Com- pany’s total revenue 461,315,552 Share- holding Per- cent- age % Shareholding value Egypt 28,535,795 3,518,357 (3,802,910) 210,027 50 12,955,277 Egypt 319,014,958 151,421,255 9,083,911 21,935,649 33,34 54,848,370 Egypt 256,287,123 165,591,402 (18,616,335) 7,483,141 37.50 35,292,123 103,095,770 Interest in joint venture Bedaya Mortgage Finance Co EFG-EV Finech Paytabs RX Capital limited Interest in associate Kaf Life Insurance takaful Zahraa Elmaadi Company* Middle East Land Reclamation Company* Prime for investment fund management* Enmaa Financial Leasing company* Balance Interest in Joint venture EFG-EV Finech Bedaya Mortgage Finance co Interest in associates Kaf Life Insurance Takaful Balance *Equity accounted investees acquired during the year through the acquisition of Arab Investment Bank (aiBank). Debt instruments-Listed Impairment loss Balance 13. Investment property Particular Cost Balance as at 1/1/2020 Reclassification to assets held for sale Foreign currency translation differences Total cost as at 31/12/2020 Total cost as at 31/12/2021 Accumulated depreciation Accumulated depreciation as at 1/1/2020 Depreciation for the year Reclassification to assets held for sale Impairment loss Foreign currency translation differences Accumulated depreciation as at 31/12/2020 Depreciation for the year Accumulated depreciation as at 31/12/2021 Carrying amount Net carrying amount as at 31/12/2020 Net carrying amount as at 31/12/2021 31/12/2021 31/12/2020 10,069,806,653 (19,527,735) 10,050,278,918 - - - Buildings 247,559,990 (76,148,076) (1,872,096) 169,539,818 169,539,818 42,061,568 9,085,335 (16,507,178) 3,384,491 (558,900) 37,465,316 6,545,030 44,010,346 132,074,502 125,529,472 Investment property net carrying amounted to EGP 125,529,472 as at 31 December 2021, represents the following:- • • • EGP 119,806,262 the book value of the area owned by EFG – Hermes Holding Company in Nile City building, and with a fair value of EGP 434,275,000. EGP 3,087,806 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 10,400,000. EGP 2,635,404 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 17,894,190. 180 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 181 Consolidated Financial Statements l a t o T , ) 1 1 8 0 8 7 ( ) 1 2 1 , 2 0 2 , 1 1 ( , 6 7 5 3 2 6 , 1 3 1 6 2 1 , 3 4 7 2 7 2 , 1 , 0 7 7 , 3 8 3 , 2 9 3 , 1 2 9 9 , 7 6 6 6 0 2 , 4 6 2 , 7 0 7 , 7 3 8 4 7 , 6 5 0 6 1 4 , 1 4 2 , 2 4 1 , 6 8 2 , 0 7 7 3 8 3 2 9 3 , 1 , , 2 9 9 7 6 6 6 0 2 , , 4 6 2 7 0 7 7 3 , , 8 4 7 6 5 0 6 1 4 , , 4 6 9 5 6 5 5 7 1 , 6 1 3 , 1 1 5 3 9 , 1 5 1 , 7 2 6 8 , , 2 8 5 5 8 4 3 3 , , 1 4 2 2 4 1 , 6 8 2 , 4 2 0 3 8 2 0 3 , , ) 7 8 6 9 8 4 3 5 , ( ) 0 1 9 , 1 8 4 0 2 , ( ) , 3 6 0 6 1 5 , 1 ( , 9 1 4 7 6 0 9 7 6 , - 9 1 1 , 6 6 7 , 1 1 ) , 2 1 5 4 2 9 3 , ( ) , 6 3 5 6 0 2 ( ) 0 4 4 , 1 2 1 , 4 ( - ) , 5 1 2 8 2 1 ( , 4 8 9 5 2 3 4 , ) , 4 5 4 0 4 1 , 8 2 ( ) 0 1 9 , 1 8 4 0 2 , ( 3 9 1 , 2 9 1 , 0 3 1 - , ) 1 8 2 8 1 5 0 1 ( , , 7 9 2 9 4 3 2 5 , ) , 8 2 5 5 4 5 ( ) 8 6 2 , 1 1 5 ( ) 0 7 0 4 4 2 , ( - - 7 2 1 , 2 0 4 3 8 , 7 2 1 , 2 0 4 3 8 , , 1 9 8 8 5 6 9 , , 4 7 0 5 2 0 2 6 1 , ) 9 8 3 6 8 , ( ) 8 6 7 , 1 2 ( - 8 9 3 , 7 0 4 2 6 3 , , 8 9 3 7 0 4 2 6 3 , ) , 0 0 0 5 8 7 6 , ( - , 2 5 7 8 0 4 8 1 3 , ) 2 7 6 , 1 2 7 3 , ( ) , 6 6 2 2 9 2 3 , ( , 9 9 3 4 2 9 7 6 1 , - , 3 9 0 4 6 4 2 4 , ) , 0 0 5 0 2 7 3 , ( ) , 5 5 6 9 5 3 ( ) 5 4 8 , 1 0 2 ( , 4 1 5 5 0 9 7 , , 0 5 2 3 6 3 0 3 , , 1 9 2 0 4 2 , 1 6 4 8 6 , 1 2 9 2 1 , 4 9 9 , 1 9 0 7 , - , 7 2 4 2 4 7 8 5 3 , , 1 5 4 9 9 6 6 7 2 , , 3 0 2 4 5 5 6 7 , , 6 9 3 9 5 4 2 6 3 , ) , 8 9 2 4 0 2 ( ) , 8 2 6 6 8 1 ( - ) 0 3 2 0 3 , ( s t e s s a e s u f o t h g R i l s e c h e V i r e t u p m o C t n e m p u q E i t n e m p u q e i l a c i r t c e e & l s e c n a i l p p a , e r u t i n r u f e c ffi O l d o h e s a e L s t n e m e v o r p m i s g n d i l i u B & d n a L i l s e c n e r e ff d n o i t a s n a r t y c n e r r u c n g e r o F i s t e s s a e b g n a t n l i i o t n o i t a c i f i s s a c e R l l s a s o p s D i 0 2 0 2 / 2 1 / 1 3 t a s a t s o c l a t o T 1 2 0 2 / 1 / 1 t a s a e c n a a B l s n o i t i d d A s t e s s a d e x F i . 4 1 0 2 0 2 / 1 / 1 t a s a e c n a a B l s n o i t i d d A l r a u c i t r a P t s o C l s a s o p s D i i i s e i r a d s b u s f o n o i t i s u q c A i , 3 9 4 9 2 5 , 1 7 1 , 2 , 9 7 3 4 1 8 , 7 0 3 4 4 7 , 0 1 4 6 4 , , 1 3 6 6 6 5 0 3 5 , , 3 1 0 5 4 7 , 7 5 3 3 0 7 , 9 9 9 4 5 2 , , 3 2 0 3 9 9 3 7 6 , 1 2 0 2 / 2 1 / 1 3 t a s a t s o c l a t o T ) 7 2 1 , 8 3 ( i l s e c n e r e ff d n o i t a s n a r t y c n e r r u c n g e r o F i l a t o T 4 9 7 , 1 3 3 5 0 6 , , 9 5 7 0 2 2 4 4 1 , ) 8 4 9 8 2 6 , ( ) , 8 4 5 3 8 8 , 1 ( ) , 5 5 3 4 1 6 6 , ( s t e s s a e s u f o t h g R i l s e c h e V i , 6 0 7 2 1 3 5 2 , - - , 1 2 8 7 8 3 3 4 , ) , 5 1 7 6 2 6 ( , 7 8 6 3 2 2 9 1 , , 7 5 8 6 0 8 4 , ) , 5 5 6 9 5 3 ( , 2 1 0 7 0 7 4 6 1 , , 8 3 2 7 0 4 7 4 , , 8 7 3 9 8 0 6 , 3 9 2 , 1 9 8 5 5 , ) , 2 3 3 7 8 5 7 4 , ( ) , 9 7 2 6 4 7 2 , ( ) , 4 9 0 3 9 7 3 , ( ) 5 2 2 , 1 2 9 7 2 , ( , 2 7 0 8 0 0 9 2 , ) 1 2 0 , 1 8 4 0 1 ( , , 7 6 8 8 3 2 , ) 1 0 3 5 5 1 , 8 1 ( - , 7 6 8 8 3 2 - - - , ) 1 0 3 5 5 1 , 8 1 ( - - ) 8 7 1 , 8 5 0 , 1 ( , 5 0 8 6 5 5 3 3 3 , ) , 9 6 3 0 3 1 ( , 9 5 8 2 8 6 3 , , 0 3 5 7 1 1 , 4 ) 7 4 3 9 0 1 ( , ) 0 6 6 4 1 4 , ( ) 4 4 9 9 1 3 , ( , 2 2 4 6 6 3 7 7 , , 9 9 8 5 3 7 7 2 , 2 0 7 , 5 2 4 0 4 7 , , 2 1 8 3 7 0 8 6 , 4 2 2 , 5 0 5 3 2 , , 0 7 3 3 3 5 3 0 3 , , 9 4 6 0 0 9 2 2 2 , , 2 0 7 5 2 4 0 4 7 , , 2 1 8 3 7 0 8 6 , , 4 2 2 5 0 5 3 2 , , 0 7 3 3 3 5 3 0 3 , , 9 4 6 0 0 9 2 2 2 , ) , 5 6 6 5 6 1 ( ) 6 8 1 , 7 2 1 , 3 ( - ) , 0 8 4 0 6 2 , 1 ( ) 8 6 0 3 2 6 , ( ) , 0 5 8 4 6 5 2 , ( ) 4 8 9 3 5 1 ( , ) 9 0 3 5 1 1 ( , , 7 8 7 7 3 7 6 4 , , 9 8 7 2 2 3 8 2 , , 3 3 2 7 3 3 , 1 6 2 7 8 0 , 1 8 8 7 9 1 , r e t u p m o C t n e m p u q E i t n e m p u q e i l a c i r t c e e & l s e c n a i l p p a , e r u t i n r u f e c ffi O l d o h e s a e L s t n e m e v o r p m i s g n d i l i u B & d n a L i n o i t a c e r p e d d e t a u m u c c A l , 3 1 8 0 0 5 9 3 , - - - - - , 5 5 4 2 4 4 , 1 1 ) 0 8 3 , 1 2 1 ( 8 8 8 , 1 2 8 0 5 , 8 8 8 , 1 2 8 0 5 , 9 5 8 , 1 2 4 4 1 , , 0 1 2 8 9 6 9 3 1 , ) 9 5 5 4 6 , ( ) 9 5 5 8 , ( - - , 0 5 0 3 2 5 9 , , 8 6 2 6 7 0 2 6 , 0 2 0 2 / 1 / 1 i t a s a n o i t a c e r p e d d e t a u m u c c A l i n o i t a c e r p e D i n o i t a c e r p e d d e t a u m u c c a l ’ l s a s o p s D i s t e s s a e b g n a t n l i i o t n o i t a c i f i s s a c e R l i l s e c n e r e ff d n o i t a s n a r t y c n e r r u c n g e r o F i 9 5 7 , 0 9 5 , 1 7 , 9 5 7 0 9 5 , 1 7 2 7 1 , 9 8 8 , 1 1 0 2 0 2 / 2 1 / 1 3 t a s a n o i t a c e r p e d d e t a u m u c c A i l 1 2 0 2 / 1 / 1 i t a s a n o i t a c e r p e d d e t a u m u c c A l i n o i t a c e r p e D ) , 3 1 7 5 4 6 2 , ( - - ) 9 9 2 9 1 ( , , 5 8 8 5 5 9 0 8 , i n o i t a c e r p e d d e t a u