Paints&ch.gdr Regulatory News (PCLD)

30 Oct 2006 07:00

Paints and Chemical Industries Co.29 October 2006 Paints and Chemical Industries Company S.A.E. The Consolidated Financial Statements Together with Auditor's Report for the year ended June 30, 2006 INDEPENDENT AUDITORS' REPORT To The Shareholders of Paints and Chemical Industries Company S.A.E. We have audited the accompanying consolidated balance sheet of Paints andChemical Industries Company S.A.E as of 30 June 2006 and the relatedconsolidated statements of income, cash flows and changes in shareholders'equity. These consolidated financial statements are the responsibility of thecompany's management. Our responsibility is to express an opinion on thesefinancial statements based on our audit. We conducted our audit in accordance with Egyptian standards on auditing and inthe light of the provision of the prevailing Egyptian laws and regulations.Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatements. An audit includes examining, on test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statements presentation.We have obtained all information and explanations, which we considered necessaryfor our audit. We believe that our audit provides a reasonable basis for ouropinion. In our opinion, the consolidated financial statements referred to above and thenotes thereto presents fairly, in all material respects, the consolidatedfinancial position of paints and chemical industries company as of June 30, 2006, and the results of its consolidated operations and cash flows for the yearthen ended, in conformity with Egyptian Accounting Standards and in the light ofthe related applicable Egyptian laws and regulations. Cairo, October, 18, 2006 Kamel Magdy Saleh ACAF.E.S.A.A. (R.A.A. 8510) PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E. Consolidated Balance Sheet As of June 30,2006 Consolidated Pachin Notes 30/6/2006 30/06/2005 30/6/2006 30/06/2005 --------- --------- --------- --------- EGP EGP EGP EGP --------- --------- --------- ---------Long-term assetsFixed Assets (Net) (2b, 4) 181 488 215 187 985 884 18 800 526 21 912 575Projects underconstructions (2c, 5) 19 126 833 6 321 351 806 754 1 121 500Other long-term assetsInvestment insubsidiarycompanies (2e, 6) -- -- 212 395 000 169 915 500Otherlong-terminvestments (7) 774 906 774 906 774 906 774 906 --------- --------- --------- ---------Totallong-termassets 201 389 954 195 082 141 232 777 186 193 724 481 --------- --------- --------- --------- Current assetsInventories(Net) (2f, 8) 112 453 338 149 536 140 58 676 842 75 358 530Letters ofcredit 2 398 273 2 419 456 1 766 906 1 555 502Accountsreceivables(Net) (2g, 9) 33 086 939 27 275 249 26 056 374 22 416 667Notesreceivable(Net) (10) 33 357 692 46 029 099 5 693 332 9 540 253Due fromsubsidiariescompanies (11, 12) -- -- 6 284 784 964 937Other debitbalances (13) 45 147 260 40 941 268 109 958 191 100 704 673Short-terminvestments (2h, 14) 78 861 641 56 415 978 33 025 289 56 415 978Cash and cashequivalents (2i, 15) 60 739 676 55 926 483 24 877 121 26 938 808 --------- --------- --------- ---------Total currentassets 366 044 819 378 543 673 266 338 839 293 895 348 --------- --------- --------- --------- Current LiabilitiesProvisions (16 A) 33 235 309 29 945 448 30 854 702 27 780 077Banks -overdraft (17) 6 122 191 29 946 958 1 451 380 3 377 842Accounts andnotes payable (18) 31 732 920 33 369 247 10 124 190 9 365 643Dividendspayable 257 986 257 986 257 986 257 986Other creditbalances (19) 34 038 814 34 873 985 20 169 180 19 451 159 --------- --------- --------- ---------Total CurrentLiabilities 105 387 220 128 393 624 62 857 438 60 232 707 --------- --------- --------- ---------Working Capital 260 657 599 250 150 049 203 481 401 233 662 641 --------- --------- --------- ---------TotalInvestments 462 047 553 445 232 190 436 258 587 427 387 122 ========= ========= ========= =========Share Capital and ReservesShare capital (20) 200 000 000 200 000 000 200 000 000 200 000 000Reserves (21) 174 508 002 167 657 277 162 610 049 159 219 532Retainedearnings 3 063 605 1 781 129 1 043 740 637 661Profit for theyear 81 328 926 73 702 171 72 237 413 67 529 929 --------- --------- --------- ---------Total ShareCapital andReserves 458 900 533 443 140 577 435 891 202 427 387 122 --------- --------- --------- ---------Minorityinterest 151 999 123 887 -- --Long-termliabilities (22) 2 995 021 1 967 726 367 385 -- --------- --------- --------- ---------TotalFinancing ofWorking Caitaland Long-termAssets 462 047 553 445 232 190 436 258 587 427 387 122 ========= ========= ========= ========= - The accompanying notes from (1) to (30) form an integral part of the financial statements. Financial Controller The Managing Director Chairman of the Board - Auditors' Report attached. PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E. Consolidated Income Statement For the year Ended June 30,2006 Consolidated Pachin Notes 30/6/2006 30/06/2005 30/6/2006 30/06/2005 ----------- --- ------------ --- ----------- --- ------------ EGP EGP EGP EGP ----- ----- ----- -----Net sales (3) 476 882 155 444 