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Credit certificate

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Appendix

1 - Company Overview

2 - Facility Structure (7%)

3 - Company Background (7%)

4 – Management and BOD (7%)

5 – Operations and ACC (7%)

6 - Risks and mitigates (10%)

7 – Industry Analysis (7%)

 Macro environmental analysis

 Internal environmental analysis

8 – Financial Statements' Analysis (16%)

9 - Cash Flow Analysis (7%)

10 – Projection and recommendations (7%)

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 1 - Company Overview
1. Company’s name & legal status: Misr Beni Suef Cement (MBSC) Egyptian Joint Stock
Company.
2. Company’s Capital: Authorized Capital is 1,000,000,000 and Paid in Capital is
750,000,000 Represented by 75,000,000 shares at a nominal value of 10 EGP each.
3. Purpose & Activity : Misr Beni Suef Cement Company produces all types of cement
(clinker - packed - bulk) or related materials in various stages, as well as its packaging
materials and the production of building materials and construction supplies.
4. Company Headquarter : 14 Marwah St., Othman Towers, Maadi
Tel.: +20 2 25282401
Fax: +20 2 25282466
Email: mbcc@mbccegypt.com

2 - Facility Structure (7%)

Facility Amount • Zero

Type of Facility • L/C

Purpose • For Importation of Raw Material

Source of repayment • .ACC

Tenor • One Year.

Pricing

HDB Comm. • As per bank tariff or any other agreed upon tariffs

Comm.

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Security and Collaterals • 100% cash margin upon issuance.

• L/Cs to be issued for importation of raw materials only.

Terms & Cond.
• Fire and theft insurance policy covering 100% of facility amount.

Legal documents •

i. Company's background: (7%)

Misr Beni-Suef Cement Company was have a license in 1997 with No 840 / 09-11-1997 to built a plant in
Beni-suef and The company's shares were listed on the Egyptian Stock Exchange on August 11,
1999,Misr Beni-Suef Cement Company is located in the center of Egypt, 190 km south of Cairo, MBCC
started production in 2003 with a plant of 1 cement production line, last 2006 year built 1 new cement
production line, Now Mbcc have a plant of 2 cement production lines. an original production capacity
almost 3 million metric tons / year of Poltrand cement

ii. Shareholders structure:

Name Number of Value of Percentage

Shares shares
Farouk Mustafa Muhammad 13,694,862 136,948,620 20.158%
Ahmed and his associated group
Faiq Ibrahim Al-Sayed Al- 11,974,159 119,741,590 15.97%
Qasrawi and his associated
group
National Investment Bank 10,207,134 102,071,340 15.026%
Magdy Abdel-Al Abbas Bakr 8,301,605 83,016,050 11.07%
and his associated group
ElSayed Ali Muhammad 5,405,635 54,056,350 7.21%
Ahmed and his group
Muhammad Ali Muhammad 4,704,084 47,040,840 6.934%
Ahmed and his associated group
Others 23.632%
Total 100%

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3– Management Analysis (7%)
Name Position Representation Attribute (executive/non-executive

Sharif Muhammad Ali Chairman

Ahmed Non-executive

Osama Al-Sayed Ali Managing Director Executive

Muhammad

Yasser Farouk Mustafa Managing Director Executive

Muhammad

Muhammad Faiq BOD Member

Ibrahim Al-Qasrawi Non-executive

Nashwa Mohamed BOD Member National

Ahmed Investment Bank Non-executive

Magdy Abdel-Al Abbas BOD Member Non-executive

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 Ayman Al-Sayed Ali BOD Member

Muhammad Non-executive

Yasmine Ahmed Awad BOD Member

Mowafy Non-executive

Tariq Mahmoud Ahmed BOD Member

El Gendy Non-executive

:From the previous we can assess the management as follows

 ( C.V ):
 Track record
 Achievements

4 – Operations and ACC (7%)