m u c c a l ’ l s a s o p s D i s t e s s a e b g n a t n l i i o t d e i f i s s a c e R l t n e m t s u d A j i i s e i r a d s b u s f o n o i t i s u q c A i i l s e c n e r e ff d n o i t a s n a r t y c n e r r u c n g e r o F i 5 7 5 , 7 2 1 , 2 7 1 , 1 8 2 1 , 6 2 5 6 1 1 , , 8 6 0 8 5 9 , 1 5 6 8 1 9 , 1 0 4 9 9 9 , 0 8 1 , 4 9 5 8 3 1 , 1 5 2 , 8 8 2 , 1 9 1 , 1 9 6 9 0 8 9 2 , , 9 9 8 9 9 2 0 9 3 , , 5 5 6 3 4 8 8 6 2 , 8 9 3 , 7 7 8 4 0 2 , , 4 0 8 0 7 7 , 1 6 1 , 0 4 0 2 0 2 4 1 , , 8 7 3 3 2 5 , 2 1 1 2 9 5 , 1 4 2 , 3 6 3 5 0 , 1 0 6 6 1 , 2 3 7 , 6 6 2 0 4 1 , 8 5 3 , 1 0 9 8 8 , , 9 3 2 0 8 5 , 2 3 5 0 3 , 2 2 1 , 0 5 , 9 3 6 6 1 8 0 9 2 , 9 1 2 , 2 2 2 , 2 1 5 1 2 0 2 / 2 1 / 1 3 t a s a n o i t a c e r p e d d e t a u m u c c A i l 0 2 0 2 / 2 1 / 1 3 t a s a t n u o m a g n y r r a C i 1 2 0 2 / 2 1 / 1 3 t a s a t n u o m a g n y r r a C i t n u o m a g n y r r a C i 15. Goodwill and other intangible assets Goodwill Customer relationships Licenses Software Balance (15-1) 15.1. Goodwill is relating to the acquisition of the following subsidiaries: 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 Arab Investment Bank * Balance 31/12/2021 994,145,243 38,882,258 3,839,378 70,530,073 1,107,396,952 31/12/2021 179,148,550 1,600,000 8,639,218 365,398,862 - 325,800,740 113,557,873 994,145,243 31/12/2020 890,091,108 46,024,888 10,550,653 37,687,265 984,353,914 31/12/2020 179,148,550 1,600,000 8,639,218 365,398,862 9,503,738 325,800,740 - 890,091,108 Acquisition of Arab Investment Bank * In November 2021, the company acquired 51% of Arab Investment Bank shares with an acquisition cost amounting to EGP 2,551,048,598. The Company’s share in the acquired net assets and liabilities on the date of acquisition amounted to EGP 2,437,490,724. Accordingly the goodwill will represents the difference which amounts to EGP 113,557,873 The following represents the assets and liabilities on the acquisition date: Description Cash and cash equivalents Financial Investment Loans and advances to customers Other assets Fixed assets Intangible assets Deferred tax assets Due to banks Customer deposit Creditors and other credit balances Provisions Loans and facilities from bank Current tax liability Total Non- controlling Interest Company's share in the acquired assets Paid in acquisition (Cash Paid) Goodwill EGP 14,239,302,091 21,053,414,326 9,717,070,397 1,689,552,626 337,427,383 30,498,454 11,764,631 (1,361,146,504) (39,807,407,618) (664,755,704) (200,909,201) (155,334,636) (112,047,214) 4,777,429,031 2,339,938,307 2,437,490,724 2,551,048,598 113,557,873 The acquiree’s financial statements have been consolidated based on the book value of the identifiable assets and liabilities. The company has a grace period of 12 months ending October 2022 for preparing Purchase Price Allocation (PPA) study to determine the fair value of the identifiable asset and liabilities according to the Egyptian Accounting Standards. 182 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 183 Consolidated Financial Statements 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 Egypt Gulf Bank- Tanmeyah Clients Receivables-sale of investments Securitization surplus Sundry debtors Total Deduct: Impairment loss Balance (16-1) (16-2) 31/12/2021 57,133,978 899,769,920 83,360,970 61,420,556 989,851,567 23,615,895 1,373,856 22,898,787 17,314,143 16,854,902 31,045,330 393,243,155 2,597,883,059 (36,803,392) 2,561,079,667 31/12/2020 38,910,748 89,543,602 60,270,163 56,309,877 257,587,316 19,983,975 1,623,856 21,480,174 23,306,020 9,826,622 15,331,670 48,065,349 642,239,372 (21,027,052) 621,212,320 16.1. Deposits with others include an amount of EGP 15,046,240 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 Balance 17. Due to banks and financial institutions Financial institutions Bank overdraft * Deposits** Current account** Balance 31/12/2021 1,348,856 25,000 - 1,373,856 31/12/2020 1,348,856 25,000 250,000 1,623,856 31/12/2021 7,861,707,906 8,818,578,082 1,008,686,945 47,607,178 31/12/2020 4,242,605,354 4,992,861,554 -- -- 17,736,580,111 9,235,466,908 *Banks overdraft include the credit facilities granted from one of the banks which represents the following: • During 2021 a pledged governmental bond contract has been signed to obtain a credit facility amounted to EGP 1,057,000,000. • During 2021 a pledged Treasury bills contract has been signed to obtain a credit facility amounted to EGP 737,000,000. ** Related to Arab Investment Bank (aiBank). 18. Customer deposits Call deposits Term deposits Saving and deposit certificates Saving deposits Other deposits Balance Corporate deposits Individual deposits Balance Current Non-current Balance 31/12/2021 31/12/2020 13,590,506,782 14,545,755,376 7,881,255,045 1,316,791,217 1,230,428,951 38,564,737,371 14,820,936,371 23,743,801,000 38,564,737,371 19,160,002,371 19,404,735,000 38,564,737,371 - - - - - - - - - - - 19. 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. 20. Short term bonds • During December 2021 Hermes Securities Brokerage (a subsidiary -100%) issued short-term bonds with a value of EGP 550 million (Third 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 11.15 % 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. 21. 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 31/12/2021 1,725,048,720 297,364,906 50,637,002 347,141,373 12,489,264 68,525,079 18,217,043 12,837,396 4,136,184 159,334,035 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 2,695,731,002 1,927,757,515 *Deposits due to others amounted to EGP 4,136,184 as at 31 December 2021 versus EGP 14,639,821 as at 31 December 2020 represents the deposits collected from the lessees of EFG Hermes Corp- Solutions. 184 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 185 Consolidated Financial Statements x a t d e r r e f e D x a t d e r r e f e D s e i t i l i b a i l s t e s s a t e N s e c n e r e ff d i y t i u q e n i s s o l r o t i f o r p i s e i r a d s b u s i 1 2 0 2 / 1 / 1 i n g e r o F y c n e r r u c d e z i n g o c e R n i d e z i n g o c e R f o n o i t i s u q c A i t a e c n a a B l ) s e i t i l i b a i l ( s t e s s a x a t d e r r e f e D . 2 2 - , 5 8 7 5 8 0 6 , , 5 8 7 5 8 0 6 , 4 8 5 ) 2 0 3 8 9 3 , ( - ) 2 0 3 8 9 3 , ( ) 8 1 4 8 , ( - - 4 0 1 , 0 8 1 , 1 4 0 1 , 0 8 1 , 1 4 2 7 4 7 , 1 4 2 9 2 , 7 4 7 , 1 4 2 9 2 , ) 1 6 3 7 1 ( , - - - - ) , 8 1 7 9 0 2 ( ) 4 1 7 4 4 , ( , 1 7 9 9 1 1 , 9 ) , 3 4 0 9 3 2 , 1 ( ) , 0 5 3 7 0 6 0 9 2 , ( - ) , 0 5 3 7 0 6 0 9 2 , ( - ) 1 8 1 , 0 3 9 ( 8 9 2 3 2 9 , - - ) , 9 6 9 2 8 5 5 , ( - , 3 5 0 5 7 7 7 , , 3 5 0 5 7 7 7 , 7 4 1 , 7 6 8 , 1 7 4 1 , 7 6 8 , 1 - ) , 9 6 9 2 8 5 5 , ( - - - , 3 7 3 7 5 4 , 1 , 3 7 3 7 5 4 , 1 ) 7 2 8 ( - - - - - 2 8 1 , 3 4 5 ) 3 4 0 3 8 3 , ( , 3 5 0 5 7 7 7 , , ) 1 2 6 8 8 5 6 9 2 ( , 9 0 2 , 7 0 6 , 7 4 ) 2 1 4 , 1 8 9 8 4 2 ( , ) 8 9 9 5 2 ( , ) 1 8 1 , 0 3 9 ( , 6 8 9 4 8 4 6 1 , 23. Provisions Claims provision Commercial bank (aiBank) contingent liabilities Severance pay provision Financial guarantee for contingent liabilities (23-1) (23-1) (23-1) (23-1) Balance 23.1. 