384 988 147 053 893 146 478 688Cost of Sales (375 397 109) (357 405 976) (133 561 452) (135 294 447) ----------- ----------- ----------- -----------Gross profit 101 485 046 86 979 012 13 492 441 11 184 241 ----------- ----------- ----------- ----------- General andadministrativeexpenses (12 058 096) (10 811 779) (7 763 204) (8 965 074)Provisionsother thandepreciation (8 300 000) (4 500 000) (4 800 000) (2 500 000)Allowance forattendingBoard ofDirector ( 187 500) ( 278 000) ( 70 500) ( 172 500) ----------- ----------- ----------- -----------Profit (loss)fromoperations 80 939 450 71 389 233 858 737 ( 453 333)Interestexpenses (2 844 965) (3 622 752) (1 498 858) ( 839 078)Investmentincome fromsubsidiarycompanies -- -- 70 964 500 62 968 500Profit on saleof investment 1 707 387 1 244 893 1 079 568 1 244 893Investmentincome 3 085 431 3 754 286 2 253 134 3 754 286Interest income 2 013 445 1 391 248 957 608 1 075 835Capital gain 228 339 96 221 193 778 14 021Other income 650 227 1 004 581 553 297 824 521Impairment ofassets (23) (2 700 000) (2 700 000) --Profits/Lossesfrom foreigncurrencytranslation ( 163 212) (1 520 945) ( 56 966) (1 059 716) ----------- ----------- ----------- -----------ProfitbeforeTaxes 82 916 102 73 736 765 72 604 798 67 529 929Income taxes -- -- -- --Deferred taxes (22c) (1 547 139) -- ( 367 385) ----------- ----------- ----------- -----------Profit aftertax 81 368 963 73 736 765 72 237 413 67 529 929Minorityinterest ( 40 037) ( 34 594) -- -- ----------- ----------- ----------- -----------Profit aftertax andminorityinterest 81 328 926 73 702 171 72 237 413 67 529 929Employees' andDirectors'bonus (9 544 444) (8 633 333) (6 944 444) (6 733 333) ----------- ----------- ----------- -----------Profitattributabletoshareholders 71,784,482 65 068 838 65 292 969 60 796 596 =========== =========== =========== ===========Earnings pershare (26) 3.59 3.05 3.26 3.04 Financial Controller The Managing Director Chairman of the Board PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E. Consolidated Cash flows Statement For the year Ended June 30,2006 Consolidated Pachin 30/6/2006 30/06/2005 30/6/2006 30/06/2005 ----------- ------------ ----------- ------------ EGP EGP EGP EGP ----- ----- ----- -----Cash flows from operating activities Net profitbefore tax 82 916 102 73 736 765 72 604 798 67 529 929 Adjustments to reconcile net profit to net---------------------------------------------cash provided from operating activities-----------------------------------------Depreciation 9 469 885 9 378 532 2 209 513 2 441 173Impairment ofassets 2 700 000 -- 2 700 000 --Net provisionsformed and(utilized) 7 892 148 ( 400 210) 4 676 904 434 419Profit on saleof fixedassets ( 228 339) ( 96 221) ( 193 778) ( 14 021)Profit on saleof investments (1 707 387) (1 244 893) (1 079 568) (1 244 893) ----------- ---------- ---------- ----------Operatingprofit beforeworkingcapitalchanges 101 042 409 81 373 973 80 917 869 69 146 607 (Increase )decrease inreceivables ( 791 331) 9 574 691 (14 811 207) 37 344 522Decrease(Increase ) ininventories 35 946 755 (6 152 659) 15 313 053 (12 522 417)(Decrease)Increase increditors (2 948 585) 17 054 102 1 466 869 (4 493 746) ----------- ---------- ---------- ----------Net cashprovided fromoperatingactivities 133 249 248 101 850 107 82 886 584 89 474 966 ----------- ---------- ---------- ---------- Cash flows from investing activitiesPurchase ofinvestments (175 973 457) (64 003 464) (91 104 369) (64 003 464)Proceeds fromsale ofinvestments 155 235 181 57 608 272 115 574 626 57 608 272Purchase ofinvestments insubsidiary(Pachin forInks) -- -- (7 497 000) (4 998 000)Purchase ofinvestments insubsidiary(Elobour forpaints andchemicals) -- -- (34 982 500) --Proceeds fromsale of fixedassets 289 734 37 068 255 200 37 068Purchase offixed assetsand otherlong-termassets (18 539 093) (7 067 720) (1 544 113) (1 594 482) ----------- ---------- ---------- ----------Net cash usedin investingactivities (38 987 635) (13 425 844) (19 298 156) (12 950 606) ----------- ---------- ---------- ---------- Cash flows from financing activitiesDividends paid (65 623 653) (65 282 440) (63 723 653) (63 732 440) ----------- ---------- ---------- ----------Net cash (usedin) financingactivities (65 623 653) (65 282 440) (63 723 653) (63 732 440) ----------- ---------- ---------- ---------- Net increaseor (decrease)in cash andcashequivalents 28 637 960 23 141 823 ( 135 225) 12 791 920Net cash andcashequivalents atbeginning ofthe year 25 979 525 2 837 702 23 560 966 10 769 046 ----------- ---------- ---------- ----------Net cash andcashequivalents atend of theyear 54 617 485 25 979 525 23 425 741 23 560 966 =========== ========== ========== ========== Financial Controller The Managing Director Chairman of the Board PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E. Cosolidated Changes in Shareholders' Equity Statement For the year Ended June 30,2006 Share Legal Retained Profit Total --- --- ------- --- -------- --- ----------- --- --------- --- ------- Capital Reserve Earnings For the year --- --- --------- --- --------- --- ---------- --- -------------- --- --- EGP