Company Operations & Asset Conversion Cycle

1- Company Operations:
 Operations: Portland cement is the most common type of cement in
general use around the world, as it is a basic ingredient of concrete,
mortar, stucco and most non-specialty grout. It is a fine powder produced
by grinding Portland cement clinker (more than 90%), a limited amount of
calcium sulfate (gypsum CaSO4.2H2O)
 Production cycle: Portland cement is made by reacting limestone and clay
materials, after grinding and mixing. The process of grinding and mixing is
carried out in a dry or wet way. The raw materials are analyzed and then crushed
and mixed in the calculated proportions of any cement type. There are reactions
in the furnace between the input materials and form components called clinker
and grinded with a proportion of gypsum to reach the desired smoothness.
-How cement is manufactured?
Extraction of raw materials: Raw materials such as limestone, clay, sand, iron ore and
gypsum are extracted from the quarry area by blasting or crushing.
 Cracking process: The materials are brought from the quarries by trucks
to the crushers, which in turn break the materials to certain dimensions
and diameters depending on the type of manufacturing standard and then
these materials are stored separately in huge stores known as (raw silo)
and is somehow for the homogenization process. This process continues in
more than one storage area of the plant.

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  Milling process: The materials are then transported by conveyor belts to
the raw material mills responsible for converting these materials into
powder with a certain degree of smoothness and kept in stores known as
meal stores, which feed the furnace to produce clinker, the final product of
cement, which some material is added to it afterwards.
There are two methods of milling process:
1-Dry way: All crushing and grinding operations are carried out in dry condition
where the raw materials are grinded to the fineness required to feed the furnace. This
method is the newest and the most economical because it is characterized by energy
saving.
2-Wet way: This method is used when raw materials are high in moisture because
the dry method first needs to dry the raw materials; therefore, this method is not
economical. The water is added during the grinding process by about 40% and the dough
is formed and pumped into the dough tank using pumps until the dough becomes
homogeneous.
 Burning process: The raw material is transported from the raw materials
warehouse to the primary heater through conveyors where the primary
heater acts as the thermal preparation of the grinded materials in order to
enter the furnace, which turns the materials, and burns them in order to
obtain the basic material clinker (Clinker is raw cement before grinding
and smoothing). Temperatures in the oven range from 1200 to 1700
degrees.
 Storing process: Clinker is grinded by cement mills and adds some
materials to it such as gypsum, and then stored in cement stores to be
ready for packing in bags or inside trucks for direct casting at work sites.
 Business Cycle: Main components in the cement industry are the energy,
labor force and the equipment.
 Methods of production: Dry method All the crushing and milling
operations are done in the dry state where the raw materials are grinded to
the softness required to feed the oven and this method is the latest and the
best economically because it is characterized by saving energy and Wet
method this method is used when the raw materials contain a high
percentage of moisture, because the dry method first needs to dry the raw
materials and therefore it is considered non -economic. Add the water
during the grinding process by about 40% the dough is composed and
pumped into the dough tank using pumps until the dough becomes
homogeneous.
2- Purchasing Policy :
(Foreign purchases represents 60% while Local Purchases Represents 40% of the
company’s purchases according to Industry Norm) - (90% purchases are made
on cash basis the remaining 10% of the purchases are made on credit terms and
the company enjoying suppliers facility up to 40 days)
3- Inventory Policy :

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 The company keeps inventory for 113 days as follows:
Raw material is for maximum 5 days.
WIP are for maximum 40 days.
Finished goods are for maximum 11 days.

4- Sales Policy :
Cash sales almost 98 % and 2% credit sales
Collection period is 0 days. (According to A/R DOH)
There is current export activity is 1% While local is 99%.

cash

A/R RM

FG WIP

5- Assets Conversion Cycle (ACC)

Operating Cycle = (0.2) + 113.5= 113.3

SF DOH = 36.2

Net operating cycle (Financing Gap in days) = 77.1Days

6- Cash Conversion Cycle (CCC) = 77.1

Most Important Suppliers and customers :

Name Type of relationship

Customer/suppliers

5 - Risks and mitigates (10%)