31/12/2021 372,814,069 56,117,796 226,617,198 34,452,878 690,001,941 31/12/2020 312,567,570 - 213,356,835 41,032,246 566,956,651 Claims provision Severance Pay provision* Financial guarantee for contingent liabilities Commercial bank contingent liabilities Total Balance at the beginning of the year 312,567,570 213,356,835 41,032,246 - 566,956,651 Formed during the year 64,123,194 19,019,335 5,673,313 13,825,949 102,641,791 Foreign currency differences (393,499) (152,812) - (732,000) (1,278,311) Amounts used during the year (106,566,167) (4,635,084) (12,252,681) - (123,453,932) Acquisition of subsidiaries 123,504,897 - Actuarial of employees’ benefits obligations - (971,076) No longer needed (20,421,926) - - - - 77,404,304 200,909,201 - (971,076) (34,380,457) (54,802,383) Balance at the end of the year 372,814,069 226,617,198 34,452,878 56,117,796 690,001,941 * Related to group entities outside Egypt. - - - - - - , 7 5 5 4 6 9 6 1 , ) , 6 2 9 9 9 1 , 5 ( - , 1 3 6 4 6 7 , 1 1 ) , 8 3 6 9 6 6 0 1 ( , i n o i t a c e r p e d s t e s s a d e x F i 9 5 1 , 9 4 8 , 4 9 7 4 2 2 , 1 s t e s s a n o s s o l t n e m r i a p m I i i n o s v o r p s m a C l i 7 3 1 , 9 3 1 , 0 2 d r a w r o f d e i r r a c s e s s o l r a e y r o i r P , ) 7 6 4 0 0 6 0 9 2 , ( - - 8 1 0 5 1 9 , 7 4 1 , 7 6 8 , 1 ) , 0 5 8 4 7 2 6 7 2 ( , l n o i t a s n a r t y c n e r r u c n g e r o F i t n e m t s e v n i f o n o i t a u a v e R l s e c n e r e ff d i l e u a v r i a f t a t n e m t s e v n I i s e t a c o s s A n i t n e m t s e v n I y t r e p o r p d e r r e f e d P O S E 186 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 187 Consolidated Financial Statements 24. Loans and borrowings 25. Share capital Credit Limit 350 million 150 million 500 million 400 million 1 billion 231 million 260 million 150 million 200 million 100 million 653 thousand 450 million 250 million 200 million 1.6 million 99.3 million 125 million 35.3 million 20 million 225 million 500 million 600 million 500 million 100 million 10.3 million 25.4 million Maturity Contract date date 16/7/2027 16/7/2020 27/2/2027 27/2/2020 12/12/2019 12/12/2026 7/11/2022 1/4/2020 9/8/2023 9/8/2015 31/1/2031 31/1/2021 14/3/2023 14/3/2016 13/7/2027 13/7/2020 12/6/2017 12/6/2025 28/11/2016 31/10/2022 18/2/2025 18/2/2020 1/3/2020 30/9/2022 7/5/2020 3/6/2020 30/9/2025 24/4/2023 24/4/2017 25/5/2028 25/5/2021 4/4/2028 4/4/2021 19/10/2022 19/10/2017 6/5/2028 6/5/2021 7/2/2023 7/2/2018 19/5/2027 19/5/2020 8/5/2028 28/8/2018 16/3/2022 3/5/2020 26/11/2020 26/11/2027 1/8/2023 31/7/2023 13/4/2017 13/4/2018 25/2/2020 32.9 million 12/5/2017 11/5/2023 39.5 million 29/10/2021 28/10/2024 50 million 4/5/2018 3/5/2023 81.3 million 100 million 370 million 250 million 400 million 250 million 785.5 million 12/2/2022 4/11/2019 12/1/2023 27/11/2017 18/5/2022 18/11/2021 13/8/2020 13/8/2027 21/12/2021 21/12/2028 30/8/2021 30/8/2028 21/5/2023 21/5/2021 The borrower EFG Hermes Corp-Solutions * ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, ,, Arab Investment bank ,, EFG – Hermes Pakistan Limited ,, Tanmeyah Micro Enterprise Services S.A.E ,, Valu EFG - Hermes Advisory Inc. EFG Finance Holding ,, ,, EFG Hermes Int. Fin Corp Lease liabilities** Balance Current Non-current Balance 31/12/2021 169,630,189 43,728,117 412,389,761 315,766,871 682,796,686 177,724,571 69,696,583 26,822,749 19,209,706 -- 653,831 397,029,955 114,928,127 81,305,409 1,226,987 99,346,583 21,052,491 7,069,500 8,834,128 97,590,676 164,578,428 357,425,443 260,283,150 66,287,873 3,630,198 10,001,430 32,990,250 39,588,300 43,633,026 27,104,333 16,120,232 370,497,531 250,000,000 375,175,828 123,946,345 613,004,200 462,264,389 5,963,333,876 2,682,374,853 3,280,959,023 5,963,333,876 31/12/2020 74,473,883 77,230,237 464,514,612 354,726,305 638,994,688 33,305,064 250,074,996 39,618,461 78,310,630 39,823,216 1,061,181 375,701,258 195,170,136 129,412,374 2,044,979 109,383,304 139,283,053 14,161,500 22,375,602 140,000,000 140,730,595 296,740,523 98,796,378 2,057,775 - - 36,833,250 - 34,358,483 54,208,666 24,340,549 - 250,000,000 - - - 480,378,836 4,598,110,534 1,033,616,102 3,564,494,432 4,598,110,534 *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 239,123,600 in the name of EFG-Hermes Holding and Tanmeyah Micro Enterprise Services S.A.E that represents sale and lease back agreement. • • 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. The company’s General Assembly approved in its session held on May 20, 2021 to increase the company’s issued capital from EGP 3,843,091,115 to EGP 4,611,709,340 distributed on 922,341,868 shares with an increase amounting to EGP 768,618,225 by issuing 153,723,645 shares with par value EGP 5 through the issuance of one free share for every five shares. This increase is transferred from the company retained earnings that presented in December 31, 2020 financial statements. The required procedures had been taken to register the increase in the Commercial Register. • On 28th September 2021, the Company’s General Assembly approved the increase in issued capital from EGP 4,611,709,340 to EGP 4,865,353,355 representing an increase of EGP 253,644,015 and distributed on 50,728,803 shares having a par value of EGP 5 per share, The issuance of the capital increase shares were financed from the share premium reserve for the purpose of the Remuneration & Incentive Program of the Employees, Managers & Executive Board Members of the Company and its subsidiaries. The commercial register was updated and the issued shares were allocated under the Remuneration & Incentive Program of the Employees of the Company, and the Beneficiary of the program will be entitled to attend the Ordinary and Extraordinary General Shareholders of the Company and to vote on its resolutions upon the transfer of ownership of the Granted Shares to the Beneficiary. 26. Non-controlling interests Share capital Additional paid-in capital Legal reserve Other reserves Retained (losses) Profit for the year Balance 31/12/2021 2,618,870,616 120,463,104 37,775,135 106,534,088 (243,860,630) 118,442,252 31/12/2020 173,095,207 120,463,104 20,012,721 8,243,820 (46,291,160) 35,322,916 2,758,224,565 310,846,608 27. 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 31/12/2021 83,670,000 357,864,957 31/12/2020 83,670,000 358,425,546 31/12/2021 31/12/2020 71,407,412,524 55,489,735,019 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. 