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Paints & Chem Ind Co (PCLD)

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Tuesday 10 December, 2002

Paints & Chem Ind Co

1st Quarter Results

Paints and Chemical Industries Co.
10 December 2002



PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E.
Consolidated Profit & Loss Accounts

                                                                               Year ended                               
                                                                              30 September                              
                        
                                                               Consolidated                        Holding company
                                           Notes            2002           2001                    2002           2001
                                                            L.E.           L.E.                    L.E.           L.E.

  Turnover                                     3      94,546,174     60,343,113              43,111,037     32,486,477
  Cost of Sales                                     (61,377,837)   (39,746,824)            (33,770,664)   (24,754,337)

  Gross profit                                        33,168,337     20,596,289               9,340,373      7,732,140

  General and administrative expenses                (1,486,268)    (1,296,301)             (1,096,060)    (1,008,358)
  Employees' and directors' bonus                    (1,690,500)    (1,422,500)             (1,544,250)    (1,422,500)
  Interest expenses                                    (186,354)    (3,255,251)                (66,214)    (3,194,765)
  Other Income                                            47,342        251,258                  47,126        229,977
  Interest income                                      2,894,305      5,545,541               2,795,907      5,530,704
  Investment income                                        6,780        118,778                   6,780        116,516
  Profit from operations                              32,753,642     20,537,814               9,483,662      7,983,714
  Losses from foreign currency                         (143,398)       (82,362)               (143,398)       (82,362)
  translation                                                                                                         
  Profit on Ordinary activities before taxes          32,610,244     20,455,452               9,340,264      7,901,352
  Taxation                                     4               -              -                       -              -
  Profit after tax                             5      32,610,244     20,455,452               9,340,264      7,901,352
  Minority interest                                     (11,708)        (6,345)                      --             --
  Profit attributable to shareholders                 32,598,536     20,449,107               9,340,264      7,901,352

  Consolidated Earnings per share              6            1.63           1.02                    0.47           0.40



            Financial Controller                                                           Chairman of the Board        
       
 

PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E.
Consolidated Balance Sheet

                                                                                As at                                   
                                                                            30 September                                
                            
                                                        Consolidated                           Holding             
                                     Notes            2002     June 2002          2002         company       June 2002
                                                      L.E.          L.E.          L.E.                            L.E.
  Fixed Assets                                                                                                        
  Tangible assets                        7     187,615,345   186,704,980    28,125,951                      28,934,257
  Investment in subsidiary company       8               -             -    99,950,000                      99,950,000
  Other investments                      9         774,906       774,906       774,906                         774,906

  Other long term assets                10         505,980       505,980             -                               -

                                               188,896,231   187,985,866   128,850,857                     129,659,163
  Current Assets                                                                                                      
  Inventories                           11      75,433,896    71,991,261    46,069,606                      42,395,279
  Debtors                               12     151,460,341   137,854,836   189,488,309                     200,869,032

  Short term investments                        16,005,899             -    16,005,899                               0
  Cash and cash equivalents             13     127,917,307   198,694,153   111,427,693                     187,052,877
                                               370,817,443   408,540,250   362,991,507                     430,317,188
  Total assets                                 559,713,674   596,526,116   491,842,364                     559,976,351

  Liabilities and Shareholders Equity                                                                                   
                          

  Current Liabilities                                                                                                 
  Banks - overdraft                     14      23,189,354    84,162,772     1,021,597                      84,080,478
  Creditors                             15      58,005,582    66,132,046    41,919,359                      36,000,620
  Dividends Payable                             55,257,986       257,986    55,257,986                         257,986
                                               136,452,922   150,552,804    98,198,942                     120,339,084
  Provisions                            16      18,731,616    18,731,615    18,231,616                      18,231,615
  Long term liabilities                 20       2,887,072     3,148,343            --                              --
  Total Liabilities                            158,071,610   172,432,762   116,430,558                     138,570,699

  Share Capital and Reserves                                                                                          
  Share Capital                         17     200,000,000   200,000,000   200,000,000                     200,000,000
  Legal Reserve                         18      77,877,933    72,899,630    74,867,013                      71,741,383
  Other Reserves                        18      78,043,358    77,972,636    78,043,358                      77,972,636
  Retained Earnings                     18      13,813,628    15,649,086    13,161,169                      15,356,013
  Profit for the year                           32,598,536    58,547,677     9,340,264                      56,335,620
  Treasury Shares                                (772,228)   (1,044,803)             -                               -
  Total Share Capital and Reserves             401,561,227   424,024,226   375,411,804                     421,405,652
  Minority interest                                 80,837        69,128            --                              --
  Total Liabilities and Shareholders'          559,713,674   596,526,116   491,842,362                     559,976,351
  Equity                                                                                                              

  - The attached notes form an integral part of the financial statements.                                               


              Financial Controller                                       Chairman of the Board 
 


PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E
Consolidated Cash flow Statement


                                                                                       Year ended
                                                                                      30 September
                                                                      Consolidated                   Holding company
                                                                   2002           2001              2002          2001
  Cash flow from operating activities                              L.E.           L.E.              L.E.          L.E.

