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LttttLII,t,I,LIrILtL
MOSTAFA SHAWKI& CO
EGYPTIAN TRANSPORTand
COMMERCIAL SERVICES CO
(EGYTRANS)s.A.E.
CONSOLDATED FINAI\CIAL STATEMENTS TOGETHERWITII ATIDITOR'S REPORT
ron tru Yrcm nxlno oncnwnn st"'. zooe
LttL M AZ A R S
MAZARS
MOSTAFA SHAWKI & CO
Translation of auditor's reportoriginallv issued in Arabic
AUDITOR'S REPORT
To the shareholders ofEgyptian Transport & Commercial Services Co.
(Egytrans) - S.A.E.
We have audited the consolidated financial statements of Egyptian Transport and CommercialServices Co. (Egytrans) - S.A.E. , which comprise the consolidated balance sheet as ofDecember 31tt,2006, and the consolidated statements of income, changes in shareholder's equityand cash flow for the year then ended. These consolidated financial statements are theresponsibility of the company's management. Our responsibility is to express an opinion onthese consolidated financial statements based on our audit.
We conducted our audit in accordance with Egyptian Standards on Auditing and in light ofgoverning laws. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatements. An auditincludes examining, on a test basis, evidence supporting the amounts and disclosures in theconsolidated financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overallconsolidated financial statement presentation. We believe that our audit provides a reasonablebasis for our opinion.
Consolidated financial statements prepared according to company's separate financial statementswhich issued with qualified auditor report dated April 30tn ,2007 also the financial statement forEgyptian Transportation Logistics Co. (ETAL) which audited by another auditor who issued hisreport in March stn ,2007 .
In our opinion, except for the matters stated in the preceding paragraph, the consolidatedfinancial statements referred to above present fairly, in all material respects, the consolidatedfinancial position of the company as of December 31, 2006, the results of its operations, changesin shareholder's equity and cash flow for the year then ended, in conformity with Egyptian
7 8 A a o r r S n r n u A n e r S r n e e r , B o n c E L S A L A M , C L y M , P . O . B o x 3 6 0 S r D r G A B E R , A L E X A N D R r A 2 l 4 l I , E c y p rT r r : ( 0 3 ) 5 8 3 I 7 6 4 - 5 8 3
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Accounting Standards, f governing laws.
August 5't,2007.
#l-t%
Translation of financial statementsorisinallv issued in Arabic
Egyptian Transport and Commercial Services Co.(Egytrans)
S.A.E.
Consolidated balance sheet as of December 31't. 2006
(Amounts expressed in Egyptian Pound)
Note
Long term assetsFixed assets, (net)Projects under constructionDeferred costLong term investmentsGoodwill
Total long term assetsCurrent assetsInventoryDebtors and other debit balancesClearance operations in processDebit current accountsCash on hand and at banks
Total current assets
Current liabilitiesProvisionsBanks overdraftShort term loans installmentsCredit current accountsCreditors and other credit balances
Total current liabilitiesWorking capitalTotal investment
Shareholders' equitvIssued and subscribed capitalLegal reserveCapital reserveRetained earnings (loss)Net (loss) profit for the year
Total shareholders' equitYMinority interest
Long term liabilitiesLong term loansDeferred tax liabilities
Total long term liabilitiesTotal working caPital and
long term assets finance
(2d,3)(2f,4)(2e)
(2h,5)(2b,6)
(e)(10)
(2i,rr)(r2)
(1 3)(14)
(1 s)(2k)
(17)(2n)
18 t24 920 21 664 248
14 075 6161 026 580
939 787r 854 177
228 760
32 999 97033 944 842
8 t27 519t9 327 1973 003 010
2 150 00031 046 8464 400 0006 446 5513 505 028
48 750 000| 233 909| 669 406| 099 636(883 383)
51 869 568
13 380 011i a ^ a ^ a aL J Z ) Z J J
4 649 306| 854 t71
457 52r
(2e,7)(8)
31 9r9 r2732037 4217 999 724
16 43r 7925251 037
97 402 538 93 645 l0l
2 000 00031 648 7233 500 0004 906 3914 578 964
47 548 425 46 634 07849 854 lr3 47 0rr 023
68 675 27r
48 750 000| 063 495
227 602(263 618)
2975 472
67 979 033
52 752 951(70 43e) (78 76e)
14 918 884 15253 4981261 020 747 s9r
16 179 904 16 001 089
67 979 033 68 615 271
part of these consolidated financial statements.
Mr. Ahmed Mossad BeheiryBoard member and Financial manager
The accompanying notes are an i
mChairman and CEO
Translation of financial statementsoriginally issued in Arabic
Egyptian Transport and Commercial Services Co.(Egytrans)
S.A.E.
