Board of Directors Decision No. 1 of 2017

Board of Directors Decision No. (1) for the Year 2017 Date: 2017/1/18 | Last amended on: 2025/7/9 Regarding the issuance of the Egyptian Financial Valuation Standards for Enterprises in accordance with 2025/7/9

General Board of Financial Supervision After reviewing the Companies Law (Joint Stock, Limited Partnerships with Shares, and Limited Liability Companies) issued under Law No. (159) of 1981; And the Capital Market Law issued under Law No. (95) of 1992; And the Financial Markets and Non-Banking Financial Instruments Regulation Law issued under Law No. (10) of 2009; And the Minister of Investment Decision No. (101) of 2007 adding financial securities consulting activities to the activities of companies operating in the securities field; And the Board of Directors Decision No. (121) of 2010 regarding the basic professional performance standards for companies operating in providing financial consulting services in securities; And the Board of Directors Decision No. (11) of 2014 regarding the rules for listing and delisting securities on the Egyptian Exchange, with its amendments; And upon approval by the Board of Directors in its meeting No. (1) held on 2017/1/18 to approve the issuance of the Egyptian Financial Valuation Standards. Has Decided:

(Article One) The Egyptian Financial Valuation Standards for Enterprises attached to this decision are hereby issued.

(Article Two) Financial securities consulting companies licensed by the Authority must comply with the attached standards when performing all financial valuation works, including fair value determination studies, and must indicate this in the header of their reports.

1. The decision was amended by Board Decision No. 110 dated 2020/6/23, Board Decision No. 150 dated 2023/7/26, and Board Decision No. 136 of 2025 dated 2025/7/9.

Reports of financial valuation referred to in the preceding paragraph will not be accepted by the Authority unless they include an indication in their header that they were prepared in accordance with the attached Egyptian Financial Valuation Standards for Enterprises.

(Article Three) Board of Directors Decision No. (121) of 2010 is hereby repealed.

(Article Four) The provisions of this decision do not affect financial valuation reports, including fair value determination studies, submitted to the Authority before the effective date of this decision, provided they comply with the standards in force at that time.

(Article Five) This decision shall be published in Al-Waqai' Al-Masriya (Egyptian Gazette) and on the official websites of the Authority and the Egyptian Exchange, and shall take effect from the day following its publication in Al-Waqai' Al-Masriya.

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Egyptian Financial Valuation Standards for Enterprises Issued by Board of Directors Decision No. (1) of 2017 According to the latest amendment dated 2025/7/9

Contents	Page
Introduction and Scope of Application	3
First: Professional Conduct Rules Standard	9
Second: Professional Competence Requirements Standard	14
Third: Scope of Work Standard	15
Fourth: Valuation Process Execution Standard	17
Fifth: Reasonableness of Assumptions Standard	23
Sixth: Valuation Approaches and Methods Standard	25
Seventh: Preparation of Valuation Report and Contents Standard	29
Appendices	35
Appendix (A): Valuation Approaches and Methods
Appendix (B): Practical examples for the startup valuation method ("Pre-revenue – Pre-sales stage")	58

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Introduction and Scope of Application -1 Introduction: Financial valuation aims to determine the value of an enterprise or project on a specific date in accordance with multiple legal requirements, primarily implementing the provisions of Capital Market Law No. 95 of 1992 and its executive regulations, as well as the listing and delisting rules for securities on the Egyptian Exchange. In this context, the General Authority for Financial Supervision (GAFS) has been keen to issue approved Egyptian financial valuation standards for enterprises, keeping pace with international methodologies and best practices in related fields, completing the disclosure and objectivity system, which includes Egyptian Accounting Standards, Egyptian Auditing Standards, and Egyptian Real Estate Valuation Standards. These standards crown a system fundamentally aimed at protecting investors when valuing securities for purposes of public offerings, acquisitions, capital increases, and other investment decisions. Law No. 10 of 2009 regarding the regulation of supervision over financial markets and non-banking financial instruments forms the general legal framework for these standards. The financial valuation standards were prepared taking into account GAFS's issuance of the Egyptian Real Estate Valuation Standards. Accordingly, these financial valuation standards do not include a detailed explanation of real estate asset valuation, and users may refer to the Egyptian Real Estate Valuation Standards regarding real estate assets. Therefore, the existence of national standards for financial valuers and their assistants to evaluate various types of enterprises and projects aims to gain the trust of various relevant parties, protect market participants, and encourage investment. Accordingly, these standards were issued. The General Authority for Financial Supervision is the sole regulatory body in Egypt responsible for licensing independent financial consultants and approving the specific regulatory and supervisory requirements for this activity.

