Paints&ch.gdr Regulatory News (PCLD)

18 Feb 2008 07:00

Paints and Chemical Industries Co.17 February 2008 Paints and Chemical Industries Company "Pachin" S.A.E. The Consolidated Financial Statements Together with the Auditor's Report For the Period ended December 31, 2007 Translation of auditors' report originally issued in Arabic Review Report To the Board of Director of Paints and Chemical Industries Company "Pachin" We have reviewed the accompanying consolidated balance sheet of Paints andChemical Industries Company as at 31 December 2007, and the related statementsof consolidated income, cash flows and change in equity for the period thenended. These financial statements are the responsibility of the company'smanagement. Our responsibility is to issue a report on these financialstatements based on our review. We conducted our review in accordance with the Egyptian Standard on Auditingapplicable to review engagements. This standard requires that we plan andperform the review to obtain moderate assurance that the financial statementsare free of material misstatement. A review is limited primarily to inquiries ofcompany personal and an analytical procedure applied to financial data and thusprovides less assurance than an audit. We have not performed an audit and,accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believethat the accompanying consolidated financial statements do not give a true andfair view in all material respects in accordance with Egyptian AccountingStandards. Cairo, February 13, 2008 Kamel M. Saleh ACAF.E.S.A.A (RAA 8510) Original (2) of (2) PAINTS AND CHEMICAL INDUSTRIES COMPANY "PACHIN" S.A.E. Consolidated Balance Sheet As of December 31, 2007 Consolidated Pachin Notes 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPNon-current AssetsProperty, plant and equipment (2b, 4) 184 503 206 185 757 691 18 186 993 17 872 853Projects under construction (2c, 5) 50 343 362 23 895 711 1 200 085 1 355 538Investment in subsidiary (2f, 6) -- -- 232 387 000 222 391 000companiesAvailable for sales investments (2f, 7) 774 906 774 906 774 906 774 906Other long-term assets (8) 16 016 000 16 016 000 16 016 000 16 016 000Total Non-current Assets 251 637 474 226 444 308 268 564 984 258 410 297 Current AssetsInventories (Net) (2g, 9, 144 667 335 161 531 134 75 646 216 78 992 347 16b)Letters of Credit 1 736 917 2 079 372 901 069 2 006 017Accounts receivable (Net) (2h, 10, 36 622 192 40 084 836 28 521 505 33 107 914 16b)Notes receivable (Net) (11, 16b) 17 715 500 25 475 311 3 931 810 5 948 740Due from subsidiary companies (12) -- -- 500 546 403 144Other debit balances (13) 50 763 269 43 728 069 44 463 994 119 873 308Investments for trading (2i, 14) 19 196 534 28 992 814 8 376 512 354 899Cash and cash equivalents (2j, 15) 97 516 166 85 611 100 34 838 439 30 065 484Total Current Assets 368 217 913 387 502 636 197 180 091 270 751 853 Current LiabilitiesProvisions (16 A) 38 808 827 39 735 309 37 116 915 37 354 702Banks - overdraft (17) 27 384 485 7 996 320 13 642 011 1 811 282Accounts and notes payable (2l, 18) 39 999 914 35 241 518 11 849 571 9 852 408Due to El-Obour for Paint (19) -- -- 9 816 519 7 832 869Other credit balances (20) 35 969 832 37 017 363 15 745 587 18 451 483Total Current Liabilities 142 163 058 119 990 510 88 170 603 75 302 744Working Capital 226 054 855 267 512 126 109 009 488 195 449 109Total Investments 477 692 329 493 956 434 377 574 472 453 859 406Share Capital and ReservesShare capital (21) 200 000 000 200 000 000 200 000 000 200 000 000Reserves (22) 191 420 791 182 311 140 170 627 297 166 415 698Retained earnings 16 838 942 6 824 029 3 951 441 2 308 839Profit for the year 65 501 909 100 884 170 2 092 844 84 231 979Total Share Capital and 473 761 642 490 019 339 376 671 582 452 956 516ReservesMinority Interest 161 637 168 045 -- --Total shareholders equity 473 923 279 490 187 384 376 671 582 452 956 516Long-term liabilities (23) 3 769 050 3 769 050 902 890 902 890Total Financing of Working Capital and 477 692 329 493 956 434 377 574 472 453 859 406Non-Current Assets - The accompanying notes from (1) to (27), form an integral part of the financialstatements. Financial Controller Managing Director Chairman of the Board PAINTS AND CHEMICAL INDUSTRIES COMPANY "PACHIN" S.A.E. Consolidated Income Statement For the Period Ended December 31, 2007 Consolidated Notes Period from Period