Consolidated statement of incomefor the vear ended December 31't.2006
(Amounts expressed in Egyptian Pound)
Note 2006 2005
Operations revenues
Operations costs
Gross profit
General and administrative expenses
Selling and distribution expenses
B.O.D. allowances
Fixed assets deprecation
Defened co st amorti zation
Goodwill amortization
Operating profit
Finance cost
Foreign currency exchange differences
Provisions support
Investments revenues
Sundry revenues
Capital gains
Net (loss) profit for the year before tax
Income tax
Deferred tax
Income tax for the year
Net (loss) profit for the year
Distributed as follows:
Holding company interest
Minority interest
Net (loss) profit for the Year
(2i,17)
(2e,1 8)
120 900 118
(104 510 6s3)
16 389 465
(8 406 4s4)
(r32 s7s)(234 8s0)
(1 181 780)
(3 70e sr9)
(228 761)
2 495 526
(4 e}s rs3)(84e 477)
(3so oo0)2 064 205
| 2rr 053r85 736
t09 rt4 t62
(e2767 370)
16 346 792
(7 rs4 rse)(222 63s)
(239 ss0)
(1 048 66s)
(7e3 se4)
(228 76r)
6 659 428
(6 60s s48)
(300 000)
2 475 350
9t 456
r 44t 804
(2d,3)
(2e)(2b)
(2m)
(2c)
(2i)(2h)
(2n)
(2n)
(148 110)
(213 sr4)(sr3 e43)(726 e43)
(87s 053)
(883 383)8 330
3 762 490
(50 166)
(747 ser)(7e7 7s7)2 964 733
297s 472(ro 73e)
2 964 733(87s 053)
ral part of these consolidated financial statements.
*-=:*:^'..--- '4. lE ^
Mr. Ahmed Mossad BeheiryBoard member and Financial manager
The accompanying n^otes are an i
Chairman and CEO
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Translation of financial statementsoriginally issued in Arabic
Egyptian Transport and Commercial Services Co.(Egytrans)
S.A.E.
Consolidated statement of cash flowsfor the vear ended December 31't.2006
(Amounts expressed in Egyptian Pound)
2006Cash flows from operating activitiesNet (loss) profit for the year before taxes
AdiustmentsDepreciationCapital gainsProvisions supportProvisions usedAdjustments
Chanses in working capital(Increase)decrease in inventoryIncrease in debtors and other debit balancesIncrease (decrease) in creditors and other credit balancesNet cash flows from operating activities
Cash flows from investins activitiesPurchase offixed assetsProceeds from sale offixed assetsPurchase of long term investmentsPaid in projects under constructionPaid in deferred costNet cash flows from investing activities
Cash flows from financinq activitiesCash dividends paidProceeds from (Repayment of) banks overdraft(Repayment of) proceeds from long term loansNet cash flows from financing activitiesNet changes in cash and cash equivalentCash on hand and at banks, beginning ofthe yearCash on hand and at banks. end ofthe vear
(148 110)
5 188 300(18s 736)
350 000
296 6s35 501 107
(1 080 843)(s 130 621)
2s2 7t0(4s7 647)
(1 ee3 655)233 766
(1 75e 88e)
(601 877)565 386(36 4e1)
(2 2s4 027)5 257 037
3 762 490
2 196 531(1 441 804)
300 000(r 732 08r)
(40 300)3 044 836
I 240 730(2 416 8s3)( l 135 281 )
733 432
(r 23s 136)2 48s 990(e60 000)
(1 250)(rer 3e4)
98 2r0
(s0 000)2 088 026
(1 28e 104)748 922
1 s80 s643 676 473
3 003 010 5 257 037
l /1 ,
Mr. Ahmed Mossad BeheiryBoard member and Financial manager
g. HussamChairman
Wael Le
1.
Translofion of financial statementsoriginallv issued in Arabic
Egyptian Transport and Commercial Services Co.(Egytrans)
S.A.E.
