The Egyptian Financial Supervisory Authority has decided to postpone the subscription for existing shareholders in HIPC's capital increase. The company's capital will rise from 72 million EGP to 108 million EGP, an increase of 36 million EGP. This decision was made after the Authority discovered significant observations during its review of the company's financial statements.
The Financial Supervisory Authority's decision was based on its discussions with HIPC's auditor on September 16, 2026. The discussions reviewed the company's financial statements for the year ending December 31, 2025, and the period ending June 30, 2026. The Authority also reviewed the company's documents and audit file. As a result, they found significant observations that affect the reliability of some data and balances in the financial statements.
The observations included shortcomings in the company's internal control system, particularly in cash transactions and inventory movements. There were also concerns about customer balances and expected credit losses. As of December 31, 2025, the company's customer balance was approximately 215 million EGP, which decreased to around 186 million EGP by June 30, 2026.
The Financial Supervisory Authority found that HIPC did not comply with the requirements of Egyptian Accounting Standard No. 47 regarding the measurement of expected credit losses. The company also failed to disclose transactions with related parties, as required by Egyptian Accounting Standard No. 15. This is significant, as HIPC's major shareholder, Ibrahim Mohamed Ibrahim Ahmed Heba, owns around 48.03% of the company's shares.
The Authority noted that HIPC's major shareholder had a receivable balance of approximately 25.382 million EGP as of June 30, 2026. This amount could be used to subscribe to the capital increase without injecting cash into the company. However, the Authority required HIPC to provide additional documentation and explanations to address these concerns.
The proposed use of the capital increase funds includes purchasing equipment worth 16 million EGP to expand the company's piling activity. However, the Authority found that the company's primary source of revenue is from supply, not contracting. The capital increase will also be used to pay part of the company's debt to Cairo Bank, which totals around 81 million EGP.
The Financial Supervisory Authority's decision to postpone the subscription will remain in effect until HIPC addresses the Authority's concerns and provides the necessary documentation. The company's financial situation and investment needs must be thoroughly evaluated before the capital increase can proceed. Key points include the company's failure to comply with accounting standards and the need for additional documentation to support the capital increase.
Key points
- The Egyptian Financial Supervisory Authority postponed HIPC's 36 million EGP capital increase subscription due to significant observations in the company's financial statements.
- The observations included shortcomings in HIPC's internal control system and non-compliance with accounting standards.
- HIPC must address the Authority's concerns and provide additional documentation before the capital increase can proceed.