from Period from Period from 1/10/2007 to 1/7/2007 to 1/10/2006 to 1/7/2006 to 31/12/2007 31/12/2007 31/12/2006 31/12/2006 EGP EGP EGP EGPNet sales (3) 132 361 603 299 292 426 110 163 986 263 701 436Cost of sales (112 996 489) (229 476 188) (95 556 943) (202 245 401)Gross Profit 19 365 114 69 816 238 14 607 043 61 456 035 General and administrative expenses (3 430 213) (6 244 168) (3 701 082) (6 151 832)Allowance for attending the Board of Directors ( 54 000) ( 136 500) ( 68 700) ( 141 200)Profit from Operations 15 880 901 63 435 570 10 837 261 55 163 003Interest expenses ( 567 576) ( 762 586) ( 917 165) (1 330 834)Profit on sale of investments 1 299 496 1 299 496 1 442 551 2 680 263Gain on revaluation of trading 323 826 978 548 -- --investmentInvestment income -- 13 561 -- 100 013Interest income 1 252 085 1 894 663 240 587 1 694 313Capital gain -- -- 73 050 73 050Other income 370 061 814 517 69 012 181 479Losses from foreign currency translation ( 877 029) (2 140 096) ( 340 418) ( 368 157)Profit before taxes 17 681 764 65 533 673 11 404 878 58 193 130Income taxes -- -- -- --Deferred taxes -- -- -- --Profit after Tax 17 681 764 65 533 673 11 404 878 58 193 130Minority interest ( 9 605) ( 31 764) ( 7 852) ( 28 391)Profit after tax and minority interest 17 672 159 65 501 909 11 397 026 58 164 739Employees' and Directors' bonus (3 190 444) (6 380 888) (3 190 444) (6 380 888)Profit attributable to shareholders 14 481 715 59 121 021 8 206 582 51 783 851 Earnings per share 0.72 2.96 0.41 2.59 Pachin Notes Period from Period from Period from Period from 1/10/2007 to 1/7/2007 to 1/10/2006 to 1/7/2006 to 31/12/2007 31/12/2007 31/12/2006 31/12/2006 EGP EGP EGP EGPNet sales (3) 40 163 776 84 636 409 32 185 148 73 952 081Cost of sales (40 252 807) (79 230 747) (34 131 781) (69 222 163)Gross Profit ( 89 031) 5 405 662 (1 946 633) 4 729 918 General and administrative expenses (2 374 629) (4 566 994) (3 076 122) (4 767 351)Allowance for attending the Board of Directors ( 22 000) ( 53 500) ( 51 500) ( 77 000)Profit from Operations (2 485 660) 785 168 (5 074 255) ( 114 433)Interest expenses ( 295 795) ( 372 972) ( 299 776) ( 455 450)Profit on sale of investments 858 855 858 855 364 147 971 532Gain on revaluation of trading investment 176 146 176 146 -- --Investment income -- 13 561 -- --Interest income 278 998 593 394 621 286 836 412Capital gain -- -- 73 050 73 050Other income 301 467 651 230 68 530 178 998Losses from foreign currency translation ( 296 559) ( 612 538) ( 45 506) ( 73 245)Profit before taxes (1 462 548) 2 092 844 (4 292 524) 1 416 864Income taxes -- -- -- --Deferred taxes -- -- -- --Profit after Tax (1 462 548) 2 092 844 (4 292 524) 1 416 864Minority interest -- -- -- --Profit after tax and minority interest (1 462 548) 2 092 844 (4 292 524) 1 416 864Employees' and Directors' bonus (2 094 444) (4 188 888) (2 094 444) (4 188 888)Profit attributable to shareholders (3 556 992) (2 096 044) (6 386 968) (2 772 024) Earnings per share (0.18) (0.10) (0.32) (0.14) PAINTS AND CHEMICAL INDUSTRIES COMPANY "PACHIN" S.A.E. Consolidated Cash Flows Statement For the Period Ended December 31, 2007 Consolidated Pachin 31/12/2007 31/12/2006 31/12/2007 31/12/2006 Notes EGP EGP EGP EGPCash Flows from Operating ActivitiesNet Profit before Tax 65 533 673 58 193 130 2 092 844 1 416 864 Adjustments to Reconcile Net Profit to NetCash Provided from Operating ActivitiesDepreciation 4 422 820 4 701 925 1 023 716 1 023 462Gain on revaluation of trading investment ( 978 548) -- ( 176 146) --Profit on the sale of investments (1 299 496) (2 680 263) ( 858 855) ( 971 532)Provision utilized during the period ( 938 228) -- ( 249 533) --Operating Profit before Working Capital Changes 66 740 221 60 214 792 1 832 026 1 468 794 Decrease in receivables and other debit balances 4 199 001 1 266 416 81 926 997 53 448 590(Increase) decrease in inventories 17 206 254 (64 981 273) 4 451 079 (22 830 788)Increase in creditors and other credit balances 4 712 054 32 438 721 1 272 106 20 253 755Net Cash Provided from Operating Activities 92 857 530 28 938 656 89 482 208 52 340 351 Cash Flows from Investing ActivitiesPurchase of investments (133 287 102) (143 624 406)(78 504 122) (36 832 925)Proceeds from the sale of investments 145 361 426 214 977 532 71 517 510 70 640 909Purchase of fixed assets and other long-term assets (29 729 985) (23 661 337) (1 259 