A Selection of our Previous Management Consultancy Assignments

Project: Capital Markets Development
Client: USAID/Chemonics

The Egypt Capital Markets Development (CMD) project is funded by USAID to provide Egypt with assistance developing and improving its capital market. Under its Year-2001 Work Plan, the project is working with eight institutions; the Capital Market Authority (CMA), Cairo and Alexandria Stock Exchange (CASE), Misr for Clearing, Settlement, and Depository (MCSD), the Central Bank of Egypt (CBE), the Ministry of Economy and Foreign Trade (MOE), the Ministry of Finance, and members of the securities industry, represented by the Egyptian Capital Market Association (ECMA) and the Egyptian Investment Management Association (EIMA). The Project?s technical assistance to these institutions is concentrated in four basic areas; institutional development and training, information technology assistance, legal and regulatory improvements, and public awareness and outreach. Implemented by Chemonics International Inc, and its subcontractors, including our firm, the project began operating in the fall of 1998 and was initially funded for three years and is extended to fall of 2002.

Project: Labour Restructure
Client: European Community - USD

We have assisted four Public Sector Companies, through a leading governmental organization, in setting up a comprehensive scheme for labour restructure. The scheme has covered possible alternative methods of finance. We have also helped in preparing a number of state-owned companies for privatization, through restructuring their work force and developing alternative plans for early retirement.

Project: Reorganization of internal audit function
Client: USAID/Principal Bank for Development and Agricultural Credit/ Chemonics

We were engaged by the USAID program to critically evaluate the status of the internal audit function in one of the major specialized banks. The review project was divided into four stages and resulted in comprehensive recommendations for reorganization of the internal audit, development of an internal audit manual and identification of staff training needs.

Project: Financial Analysis and Profit ProjectionProject: Financial Analysis and Profit Projection
Client: USAID/Principal Bank for Development and Agricultural Credit/Chemonics

We have carried out a financial analysis study of a major specialized bank to assess its performance over the past eight years. Trends and observations from our study were used as an input to a subsequent profit projection study, taking into consideration the bank's strategy and business objectives for the next five years.

Project: Bank Assets & Liabilities Valuation
Client: Group of private investors

For a group of Kuwaiti Investors, we have carried out a valuation of the assets and liabilities of an Egyptian bank. Business consultations were provided in respect of possible restructure, revised future strategic objectives, and suggested courses of action.

Project: Bank Restructuring and Reorganization Study
Client: USAID/Chemonics

We conducted a restructuring and reorganization study of the Principal Bank,employing over 40,000 staff. During the study, we evaluated the existing organizational structure, functional statements, job descriptions, human resources management and other management practices. At the conclusion of the study, we made significant recommendations/proposals in areas of organizational development and structure and the current management practices, together with a detailed implementation plan.

Project : Internal audit Training
Client: USAID/Chemonics

We have conducted a massive internal audit training program for one of the banks. Participants are presented with the relevant technical materials and practical case studies in the classroom sessions (12 days). This is followed by on-the-job training in the field, where approved audit programs are professionally applied and proper working paper files are prepared (12 days). This is considered one of the most successful training projects presented by the bank.

Project: Litigation Support
Client: Societ`e Sucr`ee F. Deistile D'Egypte

We carried out a cost verification exercise of the claim submitted by our client against a French company before the International Arbitration Tribunal in Paris. Our report demonstrated in detail the cost effect associated with the defaults of the equipment supplied by the French company the decision was in favor of our client.

Project : Due Diligence & Purchase Investigation

We have provided expertise to a large number of investors, who engaged us to carry out full scope business, financial and management reviews of companies subject to acquisitions and mergers. Our due diligence reports were used as a basis for share valuation and bidding for a majority stake in many private and state-owned companies. Examples include:

An international UK- based client, which engaged us to carry out a due diligence review of a target company located in Egypt. This target company is in the business of cultivation of animal feeds as well as raising cattle and chicken for the purposes of milk and egg production.

A major banking client based in the Gulf also requested our assistance in purchase investigation work on a target Bank located in Egypt. This target Bank is a medium sized bank with several branches located in Cairo and Alexandria.

We have carried out a purchase investigation for an international client based in Kuwait to increase its interest in a target company located in Egypt, which conducts business in securities trading and portfolio management.

Other major assignments we have handled in this category include purchase investigations and due diligence reviews of target companies in pharmaceutical and insurance industries.

We have performed a full scope due diligence review of a target public sector company engaged in the exploration and production of Gypsum for the benefit of an international French company. The end result of this engagement was a successful acquisition of the target company by the French company.