Risk Risk Rating Mitigations

Supply risk Moderate Cement industry raw materials is represented in

cement raw material + the fuel or the energy:

cement raw materials: The Company not face

problem to gain raw materials because of the

abundance of raw materials, which generated

from natural source locally mainly low risk but

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 Energy (fuel): Cement Industry is highly

depending on the supply of energy with 70% of

the overall production cost, within the energy

crisis in Egypt in such period may negatively

affected the company investments. The company

takes serious steps to find fuel alternatives and

enhancing machinery to reduce the percentage of

energy cost. The Company has long track record

of accomplishment in the market and enjoying

.good relationship with its suppliers

Moderate The industry relying heavily on energy and

energy connection with global price so the

FX Risk
increasing in rate of foreign currency will affect

.the industry

The company maintains the latest technology in

Moderate its warehouse with bid investment in quality and

Stocking Risk
the company has efficiency turnover ratios for
Or
RM and FG. Inventory stored in large silos and
Inv Risk
warehouses to protect from dust, dampness and

rain

The Company is conducting periodical

Moderate maintenance
Production risk
The Company Granting its Employees Benefits
Machinery Risk
Low such as Considerable Increase in Salaries and
Labour Force Risk
Social Insurance System to Maintain their loyalty
Energy Risk Low The Company is Rationalizing Energy Cost by

Using the latest Technology

Competition Risk The Supply is much bigger than demand but the

Or High company is at mature stage and has long track

Sales risk record with its customer

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 Cement industry depends on the cash basis to a

Collection Risk Low large extent The percentage of cash sales

represented 99%.

Enjoying high and good experience and The

Management Risk
Low management has a good track record

6 – Industry Analysis (7%)

1- Macro environmental analysis

2- Internal environmental analysis

1- Macro environmental analysis

Egypt's cement industry: a vital economic contributor

The cement industry in Egypt holds a fundamental role in the nation's economy, directly contributing
to the infrastructural development and construction sectors. This industry, with a rich history dating
back to the first cement company established in 1927, today houses 18 cement companies that
collectively account for 1% of Egypt's GDP and nearly 10% of its manufacturing GDP.

Overcoming economic volatility and government intervention

However, the industry has faced economic volatility. Inflation and currency depreciation after the
2011 revolution and 2016 currency floatation, respectively, have challenged the industry, causing a
surge in production costs and demand fluctuations. Consequently, the government intervened to curb
excess production, proposing a 10% reduction in production. The oversupply issue was further fueled
by the government's establishment of a 13Mta military plant in Beni Suef in 2018.

Transformation from monopoly to competition

The dynamics of the industry have also transformed significantly over the years, transitioning from a
monopolistic to a more competitive market. The 1990s liberalization resulted in significant foreign
investments, with firms like Germany's HeidelbergCement, France's Vicat, Switzerland’s

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LafargeHolcim, Greece’s Titan Cement, and Mexico's Cemex making significant investments in the
sector.

Technological evolution towards energy efficiency

On the technological front, the industry has evolved towards more energy-efficient production
processes, driven by the urgency of environmental regulations. The adoption of alternative fuels and
digital technologies for process optimization and predictive maintenance are key trends shaping the
industry.

Navigating challenges and contributions to national development

Despite the challenges of overcapacity and recent regulations like the 2018 resolution to halt the
issuance of licenses for new cement plants, the Egyptian cement industry's contribution to the
national economy and infrastructure development remains significant.

Recent developments: investments, environmental initiatives, and export dynamics

The industry has witnessed transformative growth in recent years, marked by significant investments,
mergers and acquisitions, environmental initiatives, and robust export dynamics. For instance, Vicat
Egypt increased its stake in Sinai Cement, and Egy Holding Developments upped the construction rate
of its EPIC Complex project. On the environmental front, the Suez Cement Group of Companies (SCGC)
has invested heavily in reducing dust emissions and transitioning to non-fossil-based fuels, aligning
with Egypt’s 2030 Vision and the UN's Sustainable Development Goals.

Moreover, the industry has demonstrated a commitment to corporate social responsibility, with
Talaat Moustafa Group (TMG) Holding investing over EGP 5bn in community development initiatives.
Despite the contrasting financial performances of different companies, the industry overall continues
to hold an integral role in the country's economic fabric and shows promise for the future.

Key challenges

There are several key challenges currently facing the Egyptian cement industry:

Energy Costs: A primary challenge for the Egyptian cement industry is the increasing price of natural
gas supplied to the industry. Prime Minister Mostafa Madbouly has set the sale price at $12 per
MBTU, a cost that could significantly impact cement manufacturers' operating expenses and profit
margins.