Notes to the consolidated financial statementsfor the vear ended December 31't.2006
(Amounts expressed in Egyptian Pound)The companv :
^. Egyptian Transport and commercial services Co. (Egvtrans) (Holding companv):
Egyptian Transport and commercial Services Co. (Egytrans) S.A.E was incorporated onDecember l3th,lg73 as a limited liability company. According to the extra - ordinarygeneral assembly meeting held on January 1", 1987 and according to law 159 for 1981the company has changed its legal status to be Joint Stock Company. The company'spurpose to represent ship owners and shipping companies, air freight operations,shipping agency, stevedoring for dry, bulk and general cargo, transportation andgeneral services, international transportation by land, sea or air, customs clearance andshipping, warehousing and storage, container handling and related activities, packingand exhibition services also storage and selling all kinds of goods through the companybranch locates at port said free zone area.
b. Eeyptian Transportation and Loeistics Co. (ETAL) (SAE) (Subsidiary):
The company was incorporated on December 18, 1982 according to law 43 for 1974amended by law 32 for 1977 and its executive regulation with capital amounting L.E328,000, according to the extra - ordinary general assembly meeting dated March 24,2007 company's capital has increased with amount L.E 3,172,000 to be 3.5 MillionEgyptian Pounds this increased didn't finalize yet. The company's purpose represent invehicles transport for weight exceed 250 ton which required studies and technicalexperience in engineering transportation and stevedoring.
Significant accounting policies :
Accounting policies have been modified starting from January lst, 2007, according toEgyptian Accounting Standards issued by minister of investment no. 243 for the year 2006which replaced Egyptian Accounting Standards issued by ministerial decision no. 345 for theyear 2002.A summary of the principal accounting policies, is as follows:
L. Basis of accounting :
The accounts have been prepared according to historical cost and in conformity withEgyptian Accounting Standards and in light of govemment laws, financial statementspreparation require assumptions that affect some assets, liabilities, revenues & expensesduring fiscal year and the actual result might be different than these assumption.
b. Basis of consolidation :
Consolidated financial statements include assets, liabilities and operation results forholding and its subsidiary companies Egyptian Transportation and Logistics Co. (ETAL)which hold by share percentage 95%o, this consolidated financial statement Preparedaccording to the following basis:
,
b.
-2 -
Similar items of assets, liabilities, revenues and expenses for holding company andits subsidiary are cumulated together.Removable of all transactions and balances between the companies group also theprofit resulted from transactions between them.Equity method is followed for subsidiaries in purpose of preparing the consolidatedfinancial statement goodwill resulted from acquisition is recorded as an asset in theconsolidated financial statement which is amortized over ten years.Minority equity represented by their equity in subsidiary net assets whichreclassified as a separate item on the consolidated financial statements aftershareholders equity.
Foreign currency :
- The company's functional and reporting curency is the Egyptian Pound.Transactions in foreign currencies during the year are translated to Egyptian Poundat the rates ruling at the transaction date. At the end of each period, monetary assetsand liabilities denominated in other currencies are translated to Egyptian Pounds atthe rates ruling atthat date. Translation differences are included in the statement ofincome.
- Concerning the company's branch at Port Said (free zone), the branch's functionaland reporting currency is US Dollar, the branch balance sheet translated at the endof each period at the rates ruling atthat date.
Fixed assets :Fixed assets are stated at cost, and are depreciated by the straight line method based ontheir estimated useful lives, using the following rates :
AssetsBuildingsVehiclesComputers and softwareEquipments and toolsFittingsFurniture and office equipment
Dep. rate2%20%25%t0%20%r0%
d.
Inventory:Inventory is stated at cost or net realizable value whichever is less. Cost of issued itemsfrom texture, housing tools, vehicles, spare parts and leather are using first in, first outmethod.
Proiects under construction :The cost of constructing fixed assets is stated as projects under construction, when theassets are ready for use these costs are added to fixed assets.
Deferred cost :
The holding company's deferred cost balance has been fully amortized this year.
e.
g.
-3 -
Long term investments :
- Long term investments are valued at cost, its book value is reduced as there ispotential reduction in the value of these investments and this for each investmentseparately.
- According to the cost method revenue is recognized according to subsidiarycompanies dividends after investment acquisition date.
Revenue recoqnition :
- Maritime activity :Revenue is recognized according to accruals basis when services are rendered to theclient and invoices are issued.
- Free zone activity :Sales revenue is recognized when all ownership risks, rewards and control aretransferred to the customer, goods are delivered and invoices are issued.
Provisions :
A provision is recognized when an entity has a present obligation as a result of a pastevent and a reliable estimate can be made of the amount of the obligation, it is probablethat an outflow of resources embodying economic benefit will be required to settle theobligation.
Legal reserve :
In accordance with corporate law 159 for 1981 and the company's articles ofassociation 5o/o at least of the annual net income is required to be transferred to a legalreserve until this reserye equals at least 50%o of the capital, this reserve is not availablefor dividends.
Statement of cash flows :
Statement of cash flows is prepared according to indirect method, cash and equivalentcomprise cash on hand, at banks and time deposits.
Finance cost :
Finance cost is registered according to Egyptian Accounting Standard number (14) asexpenses in income statement.