Financial valuation reports or fair value studies required from an independent financial consultant within the Arab Republic of Egypt – in accordance with Capital Market Law No. 95 of 1992 and its implementing decisions – shall not be accepted unless signed by a company exercising the independent financial consultant activity, licensed by GAFS, with its license number stated and confirming compliance with these standards.

-2 Scope of Application according to Egyptian Capital Market Laws: These financial valuation standards apply to all cases where Capital Market Law, its executive regulations, or the Egyptian Exchange's listing and delisting rules require a valuation process for companies, securities, or other assets taking the form of an enterprise or project, particularly in the following cases:

• Capital increases by issuing new shares, according to Article 17 of the Executive Regulations of Capital Market Law No. 95 of 1992.
• Takeover offers, according to Chapter Twelve of the Executive Regulations of Capital Market Law No. 95 of 1992.
• Share swaps held by subscribers in another company's capital for the purpose of acquisition or merger, according to Article 22 (w) of the Executive Regulations.
• Fair value studies required by Egyptian Exchange listing and delisting rules when buying or selling shares of a listed company in the securities of an unlisted company or enterprise representing 10% or more of the equity rights of the listed company.
• Growth and profitability studies for companies not meeting the profitability condition, according to Egyptian Exchange listing rules.
• Valuation of investment funds' investments in unlisted securities (particularly private equity funds and real estate investment funds).
• Mergers between companies and corporate divisions, according to Capital Market Law No. 95 of 1992.
• Valuation cases for securities offering purposes.
• Cases of executing share or equity transfers, capital increases, or issuing convertible financing instruments in startups, according to shareholders' agreements, when companies and venture capital firms invest in startups through convertible financing instruments (Convertible Instruments).

1. A new case was added to the end of the scope of application cases by Board Decision No. 150 dated 2023/7/26.

These standards use the term "Valuer" to refer to anyone performing financial valuation works and preparing fair value studies. In cases where Egyptian capital market laws require a fair value study report, it must be issued by an entity licensed by the Authority to practice financial consulting services in securities.

.3 Concepts and Definitions Concept of the Valuation Process: It is the process of estimating the equity value of the evaluated enterprise on a specific date, taking into account all rights, benefits, requirements, and restrictions related to the ownership stake regardless of its legal form. This is done by using financial valuation standards that rely on variables related to: (1) The enterprise's generation of future returns. (2) Comparing the value of the evaluated enterprise with similar or comparable enterprises. (3) Estimating returns resulting from the liquidation of the evaluated enterprise (in relevant cases).

2. New definitions were added to items (6, 7, 8) by Board Decision No. 136 dated 2025/7/9.

Concept of Value: Value is the estimated monetary equivalent as a fair price for the evaluated enterprise, based on a set of future assumptions applied according to appropriate valuation methods and in light of the purpose of valuation. The most important future assumption is the continuity of the enterprise as an ongoing entity capable of generating future benefits through optimal asset use – except in liquidation cases. Value differs from market price, as the market price is the actual monetary amount requested, offered, or paid in the market for a specific asset (i.e., the most probable price or best price obtainable by the seller and most suitable for the buyer on the valuation date). Within the purpose of valuation, value concepts are defined as follows: Fair Market Value, Fair Accounting Value, Investment Value, and Liquidation Value.