EGP EGP EGP EGP --- --- ----- --- ----- --- ----- --- ----- --- -----Balance as ofJune 30,2004 200 000 000 161 166 993 4 316 269 69 237 703 434 720 965Transfer toreserves -- 6 490 284 -- (6 490 284) -Dividends -- -- (2 535 140) (62 747 419) (65 282 559)Net profit asof June30,2005 -- -- -- 73 702 171 73 702 171 ----------- ----------- ---------- ----------- -----------Balance as ofJune 30,2005 200 000 000 167 657 277 1 781 129 73 702 171 443 140 577Transfer toreserves -- 6 850 725 -- (6 850 725) --Transfer toRetainedEarnings -- -- 1 282 476 (1 282 476) --Dividends -- -- -- (65 568 970) (65 568 970)Net profit asof June30,2006 -- -- -- 81 328 926 81 328 926 ----------- ----------- ---------- ----------- -----------Balance as ofJune 30,2006 200 000 000 174 508 002 3 063 605 81 328 926 458 900 533 =========== =========== ========== =========== =========== Financial Controller The Managing Director Chairman of the Board Paints and Chemical Industries Company S.A.E. (Pachin) Notes to the Financial Statements For the Year Ended June 30, 2006 1. Group Background Paints and Chemical Industries Company S.A.E. (PACHIN) The Company is anEgyptian Joint Stock Company. Following the sale by the Holding Company forChemical Industries for part of its share in the company via a GDR offer, itsshare in the company has reduced to less than 50 %, and the company has becomesubject to the Companies Law No. 159 for 1981. The objective of the company is to manufacture various kinds of paints,varnishes, printing inks, animal extract products and related products, inaddition to purchasing and dividing land for the purpose of using or reselling,and performing specialized construction works. El-Obour for Paints and Chemicals Industries Company S.A.E is an Egyptian JointStock Company established according to Law No. 8 for 1997. The Company wasregistered on January 14, 1999 at the Commercial Register. The objective of the company is to manufacture various kinds of paints,varnishes, printing inks, animal extract products and related products, andmanufacturing of refill packaging of company products. Pachin for Inks is an Egyptian joint stock company established according to lawno. 8 for 1997, the Company was registered on April 27, 2005 at the CommercialRegister. The objective of the company is to manufacture and pack printing inks, relatedproducts, other chemical product, and manufacturing of special packages ofcompany products. 2. Basis for Preparation of Financial Statements The consolidated financial statements have been prepared in accordance withEgyptian Accounting Standards and applicable laws and regulations. The EgyptianAccounting Standards require referral to International Financial ReportingStandards "IFRS", when no Egyptian Accounting Standard or legal requirementexists to address certain types of transactions and their treatment. Theprincipal accounting policies adopted in the preparation of the financialstatements are set out below. A. Basis For Consolidation The consolidated financial statements include the subsidiary companies under thecontrol of the parent company (PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E.(PACHIN), the subsidiaries representing in El-Obour for Paints and ChemicalIndustries Company where the parent company's share is 99.95%, and Pachin forInks where the parent company's share is 99.96%. The consolidated financial statements were prepared on the following basis: • Eliminating all inter-company transactions and balances are eliminated • The unrealized profits that resulted from the inter-company transactions are eliminated. • The cost method is used to account for ownership in subsidiaries. • The consolidated income statement include the results of operation for all subsidiary companies starting from the date of ownership, the minority interest are eliminated. B. Fixed Assets Fixed assets are recorded at historical cost and are depreciated over theirestimated useful lives using the straight line method and according to theuseful lives presented in the following table. Type of Asset Depreciation rate---------------- --------------------Buildings 2 - 5 %Machinery and equipments 4.9 - 7.5 %Vehicles 10 - 20 %Tools 7.5 %Furniture 10 % C. Constructions in Progress Constructions in progress are carried at cost, less any recognized impairmentloss. Costs include all costs associated with acquiring the asset and bringingit to be ready for use condition. Depreciation for these assets, follow the samebasis of similar fixed assets, commences when the assets become ready for theirintended use. The amounts paid as advances for purchasing fixed assets are recorded asconstruction in progress. Upon receiving the fixed assets and bringing them toready for use - condition, they are reclassified to fixed assets and depreciatedon the same basis as the similar fixed assets . D. Impairment of assets Property, plant and equipment and other non current assets are reviewed forimpairment losses whenever events or changes in circumstances indicate that thecarrying amount may not be recoverable. An impairment loss is recognized for theamount by which the carrying amount of the asset exceeds its recoverable amount,(the higher of an asset's net selling price and recoverable amount). For thepurposes of assessing impairment, assets are grouped at the lowest level, atwhich there are separate identifiable cash flows. E. Long-Term Investment Long-term investments are stated at cost, investments are reduced according tothe temporary reduction in its value. F. