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Annual Financial Report

1st Oct 2009 10:45

RNS Number : 0380A

Paints and Chemical Industries Co.

01 October 2009

Paints and Chemical Industries Company "Pachin"

S.A.E.

The Consolidated Financial Statements and

Auditor's Report

For the Financial Year Ended June 30, 2009

INDEPENDENT AUDITOR'S REPORT

To : Shareholders of Paints and Chemical Industries Company "Pachin" (S.A.E)

We have audited the accompanying consolidated financial statements of Paints and Chemical Industries Company "Pachin" (S.A.E) , which are comprised the balance sheet as of June 30, 2009, and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Egyptian Accounting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Egyption Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the financial position of Paints and Chemical Industries Company "Pachin" (S.A.E) as of June 30, 2009, and of its financial performance and its cash flow for the year then ended in accordance with the Egyptian Accounting Standards.

Cairo, Sebtember 15, 2009

Kamel Magdy Saleh ACA

F.E.S.A.A. (R.A.A. 8510)

Paints and Chemical Industries Company "Pachin" S.A.E.
Consolidated Balance Sheet
As of June 30, 2009

	Notes	30/6/2009	30/6/2008	30/6/2009	30/6/2008
		Consolidated		Pachin
		EGP	EGP	EGP	EGP
Non - Current Assets
Property, plant and equipment (Net)	(2b, 4)	266 795 536	215 924 576	18 323 383	17 853 224
Projects under construction	(2c, 5)	15 587 298	48 658 552	786 059	1 888 146
Other Non - Current Assets
Investment in subsidiaries	(2f, 6)	--	--	253 246 488	232 387 000
Available for sale investments	(2f, 7)	774 906	774 906	774 906	774 906
Other long-term assets	(2d, 8)	16 016 000	16 016 000	16 016 000	16 016 000
Total Long-Term Assets		299 173 740	281 374 034	289 146 836	268 919 276
Current Assets
Inventories (net)	(2g, 9, 17b)	172 250 768	165 409 576	68 579 945	78 739 794
Letters of Credit		1 013 907	7 363 465	367 285	2 034 087
Other assets	(2r, 10)	534 765	--	534 765	--
Debtors and Accounts Receivable
Accounts receivable (Net)	(2h, 11, 17b)	38 158 944	36 603 351	27 504 783	30 990 136
Notes receivable (Net)	(12, 17b)	10 408 758	10 558 224	2 672 815	5 766 840
Due from subsidiaries	(13)	--	--	8 286 062	5 820 758
Other debit balances	(14)	55 528 144	51 202 108	137 947 058	139 070 065
Investments for trading purposes	(2i, 15)	45 537 368	75 772 987	3 234 918	317 727
Cash and cash equivalents	(2j, 16)	96 150 631	61 850 705	17 262 738	18 824 940
Total Current Assets		419 583 285	408 760 416	266 390 369	281 564 347
Current Liabilities
Provisions	(2K, 17 a)	38 543 924	38 928 731	35 540 820	35 836 819
Banks' overdraft	(18)	12 636 387	41 609 365	50 164	1 249 091
Accounts and notes payable	(2L, 19)	34 696 131	44 198 257	6 209 916	10 836 767
Short-term loans	(25)	16 000 000	--	--	--
Due to El-Obour for Paints	(20)	--	--	14 360 114	10 957 576
Other credit balances	(21)	54 568 990	40 469 301	16 570 629	17 939 534
Total Current Liabilities		156 445 432	165 205 654	72 731 643	76 819 787
Working Capital		263 137 853	243 554 762	193 658 726	204 744 560
Total Investment financed by :		562 311 593	524 928 796	482 805 562	473 663 836
Shareholders Equity
Paid-up capital	(22)	200 000 000	200 000 000	200 000 000	200 000 000
Reserves	(23)	201 754 501	191 420 791	175 558 975	170 627 297
Retained earnings		31 262 524	16 838 942	19 190 548	3 951 441
Profits for the year		91 041 360	107 917 721	87 760 875	98 633 564
Total Shareholders Equity		524 058 385	516 177 454	482 510 398	473 212 302
Minority Interest		2 324 314	182 398	--	--
Total Sharholders Equity and Minority Interest		526 382 699	516 359 852	482 510 398	473 212 302
Long-term liabilities	(24)	1 146 145	601 417	--	--
Long-term Loans	(25)	24 000 000	--	--	--
Deffered tax	(26)	10 782 749	7 967 527	295 164	451 534
Total Financing of Working Capital and Long-Term Assets		562 311 593	524 928 796	482 805 562	473 663 836
Total Financing of Working Capital and Long-Term Assets
- The accompanying notes from (1) to (30), form an integral part of the financial statements.