Market Oversaturation: A substantial increase in Egyptian cement exports (37% YoY surge to $602
million) could suggest an oversaturation of the domestic market, pushing companies to seek growth
opportunities abroad. This could create challenges in terms of logistics and market development in
foreign markets.

Financial Performance: Despite some improvements, several companies in the sector are reporting
net losses or decreasing net profits, like Misr Cement - Qena and South Valley Cement Company. This

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could be due to several factors, including increased operating costs, market competition, and overall
industry conditions.

Environmental Sustainability: With global attention increasingly focused on environmental

sustainability, the cement industry's carbon footprint is a significant concern. Companies like Suez
Cement Group of Companies (SCGC) are investing in reducing their environmental impact, but these
investments can be costly and may take time to yield returns.

Price Surges in Building Materials: Lawmakers are calling for price controls on building materials
following significant price increases. The hike in reinforced steel and cement prices, hitting record
levels, is impacting small contractors significantly, forcing some to cease operations. The industry is
facing potential monopolistic practices and the challenge of maintaining profitability in an
environment of price control.

or
PESTEL analysis
It’s important to mention to the impact of each factor on the industry

PESTEL Analysis
(1) Political Factors: The political situation in Egypt becomes relatively stable which
create a mega projects to be achieved and there are booming in the tourism sector
so the building activities ratio increased that positively reflect on the cement sector
by creating new markets for our industry and the government adopting an
Economic reform program for attracting the direct investment.
(2) Economic Factors:
 GDP: The gross Domestic production growth rate in Egypt was 3.30 % in 2021
 and forecasted to be 6.60 % in 2022 that will be improving the sales volume and
growth of the industry.
 Inflation: increased in Egypt since the floatation of the Egyptian pound at the end
of 2016, reaching a high record during 2017 due to subsidy cuts,
2017 saw the Egyptian inflation rate skyrocket 21.90% .Ever since, inflation has
recovered but slowly, although projections today see it will go down in the future
that would have a positive impact on industry.
 Exchange rate: The devaluation of the Egyptian pound and deterioration of its
value during 2016 affected adversely on industries as coal imported from outside
that lead to more cost on production and lower profitability.
 Un-Employment : per Capmass Egypt’s unemployment rate slipped to7.4% in
2021, compared to7.9% in 2020 and more lower rate expectation leading to higher
consumption and demand which creating a positive impact on the cement
industry.
 Monetary policy: After the Egyptian pound’s floatation in November 2016, the
Central bank of Egypt (CBE) has tightened the monetary policy, and Inflation has
fallen regularly since Q3 2017 and should meet the central bank’s target money

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 supply is growing at a relatively fast pace but maintaining interest rates at a high
level is placing a major strain on lending growth.
.
(3) Social Factors: The increasing growth rate of the population of Egypt which
increased to101.5 M in 2021 supported with a majority of people aged from 15-64 year
leading to the increased level of labor force and low cost for labor as well as The
increasing level of education and awareness toward public health and medical insurance
creating a very positive impact on the industry growth.
(4) Technological Factors: cement industry is a heavy industry and does not need
advance technology and the technological infrastructure for communication, systems &
power supplies in Egypt is healthy for the business continuity.
(5) Environmental Factors: The cement Industry is polluting under the governmental
intervention to set the healthy standards to minimize the environmental impact of its
activities (unfriendly industry). The cement industry is Grade (A) according to Law 4 of
1994 as a very polluting industry.
(6) Legal Factors: The cement Industry is legalized. And there are no legal restriction
according the following laws: specifications and standards and Law No. 4 of 1994 and
amended by Law No. S of 2009 called the Environmental Law No. 38 of 1967 Law on
Public Hygiene and Solid Waste Handling Law 121 of 2008 Traffic Law 137 of 1981,
amended by Resolution 12 of 2003, the Unified Work Force Law 93 of 1962, amended
by Resolution 44 of the Law of Liquid Waste Disposal.
(2) Internal Environmental Analysis:

A - Porter Five Forces

Risk Risk Level Comments

Low requires huge capital to build a factory

Expensive license and the legal
requirements

Threat of new entrants the cost of exist is exceed the cost of

entrance

the industry is depending heavily on

investment cost

Moderate Oligopoly market: same product according

Rivalry among existing
to the Egyptian standards and specifications.
players
few market players

Bargaining power of Low there is no alternatives on products and the

buyers market depending on cash

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 Moderate to Basic materials for the production of
Low cement such as limestone and clay are
available in abundance in Egypt.
Cement manufacturers often build their
factories near the places where raw
Bargaining power of materials are available and thus the
supplier negotiating power of suppliers is weak.