915) (16 625 400)Purchase of investments in subsidiary (Pachin for Inks) -- -- (9 996 000) --Proceeds from the sale of fixed assets 113 999 15 250 77 512 --Net Cash (used in) Provided from Investing Activities (17 541 662) 47 707 039(18 165 015) 17 182 584 Cash Flows from Financing ActivitiesProceeds of banks overdraft 19 388 165 -- 11 830 729 --Dividends paid (82 798 967) (70 022 591)(78 374 967) (67 164 605)Net Cash (used in) Financing Activities (63 410 802) (70 022 591)(66 544 238) (67 164 605) Net increase (decrease) in cash and cash equivalents 11 905 066 6 623 104 4 772 955 2 358 330Net cash and cash equivalents at beginning of the (15) 85 611 100 54 617 485 30 065 484 23 425 741periodNet cash and cash equivalents at end of the period (15) 97 516 166 61 240 589 34 838 439 25 784 071 PAINTS AND CHEMICAL INDUSTRIES COMPANY "PACHIN" S.A.E. Consolidated Changes in Shareholders' Equity Statement For the Period Ended December 31, 2007 Share Legal Retained Profit for the Minority Total Capital Reserve Earnings Year / Period interest EGP EGP EGP EGP EGP EGPBalance as of June 30, 2006 200 000 000 174 508 002 3 063 605 81 328 926 151 999 459 052 532Transferred to reserves -- 7 803 138 -- (7 803 138) -- --Transferred to retained -- -- 3 760 424 (3 760 424) -- --earningsDividends -- -- -- (69 765 364) ( 32 799) (69 798 163)Net profit as of June 30, -- -- -- 100 884 170 48 845 100 933 0152007Balance as of June 30, 2007 200 000 000 182 311 140 6 824 029 100 884 170 168 045 490 187 384Transferred to reserves -- 9 109 651 -- (9 109 651) -- --Transferred to retained -- -- 10 014 913 (10 014 913) -- --earningsDividends -- -- -- (81 759 606) ( 38 172) (81 797 778)Net profit as of December 31, -- -- -- 65 501 909 31 764 65 533 6732007Balance as of December 31, 200 000 000 191 420 791 16 838 942 65 501 909 161 637 473 923 2792007 Financial Controller Managing Director Chairman of the Board Paints and Chemical Industries Company "Pachin" (S.A.E.) Notes to the Financial Statements For the period ended December 31, 2007 1. The Group's Background Paints and Chemical Industries Company "Pachin" (SAE): The Company was established according to the Ministerial Decree No. 751 for1958.On October 3, 1997, the Extraordinary General Assembly agreed to circulate 27%of its share via GDR offer in the Stock Markets of London and New Yorkaccordingly, the Holding Company's share was reduced to less than 50 %, and theCompany became subject to the Companies Law No. 159 for 1981 and its executiveregulation. The Commercial Register was issued after this modification onOctober 15, 1997. On October 31, 2000, the Extraordinary General Assemblyagreed to amend some articles in the Articles of Incorporation. The Company's objective is to manufacture various kinds of paints, varnishes,printing inks, animal extract products and related products, in addition topurchasing and dividing land for the purpose of using or reselling, andperforming specialized construction works. El-Obour for Paints and Chemicals Industries Company (SAE): The Company was established according to the General Authority of Investment andFree Zones Decree No. 78 for 1999 and Law No. 8 for 1997 and its executiveregulation. The Company was registered at the Commercial Register on January 14,1999. On September 19, 2006, the Extraordinary General Assembly agreed to amendArticle (2) of the Company's Articles of Incorporation by adding the trademarkof "Pachin" to the Company's name. Therefore, the Company's name became ElAbour for Paints and Chemical Industries Company "Pachin" The Company's objective is to manufacture various kinds of paints, varnishes,printing inks, animal extract products and related products, and also tomanufacture other chemical products and special packages for the Company'sproducts. Pachin for Inks: The Company was established according to the General Authority for Investmentand Free Zones Decree No. 13623 for 2005, and Law No. 8 for 1997 and itsexecutive regulation. The Company was registered at the Commercial Register onApril 27, 2005. The Company's objective is to manufacture and pack printing inks, and relatedproducts, and also to manufacture other chemical products and special packagesfor the Company's products. 