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is calculated as follows: • Raw materials, packaging, spare parts and fuel Cost is calculated using the moving average method. • Work in progress The cost include direct and indirect manufacturing costs of partially completedstages • Goods available for sale Goods available for sale are stated at cost. • Consignment goods Consignment goods are stated at cost. • Finished goods Finished goods are stated at manufacturing cost. G. Trade Receivables Trade receivables are carried at nominal value as reduced by appropriateallowances for estimated irrecoverable amounts. Provision for trade receivablesis formed when there is evidence that the Company will not be able to recoverthe amounts due according to the original terms of receivables. The provisionrepresents the difference between the carrying amounts due and the recoverableamounts, which is represented in the expected cash flows. H. Short Term Investments Short term investments, which represent the treasury bills are, stated at theirface value less any returns that are not accrued at the balance sheet date. Theissuance premium of governmental bonds will be amortized within 3 years and willbe adjusted with the revenue. I. Cash and Cash Equivalents Cash and cash equivalents are stated in the balance sheet at nominal value. J. Provisions Provisions are recognized when the Company has a present obligation as a resultof past events and that it is probable that an outflow of resources will berequired to settle the obligations with the possibility of providing a reliableestimate for the obligation amount. Provisions are reviewed at the consolidated balance sheet date and amended torepresent the best estimate where the effect of the time value of money ismaterial. The amount of a provision shall be present value of expendituresexpected to be required to settle the obligations. K. Trade Payables Trade payables are stated at the nominal value. L. Foreign Currencies Translations Financial Statements are presented in Egyptian pounds .Transactions incurrencies other than the Egyptian Pound, is recorded at the rates of exchangeprevailing on the dates of transactions. At the financial statement preparationdate, monetary assets and liabilities that are denominated in foreign currenciesare retranslated at the rates prevailing on the balance sheet date. Gains andlosses arising on exchange are included in the income statement for the period. M. Revenue Recognition Revenue is recognized on an accrual basis upon delivery of goods to customersand issuance of the sales invoice. Interest income is accrued on an accrual basis, by reference to the principaloutstanding and the effective interest rate applicable. N. Borrowing Cost Borrowing cost is recorded in the income statement in the period it occurred. O. Cash Flow Statement The cash flow statement is prepared using the indirect method. For the purposeof preparing the cash flows statement cash and cash equivalents are comprised ofcash on hand and at banks, less banks overdraft. P. Taxation Corporate tax is calculated based on the taxable profit, which may differ fromthe profit as per income statement. The company's tax is calculated based on the prevailing tax laws and regulationsin Egypt, a provision is formed for tax liabilities after performing sufficientstudies and in light of the tax assessments. The release of the new Egyptian Tax Law on June 2005 and its executiveregulations on December 2005 resulted in the recognition of deferred tax assetsand liabilities according to the International Financial Reporting Standard(IFRS), No (12), which represents the tax impacts of the temporary differencesbetween the assets and liabilities tax basis set by the new tax law, and theirreported amounts per the accounting principles used in the preparation of thefinancial statements. Accordingly, the income statement for the reporting period is to be charged bythe tax burden represented by the current tax (calculated on taxable profitbased on local tax laws, regulations, instructions and tax rates ruling at thedate of the financial statements) as well as the deferred tax. Generally, the recognized deferred tax liabilities on taxable temporarydifferences are reported as long-term liabilities, whereas deferred tax assetsreported as long-term assets shall not be recognized for deductible temporarydifferences except to the extent that it is probable that taxable profits willbe available against which deductible temporary differences can be utilized orthere is convincing evidence that sufficient taxable profit will be available inthe future. Q. Financial Instruments Financial Assets The principal financial assets represent cash on hand and at banks, accounts andnotes receivable, due from affiliates and certain other debit balances. Accounts and notes receivable are stated at their book value as reduced byappropriate allowance for estimated irrecoverable amounts. Financial Liabilities The principle financial liabilities represent banks overdraft, accounts andnotes payable, due to affiliates and certain other credit balances. Accounts payable are stated at their nominal value. 