In other side, the industry depends on

energy as 70% of total cost so any
increase in energy cost will affect the
industry.

Low Cement has no substitutes as a

Threat of substitutes
fundamental building material.

B - The Seven Risk Characteristics:

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 Degree of
Risk Justification
Risk

High Cement industry is a capital intensive

industry with high operating Leverage,
Cost Structure
The fixed cost represented high weight
from total direct cost

High As the industry considered a high operating

leverage accordingly the breakeven point is
achieved on a high level and the industry
Profitability
depends on economies of scales.

The industry is high in profitability.

High there is a direct proportional

Cyclicality relationship between the industry and
the economic cycle

Low Cement industry is in its matured stage

worldwide, The industry considered as
Maturity
an old industry accordingly
standardized.

Low In Term of Supply: Basic materials

for the production of cement such as
limestone and clay are available in
abundance in Egypt. Cement
manufacturers often build their

Dependency factories near the places where raw

materials are available and thus the
negotiating power of suppliers is weak.

In Term of Demand: there are no

alternatives on products and the market
depending on cash.

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 Low Cement has no substitutes as a
Substitutes
fundamental building material.

High Cement industry is highly regulated

because of its pollution effect on the
health and environment, the
Regulations
government puts a lot of barriers in
order to obtain license for entering this
industry

 SWOT Analysis:

Is a simple way to show the Strength & Weakness factors inside the company and the
Opportunities & Threats that the company face in the external environment. .

Strengths ( Company) Weaknesses ( Company)

 Highly experienced management  Inefficiency of production
 Well organized and established for long machinery
period. Abundant and Cheap raw  Weak in sales market share
materials and labor. between competitors.
 Good track record with its suppliers and  Low exportation volume.
Cash sales policy

Opportunities ( Industry) Threats ( Industry)

 Infrastructure projects and mega projects
taking place
 Continuous increase of population,
which requires building new cities and
not intensive of labor.
 Industry not affected by technology.
 Declining in demand or surplus on
supply Economic conditions
 Inflation rate, which will decrease
purchasing power & slow growth of
GDP.
 Removing the subsidy of energy

7 - Financial Statement Analysis (16%)

 Auditors name:

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 Auditors Opinion:
 Financials status: (audited)
 Financial Statements Currency:

Financial Analysis:
(1) Sales & Profitability:
Figures in ( EGP 000) Dec 2019 Dec 2020 Dec 2021
Sales 1,809,146 1,194,339 1,120,263
Sales Growth (%) N/A (33.98%) (6.20%)
COGS/Sales (%) 84.6% 87.3% 84.2%
SG&A/Sales (%) 1.4% 1.8% 2.8%
EBITDA Margin 13.9% 7.7% 16.3%
ROS (%) NPAUI/Sales 4.44% 6.40% 15.07%
ROE (%) NPAUI/Equity 4.65% 4.59% 9.97%
ROA (%) NPAUI/Assets 3.51% 3.74% 8.16%
 Sales Growth (%): The Sales Decreased due to the Decrease in sales Quantity as the
Company Decreased its Production Capacity to 60%
 COGS/Sales: In 2020 The Ratio (87.3%) increased Due to the increase in Coal Prices as it
constitutes 70% of production resources but in 2021 the ratio(84.2%) decreased due to the
decrease in production Capacity to 60%.
 SG&A/Sales: The Ratio in comparison years is increasing due to the decrease in sales and
increase in SA&A expenses especially in BOD allowances.
 EBITDA Margin: In 2020 the margin (7.7%) decreased due to the decrease in sales and increase
in COGS but in 2021 The Margin (16.3%) increased due to the decrease in COGS.
 Return on sales (ROS) : The ROS in comparison years is increasing due the decrease in sales
and increase in profit from unusual items as interest income FX gain.
 Return on Assets (ROA): In 2020 The ROA(3.74%) increased due to the sales decreased less
than the decrease in assets WIP items and in 2021 The ROA(8.16%) increased due to the sales
increased much more the increase in assets FG.
 Return on equity (ROE) :In 2020 The ROE(4.59%) decreased Due to decrease in NPAUI and
increase in retained earnings and equity reserves In 2021 The ROE(9.97%) increased due to the
increase in unusual profit more than the increase in equity.
The DuPont Formula:
Three-factor DuPont for the return on equity: (ROS*ATO*ALEV)
1- Assets turnover (ATO) = Sales/TA EFF.
2- Assets leverage (ALEV) = TA/Equity FIN.
3- Return on sales (ROS) = NPAUI/Sales PRO.
Ratio 2019 2020 2021
ROS 4.44% 6.40% 15.07%
ATO 0.79 0.59 0.54
ALEV 1.32 1.23 1.22
ROE 4.65% 4.59% 9.97%