  Net profit after taxation                                  32,610,244     20,455,452         9,340,264     7,901,352
  Adjustments:                                                                                                        
  Depreciation                                                1,790,316      1,647,015           604,890       869,007

  Net provisions formed and (utilized)                                -              -                 -     (115,516)
  Profit on sale of investments                                       -      (116,516)                 -             -

  Operating profit before working capital changes            34,400,560     21,985,951         9,945,154     8,654,843

  (Increase ) or decrease in debtors                       (13,605,505)   (12,848,011)        11,380,723     8,784,028
  (Increase ) or decrease in inventories*                   (3,442,635)    (1,920,903)       (3,674,327)     2,285,177
  Increase or (decrease) in creditors                       (8,721,844)      4,795,873         5,788,046     (851,607)
  Net cash from operating activities                          8,630,576     12,012,910        23,439,596    18,872,441

  Cash flows from investing activities                                                                                
  Purchase of fixed assets and other long term assets       (2,700,680)      (744,155)                 -      (26,405)
  Proceeds from sale of fixed assets                                  -        899,883                 -       899,883
  Proceeds from sale of investments                                   -     15,815,915                 -    15,815,915
  Purchase of investments                                  (16,005,899)              -      (16,005,899)              
  Purchase of investments in subsidiary                               -              -                 -   (9,995,000)
  Net cash used in investing activities*                   (18,706,579)     15,971,643      (16,005,899)     6,694,393
  Cash flows from financing activities                                                                                
  proceeds from sale of treasury shares                         272,575              -                 -             -
  Net cash (used in) financing activities                       272,575              -                 -             -

  Net increase or (decrease) in cash & cash equivalents     (9,803,428)     27,984,553         7,433,697    25,566,834
  Net cash & cash equivalents at beginning of period        114,531,381     94,608,855       102,972,399    87,787,128
  Net cash & cash equivalents at end of period              104,727,953    122,593,408       110,406,096   113,353,962
                                                                                                               




PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E
Notes to the Consolidated financial statements


1- The Group

Paints and Chemical Industries Company S.A.E. (PACHIN) is an Egyptian Joint Stock company. Following the sale by the
Holding Company for Chemical Industries of part of its holding via a GDR offer which reduced its share to less than 50 %
the company has become subject 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.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 joint stock company established under
law 8 for 1997.The Company was registed on 14 January 1999  at the commercial registry.  The objective of the company
is to manufacture  various kinds of paints , varnishes, printing inks, animal extract products and related products.


2- Significant accounting policies

Basis of accounting

The financial statements are prepared in accordance with the Egyptian Accounting Standards, which ensure compliance with
IAS in all material respects.

Basis of consolidation

The consolidated financial statements include subsidiaries under control of Paints and Chemicals Industries Company,
which owns 99.95% of ElObour for Paints and Chemicals Industries Company.

-- All material inter company transaction are eliminated in the consolidated financial statement.
-- Acquisition of subsidiaries are accounted for by the purchase method.
-- The consolidated income statement reflect the subsidiary's results of operations starting from the date of
   acquisition, and the minority interest share of profit is eliminated.


Turnover

Turnover excludes sales tax

Revenue recognition

The company recognizes revenue when title of goods sold is passed to the buyer, which is at the time of delivery.

Foreign currency transactions

The company maintains its records in Egyptian pounds. Transactions denominated in foreign currencies are recorded at
exchange rates prevailing at the date of the transaction. At  year end, assets and liabilities denominated in foreign
currencies are translated to Egyptian pounds at exchange rates ruling on the financial statements date.  Exchange
differences are taken to the profit and loss account.


PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E
Notes to the Consolidated financial statements

Net profit attributable to shareholders

The net profit or loss after taxation is that attributable to shareholders after deducting all claims against it other
than those of the shareholders.