3. Sales Analysis Consolidated Pachin -------------- -------- Quantity (Ton) Amount '000 Quantity (Ton) Amount '000 ---------------- ------------- ---------------- -------------Paints 52,220 421,032 10,791 91,204Inks 2,502 54,298 2,502 54,298AnimalExtract 517 1,552 517 1,552Products --------------- --------------- 476,882 147,054 =============== =============== 4. Fixed Assets, Net Fixed assets as at June 30, 2006 are comprised of the following; Consolidated Land Buildings Machinery Vehicles Tools Furniture Total and Equipments and Office Equipments --------- --------- --------------- --------- ---------- ------------ ------------ EGP EGP EGP EGP EGP EGP EGP Cost 1 July 2005 39,818,434 79,528,981 100,301,041 11,997,169 11,530,423 10,778,263 253,954,311Additions /Transfers 330,782 627,247 1,979,088 1,616,789 251,179 928,526 5,733,611Disposals - - (226,212) (727,586) (38,822.00) (102,223.00) (1,094,843) --------- --------- --------------- --------- ---------- ------------ ------------30 June 2006 40,149,216 80,156,228 102,053,917 12,886,372 11,742,780 11,604,566 258,593,079 --------- --------- --------------- --------- ---------- ------------ ------------Accumulated Depreciation1 July 2005 - 14,028,693 32,256,258 8,501,486 4,854,102 6,327,888 65,968,427DepreciationCharge - 2,068,676 4,694,614 1,159,357 757,764 789,474 9,469,885Loss fromimpairment ofassets - - 2,700,000 - - - 2,700,000Disposals - - (166,492) (727,586) (38,822) (100,548) (1,033,448) --------- --------- --------------- --------- ---------- ------------ ------------30 June 2006 - 16,097,369 39,484,380 8,933,257 5,573,044 7,016,814 77,104,864 --------- --------- --------------- --------- ---------- ------------ ------------NBV @ 30 June2006 40,149,216 64,058,859 62,569,537 3,953,115 6,169,736 4,587,752 181,488,215 ========= ========= =============== ========= ========= =========== =========== NBV @ 30 June2005 39,818,434 65,500,288 68,044,783 3,495,683 6,676,321 4,450,375 187,985,884 ========= ========= =============== ========= ========= =========== =========== Pachin Company Land Buildings Machinery Vehicles Tools Furniture Total and Equipments and Office Equipments --------- --------- --------------- --------- ---------- ------------ ------------ EGP EGP EGP EGP EGP EGP EGP Cost 1 July 2005 173 143 19 337 271 28 657 752 6 433 100 4 186 836 5 929 919 64 718 021Additions /Transfers -- 347 154 699 733 258 924 54 700 498 348 1 858 859Disposals -- -- ( 226 212) ( 546 223) ( 38 822) (102 223) ( 913 480) --------- --------- --------------- --------- ---------- ------------ ------------30 June 2006 173 143 19 684 425 29 131 273 6 145 801 4 202 714 6 326 044 65 663 400 ------- -------- --------------- -------- -------- ------------ ------------Accumulated Depreciation1 July 2005 -- 8 472 706 20 872 553 5 773 251 3 041 235 4 645 701 42 805 446DepreciationCharge -- 533 868 918 219 269 152 200 375 287 899 2 209 513Loss fromimpairment ofassets* -- -- 2 700 000 -- -- -- 2 700 000Disposals -- -- ( 166 492) ( 546 223) ( 38 822) (100 548) (852 085) ------- -------- --------------- -------- -------- ------------ ------------30 June 2006 -- 9 006 574 24 324 280 5 496 180 3 202 788 4 833 052 46 862 874 ------- -------- --------------- -------- -------- ------------ ------------NBV @ 30 June2006 173 143 10 677 851 4 806 993 649 621 999 926 1 492 992 18 800 526 ======== ======== =============== ======== ======== =========== ========== NBV @ 30 June2005 173 143 10 864 565 7 785 199 659 849 1 145 601 1 284 218 21 912 575 ======== ======== =============== ======== ======== =========== ========== \* This amount represents the net book value of paints machinery and equipmentswhich out of service. (Refer to note 23). 5. Projects under Construction Consolidated Pachin ------------------------- ------------------------- 2006 2005 2006 2005 ------ ------ --- ------ --- ------ EGP EGP EGP EGPMacheniry and 13 116 478 4 049 910 744 131 786 739equipmentsBuildings 3 636 160 351 527 8 910 331 527Software and programs 2 091 522 60 262 44 500 -- ------------- ------------ ------------ ---- -------------Assets under 18 844 160 4 461 699 797 541 1 118 266constructionCapital expenditure 282 673 1 859 652 9 213 3 234 ------------- ------------ ------------ ----- ------------- Total 19 126 833 6 321 351 806 754 1 121 500 ============= ============ ============ ===== ============= 6. Investment in Subsidiary Companies Company Name Capital Ownership Ownership Paid % Paid amount % amountObour for Paints 200 000 000 99.95 199 900 000 100% 199 900 000andChemical IndustriesPachin for Inks 50 000 000 99.96 49 980 000 25% 12 495 000 --------------- 212 395 000 =============== These companies are not listed in the stock market. 