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In 2020 The ROE Decreased due to ATO and Assets Leverage Decreased much more than the
increase in ROS and In 2021 The ROE increased due to The ROS increased much more than the
decrease in ATO and Assets Leverage.

(2) Liquidity & Solvency ratios:

Item in (EGP 000) 2019 2020 2021

Working Capital
(WC) 1,083,866 1,122,062 1,191,211
Current Ratio 3.88 5.70 6.26
Quick Ratio 2.52 4.64 4.90
DEBT/EQUITY 0.25 0.18 0.18
Gearing Ratio

 Working Capital & Current Ratio: appears positive and increasing during the compared years
mainly due to the increase in current assets Cash and Inventory and decrease in current liability
accounts and dividends payable.
 Quick Ratio: the company enjoying high liquidity and its not relaying on inventory to meet its
current obligation.
 DEBT/EQUITY: the ratio is decreasing due to the decrease in accounts and dividends payables
and down payments and increase in retained earnings and equity reserves.
 Gearing Ratio:
.
3) Asset Efficiency Ratios:

Item in days 2019 2020 2021

Working Investment 222,260 2,564 124,685

WI / sales 12.29% 0.21% 11.13%

INV DOH 119.0 64.9 113.5

A/R DOH 0.0 (0.2) (0.2)
A/P DOH 48.1 32.0 36.2
ACC* 115.7 59.6 107.5
CCC* 76.4 44.4 84.2

 Working Investment: the working investment decreased in 2020 due decrease in trading assets
A/R and inventory and increase in spontaneous finance down payments and accrued expenses and
increased in 2021 due increase in inventory and decrease in down payments.
 WI / sales: although the sales decreased but the working investment decreased more than sales
increased in 2021 due to increase in working investment and decrease in sales.
 Inventory DOH: decreased in 2020 due to decrease in WIP and FG and other inventory items
but increased in 2021 due to increase in RM and FG and other inventory item. .
 Accounts Receivable DOH: decreasing in compared years due to company policy in selling cash
not on account.
 Accounts Payables DOH: stable in compared years due to purchasing policy of company.

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  8 - Cash Flow Analysis(7%)

i. 3 Blocks

ii. 2020
EBITDA (EXCLUDING NON OPERATING) 91,904
Change in W/I 219,696
Block 1 : Operating Cash Flow 269,432
Block 2 : Total Investing Cash Flow 38,300
Block 3 : Total Financing Cash Flow (144,742)
Change in cash 162,990

i. 2021
EBITDA (EXCLUDING NON OPERATING) 182,200
Change in W/I (122,121)
Block 1 : Operating Cash Flow 48,442
Block 2 : Total Investing Cash Flow 96,753
Block 3 : Total Financing Cash Flow (144,761)
Change in cash 434.0

NB.
 Block1: the Company was able to generate sufficient cash flow from its operation to
cover its core business in the compared years.
 Block2: is due to decrease in productive assets and increase in sundry and non-operating
items.
 Block3: is negative due to decrease in retained earnings due to decrease in dividends
payable.
Source & uses analysis