2. Significant Accounting Policies The consolidated financial statements have been prepared according to theEgyptian Accounting Standards and applicable laws and regulations. The EgyptianAccounting Standards require referral to the International Financial ReportingStandards "IFRS", when no Egyptian Accounting Standard or legal requirementexist to address certain types of transactions and their treatment. The principal accounting policies adopted in the preparation of the financialstatements are set out below: a. Basis for Preparing the Consolidated Financial Statements The consolidated financial statements incorporate the financial statements ofthe subsidiary companies under the control of the Holding Company (Paints andChemical Industries Company "Pachin"(SAE). The subsidiaries are represented inEl-Obour for Paints and Chemical Industries Company where the Holding Company'sshare is 99.95%, and Pachin for Inks where the Holding Company's share is 99.96% The consolidated financial statements are prepared on the following basis: • All inter-company transactions and balances are eliminated. • The unrealized profits resulting from the inter-companytransactions are eliminated. • The cost method is used to account for the ownership insubsidiaries. • The consolidated income statement includes the results ofoperation for all subsidiary companies starting from the date of ownership, andthe minority interest is eliminated. b. Property, Plant and Equipment Property, plant and equipment are recorded at historical cost and aredepreciated over their estimated useful life on a straight-line basis at therates stated below: Type of Asset Depreciation RateBuildings and constructions 2 - 5 %Machinery and equipments 4.9 - 7.5 %Vehicles 10 - 20 %Tools 7.5 %Furniture and office equipments 10 % c. Projects under Construction Projects under construction are carried at cost, less any recognized impairmentloss. Costs include all costs associated with acquiring the asset and bringingit to ready for use condition. The depreciation of these assets follows the samebasis of similar fixed assets. The projects under construction are charged withthe costs of new projects, and the purchased equipments that are not used yet. The amounts paid as advances for purchasing property, plant and equipment arerecorded as projects under construction. When the asset is received and isready for use, it is transferred to fixed asset and is depreciated on the samebasis as similar fixed assets. d. Long Term Assets The other long term assets (Patent) are recognized according acquisition cost.On the balance sheet date, the book value of assets is reviewed and in the casethat there are indications that the recoverable amounts of these assets is lowerthan their book value, then the carrying value of assets will be reduced to itsrecoverable amount, and the impairment loss is recognized immediately andcharged to the income statement. e. Impairment of Assets On the balance sheet date, the book value of assets owned by the company isreviewed and in the case that there are indications that the recoverableamounts of these assets is lower than their book value, then the carrying valueof assets will be reduced to its recoverable amount, and an impairment loss isrecognized immediately and charged to the income statement. On the balance sheet date, the company's management periodically revaluates, theexistence of indications of impairment in the losses value, which werepreviously recognized resulting from the impairment of the assets' book value inthe previous periods. In case of existence of these indications, this impairmentis revaluated and reflected so that the book value of these assets does notexceed the original net book value before recording the impairment loss. f. Investments in Subsidiaries and Available for sales Investments Investments in subsidiary companies and long-term investments are stated atcost. The company assesses whether there is any indication that the value ofeach investment is impaired. If such indication exists, the value of the relatedinvestment is reduced by the impairment loss and this loss is charged to theincome statement, for each investment separately. The available for sale financial investments, with no reliable fair value, arerecognized according to all its related costs, less the impairment losses of itsvalue. These losses are charged to the income statement. g. Inventories Inventories are stated at the lower of cost or net realizable value as follows: • Raw Materials, Packaging, Spare