188 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 189 Consolidated Financial Statements The assets and liabilities related to those transactions are represented in : 30. Income tax expense Client portfolios related to securitization transactions Balances with custodians Land and Buildings related to Sukuk transactions Total Assets Bonds Sukuk Total liabilities 3,736,460,182 650,691,234 2,600,000,000 6,987,151,416 3,099,039,305 2,600,000,000 5,699,039,305 27. Arab Investment Bank contingent liabilities are as follows: A. Capital commitments Financial investments The value of commitments related to financial investments for which payments was not requested until the date of the financial position as at 31 December 2021: African Export -Import Bank Contribution amount USD 1,066,000 Amount paid USD 586,000 Residual amount USD 480,000 B. Commitments on loans, guarantees and facilities The bank’s commitments on loans and facilities are as follows: Letters of guarantees Letters of credit (Export and Import) Acceptances of supplier facilities Balance 28. Other revenues Other revenues includes rental income, and non-recurring income. 29. Impairment loss on assets Accounts receivables Loans and facilities to customers Cash and cash equivalents Other Debit Accounts Financial Investment Good will and intangible assets Investment property Total 31 December 2021 EGP 1,475,265,000 12,910,000 246,364,000 1,734,539,000 For the year ended 31/12/2021 19,016,764 104,431,821 451,596 15,756,528 (1,661,609) 16,034,698 - 31/12/2020 63,234,718 213,211,453 918,321 16,540,748 661,330 5,921,804 3,384,491 154,029,798 303,872,865 Current income tax Deferred tax Total For the year ended 31/12/2021 (367,271,918) 16,484,988 (350,786,930) 31/12/2020 (164,296,068) (164,750,460) (329,046,528) 31. Cash and cash equivalents For the purpose of preparing the statement of cash flows, cash and cash equivalents are represented in the following : Cash and due from banks Bank overdraft Treasury bills less than 90 days Effect of exchange rate Cash and cash equivalents 32. General administrative expenses Wages , salaries and similar items * Consultancy Travel , accommodation and transportation Leased line and communication Rent and utilities expenses Other expenses Total 31/12/2021 11,355,533,830 (8,818,578,082) 2,177,404,414 - 4,714,360,162 31/12/2020 7,398,927,352 (4,992,861,554) 37,713,935 21,918,767 2,465,698,500 For the year ended 31/12/2021 2,787,653,848 179,435,929 10,203,324 142,505,592 58,457,373 489,121,942 3,667,378,008 31/12/2020 2,326,540,381 136,480,182 16,443,710 136,288,932 57,693,419 535,114,988 3,208,561,612 Share-based payments. * The Company introduced an Employees Share Ownership plan (ESOP) in accordance with the shareholder’s approval at the extraordinary general assembly meeting by issuing Free shares representing 5.5% of the issued capital of the Company shall be granted to employees, managers and executive board members of the Company and its subsidiaries The duration of this program is five years starting as of 1 January 2021 till 31 December 2025, the vesting period is 3-4 years starting from 1 January 2021 till 31 December 2024. The beneficiary entitled to shares granted to 4 equal installments. The equity instruments for share-based payment are recognized at fair value on the grant date and are record in the income statement with a corresponding increase in equity. The value of expenses charged to the income statement during the year amounted EGP 149,646,948. Equity instruments during the year represents the following: Granted shares during the year Total at the end of the year For the year ended 31/12/2021 No. of Shares 48,504,101 48,504,101 190 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 191 Consolidated Financial Statements ) , 2 9 0 2 0 3 7 ( , , ) 1 7 5 3 5 1 , 6 7 ( , 2 7 0 3 5 8 , 1 3 0 7 1 , 5 1 2 5 3 2 , , 4 1 4 0 4 1 , 4 3 2 , 7 0 4 4 6 8 3 , ) , 9 6 3 3 7 1 , 4 1 ( 2 3 1 , 1 2 4 3 4 0 6 , , ) , 8 0 0 8 7 3 7 6 6 3 , , ( - - - - - - - , 6 8 7 7 7 5 , 1 9 ) 5 9 5 , 1 3 8 5 4 ( , - 5 0 4 , 1 3 5 , 7 5 3 0 0 2 3 , , 8 7 7 0 3 3 9 4 , , 3 4 6 0 1 0 6 , , 1 5 6 7 3 5 3 , , 7 5 6 4 3 6 - - - - - - - - f o e p y t e h t n o d e s a b e r a w o e b e b a t e h t n l l i l s e s y a n a s e i t i l i b a i l & s t e s s a d n a e s n e p x e & e u n e v e r e h T l . t n e m g e s a o t e b a t u b i r t t a y l t c e r i d s m e t i e d u c n l i s e i t i l i b a i l d n a s t e s s a , s t l u s e r t n e m g e S 1 2 0 2 , 1 3 r e b m e c e D d e d n e r a e y e h t r o F i i l . t n e n o p m o c e b a h s u g n i t s d e r a t a h t s e c v r e s d n a s e i t i v i t c a s s e n s u b i i . i s s a b h t g n e l ’ s m r a n a n o d e n m r e t e d s i i i g n c i r p t n e m g e s - r e t n I . e r u t c u r t s g n i t r o p e r l a n r e t n i ’ d n a t n e m e g a n a m s p u o r G e h t n o d e s a b s i , t n e m g e s s s e n s u b i , t a m r o f y r a m i r p e h T . i s t n e m g e s s s e n s u b s p u o r G e h t ’ f o t c e p s e r n i d e t n e s e r p s i n o i t a m r o f n i t n e m g e S t n e m g e s g n i t a r e p o r o f s s a B i ) a ( t n e m g e s g n i t a r e p O . 3 3 l a t o T s t n e m - t s u d A j l a i c r e m m o C i ) k n a B a ( k n a b g n i r o t c a F e c n a n F i r e m u s n o C o r c M i e c n a n F i i g n s a e L , 5 0 2 5 5 3 6 1 4 4 , , ) , 0 9 0 9 1 6 , 1 5 ( , 9 3 7 0 9 8 4 2 7 , 2 6 1 , 1 5 8 3 1 1 , , 4 8 3 0 0 5 2 5 1 , 0 6 1 , 5 9 8 6 7 9 , , 1 6 2 7 6 8 2 7 5 , ) , 2 7 2 4 1 3 , 1 3 8 , 1 ( , 3 4 3 7 0 8 0 3 , , ) 1 8 4 6 5 8 3 0 5 , ( ) , 5 9 6 0 1 8 , 1 9 ( ) 9 1 1 , 4 2 9 2 6 , ( , 3 3 9 0 4 0 5 8 5 2 , , ) 7 4 7 , 1 1 8 0 2 ( , , 8 5 2 4 3 0 , 1 2 2 , 7 6 4 0 4 0 2 2 , , 5 6 2 6 7 5 9 8 , ) , 9 7 5 4 1 1 , 4 4 3 ( , 7 4 7 0 5 0 5 9 3 3 , , ) , 8 0 6 9 5 6 4 , ( ) , 3 9 6 6 4 4 7 1 ( , ) 6 0 0 4 4 , ( ) , 8 1 6 8 9 2 ( ) , 0 4 2 0 6 3 0 2 , ( , 7 9 3 9 8 7 8 3 , , 7 1 9 6 4 8 5 3 , , 4 5 2 9 5 7 7 7 1 , ) 3 4 0 , 1 7 2 ( ) , 4 8 8 9 6 4 4 6 2 , ( , 6 7 2 5 2 4 2 1 7 , 6 4 1 , 4 2 3 6 8 6 , ) , 6 6 2 8 3 4 3 3 4 , ( 8 6 1 , 6 3 9 0 5 0 3 , , , ) 8 4 8 9 1 0 5 2 ( , 4 0 7 , 2 4 3 , 1 2 , 1 1 9 2 0 8 5 3 , , 6 3 6 0 6 4 , 7 7 1 3 0 1 , 3 5 0 6 8 6 , , 4 4 3 9 4 6 3 4 , , 5 9 9 8 2 4 9 3 1 , 4 8 5 6 7 7 , 7 1 5 , 7 2 9 , 1 1 , 7 9 2 9 8 7 , 1 2 , 1 3 8 8 2 3 , 8 2 0 3 1 1 , 9 7 2 2 6 1 , 2 1 4 , 7 0 1 , 1 e m o c n i t s e r e t n I t e N , 7 2 8 0 8 8 6 4 , - , 2 9 8 2 6 2 4 9 , , 7 5 4 4 2 3 7 6 4 , 8 0 8 , 1 6 1 , 0 2 6 9 8 2 , 1 6 0 8 4 2 , 1 , - e m o c n i i i n o s s m m o c d n a e e F ) 3 8 4 , 1 3 2 3 , ( ) 0 7 2 ( ) , 6 1 0 9 0 9 4 , ( ) 7 5 8 7 1 1 ( , , ) 7 0 9 3 7 4 4 9 , ( ) , 2 3 6 0 5 1 , 1 1 2 ( ) 6 4 4 , 1 1 5 7 ( , i i e s n e p x e n o s s m m o c d n a s e e F e c n a n F i i g n d o H l - 4 8 5 6 7 7 , e t a v i r P y t i u q E i g n k n a B t n e m t n e m t s e v n I - e g a n a M t e s s A e g a r e k o r B y r u s a e r T i & g n d o H l , 4 2 0 4 1 3 3 1 , , 4 1 4 9 1 4 9 2 , , 1 3 8 8 2 3 , 0 5 0 7 4 9 2 5 4 , , 6 8 6 3 8 1 , 0 3 4 . 