Paints and Chemical Industries Company "Pachin" S.A.E.
Consolidated Income Statement
From July 1, 2008 until June 30, 2009

		30/6/2009		30/6/2008	30/6/2009		30/6/2008
			Consolidated			Pachin
	Notes	EGP		EGP	EGP		EGP
Sales (net)	(3)	643 001 132		598 488 087	144 140 206		172 602 144
Cost of sales		(533 715 061)		(476 767 023)	(145 004 873)		(162 372 511)
Gross Profit		109 286 071		121 721 064	( 864 667)		10 229 633
General and administrative expenses		(16 192 252)		(14 318 041)	(7 027 529)		(7 333 014)
Provision used		( 518 139)		(4 400 000)	--		(1 000 000)
Allowance for attending the Board of Directors		( 452 300)		( 283 000)	( 167 500)		( 144 000)
Profit from Operations		92 123 380		102 720 023	(8 059 696)		1 752 619
Interest expenses		(8 255 834)		(2 824 249)	( 970 866)		( 926 661)
Other expenses		( 32 803)		--	--		--
Investment income in subsidiaries companies		--		--	93 953 000		94 952 500
Profit on sale of investments		2 203 968		1 539 861	466 753		814 302
Gain on revaluation of investments for trading purposes		2 524 544		1 734 075	15 380		178 086
Investment income		35 157		44 732	35 157		44 732
Interest income		890 261		2 990 966	224 861		956 007
Capital gain		1 184 464		1 828 114	397 464		231 700
Other income		2 106 001		1 261 553	1 863 023		1 810 816
Provisions no longer required		--		8 500 000	--		--
Currency evaluation differences		1 282 405		(3 579 048)	( 320 571)		( 977 987)
Profit before Taxes and Minority Interest		94 061 543		114 216 027	87 604 505		98 836 114
Income tax		( 264 521)		(1 060 898)	--		( 653 906)
Deferred tax	(26)	(2 815 222)		(5 184 883)	156 370		451 356
Profit after Tax and before Minority Interest		90 981 800		107 970 246	87 760 875		98 633 564
Minority interest		59 560		( 52 525)	--		--
Profit after Tax and Minority Interest		91 041 360		107 917 721	87 760 875		98 633 564

- The accompanying notes from (1) to (30), form an integral part of the financial statements.

Paint and Chemical Industires Company "Pachin" S.A.E.
Consolidated Cash Flows Statement
From July 1, 2008 till June 30, 2009

		30/06/2009	30/6/2008	30/06/2009	30/06/2008
		Consolidated		Pachin
	Notes	EGP	EGP	EGP	EGP
Cash Flows from Operating Activities
Net Profit before Taxes and Minoirty Interst		94 061 543	114 216 027	87 604 505	98 836 114

Adjustments to Reconcile Net Profit to Net Cash Provided from Operating Activities
Depreciation of fixed assets		12 328 884	11 753 265	2 225 644	2 122 870
Capital gain		(1 184 464)	(1 828 114)	( 15 380)	( 178 086)
Gain on revaluation of investments for trading purposes		(2 524 544)	(1 734 075)	( 397 464)	( 231 700)
Profit on the sale of investments		(2 203 968)	(1 539 861)	( 466 753)	( 814 302)
Provision utilized during the period		518 139	4 400 000	--	1 000 000
Provisions no longer required		--	(8 500 000)	--	--
Provision utilized		( 384 807)	(2 235 889)	( 295 999)	(1 547 194)
Operating Profit before Working Capital Changes		100 610 783	114 531 353	88 654 553	99 187 702

(Increase) decrease in receivables and other debit balances		(6 250 302)	16 436 279	4 089 431	(23 302 947)
Decrease (increase) in inventories and letter of credit		1 834 947	(7 608 350)	11 826 651	242 048
Increase (decrease) in creditors and other credit balances		6 098 553	10 962 790	(2 399 754)	2 940 400
Net Cash Provided from Operating Activities		102 293 981	134 322 072	102 170 81	79 067 203

Cash Flows from Investing Activities
Purchase of nvestments for trading purposes		(174 656 514)	(205 857 716)	(75 191 424)	(77 477 841)
Proceeds from the sale of investments for trading purposes		209 620 645	162 351 479	72 756 366	78 507 401
Purchase of fixed assets and other non-current assets		(31 144 375)	(65 166 256)	(2 971 227)	(2 653 917)
Proceeds from the sale of fixed assets		1 832 884	1 847 999	1 045 884	249 768
Purchase of investments in subsidiary (Pachin Libya)		--	--	(2 218 838)	--
Purchase of investments in subsidiary (Pachin for Inks)		--	--	(17 493 000)	(9 996 000)
Net Cash (used in) Provided from Investing Activities		5 652 640	(106 824 94)	(24 072 239)	(11 370 589)

Cash Flows from Financing Activities
( Payments) proceeds of banks - overdraft		(28 972 978)	33 613 045	(1 198 927)	( 562 191)
Proceeds from long-term loans		40 000 000	--	--	--
Dividends paid		(82 583 402)	(81 797 778)	(78 461 917)	(78 374 967)
Net Cash (used in) Financing Activities		(71 556 380)	(48 184 733)	(79 660 844)	(78 937 158)

Net change in cash and cash equivalents during the year		34 299 926	(23 760 395)	(1 562 202)	(11 240 544)
Net cash and cash equivalents at beginning of the year		61 850 705	85 611 100	18 824 940	30 065 484
Net cash and cash equivalents at end of the year	(16)	96 150 631	61 850 705	17 262 738	18 824 940

- The accompanying notes from (1) to (30), form an integral part of the financial statements.