Accordingly,  the amounts treated in the local accounts as profit distributions  ( based on the company's statutes and
the Egyptian  companies law) have been charged, in the attached financial statements, to profits before arriving at the
net profit attributable to shareholders as follows;  ( see note 5 )


i-   Board of directors profit related bonuses.
ii-  Employees bonuses that are calculated as a percentage of the dividends declared to shareholders in any specific
     year.


Earnings Per Share

Earnings per share figures are calculated by dividing the net profit attributable to shareholders by the weighted
average number of shares in issue during the period (see note 6).


Fixed assets

Fixed assets are stated at historical cost and depreciated over the estimated useful life of the assets  on a straight
line basis at the rates specified below.

               Buildings                                              2-5%
               Plant & equipment                                  4.9-7.5%                      
               Vehicles                                             10-20%                        
               Tools                                                  7.5%                          
               Furniture & office equipment                            10%                           
                                   

Investments

Long term investments are stated at cost, permanent diminution in values are  written off. Amounts deposited with the
National Bank for Investment for purchasing Government bonds, are treated as long term investments, an equivalent amount
is credited to a special reserve.


Inventories

Inventories are valued at the lower of cost or net realizable value, costs are determined on the following basis: for
raw materials, packaging materials, spare parts and fuel; cost is calculated on the moving average basis. For work in
progress cost includes direct and indirect manufacturing costs for partially completed stages. The cost of  finished
products is calculated using the weighted average method.



PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E
Notes to the consolidated financial statements


  3- Turnover analysis by division                           Consolidated                        Holding company        
          
                                                  September 2002    September 2001    September 2002    September 2001 
                                                          LE'000            LE'000            LE'000           LE' 000

  Paints                                                  84,068            51,650            32,633            23,793
  Printing Inks                                           10,103             8,170            10,103             8,170
  Animal Extract Products                                    375               523               375               523
                                                          94,546            60,343            43,111            32,486


  4- Taxation                                                                                                         

  Paints and Chemicals Industries Company                                                                             
                                                                                                                      
  The Corporation Tax rate in Egypt is 32% for industrial companies , in addition to devolopment charge of 2 %.       

  El-Obour for Paints and Chemicals                                                                                   

  The company currently enjoys a tax holiday starting from the fiscal year following the date of commenced production.
  (9 November 2000)                                                                                                   


  5- Profit attributable to shareholders                                                                              
                                                            Consolidated                        Holding company
  Reconciliation to profits after taxes           September 2002    September 2001    September 2002    September 2001 
  according to Statutory accounts                             LE                LE                LE                LE

  * Profit after taxes per statutory accounts         34,289,036        21,871,607        10,884,514         9,323,852

  * Provision for directors profit related                                                                            
    bonuses and employees                                                                                               
    profit share treated as distribution in           (1,690,500)       (1,422,500)       (1,544,250)       (1,422,500)
    statutory accounts.                                                                                                 

  Profit attributable to shareholders per             32,598,536        20,449,107         9,340,264         7,901,352
  attached profit and loss account                                                                                    



  6- Earnings per share                                                                                               

  Consolidated                                                                                                        
  Consolidated earnings per share figures are calculated by dividing the profit attributable to the shareholders by   
  the weighted average number of shares in issue. For 2002 profits of L.E 32,598,536 (2001:L.E.20,449,107)by            
  20,000,000 shares.                                                                                                  


  Holding company                                                                                                     
  Earnings per share figures are calculated by dividing the profit attributable to the shareholders by the weighted   
  average number of shares in issue. For 2002 profits of L.E 9,340,264 (2001:L.E.7,901,352) by                          
  20,000,000 shares for two years.                                                                                    
 

                                                                                                                      
  PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E                                                                        
  Notes to the consolidated financial statements                                                                      


  7- Tangible Assets                                                                                                    
     Consolidated                                                                                                       
                               Land &        Machinery     Vehicles      Furniture &    Payments Account         Total 
                            Buildings      Equipment &                        office     & Assets in the              
                                                 Tools                     equipment           course of              
                                                                                           Construction               
  2002                             LE               LE           LE               LE                  LE            LE
  Cost                                                                                                 
               