Income tax :
Income tax on the profit or loss for the year, comprises current tax (calculated accordingto the laws and applicable regulations) and the deferred tax. The accrued income taxdirectly recorded in the statement of income.
The deferred tax resulting from time differences between the book values of the assetsand liabilities according to the accounting base and their value according to theexpected way to rcalize or settle the values of assets and liabilities. Deferred income taxassets are recognized to the extent that it is probable that future taxable profit will beavailable against which the temporary differences can be utilized, defened tax isrecognized as an asset of the company if there is a strong probability that this assetcould decrease the taxable profit of the company in the future years. The defened tax isrecognized as an asset and is reduced with its portion that will not result in future taxbenefit.
h.
k.
Social insurance :
The company contributes to the government social insurance system for the benefit ofits persorurel in accordance with the social insurance law NO. 79 of 1975 and itsamendment. Under this law, the employees and the ernployers contribute into thesystem on a fixed percentage of salaries basis. The company's liability is confined to theamount of its contribution. Contributions are charsed to consolidated income statementusing the accrual basis of accounting.
Comparative figures :
The comparative figures are reclassified whenever necessary, to conform to current yearpresentation.
3. Fixed assets (net) :
Fixed assets, net comprise the following :
Computersand Equipments
software and tools
Furnitureand office
Fitting equipment Total
Cost as of Jan. 1't, 2006
Additions
Disposals
Cost as of Dec 31'r, 2006
Acc. dep. as ofJan. 7"t,2006
Depreciation
Disposals - Acc. Dep.
Acc. dep. as of Dec 3 I ", 2006
N.B.V. as of Dec 3l't,2006
N.B.V. as of Dec. 3l 't, 2005
7 742014
4 786 3s5
417 017
5 203 3722 538 642
2 9s5 659
Vehicles
7 226997
150 093
(73 04r)
7 304 049
2 644 146
169 196
(s 400)
2 807 942
7 627 953
| 492 467
(3r2 56r)8 807 859
510 802
108 172
(3 250)
615 724
168 065
104 210
(3 24e)
2200 586 | 103 5793r3 787 58782(5 3ee) (284 8s4)
3 s69 625 29 321 53773 727 | 993 65s
(45 44r) (43e 6e3)3 597 9lr 30875 4992236 446 15 941 526
t62851 1 250 020(25 r20) (39r 663)
2374 177 16799 883| 223 734 14 075 616
_l]]] l l2 r33800r1
5 446 495
193 373
(73 04r)
5 s66 827
1 737 222
__LZq94Z
2 508974 877 507 269 026
298 968 7 930 352 346 698
443 s60 6 524374 342737
4. Proiects under construction :
Projects under construction balance comprises the following :
f,.
Ather El Naby ProjectSouth to SouthSky net company
long term investments :
long term investments balance compdses the following :
2006861 395
16s 1851 026 580
2005861 395296 653165 185
r 323 233
2006510 000225 000225 000885 000
6 s312 646
510 000225 000225 000885 000
6 53r2 646
2005South to SouthParwil Egytrans Shipping Agencies Co.Scan Arabia Shipping Agency Co.Damietta Feeder Terminal Co. (DFTC)Port Said for invest. and Industrial developmentHousing Bonds
I 8s4 177 I 854 177
5-
6. Goodwill :Goodwill balance comprises the following :
GoodwillAccumulated amortization
2006 20052287 606 2287 606
(2 0s8 846) (1 830 085)228760 457 521
2006 2005
7. Inventory:Inventory balance comprises the following :
Clothes and textureVehiclesSundry toolsElectricity equipmentsSports and house toolsShoes and leatherSpare partsSanitary equipments
Debtors and Other debit balances :
Debtors and Other debit balances comprise the following :
ClientsChecks under collectionPrepaid expensesEmployees advancesMaritime agents - debit balancesCash imprestDeposits with othersAccrued revenuesLIG - cash cover
Provision for doubtful debts
Debit current accounts :
Debit current accounts balance comprises the following
Affiliated companies C/ASuppliers - debit balancesWithholding taxesOther current accounts
Cash on hand and at banks :
Cash on hand and at banks balance comprises the following
Banks current acc. - foreign cuffencyBanks current acc. - local curencyBanks time deposits - foreign curencyCash on hand
18 505 4767 6622181 409 030
683 066| 587 221
890 956r 750 529
5lr 474
22 369 0302 990 83sr 2t0 r24| 974 85rr 4r2 882
9r4 807573 227473 371
8.
32 999 970 3t 9r9 r27
2006 200524 000 r075 s24 4001 903 843
2t6 400241 425336 034875 401
2 035 034794 057
21 884 5205 338 728I 215 180
178 93124 335
294 882876 485
3 498 3r2507 907
9.