Paints and Chemical Industries Company "Pachin" S.A.E.
Consolidated Statement of Changes in Shareholders' Equity
From July 1, 2008 till June 30, 2009


	Paid-up	Reserves	Retained	Profits for the	Minority Interest	Total
	Capital		Earnings	Year
	EGP	EGP	EGP	EGP	EGP	EGP
Balance as of June 30, 2007	200 000 000	182 311 140	6 824 029	100 884 170	168 045	490 187 384
Transferred to reserves	--	9 109 651	--	(9 109 651)	--	--
Transferred to retained earnings	--	--	10 014 913	(10 014 913)	--	--
Dividends for shareholders, employees, and Board of Directors	--	--	--	(81 759 606)	( 38 172)	(81 797 778)
Net profits as of June 30, 2008	--	--	--	107 917 721	52 525	107 970 246
Balance as of June 30, 2008	200 000 000	191 420 791	16 838 942	107 917 721	182 398	516 359 852
Minority interest for Pachin for Paints - Libya	--	--	--	--	2 244 326	2 244 326
Transferred to reserves	--	10 333 710	--	(10 333 710)	--	--
Transferred to retained earnings	--	--	14 423 582	(14 423 582)	--	--
Dividends for shareholders, employees, and Board of Directors	--	--	--	(83 160 429)	( 42 850)	(83 203 279)
Net profits as of June 30, 2009	--	--	--	91 041 360	( 59 560)	90 981 800
Balance as of June 30, 2008	200 000 000	201 754 501	31 262 524	91 041 360	2 324 314	526 382 699


- The accompanying notes from (1) to (30), form an integral part of the financial statements.

Paints and Chemical Industries Company "Pachin"

(S.A.E.)

Notes to the consolidated Financial Statements

As of June 30, 2009

1. The Group's Background

Paints and Chemical Industries Company "Pachin" (SAE)

The company was established according to the Ministerial Decree No. 751 for 1958. 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 York accordingly, the Holding Company's share was reduced to less than 50 %, and the company became subject to the Companies Law No. 159 for 1981 and its executive regulation. The Commercial Register was issued after this modification on October 15, 1997. On October 31, 2000, the Extraordinary General Assembly agreed 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 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 (SAE)

The company was established according to the General Authority for Investment and Free Zones Decree No. 78 for 1999 and Law No. 8 for 1997 and its executive regulation. The Company was registered at the Commercial Register on January 14, 1999. On September 19, 2006, the Extraordinary General Assembly agreed to amend Article No. (2) of the company's Articles of Incorporation by adding the trademark of "Pachin" to the Company's name. Therefore, the company's name became El Abour 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, to manufacture other chemical products and special packages for the company's products.

Pachin for Inks

The company was established according to the General Authority for Investment and Free Zones Decree No. 13623 for 2005, and Law No. 8 for 1997 and its executive regulation. The company was registered at the Commercial Register on April 27, 2005.

The company's objective is to manufacture and pack printing inks and related products and to manufacture other chemical products and special packages for the company's products.

Pachin for Paints and Chemical Industries Company

The company was established pursuant to a contract certified by the General Committee of Justice at the Arab Republic of Libya and according to the provisions of Law No. (5) for 1997 concerning investment of foreign capital and its executive regulation and amendments, and the decree of the General Committee's Treasurer No. 86 for 2006 concerning amending the executive regulation provisions for Law No. 5 for 1997.

The company's objective is to:

- Establish and operate a factory for manufacturing paintings and supplementary products with its various types, and other chemical materials and its packaging.

- Import various materials required for the project from abroad in the form of tools or equipments or in the form of spare parts, or the material required for operation such as the primary production material.

- Sell the project's products locally and abroad.

- Bring labor and foreign technical expertise required for the project.

- Open bank accounts locally and abroad and its management and the right to obtain loans and facilities.

- Transfer the profits.

- Own real-estate and deliverables required for the activity.

2. Significant Accounting Policies The consolidated financial statements have been prepared according to the Egyptian Accounting Standards and applicable laws and regulations. The Egyptian Accounting Standards require referral to the International Financial Reporting Standards "IFRS", when no Egyptian Accounting Standard or legal requirement exist to address certain types of transactions and their treatment.