Business and share Valuation

We possess considerable experience in business valuation in a wide variety of mergers and acquisition transactions. We have provided expertise in this field to a large number of international or local investors before they sell or acquire a stake in joint stock companies in Egypt. For each case, we use a tailor-made valuation technique as appropriate. Examples of the various analysis techniques/computations we use include: net-assets, discounted cash flows, discounted earnings, capitalized cash flows, capitalized maintainable earnings, benchmarking to similar transactions and marketable securities listed on the stock Exchange. Our experience in this field covers manufacturing, trading / service,oil beverage companies, and banks. Our latest assignment was the valuation of Al Gouna Group of companies (9 companies) taken over by Al Ahram Beverages Co.

Regulatory Bodies

We have been appointed as members of a committee put together by the Capital Market Authority to report on the financial aspect of the valuation of private companies going public. Also, we have been appointed as members of a committee created by the Capital Market Authority to set up rules for reporting on mutual funds, including policies for portfolio valuation.

In addition, we were appointed as members of the Independent Accountants Committee invited by the Central Bank of Egypt. The Committee was engaged in setting up the disclosure and presentation requirements for the financial statements of the banks operating in Egypt. We are also members of the committees formed to establish International Accounting Standards and Egyptian Auditing Standards.

Corporate Finance

We were engaged, as members of a team of international investment banking companies, in raising funds for joint stock companies in Egypt through offering and promoting their securities to investors in international and local capital markets. Our experience in this field includes developing information memorandums,offering circulars, prospectuses, and listing particulars for both the London and Cairo stock Exchanges. We compiled, reviewed and sometimes audited the relevant financial and management information, then reported in an appropriate form according to different reporting standards. Basically, we were the first accounting firm in Egypt to compile and report financial information of a100% state-owned company in accordance with the US Generally Accepted Accounting Principles (GAAP) and the International Accounting Standards (IAS). State-owned companies maintain their books according to the government Unified Accounting System (UAS) which has different accounting policies and practices from those of GAAP and IAS. Our exercise therefore had a great impact in facilitating and enhancing foreign investors' understanding of the securities offered, and encouraging them to participate in the Egyptian capital market. Our work was taken as an example followed by other firms.

Financial Structure

We have helped a number of big firms in Egypt to enhance their financial reporting by developing an IAS-based accounting system . Again, this practice enhanced the understanding of their financial statements by external users and attracts prospective investors into business. It also encourages family owned companies to go public, through offering their shares to new investors.

Al-Ahram Beverages Company (ABC)

The privatization of ABC is considered to be the most successful model of the privatization program in Egypt. Zarrouk, Khaled & Co (Z&K) was engaged by a US limited liability company, the Luxor group, with a team of international financial advisors, led by HSBC investment Banking, to prepare and promote an offering of 5,647,000 Global Depository Receipts (GDRs) representing 2,823,500 ABC shares in a transaction of US$ 87.5 million.

ABC was a fully state-owned company and the sole producer of beer in Egypt for over 100 years, with a turnover of L.E. 141 million in 1996. Our involvement in this transaction was well recognized and appreciated by the international mutual funds and underwriters.

The roles we played throughout the deal were as follows:

1. Conducted a full due diligence on the acquisition of 75% of ABC's outstanding shares by the Luxor group
2. Represented the buyer in negotiations with the governmental holding company and concluded an agreement, in November 1996, to buy 3,373,520 shares for L.E. 68.5 each, totalling L.E. 231,086,000
3. Following its purchase of the shares from the government holding company, Luxor offered 5,647,OOO GDRs represented by 2,823,500 shares to investors in Europe and USA. We compiled the financial information and carried out a full scope review of the financial statements of ABC, published in the offering circular. The GDRs were offered at US$ 15.5 each, totalling US$ 87,528,50O
4. In February 1997 and following the successful offering, the GDRs were listed on the London stock exchange. Z&K were appointed as the reporting accountant for purposes of the listing particulars. ABC was the first ever 100% state-owned company to be listed on the London Stock Exchange. At the moment, at least eight Egyptian companies are listed on the London Stock Exchange
5. This task was a challenging one because the financials of ABC were kept and prepared in accordance with the governmental Unified Accounting system (UAS), and audited by the Governmental Audit Bureau. It was the first exercise for an accounting firm in Egypt to reform the UAS financial statements into International Accounting Standards (IAS) and the US Generally Accepted Accounting Principles (GAAP)