1 , ) 7 0 5 6 8 3 , 1 ( ) 7 1 1 , 0 3 6 7 ( , - ) , 2 2 0 4 3 8 3 7 1 ( , ) 4 2 5 , 1 7 7 2 2 3 , ( e m o c n i t s e r e t n I e s n e p x E t s e r e t n I - - - - - - - - - - - - ) 0 7 2 ( , 6 7 8 3 5 3 9 8 , , 0 0 6 6 0 2 , 7 6 4 1 0 9 , 7 8 6 5 2 5 , , 7 5 6 0 1 9 6 3 0 , 1 , ) 6 4 4 , 1 1 5 , 7 ( i i n o s s m m o c & s e e f t e N - - 2 9 3 7 9 1 , - - - - - 8 5 0 9 3 , , ) 1 7 3 9 2 5 2 , ( ) , 8 7 0 3 7 9 7 ( , , ) 7 0 4 2 2 6 6 1 ( , , 1 0 8 5 1 9 3 1 , ) , 4 1 6 7 6 7 9 5 , ( , 6 6 8 5 0 4 7 1 , s s o l d n a t i f o r p h g u o r h t e u a v r i a f l t a s t n e m t s e v n i e h t n i s e g n a h C i s n a g ) s s o l ( s e i t i r u c e S e m o c n i d n e d v D i i , 9 0 5 7 7 0 5 3 , , 4 3 0 6 1 8 8 2 , , 6 8 0 9 8 4 , 1 3 8 0 3 4 2 1 , , 4 6 9 5 7 1 , 8 0 7 1 , 3 3 9 4 , , 1 0 8 2 6 7 , 1 , 7 8 6 9 1 3 0 3 , , 3 3 8 5 8 1 , 5 4 s e u n e v e R r e h t O ) , 5 7 3 9 0 6 , 1 7 2 ( 5 2 0 8 5 7 , , 1 7 3 3 3 1 , 0 2 4 6 7 5 , , 6 5 0 9 5 9 0 7 4 2 , , , 4 7 6 3 4 5 9 3 , 6 7 1 , 5 9 0 0 4 1 , - - - - ) , 0 8 9 7 3 2 4 , ( - ) 7 9 4 2 8 2 , , 5 1 ( ) 1 3 4 2 1 ( , , 2 9 3 5 0 9 5 9 3 5 , , ) , 2 9 2 9 5 4 6 3 , ( - - - - - ) 0 2 5 , 1 ( - - - - - - - - - - - - - - - - 1 4 7 , 1 9 7 8 1 , 2 3 6 3 5 2 , , 1 , 2 5 8 4 8 6 6 2 , 5 3 2 , 5 7 3 , 1 1 1 9 4 9 6 2 7 , , 1 9 0 , 1 , 8 3 3 4 9 9 5 8 1 , , 5 2 3 6 4 0 , 1 ) 4 1 2 , 5 8 2 ( ) 7 4 6 , 1 2 9 5 1 ( , 5 9 9 , 1 3 5 6 1 , ) 0 7 3 0 2 , ( ) 0 3 6 3 9 2 , ( ) 4 5 9 8 7 2 , ( , 9 1 3 8 6 5 4 5 , , 1 9 7 0 8 9 5 3 5 , , 7 0 0 6 5 7 0 3 , - - - - - - - - 8 1 2 , 5 0 5 , 1 ) , 0 8 9 7 3 2 4 , ( , 0 0 3 7 1 5 2 2 , 6 3 3 , 1 7 1 , 4 4 4 - 6 3 3 , 1 7 1 , 4 4 4 ) 5 7 6 7 8 , ( - 7 4 7 9 2 , - - - - - - 0 0 5 , 1 7 6 , 1 9 7 0 2 5 7 , 0 4 1 , 5 6 4 ) 1 9 0 6 3 , ( , ) 7 1 8 9 1 1 , 1 5 ( - - - , 2 7 6 8 9 3 5 2 2 , - - - , 9 8 5 6 5 9 , 1 6 3 ) , 2 8 0 5 9 0 , 1 0 2 ( , 6 3 5 3 4 0 7 3 8 , ) 6 3 1 , 7 6 4 , 1 3 ( ) , 2 4 5 6 2 5 9 1 ( , ) , 2 4 5 6 2 5 9 1 ( , , 6 3 8 2 1 3 3 0 4 , 2 8 8 , 1 3 2 , 1 , 4 0 5 8 5 1 , 5 7 5 8 0 0 , 1 9 0 3 1 , , 6 6 6 2 5 4 6 2 , , 1 9 3 6 7 8 9 1 , , 3 1 2 6 8 2 7 9 , 7 9 4 , 1 1 6 7 , ) 3 6 5 , 1 8 8 2 2 , ( - - ) , 2 6 7 2 3 7 2 , ( 8 0 2 , 2 0 3 8 6 4 , , 9 9 5 8 9 9 6 3 2 , , 5 0 9 7 2 0 3 6 3 , , 5 9 4 8 7 0 9 3 0 , 1 , ) , 3 1 3 3 7 6 5 , ( - - - - ) , 3 1 3 3 7 6 5 , ( ) , 8 9 7 9 2 0 4 5 1 ( , ) , 8 7 4 8 6 9 6 9 , ( - 3 9 0 , 1 6 6 , 1 ) , 9 7 7 8 4 3 8 1 ( , - - ) , 5 7 5 3 1 1 , 5 3 ( ) , 0 0 9 4 1 1 , 9 1 ( ) , 0 0 0 0 0 0 4 , ( ) 9 9 9 9 8 6 , ( ) , 9 4 0 5 9 3 2 5 , ( ) , 2 3 3 9 9 2 4 , ( , ) 1 1 5 4 6 6 3 9 1 ( , ) 4 8 2 , 7 0 4 , 7 4 ( ) 1 7 7 , 9 7 0 , 1 1 ( , ) 1 6 2 6 7 7 , 1 ( , ) 5 9 6 9 0 2 6 ( , , ) 5 6 0 4 8 6 0 5 ( , - - - 7 3 4 7 4 9 , 4 7 2 4 8 1 , , ) 1 7 7 9 1 0 7 ( , - - - - - i i n o s v o r p e e t n a r a u g l i a c n a n F i ) , 6 5 3 3 3 5 , 1 ( , ) 7 9 5 6 7 7 7 3 , ( , 8 7 9 9 2 4 s t e s s a n o s s o l t n e m r i a p m I - ) 4 0 0 2 8 2 ( , ) , 5 1 4 5 1 3 4 1 ( , , ) 7 1 4 4 2 1 ( ) , 9 3 6 0 6 0 9 , ( ) 0 6 7 3 3 , ( ) , 4 3 8 2 9 9 6 1 ( , ) , 5 3 6 2 0 4 3 3 , ( i s n o s v o r P i , ) 3 7 8 5 8 5 3 1 ( , ) 5 2 1 , 5 3 2 ( ) 6 1 4 , 1 3 3 ( , ) 4 0 5 4 0 9 , 7 ( ) 6 5 1 , 7 2 5 2 2 ( , ) 7 5 3 , 1 4 6 , 1 3 ( n o i t a z i t r o m a d n a n o i t a c e r p e D i , 4 2 0 7 0 7 5 2 9 , 1 , ) , 0 3 9 6 8 7 0 5 3 , ( , 4 9 0 0 2 9 4 7 5 , 1 , , 4 4 8 8 2 7 4 9 5 6 9 , , , 9 6 8 8 3 4 8 8 2 9 7 , , - - - - - 9 1 1 , 0 3 4 0 2 1 , , 9 3 0 7 5 0 4 1 , 0 9 9 , 1 3 7 5 3 , , 2 4 5 3 2 3 0 6 6 , , 3 9 3 7 7 0 4 3 1 , ) 4 1 1 , 2 5 1 , 3 9 2 ( ) , 0 8 9 6 1 3 , 1 3 ( 0 4 1 , 5 1 1 , 6 6 1 , 5 0 9 3 1 8 7 8 1 , , 4 9 4 8 4 3 4 2 1 , , 6 9 4 8 7 2 7 0 8 , ) , 3 2 2 3 5 5 5 4 , ( ) 6 9 0 , 1 9 2 3 , ( ) , 9 8 8 3 7 4 2 , ( , ) 1 0 4 4 9 2 7 6 1 ( , ) , 5 6 3 7 2 1 , 3 3 ( ) , 4 4 7 0 5 7 ( ) , 5 1 6 2 7 6 ( ) , 3 8 8 0 8 3 5 , ( , 4 9 3 2 3 9 9 , ) , 9 4 2 7 2 7 7 6 , ( ) , 9 5 8 7 4 4 4 3 , ( , 6 9 8 6 7 8 4 7 , , 3 4 9 5 6 7 , 0 1 1 0 1 , 8 5 2 3 3 , 1 4 1 , 9 2 0 3 9 4 , , 8 2 0 0 5 9 0 0 1 , , ) 8 5 8 2 0 9 3 9 2 ( , , ) 5 9 5 9 8 9 , 1 3 ( , 7 5 2 4 3 7 , 0 6 1 , 9 9 2 6 4 7 , 7 9 1 5 4 2 , 1 2 6 6 5 , , 7 3 6 0 3 8 2 7 7 , , 5 9 5 4 1 3 3 5 5 5 4 , , , 2 7 2 9 7 3 5 1 9 , 1 , , 3 4 8 8 2 6 0 9 7 , 1 , , 3 5 4 5 9 0 2 3 9 2 , , , 9 1 4 6 6 9 6 4 2 5 , , , 1 7 3 3 1 3 6 8 3 , , 0 7 5 7 7 9 , 1 8 3 , 0 4 2 4 4 2 9 6 1 , , 4 9 5 9 9 2 7 2 4 0 4 , , 3 7 1 , 4 5 8 8 6 6 , 1 , , 5 1 9 7 6 2 5 6 5 , 1 , , 3 3 5 4 1 4 3 0 2 2 , , , 5 9 9 5 3 4 0 6 4 4 , , , 0 6 3 3 4 0 9 4 , , 3 4 3 2 5 6 7 4 3 , , 2 8 9 2 9 8 7 5 2 , , 5 5 5 2 5 6 9 8 9 , , 6 4 5 8 7 4 7 5 2 , , 5 6 6 3 3 9 0 2 8 9 1 , , , 1 6 8 2 2 2 8 0 4 7 1 , , , 1 2 2 3 7 2 6 1 0 7 1 , , , 6 0 2 6 2 8 4 3 0 , 1 1 , l a t o T s t n e m t s u d A j g n i r o t c a F e c n a n F i r e m u s n o C o r c M i e c n a n F i i g n s a e L e c n a n F i i g n d o H l e t a v i r P y t i u q E i g n k n a B t n e m t n e m t s e v n I - e g a n a M t e s s A 0 2 0 2 , 1 3 r e b m e c e D d e d n e r a e y e h t r o F e g a r e k o r B y r u s a e r T i & g n d o H l , 5 5 2 9 3 5 4 9 8 2 , , ) , 5 8 7 4 3 1 , 9 2 ( , 0 4 7 4 8 6 8 4 , 6 4 1 , 5 9 5 2 8 , , 3 0 6 8 2 4 0 6 8 , , 1 9 8 2 9 6 2 6 4 , , 9 4 5 8 1 0 7 , , 8 6 6 8 0 3 4 2 , 9 1 2 , 2 4 0 6 1 , 6 7 1 , 6 0 6 , 8 2 2 3 8 8 2 6 3 , , 0 2 8 3 1 4 8 5 0 . 1 , ) , 0 5 4 9 8 8 7 7 0 , 1 ( , , 1 7 5 9 0 6 8 , ) , 3 6 3 0 3 5 8 3 , ( ) , 0 3 2 8 8 7 5 2 , ( ) 6 8 1 , 4 7 4 3 2 3 , ( ) 2 9 1 , 8 0 7 8 0 3 , ( , ) 1 3 3 3 1 5 5 , ( ) 8 6 3 , 1 9 7 , 1 ( , ) 1 7 3 4 9 1 , 5 ( - ) 1 1 9 , 1 9 1 , 1 7 1 ( ) , 9 6 0 7 0 3 6 0 2 , ( x a t e m o c n i e r o f e b t i f o r P e s n e p x e x a t e m o c n I r a e y e h t r o f t i f o r P s t e s s a l a t o T s e i t i l i b a i l l a t o T e s n e p x E t s e r e t n I e m o c n i t s e r e t n I , 1 3 4 8 6 5 2 4 7 2 , , ) , 2 7 9 7 6 9 6 1 ( , , 9 0 2 7 1 8 6 1 , , 9 8 6 8 8 5 4 5 , , 1 2 4 4 7 2 6 3 5 , , 1 6 9 4 3 0 , 1 3 , 5 0 8 9 4 6 6 1 8 , 1 , ) 4 1 2 , 5 2 5 0 2 , ( , 7 7 3 4 5 1 , 0 1 , 6 1 9 6 0 8 6 5 , , 7 1 4 4 5 9 6 3 5 , , 9 9 6 4 8 9 3 5 1 , , 8 4 8 7 4 8 0 1 , , 3 6 7 4 3 4 5 2 2 , 6 7 1 , 6 0 6 7 1 3 , 1 9 6 , 1 9 1 , 1 5 7 6 0 1 , 2 5 8 e m o c n i t s e r e t n I t e N , 6 0 4 6 7 0 3 1 4 , , 8 1 6 8 3 1 , 8 3 0 , 1 - e m o c n i i i n o s s m m o c d n a e e F ) 2 1 6 , 1 6 5 8 0 2 3 , , ( 1 0 1 , 7 4 8 9 7 , ) 0 9 8 , 1 5 2 7 1 ( , ) , 6 8 8 0 4 9 5 8 , ( ) 6 1 7 , 1 6 2 7 4 5 , ( , ) 1 2 2 4 5 3 0 7 ( , ) , 0 1 3 9 9 9 5 3 3 , ( ) , 6 7 7 4 6 8 0 4 1 ( , ) 1 1 5 , 1 3 0 3 0 2 , ( ) 9 8 1 , 6 1 9 3 8 2 , ( , ) 7 3 9 7 5 0 7 3 0 , 1 ( , , ) 1 5 7 9 7 0 0 1 ( , - - - , ) 1 5 7 9 7 0 0 1 ( , - - - ) , 5 6 8 2 7 8 3 0 3 , ( ) , 9 7 4 6 7 8 5 , ( ) , 3 5 2 6 7 8 2 , ( ) , 9 4 6 8 0 6 9 , ( ) , 4 6 9 3 7 4 2 7 1 ( , ) , 5 4 6 9 9 3 2 4 , ( ) , 2 5 8 5 4 4 ( ) , 2 8 9 2 9 0 , 1 6 ( - - - 6 5 7 5 7 1 , , ) 7 7 4 4 3 2 8 , ( ) , 0 2 3 0 4 0 , 1 ( - - n o s i i v o r p e e t n a r a u g l i a c n a n F i , 3 5 4 2 2 6 5 0 3 , , 8 7 3 3 4 8 , 7 5 , 0 1 4 4 1 1 , 2 0 3 , 3 1 4 4 9 2 , 7 2 4 , 1 1 8 1 , 4 9 8 4 1 2 , ) 3 3 7 , 2 0 9 2 1 ( , , 8 7 0 0 5 