The principal accounting policies adopted in the preparation of the financial statements are set out below:

a. Basis for Preparing the Consolidated Financial Statements

The consolidated financial statements incorporate the financial statements of the subsidiary companies under the control of the Holding Company (Paints and Chemical Industries Company “Pachin”(SAE). The subsidiaries are represented in El-Obour for Paints and Chemical Industries Company where the Holding Company's share is 99.95%, and Pachin for Inks where the Holding Company's share is 99.96%, and Pachin for Paints and Chemical Industries Company where the Holding Company's share is 50%.

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-company transactions are eliminated.

·; The cost method is used to account for the ownership in subsidiaries.

·; The consolidated income statement includes the results of operation for all subsidiary companies starting from the date of ownership, and the minority interest is eliminated.

b. Property, Plant and Equipment

Property, plant and equipment are recorded at historical cost and are depreciated over their estimated useful life on a straight-line basis at the rates stated below:

Type of Asset	Depreciation Rate
Buildings 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 impairment loss. Costs include all costs associated with acquiring the asset and bringing it to ready for use condition. The depreciation of these assets follows the same basis of similar fixed assets. The projects under construction are charged with the costs of new projects, and the purchased equipments that are not used yet. The amounts paid as advances for purchasing property, plant and equipment are recorded as projects under construction. When the asset is received and is ready for use, it is transferred to fixed asset and is depreciated on the same basis 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 case that there are indications that the recoverable amounts of these assets is lower than their book value, then the carrying value of assets will be reduced to its recoverable amount, and the impairment loss is recognized immediately and charged to the income statement.

e. Impairment of Assets

On the balance sheet date, the book value of assets owned by the company is reviewed (except for inventory), and in the case that there are indications that the recoverable amounts of these assets is lower than their book value, then the carrying value of assets will be reduced to its recoverable amount, and an impairment loss is recognized immediately and charged to the income statement.

On the balance sheet date, the company's management (periodically) revaluates, the existence of indications of impairment in the losses value, which were previously recognized resulting from the impairment of the assets' book value in the previous periods. In case of existence of these indications, this impairment is revaluated and reflected so that the book value of these assets does not exceed the original net book value before recording the impairment loss.

f. Investments in Subsidiaries and Available for Sale Investments

Investments in subsidiary companies and long-term investments are stated at cost. The company assesses whether there is any indication that the value of each investment is impaired. If such indication exists, the value of the related investment is reduced by the impairment loss and this loss is charged to the income statement, for each investment separately. The available for sale financial investments, with no reliable fair value, are recognized according to all its related costs, less the impairment losses of its value. 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 completed stages in addition to the material, direct wages costs of the completed production 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 appropriate allowances for estimated irrecoverable amounts. Allowances for accounts receivable are formed when there is evidence that the company will not be able to recover the amounts due according to the original terms of receivables. The provision represents the difference between the book value and the recoverable as stated in the expected cash flows.

i. Investments for Trading: Investments for trading which are issued by banks are stated at fair value, representing its recoverable value as of evaluation date. The resulting differences are stated in the income statement, while the investment certificates are evaluated at their nominal value.

j. Cash and Cash Equivalents Cash and cash equivalents represent cash on hand and at banks.

k. Provisions Provisions are recognized when the company has a present obligation (legal or constructive) as a result of past events and that it is probable that an outflow of economic resources will be required to settle the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date. When the effect of the time value of money is material, the amount of a provision shall be the present value of expected expenditures, required to settle the obligation.

l. Accounts Payable Accounts payable are recorded at their fair value.

m. Foreign Currencies Transactions The company maintains its accounts in Egyptian pound. Transactions denominated in foreign currencies are recorded using the exchange rates prevailing at the transaction date. On the financial statements date, balances of monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate prevailing on that date. Differences arising from revaluation are stated in the income statement.

n. Revenue Recognition - Revenue is recognized on an accrual basis upon delivery of goods to customers and the issuance of the sales invoice. - Interest income is recognized on an accrual basis.

o. Borrowing Cost Borrowing cost is recorded in the income statement in the period it was incurred as financing expenses.

p. Cash Flows Statement The cash flows statement is prepared using the indirect method. For the purpose of preparing the cash flows statement, cash and cash equivalents are comprised of 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 regulations in Egypt; a provision is formed for tax liabilities after performing sufficient studies and in light of the tax assessments. Deferred tax is recognized on the temporary differences between the assets and liabilities tax bases set by the new Egyptian tax law, and their reported amounts per the accounting principles used in the preparation of the financial statements. Accordingly, the income statement for the reporting period is to be charged by the tax burden represented by the current tax (calculated on taxable profit based on local tax laws, regulations, instructions and tax rates ruling at the date of the financial statements), as well as the deferred tax. Generally, the recognized deferred tax liabilities on taxable temporary differences are reported as long-term liabilities, whereas deferred tax assets reported as long-term assets shall not be recognized for deductible temporary differences except to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized or there is convincing evidence that sufficient taxable profit will be available in the future.

r. Non-Current Held for Sale Assets Non-current assets (or the assets to be disposed) are stated as held for sale if its book value is expected to be recovered on the basis of sale transaction and not on the basis of its use. These assets stated as held for sale are measured at the least of the book value or the fair value less sale costs. The impairment losses are stated at the income statement upon the initial recognition of the held for sale assets.

s. Financial Instruments A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. Financial assets and liabilities are recognized on the company's balance sheet when the company becomes a party to the contractual rights and obligations of the financial instrument.