  1 July 2002             102,271,803       73,293,664   11,214,625        8,904,530          33,728,731   229,413,353
  Addition /                        -                -            -               65           2,700,615     2,700,680
  Transfers                                                                                                           
  Disposals                         -        (213,200)            -                -                   -     (213,200)
  30 September 2002       102,271,803       73,080,464   11,214,625        8,904,595          36,429,346   231,900,833
  Accumulated                                                                                                         
  Depreciation                                                                                                        
  1 July 2002               8,218,229       23,984,502    6,368,346        4,137,295                   -    42,708,372
  Depreciation                391,440          852,067      372,765          174,044                   -     1,790,316
  Charge                                                                                                              
  Disposals                         -        (213,200)            -                -                   -     (213,200)
  30 September 2002         8,609,669       24,623,369    6,741,111        4,311,339                   -    44,285,488
  NBV @ 30                 93,662,134       48,457,095    4,473,514        4,593,256          36,429,346   187,615,345
  September 2002                                                                                                      
  NBV @ 30 June            94,053,573       49,309,162    4,846,279        4,767,235          33,728,731   186,704,980
  2002                                                                                                                



  The Holding Company                                                                                                   
  
                               Land &        Machinery     Vehicles      Furniture &    Payments Account         Total 
                            Buildings      Equipment &                        office     & Assets in the              
                                                 Tools                     equipment           course of              
                                                                                            Construction               
  2002                             LE               LE           LE               LE                  LE            LE
  Cost                                                                                                                
  1 July 2002              19,254,071       32,653,954    7,227,668        5,349,773           1,703,080    66,188,546
  Addition /                        -                -            -                -           (104,417)     (104,417)
  Transfers                                                                                                           
  Disposals                         -        (213,200)            -                -                   -     (213,200)
  30 September 2002        19,254,071       32,440,754    7,227,668        5,349,773           1,598,663    65,870,929
  Accumulated                                                                                                         
  Depreciation                                                                                                        
  1 July 2002               6,948,144       21,017,826    5,647,415        3,739,903                   -    37,353,288
  Depreciation                 37,124          309,149      173,417           85,200                   -       604,890
  Charge                                                                                                              
  Disposals                         -        (213,200)            -                -                   -     (213,200)
  30 September 2002         6,985,268       21,113,775    5,820,832        3,825,103                   -    37,744,978
  NBV @ 30                 12,268,803       11,326,979    1,406,836        1,524,670           1,598,663    28,125,951
  September 2002                                                                                                      
  NBV @ 30 June            12,404,927       11,636,127    1,580,253        1,609,870           1,703,080    28,934,257
  2002                                                                                                                
                                                                                                                      
                                                                                                                      
 

                                                                                                                      
  PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E                                                                        
  Notes to the consolidated financial statements                                                                        
                                 
                                       Consolidated                                     Holding company          
                                September 2002      June 2002           September 2002                    June 2002 
                                     L.E               L.E                    L.E                            L .E.      
              
  8- Investments in subsidiary                                                                                          
     companies                                                                                                          

  El-Obour for Paints and Chemicals   -                 -                 99,950,000                      99,950,000 
  Industries Company                                                                                                  
                                                                                                                      

  9- Other investments                                                                                                  
      

  Government                       774,906           774,906                 774,906                         774,906    
  Bonds via                                                                                                           
  National                                                                                                            
  Investment Bank                                                                                                     


  10- Know how                                                                                                        

  Representing the payment made to( ICI) company to                                                                   
  get its paints formula.                                                                                             


  11- Inventories                                                                                                     

  Raw materials,                61,681,062        55,236,993              38,659,730                      35,467,442    
  packaging                                                                                                           
  materials and                                                                                                       
  spare parts                                                                                                         

  Work in progress               1,461,972         1,461,972               1,458,792                       1,458,792    
            
  Finished                      11,026,822        14,008,003               4,708,376                       4,221,391    
  products                                                                                                            

  Scraps                            81,192           101,445                  59,860                          64,806    
  Inventories for                1,182,848         1,182,848               1,182,848                       1,182,848    
  the purpose of                                                                                                      
  resale                                                                                                              

  Total                         75,433,896        71,991,261              46,069,606                      42,395,279    
           

  The above figures are shown net of provisions for slow moving and obsolete items amounting to LE 3,826,007.           
                                                                                              
  12- Debtors                                                                                                         

  Letters of                    13,646,065         4,630,984               8,448,547                       3,045,004    
  credit                                                                                                              
  Accounts &                   133,485,440       128,220,713              74,178,233                      72,368,138    
  notes                                                                                                               
  receivable *                                                                                                        
  Accrued income                 4,207,619         5,910,052              38,190,619                       39,893,052   
  Suppliers debit                2,737,810         2,849,387               2,429,170                        2,513,943   
  balances                                                                                                            
  Other debit                   20,316,665        19,176,958              18,461,439                       17,898,222   
  balances                                                                                                            
  Amounts owing                      -                 -                  62,713,559                       80,083,931   
  from subsidiary                                                                                                     
  company                                                                                                             
                               174,393,599       160,788,094             204,421,567                      215,802,290   
           