7. Other Long-Term Investments --------------------------------- ---------------------- Consolidated Pachin --------------------------------- --- ---------------------- 2006 2005 2006 2005 ------ --- ------ --- ------ --- ------ EGP EGP EGP EGPGovernmentalBonds Via 774 906 774 906 774 906 774 906National InvestmentBank ================ ================ =========== =========== 8. Inventories, Net -------------------------- Consolidated Pachin ----------------------------- --- -------------------------- 2006 2005 2006 2005 ------ ------ --- ------ --- --- ------ EGP EGP EGP EGPRawmaterials,packagingmaterials 87 194 756 126 859 079 47 348 705 64 448 055andspare partsWork inprogress 3 501 530 3 101 355 1 518 362 1 488 704Finishedproducts 19 449 593 17 750 140 8 011 418 7 925 189Scraps 887 369 466 724 378 267 137 740Consignmentgoods 1 180 140 1 119 051 1 180 140 1 119 051Inventoriesforthe purpose 239 950 239 791 239 950 239 791of resale --------------- --------------- ------------ ---- ---- ------------ 112 453 338 149 536 140 58 676 842 75 358 530 =============== =============== ============ ===== ===== =========== The above mentioned figures net of provisions (refer to note 16). 9. Trade Receivables -------------------------- Consolidated Pachin -------------------------- --- -------------------------- 2006 2005 2006 2005 ------ ------ --- ------ --- --- ------ EGP EGP EGP EGPAccountsreceivables 38 993 334 32 736 589 31 462 769 27 378 007Provisionfor (5 906 395) (5 461 340) (5 406 395) (4 961 340)doubtful debts -------------- -------------- ------------ ---- ---- ------------ 33 086 939 27 275 249 26 056 374 22 416 667 ============== ============== ============ ===== ===== =========== 10. Notes Receivables Notes receivables as of June 30, 2006 amounted to EGP 33 357 692. Net of aprovision amounted to EGP 18.4 million. Its maturity date is due after one year. 11. Due from Subsidiary El-Obour for Paints and Chemicals Industries Company The balance of this account amounted to EGP 6 203 261 resulting from theordinary operations between the two companies. 12. Due from Subsidiary Pachin for Inks The Company was incorporated according to the decree of the Investment Authoritydated April, 27 2005. The balance of this account amounted to EGP 81 523 whichrepresents the amounts paid by the holding Company on behalf of the mentionedcompany. 13. Other Debit Balances, Net Other debit balances (Net) as of June 30, 2006 are comprised of the following: -------------------------- ---------------------------- Consolidated Pachin -------------------------- --- ---------------------------- 2006 2005 2006 2005 ------ ------ --- ------ --- --- ------ EGP EGP EGP EGPAccrued income* 1 684 549 548 986 71 673 406 63 517 486Suppliers debitbalances 2 226 531 1 865 882 1 077 619 1 069 864Employees loans 800 202 2 216 190 800 202 734 390Deposits withothers 2 633 606 2 490 862 2 135 304 2 010 393Corporate tax** 24 857 954 24 857 954 24 857 954 24 857 954Withholding tax 5 837 458 4 915 940 5 733 591 4 915 940Other debitbalances 7 106 960 4 045 454 3 680 115 3 598 646 -------------- -------------- ------------- ---- ---- ------------- 45 147 260 40 941 268 109 958 191 100 704 673 ============== ============== ============= ===== ===== ============ * Includes the investment income from El-Obour for Paints and ChemicalIndustries Company amounting to EGP 70 964 500 ** This balance Contains: • An amount of EGP 12.447 million, which represents the amount paid to the Tax Authority for the years 1993 to 1997 according for the decision of Internal Committee and the Appeal Committee. This amount will be settled against the provision available for this objective upon receiving the court decision (Refer to note No 28). • An amount of EGP 12.411 million paid on account for the tax due for the years 1998 to 2001. 14. Short-Term Investments ----------------------- ------------------------- Consolidated Pachin ----------------------- --- ------------------------- 2006 2005 2006 2005 ------ ------ --- ------ ------ EGP EGP EGP EGPTreasury Bill 73 497 804 18 340 935 27 661 452 18 340 935Investment 188 837 172 501 188 837 172 501CertificatesSaving -- 32 500 000 -- 32 500 000CertificatesGovernmentalbonds 5 175 000 5 402 542 5 175 000 5 402 542(Dollars)* ------------- ------------ ------------- -------------- 78 861 641 56 415 978 33 025 289 56 415 978 ============= ============ ============= ============== * Represents the governmental bonds in US dollars which were purchased with anamount of USD 1,004,088 with a premium amounting to USD 104,088 (Refer to NoteNo."2-d" for the treatment of the premium) and the company amortized the balanceof the premium amounting to EGP 644,304. 