·; Financial Assets: (are represented in cash on hand and at banks, accounts and notes receivable, and certain other debit balances).

·; Financial Liabilities: (are represented in banks overdraft, accounts and notes payable and certain other credit balances).

t. Use of Estimates The preparation of financial statements in conformity with the Egyptian Accounting Standards requires the company's management to make estimates and assumptions about 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 and other factors that are considered to be relevant. Actual results may differ from those estimates used in the preparation of the financial statements. The estimates and underlying assumptions are reviewed on an ongoing basis.

3. Sales Analysis

	Consolidated		Pachin
	Quantity (Ton)	Amount'000	Quantity (Ton)	Amount'000
Paints	70 163	588 301	9 849	568 111
Inks	2 253	50 693	1 298	28 565
Animal extract product	842	4 007	842	4 007
		643 001		144 140

4. Property, Plant and Equipments

Consolidated

	Land	Buildings	Machinery and Equipments	Vehicles	Tools	Furniture and Office Equipments	Total
	EGP	EGP	EGP	EGP	EGP	EGP	EGP
Cost
July 1, 2008	40 149 216	98 480 339	129 155 326	15 168 517	14 762 121	13 577 732	311 293 251
Additions	483 875	45 905 826	9 761 481	3 059 653	2 715 325	2 289 468	64 215 628
Disposals	(14 326)	(235 265)	(2 037 275)	(284 452)	(28 378)	(25 041)	(2 624 737)
Cost as of June 30, 2009	40 618 765	144 150 900	136 879 532	17 943 718	17 449 068	15 842 159	372 884 142
Accumulated Depreciation
July 1, 2008	--	(20 264 140)	(48 394 651)	(10 714 158)	(7 269 716)	(8 726 009)	(95 368 674)
Depreciation charge	--	(2 952 062)	(5 677 463)	(1 732 197)	(937 370)	(1 029 792)	(12 328 884)
Disposals	--	223 762	1 059 274	282 533	18 809	24 574	1 608 952
As of June 30, 2009	--	(22 992 440)	(53 012 840)	(12 163 822)	(8 188 277)	(9 731 227)	(106 088 606)
NBV @ June 30, 2009	40 618 766	121 051 710	83 973 442	5 779 896	9 260 791	6 110 932	266 795 536
NBV @ June 30, 2008	40 149 216	78 216 199	80 760 675	4 454 359	7 492 405	4 851 723	215 924 576

Pachin Company

	Land	Building	Machinery and Equipments	Vehicles	Tools	Furniture & Office Equipments	Total
	EGP	EGP	EGP	EGP	EGP	EGP	EGP
Cost
July 1, 2008	173 143	19 788 333	29 417 794	6 096 592	5 563 832	6 813 420	67 853 114
Additions	--	--	2 668 824	426 286	353 337	263 141	3 711 588
Disposals	14 326))	(235 265)	(2 037 275)	(284 452)	(28 378)	(21 941	(2 621 637)
Cost of June 30, 2009	158 817	19 533 068	30 049 343	6 238 426	5 888 791	7 054 620	68 943 065
Accumulated Depreciation
July 1, 2008	--	( 10 024 059)	( 25 576 203)	( 5 308 928)	( 3 698 530)	( 5 392 170)	( 49 999 890)
Depreciation charge	--	(663 652)	(771 464)	( 287 533)	(237 903)	(265 092)	( 2 225 644)
Disposals	--	223 762	1 059 274	282 533	18 809	21 474	1 605 852
As of June 30, 2009	--	( 10 463 949)	( 25 288 393)	( 5 313 928)	( 3 917 624)	( 5 635 788)	( 50 619 682)
NBV @ June 30, 2009	158 817	9 089 119	4 760 950	924 498	1 971 167	1 418 832	18 323 383
NBV @ June 30, 2008	173 143	9 764 274	3 841 591	787 664	1 865 302	1 421 250	17 853 224

5. Projects under Construction

	Consolidated		Pachin
	30/6/2009	30/6/2008		30/6/2009	30/6/2008
	EGP	EGP		EGP	EGP
Machinery and equipments	3 711 432	3 503 813		986 697	767 335
Buildings	6 172 845	35 171 400		--	--
Tools and equipments	15 681	109 259		681 15	--
Software and programs	3 147 496	7 162 513		44 500	44500
Assets under construction	13 047 454	45 946 985		167 758	811 835
Letter of credit (Fixed Assets)	27 892	717 749		--	717 749
Capital expenditure	2 511 952	1 993 818		892 27	358 562
Balance	15 587 298	48 658 552		059 786	1 888 146