6 8 0 1 , , 7 6 0 9 2 9 3 9 4 , , 1 9 5 8 1 8 , 7 2 5 , 8 8 3 5 2 3 , 1 4 3 , 1 , 1 0 5 3 6 6 2 2 3 , 1 , ) , 9 0 2 0 5 6 0 2 1 ( , ) 8 7 1 , 5 9 8 2 2 , ( ) , 6 7 6 7 7 7 3 0 2 , ( ) 2 6 1 , 4 2 6 5 0 7 ( , , ) 1 2 2 2 8 4 , 1 8 ( , ) 7 6 3 2 3 5 2 5 2 , ( ) , 5 4 7 7 8 5 2 3 1 ( , ) 2 7 8 , 1 2 4 8 1 3 , ( ) , 6 6 0 3 3 5 0 3 3 , ( , ) 7 0 3 0 8 6 9 3 1 , 1 ( , , ) 1 9 9 0 7 7 0 5 4 , ( - - - - - - - - , 6 5 7 6 2 3 - - ) , 5 5 3 3 0 8 3 1 ( , - - , ) 1 7 6 4 0 0 , 1 ( - - - - - - - - - - 3 9 9 7 1 2 , 8 7 7 , 1 1 9 7 2 2 , i e g n a h c x e s e c n e r r u c n g e r o F i s e c n e r e ff d i l d e h s t e s s a g n i l l e s n o n a G i y t i u q e m o r f s s o l f o e r a h S s e e t s e v n i d e t n u o c c a s e u n e v e r l a t o T l e a s r o f e v i t a r t s n m d a i i l a r e n e G s e s n e p x e , ) 7 6 0 5 7 4 2 3 , ( 8 0 2 , 2 4 - - 4 6 7 0 2 , - ) , 9 5 8 9 0 9 ( ) , 4 2 5 3 4 1 , 1 7 1 ( , 3 7 5 2 7 7 9 6 6 , 1 , ) , 8 2 5 6 4 0 9 2 3 , ( , 5 4 0 6 2 7 0 4 3 , 1 , , 1 5 6 9 0 0 , 1 4 7 8 3 , , 6 6 4 6 6 0 3 0 8 4 2 , , - - - - - ) , 8 3 5 3 5 5 7 3 , ( ) 1 9 8 4 5 7 , , 1 ( 8 1 8 , 1 0 8 4 , ) 9 2 1 , 2 9 1 , 2 ( , 9 8 6 9 0 6 2 , , 3 5 3 5 3 3 0 8 7 , ) , 6 8 8 5 4 5 7 ( , , 4 1 8 9 7 2 8 , - , 4 1 8 9 7 2 8 , , 4 9 6 5 4 5 9 0 7 , ) , 8 4 6 8 7 0 7 4 , ( ) 2 6 4 0 1 2 , ( ) , 2 6 3 2 3 0 4 1 ( , , 4 3 6 3 5 8 4 1 3 , ) , 4 5 5 4 9 7 9 8 , ( , 0 8 0 9 5 0 5 2 2 , , 0 1 0 0 3 0 3 7 , ) , 6 9 0 2 3 1 , 3 1 ( , 4 1 9 7 9 8 9 5 , ) 8 1 3 8 , ( ) 5 4 1 , 0 2 1 , 4 5 3 ( , 3 0 2 0 3 9 2 7 6 , , 9 9 4 8 5 9 6 6 4 , , 2 0 0 5 9 3 3 7 1 , 2 , , 5 7 9 7 6 7 5 2 1 , 4 , , 8 2 9 6 0 4 3 3 , , 8 5 4 2 0 1 , 8 1 4 7 5 1 , 5 8 8 6 6 1 , , 3 2 6 9 8 2 7 9 1 , , 1 9 5 0 8 2 3 3 4 0 1 , , , 0 3 0 0 5 0 5 1 1 , 6 , , 3 3 5 6 8 7 6 4 8 2 , , , 0 6 3 3 8 0 9 9 7 4 , , , 8 4 6 7 0 3 3 4 1 , , 5 6 7 9 2 0 9 3 6 , 9 5 2 , 5 5 2 0 7 2 , 9 2 7 , 1 2 4 2 4 7 , 4 5 7 6 2 7 , , 1 8 1 , 3 1 , 4 5 5 7 1 5 8 2 6 4 1 , , ) , 3 6 4 8 2 1 , 4 5 3 ( , 7 5 7 2 7 3 , 1 2 2 8 5 1 , 3 5 0 9 2 , , 0 9 2 3 4 3 4 7 , ) , 6 3 6 4 6 2 0 7 ( , - ) 2 6 2 , 2 2 3 ( 8 8 1 , 2 2 0 6 6 2 , , ) 1 3 4 9 4 6 4 4 , ( ) 0 4 9 3 3 9 , ( ) 8 6 9 6 6 4 , ( ) , 8 6 2 4 0 1 , 8 2 ( ) , 8 2 4 6 0 3 ( ) , 6 7 8 3 8 1 , 0 1 ( ) , 5 0 4 4 6 4 9 1 ( , , 0 2 7 6 2 7 2 3 , , 8 2 6 6 3 6 8 6 , ) , 2 9 5 2 8 7 3 5 , ( ) , 2 6 5 3 7 6 3 , ( , 2 6 6 6 0 7 5 , ) , 4 4 0 2 8 4 6 1 ( , , 5 6 8 8 0 9 , 1 1 9 , 1 , ) 7 7 2 0 3 7 6 6 5 , ( ) , 4 0 0 3 2 1 , 2 ( ) , 6 6 7 0 9 6 2 3 , ( , 8 9 4 4 2 3 9 0 3 , 1 , ) 6 5 0 , 1 2 8 4 6 1 ( , , 2 4 4 3 0 5 4 4 1 , 1 , l e u a v r i a f t a s t n e m t s e v n i e h t n i s e g n a h C s s o l d n a t i f o r p h g u o r h t ) s e s s o i l ( s n a g s e i t i r u c e S e m o c n i d n e d v D i i s e u n e v e R r e h t O i i e s n e p x e n o s s m m o c d n a s e e F i i n o s s m m o c & s e e f t e N i s e c n e r e ff d e g n a h c x e s e c n e r r u c n g e r o F i i d e t n u o c c a y t i u q e m o r f s s o l f o e r a h S s e u n e v e r l a t o T s e e t s e v n i s e s n e p x e e v i i t a r t s n m d a i l a r e n e G n o i t a z i t r o m a d n a n o i t a c e r p e D i s t e s s a n o s s o l t n e m r i a p m I s n o s i i v o r P x a t e m o c n i e r o f e b t i f o r P e s n e p x e x a t e m o c n I r a e y e h t r o f t i f o r P s e i t i l i b a i l l a t o T s t e s s a l a t o T 192 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 193 Consolidated Financial Statements (b) Geographical segments • • The Group operates in three main geographical areas: Egypt, GCC and Lebanon. In presenting the geographic infor- mation, 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. Egypt GCC Lebanon Other Total Total revenues 4,638,884,790 1,230,795,863 Segment assets 80,659,376,773 15,427,005,155 - - 173,740,479 6,043,421,132 508,346,916 96,594,728,844 December 31, 2021 Egypt GCC Lebanon Other Total Total revenues 4,492,363,764 764,899,614 -- 138,642,014 5,395,905,392 Segment assets 28,170,967,092 10,093,748,380 1,354,003 474,940,176 38,741,009,651 December 31, 2020 34. Tax status (the holding company) • • • • As to Income Tax, the years till 2019 the competent Tax Inspectorate inspected the parent company’s books and all the disputed points have been settled with the Internal Committee. And as to year 2020, have not been inspected yet. As to Salaries Tax, the parent company’s books had been examined till 2019 and all the disputed points have been settled with the Internal committee and as to year 2020/2021 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 2019/2021 have not been inspected yet. As to Property Tax, for Smart Village building the company paid tax till December 31,2021 and for Nile City building the company paid tax till December 31,2021. 35. Corresponding figures Certain reclassification and adjustments have been made to some comparative figures in order to confirm with the current period presentation as following: Income Statement Interest Income Interest Expense Fees and commission income Fees and commission expense Revenues from leasing activities Other revenues General & Administrative expense (As reported) for the year ended 31/12/2020 EGP 2,207,704,690 1,102,679,260 2,922,038,065 237,680,811 490,547,721 156,912,385 3,217,700,365 Reclassifications EGP 686,834,565 (24,789,810) (179,469,634) 33,928,564 (490,547,721) (16,817,209) (9,138,753) (Restated) for the year ended 31/12/2020 EGP 2,894,539,255 1,077,889,450 2,742,568,431 271,609,375 - 140,095,176 3,208,561,612 36. Group’s entities The parent company owns the following subsidiaries: Financial Brokerage Group Egyptian Fund Management Group Hermes Portfolio and Fund Management Hermes Securities Brokerage 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 IB Limited Financial Group for Securitization Beaufort Investments Company EFG Hermes-Direct Investment Fund Tanmeyah Micro Enterprise Services S.A.E EFG – Hermes Frontier Holdings LLC Direct ownership % 99.87 88.51 78.81 97.58 99.42 100 - 99.88 100 99 96.3 1.59 -- 100 - - - 100 99 73.3 99 - - - - - 100 - - - - 100 49 97 - 100 - - - - 100 100 - 64 - 100 Indirect ownership % 0.09 11.49 21.19 2.42 0.48 - 100 - - 1 3.7 63.41 100 - 99.33 96 74.92 - - 26.7 0.97 95 95 100 100 51 - 50 63.084 52 100 - 20.37 - 97 - 50 45 45 100 - - 100 - 100 - 194 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 195 Consolidated Financial Statements 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 Beaufort Holding LTD. Beaufort Management LTD. Vortex IV GP LTD. Beaufort SLP Holding Beaufort Private Investment Holding LTD. Frontier Disruption Capital Arab Investment Bank EFG VA Holdco Limited EFG VA Investco Limited Direct ownership % 100 - - - 99.82 - - 99.9 - - - - - - - - 100 0.002 - - - - 100 - 90 - - - - - - 51 - - Indirect ownership % - 65 52.5 100 0.18 51 100 - 50 100 100 100 100 100 100 100 - 95.196 52.5 50 80 100 - 50 10 100 100 100 100 100 50 - 100 100 *Due to the political situation in Syria, the Group lost its control on the Syrian entities. In 2016, the Group deconsolidated the Syrian compa- nies 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. 