  Provision for                (22,933,258)      (22,933,258)            (14,933,258)                     (14,933,258)  
  doubtful debts                                                                                                      
                               151,460,341       137,854,836             189,488,309                      200,869,032   
           
  *Includes notes receivable due within more than one year                                                              
                                        
 

                                                                                                                      
  PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E                                                                        
  Notes to the Consolidated financial statements                                                                      
                                                              Consolidated                     Holding company       
                                                     September 2002    June 2002      September 2002        June 2002 
                                                                L.E          L.E                 L.E             L.E.   
    
  13- Cash and cash equivalents                                                                                   

  Cash on hand                                            1,342,922        1,400             784,433            1,400   
  Current accounts                                        7,393,030    4,324,432           1,065,946        3,225,365   
  Time deposits(see note 14)                            119,181,355  189,746,453         109,577,314      179,676,233 
  Checks under collection                                    -         4,621,868               -            4,149,879   

                                                        127,917,307  198,694,153         111,427,693      187,052,877

  14- Bank overdraft                                                                                                  

  Bank overdrafts are secured by time deposits amounting LE 23,189 million.                                             
                                          

  15- Creditors                                                                                                       

  Accounts and notes payable                             26,880,317    35,402,506             17,633,986    11,967,461
  Advance receipts from customers                         4,521,783     1,884,178              2,470,012     1,715,018
  Accrued expenses                                        2,481,393     4,976,445              2,232,176     4,646,045
  Employees share in profit                               8,130,608     6,239,747              7,568,108     5,789,747
  Directors bonuses                                         668,750       535,000                500,000       400,000
  Other employees benefits                                4,534,757     4,602,691              4,534,757     4,602,691
  Fixed assets creditors                                    992,333     2,642,814                498,931       615,704
  Other creditors                                         9,795,641     9,848,665              6,481,389     6,263,954
                                                         58,005,582    66,132,046             41,919,359    36,000,620


  16- Provisions                                                                                                      

  Tax provision                                           8,059,678     8,059,677              8,059,678     8,059,677
  Other provisions                                       10,671,938    10,671,938             10,171,938    10,171,938
                                                         18,731,616    18,731,615             18,231,616    18,231,615


  17- Share Capital                                                                                                   

  Authorized                                            200,000,000   200,000,000            200,000,000   200,000,000
  Issued and fully paid                                 200,000,000   200,000,000            200,000,000   200,000,000
  Nominal value per share                                        10            10                     10            10  
  Number of shares                                       20,000,000    20,000,000             20,000,000    20,000,000
                                                                                                                      


  PAINTS AND CHEMICAL INDUSTRIES COMPANY S.A.E                                                                        
  Notes to the Consolidated financial statements                                                                        
                                 

  18- Treasury shares                                                                                                 

  Represents 94,000 shares owned by ElObour for Paints and Chemicals's in Paints and Chemicals Industries Company.      
                                                                                          
                                                             Consolidated                       Holding company         
                                                  September 2002         June 2002    September 2002         June 2002 
                                                            L.E.              L.E.              L.E.              L.E.
  19- Reserves                                                                                                        

  Legal Reserve                                       77,877,933        72,899,630        74,867,013        71,741,382
  Other Reserves                                      78,043,358        77,972,636        78,043,358        77,972,636
  Retained Earnings                                   13,813,628        15,649,086        13,161,169        15,356,013
                                                     169,734,919       166,521,352       166,071,540       165,070,031
                                                                                                                      

  20- Long term liabilities                                                                                           

  Sales tax relating to fixed assets                   2,255,180         2,516,451                 -                 -
  Differed revenue                                       631,892           631,892                 -                 -
                                                       2,887,072         3,148,343                 -                 -


  21- Contingent liabilities                                                                                          

  Comprised of letters of credit amounting to L.E. 10.968 million .                                                     
                                         
                                                                                                                      

                                                 September 2002   September 2001    September 2002    September 2001  

  22- Net cash and cash equivalent                                                                                    

  Cash and cash equivalents                          127,917,307  226,876,490       111,427,693       217,637,044     
  Banks - overdraft                                 (23,189,354)  (104,283,082)     (1,021,597)       (104,283,082)   
                                                     104,727,953  122,593,408       110,406,096       113,353,962     



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