15. Cash and Cash Equivalents ------------------------ ------------------------- Consolidated Pachin ------------------------ --- ------------------------- 2006 2005 2006 2005 ------ ------ --- ------ ------ EGP EGP EGP EGPCash on hand 58 072 -- 50 000 --Bank current account 3 975 878 20 482 077 1 216 698 6 137 582Bank time deposit 51 134 254 31 332 304 20 454 566 18 298 450Checks undercollections* 5 571 472 4 112 102 3 155 857 2 502 776 ------------- ------------ ------------- -------------- 60 739 676 55 926 483 24 877 121 26 938 808 ============= ============ ============= ============== * Represents outstanding checks with due dates before 30/6/2006 were collectedafter this date. 16. Provisions Balance as of Provision Provision Balance as of --------------- ----------- ----------- --------------- 1 July 2005 Established Used 30-Jun-06 ------------- ------------- ------ ----------- EGP EGP EGP EGPA- Provisions-Current Liabilities-----------------------------------Provision for taxdisputes 22 749 283 2 900 000 -- 25 649 283Provision for claims 6 813 460 500 000 310 139 7 003 321Other provisions 382 705 200 000 -- 582 705 --------------- ------------- ----------- ---------------Total provisions(Current liabilities) 29 945 448 3 600 000 310 139 33 235 309B- Provisions-Current Assets------------------------------Accounts receivableprovision 5 461 340 500 000 54 945 5 906 395Notes receivableprovision 15 438 000 3 000 000 -- 18 438 000Raw material provision 333 300 250 000 42 768 540 532Finished goodsprovision 648 649 950 000 -- 1 598 649 --------------- ------------- ----------- ---------------Slow moving andobsolete spare 481 533 -- -- 481 533parts provision --------------- ------------- ----------- ---------------Total provisions(Current Assets) 52 308 270 8 300 000 407 852 60 200 418 =============== ============= =========== =============== 17. Bank Overdraft Represents credit facilities that the company has obtained from various banks asof 30-June 2006 amounting to EGP 6,122 million and it is secured by timedeposit. 18. Accounts and Notes Payables Accounts and notes payables as of June 30, 2006 are comprised of: ------------------------- Consolidated Pachin -------------------------- ------------------------- 2006 2005 2006 2005 ------ ------ --- ------ ------ EGP EGP EGP EGPAccounts 26 598 563 25 931 349 8 764 468 8 194 896payableNotes 5 134 357 7 437 898 1 359 722 1 170 747payable -------------- -------------- -------------- ------------- 31 732 920 33 369 247 10 124 190 9 365 643 ============== ============== ============== ============= 19. Other Credit Balances -------------------------- Consolidated Pachin -------------------------- --- -------------------------- 2006 2005 2006 2005 ------ ------ --- ------ ------ EGP EGP EGP EGPAdvance receipts fromcustomers 8 836 781 8 778 072 2 655 185 2 218 314Accrued expenses 7 333 419 6 795 490 6 561 395 6 410 291Sales tax 6 071 902 5 594 105 1 868 202 703 923Deposit withheld 2 281 797 3 041 709 743 158 1 365 978Employees share inprofit 37 370 27 690 37 370 27 690Other employeesbenefits 4 082 371 4 082 370 4 082 371 4 082 370Fixed assets creditors 376 122 429 001 108 841 258 506Tax withheld 480 670 1 320 054 320 044 416 134Current portion of long 428 658 426 657 -- --term liabilities *Other creditors 4 109 724 4 378 837 3 792 614 3 967 953 -------------- ------------- --------------- ------------- 34 038 814 34 873 985 20 169 180 19 451 159 ============== ============= =============== ============= * Refer to Note No. "22-A" 20. Share Capital The company's authorized capital amounted to EGP 200 000 000, and the issued andpaid-up capital amounted to EGP 200 000 000, distributed among 20 million shareswith par value ofEGP 10 each. 21. Reserves --------------------------- Consolidated Pachin --------------------------- -------------------------- 2006 2005 2006 2005 ------ ------ --- ------ ------ EGP EGP EGP EGPLegal 96 092 967 89 256 263 84 195 014 80 818 518ReserveFixedassets 6 290 899 6 290 899 6 290 899 6 290 899reserveOther 72 124 136 72 110 115 72 124 136 72 110 115Reserves -------------- -------------- -------------- -------------- 174 508 002 167 657 277 162 610 049 159 219 532 ============== ============== ============== ============== 22. Long Term liabilities - The long term liabilities are represented as follows : A. The sales tax installment on the imported assets whichamounted to EGP 961 872 (after deducting the current portion which included inother credit balances). B. The deferred revenue related to the company's donatedassets which will be recorded revenue over the estimated useful lives of thoseassets with an amount of EGP 486 010. C. Deferred tax liability amounted to EGP 1 547 139 resultedfrom the difference between the books depreciations rates and the tax lawdepreciations rates (Refer to Note No. "2N" ) 23. Losses from Impairment of Assets The balance of this account amounting to EGP 2.7 million represents the net bookvalue of machinery and equipment related to the production of paints which wasdiscontinued, and produced by El-Obour for Paints Company. 24. Contingent Liability - The uncovered portion of the Letter of Credit amounting to EGP 3.782 millionas of 30 June 2006. - The uncovered portion from Letter of Grantee amounting to EGP 1.100 million asof 30 June 2006. 