-1 Fair Market Value (FMV): It is the estimated monetary equivalent as a fair price in an exchange between parties, each possessing the ability and free will to make decisions in an open market for participants after adequate marketing. The definition assumes that the exchanging parties (buyer and seller) represent most market participants, have obtained sufficient information about the nature and characteristics of the evaluated enterprise, and can act independently and prudently based on available information, in their own interest and within market conditions on the valuation date. For the current or potential buyer, FMV represents an estimate of expected current and future economic benefits arising from owning equity in the evaluated enterprise. For the current or potential seller, it expresses the most probable price to be paid for relinquishing those benefits and rights.

-2 Fair Accounting Value: According to Egyptian Accounting Standard No. (45), fair value is the monetary amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, for the purpose of preparing and presenting financial statements.

-3 Investment Value: It is the monetary equivalent of the evaluated enterprise from the perspective of a specific investor (or group of investors) for investment purposes, which may differ from other market participants. It is a transaction value depending on mutual acceptance between parties acting independently, without any relationship that might make the equivalent deviate from or exceed market value. Investment Value represents the synergistic value resulting from combining two or more stakes.

-4 Liquidation Value: It is the sum of expected values from liquidating the enterprise, resulting from selling each asset individually, after settling all liabilities. This concept is used in cases of financial distress or the commencement of liquidation proceedings.

-5 Startups: 3. Item (5) was added by Board Decision No. 150 dated 2023/7/26. They are companies with a short operating history, often newly established and in the growth/search-for-market phase. Some rely on innovative technology for new things, often starting with low capital and high costs during the establishment phase, facing multiple challenges early on to obtain necessary financing to expand operations and market presence.

The need for startup valuation arises to increase capital according to the company's growth stage, as main investors (current or prospective) evaluate their investments based on differing returns and risks per startup stage.

-6 Intangible Asset: A non-cash asset that grants economic rights or benefits to its owner, lacking physical characteristics but distinguished by specific economic attributes such as ownership, functions, market position, reputation, and legal protection. Intangible assets usually fall into one or more of the following categories: (a) Product/service marketing-related intangible assets; e.g., trademarks. (b) Customer-related intangible assets; e.g., customer lists, contracts with customers, and contractual/non-contractual relationships. (c) Artistic works-related intangible assets arising from the right to benefit from artistic works; e.g., plays, books, films, music, copyright and publishing rights. (d) Contractual agreement-derived intangible assets; e.g., licensing agreements, intellectual property fees, supply contracts, permits and broadcasting rights, service contracts, employment contracts, non-compete agreements. (e) Technology-related intangible assets arising from contractual or non-contractual rights to use registered and unregistered technology, such as patents, databases, designs, and software. (f) Goodwill.

-7 Goodwill: The future economic benefit arising from other acquired assets in a merger, which have not been individually identified and recognized separately. Goodwill is usually valued as the residual amount after deducting the values of all tangible, intangible, and monetary assets (adjusted for actual or contingent liabilities) from the value of any enterprise.

-8 Contributory Assets (CACs): Assets used together with the evaluated intangible asset that contribute to achieving potential cash flows related to that asset. Contributory assets usually include intangible assets other than the evaluated one, working capital, fixed assets, human capital, and others.

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First: Professional Conduct Rules Standard (1) Introduction: This standard aims to ensure the Valuer performs duties with integrity, diligence, and respect by adhering to the professional conduct and ethics rules in this standard, complying with financial valuation standards or any technical/professional standards issued by the Authority, and adhering to laws and regulations related to evaluated enterprises. The Valuer must exercise the care of a prudent man when performing any analysis within financial valuation duties.

(2) Professional Conduct Rules: -1/2 Integrity and Objectivity: a. The Valuer must not practice any professional behavior characterized by misconduct, fraud, or deception, or involving actions that could negatively affect reputation, integrity, or professional competence. b. The Valuer must not participate in any financial valuation process aimed at reaching a specific predetermined value.