6. Investment in Subsidiaries

Company Name	Issued Capital EGP	Currency	Ownership %	Ownership Amount EGP	Paid %	30/6/2009 Paid Amount EGP	30/6/2008 Paid Amount EGP
Obour for Paints and Chemical Industries	200 000 000	EGP	99. 95%	199 900 000	100%	199 900 000	199 900 000
Pachin for Inks	50 000 000	EGP	99. 96%	49 980 000	100%	49 980 000	32 487 000
Pachin Libya	2 000 000	LYD	50 %	1 000 000	75 %	3 366 488	--
						253 246 488	232 387 000

These companies are not listed in the stock market.

7. Available for Sale Investments

Consolidated

Pachin

30/6/2009

EGP

30/6/2008

EGP

30/6/2009

EGP

30/6/2008

EGP

Governmental bonds at the National Investment Bank

906 774

774 906

906 774

774 906

The available for sale investment include also investment in Sefca amounting to EGP 1.5 Million and this investment is fully impaired due to that the company is under liquidation.

8. Other Long-Term Assets

Other long-term assets as of June 30, 2009 amounting to EGP 16 016 000 is Equivalent to Euro 2 200 000 represents the amount paid to the Danish Company Deroup A/S for the final cession of the trademarks according to the contract dated December 4, 2006.

9. Inventories

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Raw materials and packaging	126 310 384	125 802 830	272 099 53	60 996 178
Less: Provision for scrap materials	(264 130)	(500 396)	(130 264)	( 500 396)
	126 046 254	125 302 434	142 835 52	60 495 782
Finished products	31 952 406	25 448 613	580 434 9	11 039 635
Less: Provision for finished goods	(798 649)	(798 649)	(798 649)	(798 649)
	31 153 757	24 649 964	931 635 8	10 240 986
Fuel and spare parts	8 030 322	7 774 437	525 127 4	4 234 626
Less: Provision for spare parts	(481 533)	(481 533)	(481 533)	(481 533)
	7 548 789	7 292 904	992 645 3	3 753 093
Work in-progress	5 409 996	6 016 178	300 621 1	2 340 464
Consignment goods with others	862 040	1 301 893	040 862	1 301 893
Inventories for resale purpose	684 302	299 548	302 684	299 548
Scrap	545 630	546 655	238 295	308 028
	172 250 768	165 409 576	945 579 68	78 739 794

10. Other Assets

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Factory at old Cairo	543 765	--	543 765	--
	543 765	--	543 765	--

The company's management decided to dispose of some assets that are not used in the main company's operations. Therefore, the company started to sell these assets and it is expected to finalize this sale during the period of twelve month. These assets to be disposed are represented by the factory at old Cairo with an area of 37 935 q2 including area of 267 Square a seized by hand.

11. Accounts Receivable (net)

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Accounts receivable	49 509 844	47 486 112	683 255 35	38 741 036
Less:
Provision for doubtful debts	(11 350 900)	(10 882 761) 761)	(900 750 7)	(7 750 900)
	38 158 944	36 603 351	783 504 27	30 990 136

12. Notes Receivable (Net)

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Notes receivable	11 896 758	11 996 224	3 110 815	6 204 840
Less:
Provision for doubtful debts	(1 488 000)	(1 438 000)	(000 438)	(438 000)
	10 408 758	10 558 224	2 672 815	5 766 840

13. Due from Subsidiary (Pachin for Inks)

The balance of this account amounted to EGP 8 286 062, represents the amount stated in the independent balance sheet of paints and chemical industries company (Pachin), which was paid by Pachin on behalf of Pachin for inks company.

14. Other Debit Balances

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Accrued income	89 194	299 370	809 985 93	95 100 698
Advanced to purchase investments *	--	1 147 650	--	1 147 650
Suppliers debit balances	4 333 541	2 930 257	252 752 1	1 567 929
Employees loans	750 790	804 711	790 750	804 711
Deposits with others	2 723 658	1 806 099	799 887 1	958 997
Corporate tax**	28 860 101	28 882 618	101 860 28	28 882 618
Withholding tax	7 397 719	7 409 913	429 220 7	7 232 623
Sales tax	2 285 207	--	--	--
Other debit balances	9 087 934	7 921 490	878 489 3	3 374 839
	55 528 144	51 202 108	058 947 137	139 070 065

* This balance represents advanced payments to purchase investments in Pachin - Libya for Paints and Chemical Industries (under construction) with a percentage of 25% of the contribution value amounting to a million Libyan Dinar (50%) which was paid during the month June 2008.