35 92670r 33 819 280(r e81 859) ( l 781 8se)33944842 32037 42r
2006 20053 961 215
231 r473 422 612
t r 712223
4 6s6 0s0182 654
3 220 6788 312 410
t9 327 r97 16 431 792
20052006r 462 690
797 r22
743 r98
I 388 079357 824
3 163 300347 834
3 003 010
10.
5 257 037
-6 -
11. Provisions :
Provisions balance comprises the following :
Provisions included in current liabilitiesTax provision
Provisions deducted from its related AssetsProvision for doubtful accounts
Banks overdraft:
Banks overdraft balance comprises the following :
Banks current accounts - local currencyBanks current accounts - foreign currency
13. Credit current accounts :
Credit current accounts balance comprises the following :
SuppliersOther current accounts
14. Creditors and other credit balances :
Creditors and other credit balances comprise the following :
Dividends creditorsMaritime agents - credit balancesAccrued expensesIncome taxDeposits from othersOther creditors
2 000 000 2 150 000
I 981 859I 781 859 200 0003 781 859 350 000 4 I3I 859
2006 200527 266962 2t 8448713 779 884 9 803 852
31 046 846 31 648 723
2006
Balanceat l/l/2006
Provisionssupport
150 000
Balanceat3l/1212006
12.
200s
6446 55t 4906391
2006
1 806 8934 639 658
701 4234 204 968
20052 061 546r 525 822
828 76150 166
tt2 669
2 061 546154 740244 530213 514561 235269 463
3 505 028 4 578 964
Issued and subscribed capital:
The authorized capital amounted L.E. 100 million, issued and fully paid up capital amountedL.E 48.75 million distributed into 4 875 000 shares of L.E. l0 par value each.
15.
- 7 -
16. Long term loans :Long term loans balance comprises the following :
National Bank of EgyptSuiez Canal BankPiraeus BankNSGBMisr Bank
17. Operations revenues :
Maritime activityFree zone activitv
18. Operations costs :
Maritime activityFree zone activityFixed assets depreciation
t4 918 884 L5 253 498
2006 200597 428995 r0l 4tI 4s923 471 123 7 702703
120 900 1 18 t09 1r4 162
2006 2005
2006 20058 r70 408| 416 0922337 1962 992 751
2 437
7 356 6782 477 2742216 5932 646 516
556 437
83 902 93220 539 481
68 240
87 792 5804 849 279
r25 511104 510 653 92767 370
19. The fair value of financial instruments :The financial instruments of the company represent financial assets and liabilities financialassets include cash at banks, clients and some debit balances while financial liabilities includesuppliers and some creditors and credit accounts.
20. Risk manasement :
A. Credit risk :
Credit risk represents the company's ability to collect notes receivable on its due dateswith whom the company deals, management observe the collection of these dues andimprove its performance continuously.
B. Foreign currencies risk:
Foreign currencies risk is represented in the changes of foreign exchange rates whichaffect payments and collections of foreign currencies and the evaluation of assets andliabilities in foreign currencies.
C. Interest rate risk:
The company depends basically on the facilities of banks in providing the workingcapital, interest rate risk represents the risk of the change in rates of banks.
-8 -
21. Tax situation:
a. Ewptian Transport and Commercial Services Co. (Ewtrans) (Holding company)
Corporate tax
The years from beginning of operation till 1993:The company's accounts were inspected by tax authorities from the beginning of it'soperation till 1993, the company's still paying the accrued taxes for that yearaccording to appeal committee decision.
The years from 1994 till2003 :The company's accounts were inspected by tax authorities for the years 1994 till1998, the company was informed by tax form (18) and were rejected from thecompany which transferred to the internal committee.
Years from 2004 till2006:The company prepared it's tax return at the legal time , no inspection done from taxauthority.
Pavroll tax:
: ;l: ::l?xT,ff::'f1,TlJlfti::["Jffi"1"il ff.",il'T#' l:":,,, reee and,were rejected from the company.The company's accounts were inspected by tax authority from 2000 till 2001 and notax forms were received concerning these years.
Stamp tax:The company's accounts were inspected by tax authorities till October 2005.
b. Eevptian Transport and Loeistics Co. (ETAL)
Corporate tax
The companies accounts were inspected by tax authorities for the years from 1998trll2004, these years were settled according to internal committee agreement.
22. Contineentliabilities
The company has issued letters of guarantee at banks in favor of third parties. Theoutstanding letters of guarantee as of December 3Itr,2006 amounts L.E 12,692,245 and. necovered by an amount of L.E. 794,057.