-2/2 Duties towards Participants and the Market: a. The Valuer must prioritize participants' and potential investors' interests over personal interests, treating all clients fairly and objectively when expressing opinions, recommendations, or consultations. The Valuer must always remember acting in the public interest and for potential investors of the evaluated enterprise. b. The Valuer must not engage in or assist others in practices that manipulate prices. Since being commissioned, the Valuer is considered a related party to the evaluated enterprise and informed about valuation transactions and all parties involved. c. The Valuer must disclose to the client the nature of actual or potential conflicts of interest with any parties operating in the securities market before conducting valuation and preparing the report.

-3/2 Independence and Conflict of Interest Commitment: a. A financial Valuer may not perform valuation works for two or more entities simultaneously if their interests conflict, unless written consent is obtained from all parties and disclosed in the valuation report or fair value study (except for fair value studies of securities for public/private offerings). b. The Valuer is responsible for ensuring no conflict exists between personal interests, employees, employer, relatives up to the second degree, or partners, and client/interested parties' interests. If a potential conflict exists, the Valuer must notify the client in writing before accepting the commission. If discovered after acceptance, notification must be made in writing and at a reasonable time before work completion. c. The Valuer is prohibited from issuing a valuation report or fair value study for use in determining the value of assets or financial instruments owned by them or related parties, according to the definition at the end of this main section. d. The Valuer is prohibited from trading securities or assets of the evaluated enterprise using unpublished or non-market-available information, even if incomplete during the valuation period, whether related to imminent transactions or other events having a material effect on trading prices or financial positions of issuers. e. The Valuer is prohibited from trading securities they evaluated within the three years following the valuation date, and is prohibited from issuing a valuation report for use in any purposes within these standards' scope according to capital market laws, if they have a relationship with one of the parties to a transaction based on that report. f. If contracted as an independent financial consultant according to capital market laws, full independence must be maintained for six months prior to the contracting date. For takeover offers, this commitment includes not providing financial consulting to the bidder and the target enterprise for six months after offer expiration (if unexecuted) or three months after expiration (if executed). g. The Valuer's fees must not depend on the reached enterprise value or any gains/losses arising for related parties from issued reports. h. Salaries, bonuses, and fees of the Valuer and employees must not be linked to report/study results. i. The Valuer must not accept gifts or grants from any person with business relations to influence professional performance, valuation process/results, or behavioral neutrality.

Related Parties: Considered related parties to the financial Valuer: • Company board members issuing the valuation, the natural person preparing it, and the assisting team (including specialized management analysts) and their relatives up to the second degree. • Subsidiary companies of the company in the previous item. • The majority shareholder of the capital of the company issuing the valuation, and its subsidiaries (if a legal entity) or companies where they/relatives own majority shares (if a natural person). • Subsidiary companies of legal entity board members, as well as companies where majority shares are owned by the Valuer or assisting team (or board members/relatives).

4/2 Objectivity and Avoidance of Misleading Information: a. The Valuer must ensure that when making choices or exercising personal judgment, they rely on logical and objective foundations for their choice/judgment, then clarify them to report users. The Valuer must strive and rely on logical foundations during analysis/selection, supported by appropriate research/inquiries as much as possible. The Valuer must not intentionally use valuation bases to inflate or deflate results. b. The Valuer must not use any information obtained for valuation purposes without exercising prudent care to verify its accuracy, credibility, and reasonableness. If relying on hard-to-verify or questionable data, the Valuer must clearly disclose this in a prominent place in the report and explain its impact on valuation results. c. The Valuer is prohibited from intentionally using, writing, or publishing misleading reports/statements/information, or expressing biased opinions. Financial analyses, opinions, and recommendations must not be intentionally misrepresented; the presentation must be fair, accurate, and complete.