** This balance represents the amount of EGP 12.447 million, which represents 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. 30), and the amount of EGP 16.413 million, paid on the due tax account for the years 1998 - 2001.

15. Investments for Trading Purposes

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Investment Certificates	45 537 368	75 772 987	3 234 918	317 727
	45 537 368	75 772 987	3 234 918	317 727

16. Cash and Cash Equivalents

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Banks current accounts	36 782 392	13 083 020	688 533 9	3 596 031
Banks time deposits	54 325 628	42 046 799	914 916 6	12 676 673
Checks under collection*	5 042 611	6 720 886	136 812	2 552 236
	96 150 631	61 850 705	17 262 738	18 824 940

* Represents outstanding checks with due dates before 30/6/2009, collected after this date.

17. Provisions

	Balance as of 1/7/2008	Provision Established during the Period	Provision No Longer Required during the Period	Provision Utilized during the Period	Balance as of 30/6/2009
	EGP	EGP	EGP	EGP	EGP
A- Provisions-Current Liabilities
Provision for tax disputes	32 149 283	--	--	--	32 149 283
Provision for claims	6 196 743	--	--	(384 807)	5 811 936
Other provisions	582 705	--	--	--	582 705
Total provisions (current liabilities)	38 928 731	--	--	(384 807)	38 543 924
B- Provisions-Current Assets
Impairment in accounts receivable	10 882 761	468 139	--	--	11 350 900
Impairment in notes receivable	1 438 000	50 000	--	--	1 488 000
Raw material provision	500 396	--	--	(236 266)	264 130
Finished goods provision	798 649	--	--	--	798 649
Spare parts provision	481 533	--	--	--	481 533
	53 030 070	518 139	--	(621 073)	52 927 136

18. Banks' Overdraft

Banks' overdraft represent credit facilities that the group has obtained from various banks as of June 30, 2008 amounting to EGP 12 636 387 These facilities are secured by time deposits.

19. Accounts and Notes Payable

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Accounts payable	33 124 560	42 549 461	6 156 059	10 534 572
Notes payable	1 571 571	1 648 796	53 857	302 195
	34 696 131	44 198 257	6 209 916	10 836 767

20. Due to Subsidiary (El-Obour for Paints and Chemicals Industries Company)

The balance of this account amounting to EGP 14 360 114, represents the operations results between Paints and Chemicals Industries Company (Pachin) and El Obour for pint and chemicals industries Company.

21. Other Credit Balances

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Accrued expenses	7 904 075	9 125 517	576 724 6	7 785 155
Accounts receivable - credit balances	21 632 554	10 056 260	384 780 1	2 454 789
Sales tax	8 672 711	2 862 528	268 029 2	1 057 193
Fixed assets - creditors	1 731 837	3 295 574	244 45	31 594
Deposit to others	6 359 651	5 366 255	536 317 1	915 840
Employees share in profits	2 100 651	1 523 624	104 43	42 242
Withholding tax	307 280	404 159	314 102	147 399
Current portion of long-term liabilities	181 060	352 172	--	--
Salary tax	279 097	130 984	097 279	130 984
Other employees benefits	4 082 371	4 082 371	371 082 4	4 082 371
Income tax - Tax Authority	264 521	1 060 898	--	653 906
Other credit balances	1 053 182	2 208 959	735 166	638 061
	54 568 990	40 469 301	629 570 16	17 939 534

22. Paid-up Capital

The company's authorized capital amounted to EGP 200 million, and the issued and paid-up capital amounted to EGP 200 million, distributed among 20 million shares with par value of EGP 10 each.

23. Reserves

	Consolidated		Pachin
	30/6/2009	30/6/2008	30/6/2009	30/6/2008
	EGP	EGP	EGP	EGP
Legal reserve	123 145 688	112 811 978	96 950 162	92 018 484
Reserve invested in treasury bonds	774 905	774 905	774 905	774 905
Fixed assets reserve	6 290 899	6 290 899	6 290 899	6 290 899
Other reserves	71 543 009	71 543 009	71 543 009	71 543 009
	201 754 501	191 420 791	975 558 175	170 627 297

24. Long-Term Liabilities

The long-term liabilities are represented as the deferred revenue related to El Obour for Paints and Chemicals industries company granted assets which will be recorded revenue over the estimated useful lives of those assets with an amount of EGP 1 146 145.

25. Long-Term Loans

Pachin for Inks Company obtained a loan amounting to EGP 40 million during the month of January 2009 from the Egyptian Industrial Development and Labor Bank guaranteed jointly by the Paints and Chemicals Industries Company (Pachin) and El Obour for Paints and Chemical Industries Company. Pachin for Inks Company is obligated not to pledge any of its tools or buildings to any other banks.

The company is obligated to pay the financing over five semi-annual installments amounting to EGP 8 million. The first installment is due on December 31, 2009 (after a grace period of 6 month) in the amount of EGP 9.444 million after adding interest and commission at the rate of the loan corridor - 1.5% annually, amounting to 13% annually and commission at the rate of .5% monthly. The last installment is due on December 31, 2011.