25. Cash and Cash Equivalent (Cash Flow) Consolidated Pachin -------------------------- ------------------------ 2006 2005 2006 2005 ------ ------ --- ------ ------ EGP EGP EGP EGP Cash and cashequivalents 60 739 676 55 926 483 24 877 121 26 938 808Less: Banks -overdrafts (6 122 191) (29 946 958) (1 451 380) (3 377 842)-------------------------- ------------- -------------- ------------- ------------- 54 617 485 25 979 525 23 425 741 23 560 966 ============= ============== ============= ============= 26. Earning per Share ------------------------ ------------------------- Consolidated Pachin ------------------------ --- ------------------------- 2006 2005 2006 2005 ------ ------ --- ------ ------ EGP EGP EGP EGPNet profit after tax 81 328 926 73 702 171 72 237 413 67 529 929Less:-------Employee share ofprofit 8 544 444 7 833 333 6 444 444 6 333 333Board of Directors'Bonus 1 000 000 800 000 500 000 400 000 ------------- ------------- ------------- -------------Profit attributable tothe shareholders 71 784 482 65 068 838 65 292 969 60 796 596Average No. ofoutstanding 20 000 000 20 000 000 20 000 000 20 000 000shares during the year ------------- ------------- ------------- -------------Earnings per Share 3.59 3.25 3.26 3.04 ============= ============= ============= ============= 27. Capital Commitments - Represents the unpaid portion of the company's share in Pachin for Inks sharecapital with an amount of EGP 37 485 000. - The capital commitment as of June, 30 2006 represent the unexecuted portion ofthe construction contract for the management building for El-Obour Paints andChemicals Industries with an amount of EGP 2.9 million. - The capital commitment as of June, 30 2006 represent the unexecuted portion ofthe construction contract for the factory building for Pachin for Inks with anamount of EGP 29 million. 28. Managing the Risks Related to Financial Instruments (i) Foreign Exchange Risk Foreign Currency risk represents the change in currency rates which affects thereceipts, disbursements and the translation of assets and liabilities in foreigncurrencies. The company exerts all efforts to avoid having a net foreigncurrency open position. (ii) Credit risk The group's credit risk is primarily attributable to its trade and notesreceivables. This risk represents some customers' failure to pay their debts intime. The company forms a provision for doubtful debts to meet this risk. (iii) Interest risk This risk represents the changing rates of interest which affect the operationsresults. The company's management exerts all efforts to obtain the bestconditions in the market for banking facilities and performs periodic review onthe interest rates. (iv)Fair value The fair values of financial instrument dose not differ from the book value asof the balance sheet date. 29. Tax Position Corporate Income Tax (Paints and Chemicals Industries Company) The company is subject to corporate tax according to law No. 11 for 2005 issuedin June 2005. The company submits its tax returns in due time and pays the taxesdue. The Tax Authority inspected the company's books and the taxes were settled andpaid for the years till June 30, 1993. The Tax Authority inspected and assessed the company's book for years 1993/1994till 1996/1997 and the disputed matters are currently in the court. The Tax Authority inspected the company's books for year 1997/1998 till 2000/2001. The company objected the claim resulting from the inspection and thedisputed points were transferred to the Internal Committee. The tax claimsamounted to EGP 26.5 million. The disputed points were transferred to the AppealCommittee and the final resolution has not been determined yet. The Tax Authority inspected and assessed the company's books for sales tax till31/3/2005. The Tax Authority inspected and assessed the company's books for salary tax from1999 till 2002. Corporate Income Tax (El-Obour for Paints and Chemicals Industries Company) The company is enjoying tax exemption starting from the first year of operationaccording to law No 8 for year 1997. This exemption will be till June, 30 2011. Corporate Income Tax (Pachin for Inks) The company is subject to the provisions of Law No. 8 for 1997 and its executiveregulations. The company did not start its operation yet. 30. Dividends * Paints and Chemicals Industries Company 30/6/2006 30/6/2005 --- ----------- ----------- EGP EGP ----- -----Net income 72 237 413 67 929 529 Retained earning 1 043 740 637 661 -------------- ------------- 73 281 153 68 167 590 ============== =============Legal reserves 3 611 871 3 376 496Dividends to Shareholders 58 000 000 57 000 000 Employee share of profit 6 444 444 6 333 333 Board of Directors' Bonus 500 000 400 000 Other reserves 193 778 14 021 Retained earning to next year 4 531 060 1 043 740 -------------- ------------- 73 281 153 68 167 590 ============== ============= * This above-mentioned figures is subject to the approval of the generalassembly. Financial Controller The Managing Director Chairman of the Board This information is provided by RNS The company news service from the London Stock Exchange