37. Financial instruments and management of related risks: 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 measurement of the important financial instruments and related revenues and expenses by the company to minimize the consequences of such risks. 37.1. 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. 37.2. 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 ac- counting policy. 37.3. 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, technology and industry. They are monitored through the Group’s strategic planning process. 37.4. 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. 196 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 197 Consolidated Financial Statements 37.5. 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 addition 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. 37.6. 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. 37.7. 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. 37.8. 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. 37.9. 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. 37.10. 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 sub- sequently re-measured at their fair value, according to the valuation basis applied, in accounting policies to derivative financial instruments. In accordance with an arrangement between the subsidiary, EFG- Hermes Mena Securities Limited Co. and its cus- tomers (“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. 38. Significant events With the outbreak of COVID-19 pandemic all over the world, the year 2020 witnesses a slowdown in the economic activities till date. Accordingly, the company's management has formed a taskforce to develop and implement the emergency plan to face these exceptional circumstances. Several measures have been taken, including a plan to split the employee workforce whereby 50% of the employees will work from the office, while the remaining 50% will work remotely from home. The management is closely monitoring the situation to ensure the safety of the company’s employees. 39. Significant accounting policies applied 39.1. Basis of consolidation 39.1.1. 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 198 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 199 Consolidated Financial Statements 39.1.2. 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. 39.1.3. Non-controlling interests NCI are measured at their proportionate share of the acquiree’s identifiable net assets at the date of acquisition. Changes in the Group’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. 39.1.4. 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. Interests in equity-accounted investees 39.1.5. 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. 39.1.6. Transactions eliminated on consolidation Intra-group balances and transactions, and any unrealised income and expenses arising fromintra-group transactions, 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. 39.2. Foreign currency 39.2.1. 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 determined. 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. 39.2.2. 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. 39.3. 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. 39.4. Revenue 39.4.1. 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. 39.4.2. Dividend income Dividend income is recognized when declared. 39.4.3. Custody fee Custody fees are recognized when the service is provided and the invoice is issued. 39.4.4. 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”. 39.4.5. 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. 200 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 201 Consolidated Financial Statements 39.4.6. 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. 39.4.7. Management fee Management fee is calculated as determined by the management contract of each investment fund & portfolio and recorded on accrual basis. 39.4.8. 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. 39.5.1. 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. 39.5.2. Deferred tax Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for: Investment property rental income 39.4.9 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. • • 39.4.10. 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 distrib- uting 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 re- cords 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- enterprises 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 issu- ance 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. • • 39.4.11. Gains from securitization 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. Income tax 39.5. 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. Temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combina- tion 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. • • 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. 39.6. Property, plant and equipment 39.6.1. 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. 202 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 203 Consolidated Financial Statements 39.6.2. 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. 39.10. 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. 39.6.3. 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. 39.6.4. Reclassification to investment property When the use of a property changes from owner-occupied to investment property. 39.7. Projects under construction Projects under construction are recognized initially at cost, the book value is amended by any impairment concerning 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. Intangible assets and goodwill 39.8. - Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. Goodwill 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. Investment property 39.9. Investment property is measured at cost on initial recognition. Subsequent to initial recognition investment property is measured at cost less accumulated depreciation and impairment 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. 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. 39.11. Financial instruments 39.11.1. 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. 39.11.2. Classification and subsequent measurement 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. 204 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 205 Consolidated Financial Statements 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. 39.11.3. Financial assets – Business model assessment The Group makes an assessment of the objective of the business model in which a financial asset is held at a portfolio 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, matching 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 expecta- tions 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. 