		June 30, 2009
		EGP
Short-term portion		16 000 000
Long-term portion		24 000 000
		40 000 000

26. Deferred tax

The balance of this account amounted to EGP 10 782 749 represent in Deferred tax liabilities resulting from the temporary differences between the net book value of fixed assets based on tax basis, and their net book value based on accounting basis.

	30/6/2009	30/6/2008
	EGP	EGP
Opening balance	7 967 527	2 782 644
During the year	2 815 222	5 184 883
Balance as of end of the year	10 782 749	7 967 527

27. Contingent Liabilities

The uncovered portion of the Letters of Credit amounted to EGP 4.170 million as of June 30, 2009.

28. Capital Commitments

The capital commitments as of June 30, 2009 are represented in the unpaid portion of the company's share in Pachin - Libya for Paints and Chemical Industries amounting to 250 000 Libyan Dinar.

29. Managing the Risks Related to Financial Instruments

a. Foreign Exchange Risk

Foreign currency risk represents the change in currency rates which affects the receipts, disbursements and the translation of assets and liabilities in foreign currencies. The company exerts all efforts to avoid having a net foreign currency 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 Rate Risk

This risk represents the changing of interest rates which affect the operations results. The company's management exerts all efforts to obtain the best conditions in the market for banking facilities and performs periodic review on the interest rates.

d. Fair Value

30. Tax Position

Paints and Chemicals Industries Company

First: Corporate Tax

·; The company is subject to corporate tax according to Law No. 91 for 2005. The company submits its tax returns on due time and pays the due taxes. The Tax Authority inspected the company's books and the taxes were settled and paid for the years until June 30, 1993.

·; The Tax Authority inspected and assessed the company's books for years 1993/1994 until 1996/1997 and the disputed points were transferred to court. The North Cairo Preliminary Court issued it ruling for this period and the tax bases were reduced according to the issued ruling. The company paid the due tax and is currently discussion the delay penalty amounting to EGP 12 250 480 with the Tax Authority.

·; The Tax Authority inspected the company's books for year 1997/1998 until 2000/2001. The company objected the claim resulting from the inspection and the disputed points were transferred to the Internal Committee. The tax claims amounted to EGP 26.5 million. The disputed points were transferred to the Appeal Committee and the final resolution has not been determined yet.

·; The Tax Authority inspected and assessed the company's books for years 2001/2002 until 2004/2005 and the company received a tax claim amounting to EGP 89 568 684 which the company objected, and the disputed points were transferred to the Internal Committee. The management believes that these claims will be greatly reduced.

·; For years 2005/1006 until 2006/2007, the Tax Authority is currently determining the inspection time for the period from 2005 until 2007.

Second: Sales Tax

The Tax Authority inspected and assessed the company's books until June 30, 2006. Third: Sales Tax The Tax Authority inspected and assessed the company's books until 2004

Fourth: Sales Tax

The Tax Authority inspected and assessed the company's books from the inception date until 31/8/1998. The Tax Authority inspected and assessed the company's books for the period from 1/9/1998 until 30/4/2002. The inspection resulted in due tax in the amount of EGP 175 307. The company did not pay this amount since there is due tax in favor of the company amounting to EGP 196 614. This amount represents the value of stamp tax for which a final ruling was issued in the company's favor. This amount is currently being settled with the Tax Authority. The Tax Authority inspected the period from 1/5/2002 until 31/3/2005 and the inspection resulted in due tax in the amount of EGP 127 027. The Tax Authority inspected the period from 1/4/2005 until 31/7/2006 and the inspection resulted in due tax in the amount of EGP 210 468.These items were discussed at the Internal Committee and the tax was reduced by the amount of EGP 196 032.

El-Obour for Paints and Chemicals Industries Company

The company is enjoying a tax exemption starting from the first year of operation according to Law No. 8 for 1997 and its executive regulation. This exemption will end on June 30, 2011.

The Tax Authority inspected the company's books for sales tax until June 30, 2006 and the due tax was paid.

The company's books where not inspected for salary tax yet.

Pachin for Inks

First: Corporate Tax

The company is subject to the provisions of Law No. 8 for 1997 and its executive regulation. The company started its operation on May 8, 2008, and the company was not inspected by the Tax Authority yet.

Second: Salary Tax

Salary taxes are submitted to the Tax Authority on due dates, and the company was not inspected by the Tax Authority yet.

Third: Sales Tax

Tax returns are submitted on a monthly basis, and the company was not inspected by the Tax Authority yet.

Chief financial officer

Accountant: Ashraf Moustafa El Kahky

Chairman and Managing Director

Eng.: Sherif Mahmoud Ahmed Shawky

This information is provided by RNS

The company news service from the London Stock Exchange

END

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