Parts and Fuel Cost is calculated using the perpetual weighted average method. • Work in-Progress The cost includes direct and indirect manufacturing costs of partially completedstages in addition to the material, direct wages costs of the completedproduction stage. • Goods Available for Sale Goods available for sale are stated at cost. • Consignment Goods Consignment goods from finished product are stated at manufacturing cost. • Finished goods Finished goods are stated at manufacturing cost. h. Accounts Receivable Accounts receivable are carried at nominal value as reduced by appropriateallowances for estimated irrecoverable amounts. Allowances for accountsreceivable are formed when there is evidence that the Company will not be ableto recover the amounts due according to the original terms of receivables. Theprovision represents the difference between the book value and the recoverableas stated in the expected cash flows. i. Investments for trading: Investment for trading that are issued by banks are stated at fair value,representing its recoverable value as of evaluation date. The resultingdifferences are stated in the income statement. j. Cash and Cash Equivalents Cash and cash equivalents are stated in the balance sheet at nominal value. k. Provisions Provisions are recognized when the company has a present obligation (legal orconstructive) as a result of past events and that it is probable that an outflowof economic resources will be required to settle the obligation. The amountrecognized as a provision is the best estimate of the consideration required tosettle the present obligation at the balance sheet date. When the effect of thetime value of money is material, the amount of a provision shall be the presentvalue of expected expenditures, required to settle the obligation. l. Accounts Payable Accounts payable are stated at the nominal value are recorded with the value ofgoods and services provided by others and the invoice. m. Foreign Currencies Transactions The company maintains its accounts in Egyptian pound. Transactions denominatedin foreign currencies are recorded using the exchange rates prevailing at thetransaction date. On the financial statements date, balances of monetary assetsand liabilities denominated in foreign currencies are translated at the exchangerate prevailing on that date. Differences arising from revaluation are stated inthe income statement. n. Revenue Recognition - Revenue is recognized on an accrual basis upon deliveryof goods to customers and the issuance of the sales invoice. - Interest income is accrued on an accrual basis. o. Borrowing Cost Borrowing cost is recorded in the income statement in the period it wasincurred. p. Cash Flows Statement The cash flows statement is prepared using the indirect method. For the purposeof preparing the cash flows statement, cash and cash equivalents are comprisedof cash on hand and at banks and checks under collection. q. Taxation The company's tax is calculated based on the prevailing tax laws and regulationsin Egypt;a provision is formed for tax liabilities after performing sufficient studiesand in light of the tax assessments. Deferred tax is recognized due to temporary differences between the assets andliabilities tax bases set by the new Egyptian tax law, and their reportedamounts per the accounting principles used in the preparation of the financialstatements. Accordingly, the income statement for the reporting period is to becharged by the tax burden represented by the current tax (calculated on taxableprofit based on local tax laws, regulations, instructions and tax rates rulingat the date 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. r. Financial Instruments A financial instrument is any contract that gives rise to both a financial assetof one enterprise and a financial liability or equity instrument of anotherenterprise. Financial assets and liabilities are recognized on the company'sbalance sheet when the company becomes a party to the contractual rights andobligations of the financial instrument. • Financial Assets: are represented in cash on hand and at banks, accountsand notes receivable, and certain other debit balances. • Financial Liabilities: are represented in short-term loans, accounts andnotes payable and certain other credit balances. s. Accounting Estimates The preparation of financial statements in conformity with Egyptian AccountingStandards requires the company's management to make estimates and assumptionsabout the carrying amounts of assets and liabilities at the balance sheet date,and the reported amounts of revenues and expenses during the reporting period.The estimates and associated assumptions are based on historical experience andother factors that are considered to be relevant. Actual results may differ fromthose estimates used in the preparation of the financial statements. Theestimates and underlying assumptions are reviewed on an ongoing basis. 