Year 2020
Source 000 % Use 000 %

Change in Equity 4,012 0.99% EBIT 4,012 0.99%

Sundry, Unusual 38,656 9.60% EBIT 38,656 9.60%

Depreciation 356 0.09% CAPEX 356 0.09%
Depreciation 5,765 1.43% EBIT 5,765 1.43%
Changing in WI 42,168 10.47% Paid Tax 42,168 10.47%
Changing in WI 148,754 36.94% Paid Dividends 148,754 36.94%

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 Changing in WI 134,216 33.33% Net Change in Cash 134,216 33.33%

Depreciation 28,774 7.15% Net Change in Cash 28,774 7.15%

Total 402,701 100% Total 402,701 100%

The Company Has Slightly Healthy Cash Flow as It Uses Change in

Equity and Sundry item to finance the deficit in EBIT Partially but also
It Has Unhealthy Cash Flow as It Uses Depreciation to Finance CAPEX
Partially and Uses It to Cover EBIT Deficit and Uses Change in
Working Investment to Pay Dividends.
Year 2021
Source 000 % Use 000 %

EBIT 11,637 3.27% Paid Tax 11,637 3.27%

EBIT 69,642 19.55% Paid Dividends 69,642 19.55%

Depreciation 73,534 20.64% CAPEX 73,534 20.64%
Sundry, Unusual 122,121 34.27% Changing in WI 122,121 34.27%
Sundry, Unusual 48,166 13.52% Paid Dividends 48,166 13.52%
Change in Equity 3,819 1.07% Paid Dividends 1.07%
3,819
Depreciation 26,953 7.56% Paid Dividends 7.56%
26,953
Depreciation 434 0.12% Change in Cash 0.12%
434

Total 356,306 100% Total 356,306 100%

The Has Healthy Cash Flow as It Uses EBIT to Pay Taxes and
Dividends and Sundry items to Finance the Gap in Working Investment
and Change It Equity to Pay Dividends However It Has a Slightly
Unhealthy Cash Flow as It Uses Depreciation to Finance CAPEX
Partially and Uses It to Pay Dividends and Finance Cash.
Ratios Measuring the Co. cash flow :-

iii. DSR = EBITDA / FP :The Company Doesn’t Have any Financial payment but in 2020
the EBITDA was negative so the company isn’t able to cover any financial payment and
in 2021 it has positive EBITDA which mean it can cover its payment.

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 iv. DSR = EBITDA / (FP + DIV): in 2020 the ratio was (32.56%) which mean the company
isn’t able to cover its financial payment or/and dividends and in 2021 the ratio was
54.70% without financial payment so the company can't pay dividends.

9 - Projections’ Assumptions (7%)

 Income Statement Assumptions:

1 Sales
2 COGS
3 Depreciation (Direct & Indirect)
4 SG&A
5 Interest income
6 dividend income
7 Provisions:
8 Interest Expense :
9 Sundry Income / Expenses
6 FX gains or losses
7 Tax expense

 Balance Sheet Assumptions:

 CURRENT ASSETS
1- Cash = % of sales
2- A/R DOH
3- Inventory DOH
4- R/M
5- F/G
6- Advance payment DOH
7- Sundry Current Assets
 NCA
8- Investments,
9- Due from sis,
10- deferred tax assets,
11- Prepaid &
12- other Non-Current Assets

 PLANT
13- Fix Ass
14- Accumulated depreciation
15- Construction in progress

CURRENT LIABILITIES

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 16- Short term borrowing Exist
17- Short term borrowing New
18- A/P. DOH
19- Tax payables
20- A/E DOH
21- Down payment DOH
22- Div payable
23- Other currents liabilities
24- Deferred taxes
25- Common stock
.
 New money need and new debt:

NMN= Projected Assets – Projected Known Liabilities

NMN = New Debt + Change in RE
CH RE = (NOP- INT.E exist - INT.E new +/- OTHER ) X (1-22.5%) X (1-Dividend %)
INT.E new = NDN * % from Facility Structure
Projected DSR = Projected EBITDA / Projected FP

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