39.11.4. Financial assets – Assessment whether contractual cash flows are solely payments of principal and interest For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘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 contractual 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. 39.11.5. 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 These assets are subsequently measured at fair value. Interest income calculated using 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. Equity investments at FVOCI 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. 39.11.6. Financial liabilities – Classification, subsequent measurement and gains and losses 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 liabilities 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. 39.11.7. 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 consideration paid (including any non-cash assets transferred or liabilities assumed) is recognised in profit or loss. 206 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 207 Consolidated Financial Statements 39.11.8. 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. 39.11.9. 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. 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. 39.12. Share capital 39.12.1. 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. 39.12.2. 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. 39.13. 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 39.14. Impairment 39.14.1. Non-derivative financial assets Financial instruments and contract assets The Group recognises loss allowances for Expected Credit Loss (ECLs) on: Financial assets measured at amortised cost; • • Debt investments measured at FVOCI; • contract assets. 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. 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: For all other hedged forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging 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. • 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. 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. 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 available 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. 208 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 209 Consolidated Financial Statements The Group considers a financial asset to be in default when: 39.14.6. Non-financial assets • • 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). The maximum period considered when estimating ECLs is the maximum contractual period over which the Group is exposed to credit risk. 39.14.2. Measurement of ECLs 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. 39.14.3. Credit-impaired financial assets 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. 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. 39.14.4. 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 assets. For debt securities at FVOCI, the loss allowance is charged to profit or loss and is recognised in OCI. 39.14.5. Write-off 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. • • • • • • At each reporting date, the Group reviews the carrying amounts of its non-financial assets (other than, investment prop- erty, 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. 39.15. 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. 39.16. 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. 39.17. 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. 39.18. 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. 39.19. 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. 210 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 211 Consolidated Financial Statements 39.20. Employees benefits 39.20.1. Share based payments Equity settled transactions For equity-settled share-based payment transactions, the company measure the services received, and the corresponding increase in equity, indirectly, by reference to the fair value of the equity instruments granted. The fair value of those equity instruments is measured at grant date. Vesting conditions, other than market conditions, are taken into account by adjusting the number of equity instruments included in the measurement of the transaction amount so that, ultimately, the amount recognized for services received as consideration for the equity instruments granted are based on the number of equity instruments that eventually vest. Hence, on a cumulative basis, no amount is recognized for services received if the equity instruments granted do not vest because of failure to satisfy a vesting condition. The company recognize an amount for the services received during the vesting period based on the best available estimate of the number of equity instruments expected to vest and revise that estimate, if necessary, if subsequent information indicates that the number of equity instruments expected to vest differs from previous estimates. On vesting date, the entity shall revise the estimate to equal the number of equity instruments that ultimately vested 39.21. Micro-enterprises Receivables 39.21.1. 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 activ- ity (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. • • • Client's Life Insurance The insurance process on the client is performed with the authorized companies from insurance supervisory authority. 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. 39.22. Leases 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. 39.22.1. As a lessee 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 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 commencement 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: fixed payments, including in-substance fixed payments; 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 assessment of whether it will exercise a purchase, extension or termination option or if there is a revised in-substance fixed lease payment. 212 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 213 Consolidated Financial Statements 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. 39.22.2. As a lessor At inception 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 their relative stand- alone prices. When the Group acts as a lessor, it determines at lease inception whether each lease is a finance lease or an operating lease. 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 separately. 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 investment 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’. 39.23. 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. 214 ● EFG Hermes Holding ● Annual Report 2021 2021 Annual Report ● EFG Hermes Holding ● 215 Consolidated Financial Statements A HOLISTIC SET OF FINANCIAL PRODUCTS AND SERVICES Annual Report 2021