3. Sales Analysis Consolidated Pachin Quantity (Ton) Amount'000 Quantity (Ton) Amount'000Paints 33 785 267 853 5 587 53 197Inks 1 406 29 725 1 406 29 725Animal Extract Product 376 1 714 376 1 714 299 292 84 636 4. Property, Plant and Equipment Consolidated Land Buildings Machinery Vehicles Tools Furniture Total and and Office Equipments Equipments EGP EGP EGP EGP EGP EGP EGPCostJuly 1, 2007 40 149 216 80 453 994 114 946 493 13 979 727 12 476 271 12 214 191 274 219 892Additions -- 85 941 1 360 691 515 798 692 602 627 302 3 282 334Disposals -- -- (83 257) (431 000) (101 960) (26 645) (642 862)Cost as of December 31, 40 149 216 80 539 935 116 223 927 14 064 525 13 066 913 12 814 848 276 859 3642007Accumulated DepreciationJuly 1, 2007 -- (18 143 464) (46 298 527) (9 777 628) (6 371 368) (7 871 214 )(88 462 201)Depreciation charge -- (1 029 460) (1 881 256) (666 276) (408 515) (437 313) (4 422 820)Disposals -- -- 71 057 431 000 1 896 24 910 528 863As of December 31, 2007 -- (19 172 924) (48 108 726) (10 012 904) (6 777 987) (8 283 617) (92 356 158)NBV @ December 31, 2007 40 149 216 61 367 011 68 115 201 4 051 621 6 288 926 4 531 231 184 503 206NBV @ June 30, 2007 40 149 216 62 310 530 68 647 966 4 202 099 6 104 903 4 342 977 185 757 691 Pachin Company Land Building Machinery and Vehicles Tools Furniture & Total Equipments office equipment EGP EGP EGP EGP EGP EGP EGPCostJuly 1, 2007 173 143 19 694 750 29 131 798 6 254 515 4 591 171 6 532 271 66 377 648Additions -- 67 484 421 782 221 970 456 717 247 415 1 415 368Disposals -- (83 257) (337 500) (66 980) (24 892) (512 629)Cost of December 31, 173 143 19 762 234 29 470 323 6 138 985 4 980 908 6 754 794 67 280 3872007AccumulatedDepreciationJuly 1, 2007 -- (9 510 605) (24 930 814) (5 500 796) (3 425 760) (5 136 820) (48 504 795)Depreciation charge -- (255 570) (360 716) (141 588) (112 824) (153 018) (1 023 716)Disposals -- 71 057 337 500 1 896 24 664 435 117 As of December 31, -- (9 766 175) (25 220 473) (5 304 884) (3 536 688) (5 265 174) (49 093 394)2007NBV @ December 31, 173 143 9 996 059 4 249 850 834 101 1 444 220 1 489 620 18 186 9932007NBV @ June 30, 2007 173 143 10 184 145 4 200 984 753 719 1 165 411 1 395 451 17 872 853 5. Projects under Construction Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPMachinery and equipments 3 110 470 1 982 429 787 189 888 659Buildings 26 673 211 11 611 533 -- 63 469Tools and equipments 338 193 226 987 177 693 226 987Furniture 9 920 80 605 -- 70 685Vehicles 3 732 3 732 -- --Software and programs 2 797 815 2 797 815 44 500 44 500Assets under construction 32 933 341 16 703 101 1 009 382 1 294 300Letter of credit 11 903 445 1 536 620 --Capital expenditure 5 506 576 5 655 990 190 703 61 238Total 50 343 362 23 895 711 1 200 085 1 355 538 6. Investment in Subsidiary Companies Company Name Capital Ownership Ownership Paid 31/12/2007 30/6/2007 % amount % Paid amount Paid amount EGP EGP EGPObour for Paints 200 000 000 99, 95% 199 900 000 100% 199 900 000 199 900 000and ChemicalIndustriesPachin for Inks 50 000 000 99, 96% 49 980 000 65% 32 487 000 22 491 000 232 387 000 222 391 000 These companies are not listed in the stock market. 7. Available for sales Investments Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPGovernmental Bonds at theNational Investment Bank 774 906 774 906 774 906 774 906 8. Other Long-Term Assets Other long-term assets as of December 31, 2007 amounting to EGP 16,016,000,equivalent to Euro 2,200,000 represent the amount paid to the Danish CompanyDeroup A/S for the final cession of the trademarks according to the contractdated December 4, 2006. 