-5/2 Assistance from Other Valuers: The Valuer may engage external parties for valuations involving specialized activities or assets related to the evaluated enterprise, after exercising due care in selecting qualified specialists with appropriate competence/experience for assigned tasks. Appropriate disclosure must be made within the scope of work before starting valuation and preparing the report. This does not exempt the Valuer from responsibility for final report results.

6/2 Valuation Report or Fair Value Study: The Valuer's report or fair value study must be fair, accurate, complete, and clearly presented. It must not include known erroneous/unclear data or biased opinions, nor intentionally misrepresent financial analyses/opinions/recommendations.

-7/2 Confidentiality: a. The Valuer must maintain report confidentiality and use them only for their specified purpose, protecting any information about the evaluated enterprise that comes to knowledge during work and could affect valuation, investment decisions of participants, or market trading trends. The Valuer must also bind analysts under them to confidentiality and not expose study results to related parties operating in investment. b. The Valuer must not disclose valuation results for a client unless disclosed to contract-specified parties, regulatory/judicial authorities upon request.

-8/2 Information Retention: The Valuer must retain all valuation/fair value study-related data, information, and paper/electronic documents (provided by client or others and relied upon during valuation), along with documented methodologies used in analysis/valuation, and the results report for no less than five years from submission to the requesting authority, without prejudice to Capital Market Law/executive regulations or related laws based on task nature.

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Second: Professional Competence Requirements Standard (1) Introduction: Performing financial valuation duties requires several fundamental components related to the Valuer's professional competence and assisting team. They must possess sufficient scientific/professional qualifications, practical experience, and ability to obtain necessary information for preparing the valuation report.

(2) Scientific and Professional Requirements: The Valuer must have appropriate knowledge, experience, and scientific/professional specialization in financial valuation fields, with the ability to absorb work-related developments enabling proper task completion. The Valuer must not claim unacquired qualifications or unavailable experiences.

(3) Continuing Education and Skill Development: The Valuer must be well-versed in laws, regulations, and rules related to financial valuation works, familiar with these standards and internationally recognized valuation methodologies. They must maintain and continuously upgrade knowledge through professional development programs and continuous awareness of field developments.

(4) Acceptance of Valuation Assignment: The Valuer must not accept valuation duties unless expecting to complete them with a high degree of professional competence, enabling identification, aggregation, and analysis of actual enterprise data, exercising appropriate professional judgment to set future assumptions, select the most suitable valuation approach/methods, and comply with these standards.

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Third: Scope of Work Standard (1) Introduction: This standard aims to define the elements of the Valuer's work framework based on different valuation purposes, containing acceptance conditions and required contents when preparing the engagement letter with the client.

(2) Acceptance of Valuation Assignment: Refers to the Valuer accepting the valuation process without restrictions limiting independence, objectivity, and compliance with these standards and requesting authority requirements.

(3) Engagement Letter with Client: Represents a written contract between the Valuer and the requesting party(ies) to define scope, timing, and fees. The Valuer's work scope is defined in the contract based on valuation purpose. The engagement letter must include at least: a. Confirmation that the Valuer is: .1 Listed in the register of independent financial consultants with the Authority (in cases required by capital market laws). .2 Free from conflicts of interest as stipulated in the "Professional Conduct and Ethics Standard". b. Identification of Client and other report users: The requesting party(ies) and any other users must be identified. Restrictions on using report results must be disclosed. c. Purpose of Valuation: Clearly defined and disclosed upon client acceptance, within these standards' scope. d. Start Date of Assignment: e. Nature and Sources of Information: Disclose as much as possible the nature/sources of data/information provided by the requesting party and main sources the Valuer will use. Restrictions/limitations affecting work must be disclosed in the engagement letter. f. Confirmation that valuation will be completed according to Egyptian Financial Valuation Standards. g. Report Description: The engagement letter must include a general description of the report's contents, consistent with provisions in the "Preparation of Valuation Report and Contents Standard".