9. Inventories, Net Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPRaw materials and packaging 103 748 984 128 946 404 59 359 087 65 156 527Finished products 27 265 476 19 202 648 9 278 241 7 032 009Fuel and spare parts 7 473 445 7 181 957 3 636 958 3 716 106Work in-progress 4 692 525 5 001 140 1 890 730 2 178 462Consignment goods 1 066 038 568 823 1 066 038 568 823Inventories for the purpose of 260 254 161 922 260 254 161 922resaleScrap 160 613 468 240 154 908 178 498 144 667 335 161 531 134 75 646 216 78 992 347 The above-mentioned figures are net of provisions (Refer to Note No. 16). 10. Accounts Receivable Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPAccounts receivable 44 504 953 47 979 343 35 272 405 39 870 560Less:Provision for doubtful (7 882 761) (7 894 507) (6 750 900) (6 762 646)debts 36 622 192 40 084 836 28 521 505 33 107 914 11. Notes Receivable Notes receivable as of December 31, 2007 amounted to EGP 17 715 500 after thededuction of the provision amounting to EGP 9 938 000 its maturity date is dueafter one year. 12. Due from Subsidiary (Pachin for Inks) The balance of this account amounted to EGP 500 546, which represents theamounts paid by the Holding Company on behalf of the mentioned Company. 13. Other Debit Balances Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPAccrued income 1 540 426 483 449 1 142 526 81 234 845Suppliers debit balances 3 352 407 2 251 535 1 700 247 1 060 510Employees loans 795 055 1 495 720 795 055 1 495 720Deposits with others 2 075 050 1 976 505 1 372 950 1 416 577Corporate tax* 28 857 954 24 857 954 28 857 954 24 857 954Withholding tax 6 995 472 6 649 387 6 852 213 6 506 128Other debit balances 7 146 905 6 013 519 3 743 049 3 301 574 50 763 269 43 728 069 44 463 994 119 873 308 * This balance represents: • An amount of EGP 12 447 million, whichrepresents the amount paid to the Tax Authority for the years 1993 - 1997,according for the decisions of the 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. 27). • An amount of EGP 16 411 million, paid on thedue tax account for the years 1998 - 2001. (Refer to Note No. 27). 14. Investments for trading Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPInvestment Certificates 19 196 534 28 992 814 8 376 512 354 899for Egyptian development Bank 19 196 534 28 992 814 8 376 512 354 899 15. Cash and Cash Equivalents Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPCash on hand 426 899 30 884 305 707 --Bank current accounts 13 842 963 7 904 337 6 344 407 3 054 586Bank time deposits 75 093 224 71 662 114 21 682 508 23 598 040Checks under collection* 8 153 080 6 013 765 6 505 817 3 412 858 97 516 166 85 611 100 34 838 439 30 065 484 * Represents outstanding checks with due dates before 31/12/2007, collectedafter this date. 16. Provisions Balance Provision Provision Provision Balance as of Established No longer utilized as of 1/7/2007 during required during 31/12/2007 the period during the the period period EGP EGP EGP EGP EGPA- Provisions-CurrentLiabilitiesProvision for tax disputes 32 149 283 -- -- -- 32 149 283Provision for claims 7 003 321 -- -- 926 482 6 076 839Other provisions 582 705 -- -- -- 582 705Total provisions (Current 39 735 309 -- -- 926 482 38 808 827Liabilities) B- Provisions-CurrentAssetsAccounts receivable 7 894 507 -- -- 11 746 7 882 761provisionNotes receivable provision 9 938 000 -- -- -- 9 938 000Raw material provision 517 961 -- -- -- 517 961Finished goods provision 798 649 -- -- -- 798 649Slow moving and obsolete 481 533 -- -- -- 481 533spare parts provision 59 365 959 -- -- 938 228 58 427 731 17. Banks Overdraft Represents credit facilities that the group has obtained from various banks asof December 31, 2007 amounting to EGP 27 384 485. These facilities are secured bytime deposits. 18. Accounts and Notes Payable Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPAccounts payable 37 244 357 30 778 933 11 669 170 8 814 390Notes payable 2 755 557 4 462 585 180 401 1 038 018 39 999 914 35 241 518 11 849 571 9 852 408 19. Due to Subsidiary (El-Obour for Paints and Chemicals Industries Company) The balance of this account amounting to EGP 9 816 519 represents the ordinaryoperations results between Paints and chemicals industries company (Pachin) andEl-Obour for paints and chemicals industries company. 20. Other Credit Balances Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPAccrued expenses 6 672 607 8 360 701 6 005 397 7 548 292Accounts receivable - credit 12 249 727 11 584 415 2 718 078 3 219 161balancesSales tax 3 942 689 5 915 594 666 641 1 238 725Fixed assets - creditors 1 238 484 845 708 128 854 80 835Deposit to others 3 967 788 2 920 599 885 011 816 058Employees share in profit 42 242 39 431 42 242 39 431Withholding tax 368 478 430 943 192 463 239 944Current portion of long- 161 366 428 658 -- --Term liabilities *Other employees benefits 4 082 371 4 082 371 4 082 371 4 082 371Income tax -- 368 139 -- --Other creditors 3 244 080 2 040 804 1 024 530 1 186 666 35 969 832 37 017 363 15 745 587 18 451 483 * Refer to Note No. "23-A" 21. Share Capital The Company's authorized capital amounted to EGP 200 million, and the issued andpaid-up capital amounted to EGP 200 million, distributed among 20 million shareswith par value of EGP 10 each. 22. Reserves Consolidated Pachin 31/12/2007 30/6/2007 31/12/2007 30/6/2007 EGP EGP EGP EGPLegal Reserve 112 811 978 103 702 327 92 018 484 87 806 885Reserve invested in treasury 774 905 774 905 774 905 774 905bandsFixed assets reserve 6 290 899 6 290 899 6 290 899 6 290 899Other Reserves 71 543 009 71 543 009 71 543 009 71 543 009 191 420 791 182 311 140 170 627 297 166 415 698 23. Long-Term Liabilities The long-term liabilities are represented as follows: A. The sales tax installment on the imported assetswhich amounted to EGP 533 219 (after deducting the current portion and recordingit in other credit balances). B. The deferred revenue related to the Company'sgranted assets which will be recorded revenue over the estimated useful lives ofthose assets with an amount of EGP 453 187. C. The deferred tax liability amounting to EGP 2 782 644, resulted from the difference between the books depreciations rates and thetax depreciations rates (Refer to Note No. "2Q"). 24. Contingent Liabilities The uncovered portion of the Letters of Credit amounted to EGP 6.477 million asof December 31, 2007. 25. Capital Commitments - Represents the unpaid portion of the Company's sharein Pachin for Inks with an amount of EGP 17 493 000. - The capital commitments as of December 31, 2007represent the unexecuted portion of the factory building for Pachin for Inkswith an amount of EGP 14 million. 26. Managing the Risks Related to Financial Instruments a. 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. b. Credit Risk This risk represents some customers' failure to pay their debts on due dates.The Company forms a provision for doubtful debts to meet this risk. c. Interest Risk This risk represents the changing rates of interest which affects 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. d. Fair Value The fair value of financial instrument does not differ from the book value as ofthe balance sheet date. 27. Tax Position Corporate Income Tax (Paints and Chemicals Industries Company) a. The Company is subject to corporate tax according to Law No. 91 for 2005.The Company submits its tax returns in due time and pays the taxes due. The TaxAuthority inspected the Company's books and the taxes were settled and paid forthe years till June 30, 1993. b. The Tax Authority inspected and assessed the Company's books for years1993/1994 till 1996/1997 and the disputed points were transferred to court. c. The Tax Authority inspected the Company's books for year 1997/1998 till2000/2001. 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. d. The Tax Authority inspected and assessed the Company's books for years2001/2002 till 2004/2005 and the company received a tax claim amounting to EGP89 568 684 which the company objected, and the disputed points were transferredto the Internal Committee. The management believes that these claims will begreatly reduced . e. The tax authority inspected the company's books for sales tax till 30 June2006 and the tax due was paid. f. The Tax Authority inspected and assessed the Company's books for salary taxfrom 1999 till 2002. Corporate Income Tax (El-Obour for Paints and Chemicals Industries Company) a. The Company is enjoying a tax exemption starting from the first year ofoperation according to Law No. 8 for year 1997. This exemption will end on June30, 2011. b. The tax authority inspected the company's books for sales tax till 30 June2006 and the tax due was paid. c. The company's book where not inspected for salary tax yet. 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 Financial Controller Managing Director Chairman of the Board This information is provided by RNS The company news service from the London Stock Exchange