Extracted oil & Derivatives Co.

(EMIS)

Prepared by :

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 Credit certificate

Appendix

1 - Company Overview

2 - Facility Structure

3 - Company Background

4 – Management and BOD

5 – Operations and ACC

6 - Risks and mitigates

7 – Industry Analysis

 Macro environmental analysis

 Internal environmental analysis

8 – Financial Statements' Analysis

9 - Cash Flow Analysis

10 – Projection and recommendations

1 - Company Overview
Company’s name & legal status:
Extracted Oil & Derivatives Co. – ISO 9001

- Is an Egyptian joint Stock Affiliated company.

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 - It was established according to the presidential Decree no. 534 in 1959. Some companies were
merged to the company in accordance to the presidential decrees of nationalization in 1963
and It became owned by the Holding co. for food industries according to law 203 issued in 1991

Company’s Capital:

Authorized Capital: EGP 400 Mio

Paid In Capital: EGP 200 Mio

Company’s Purpose & Key Activities:

- Manufacturing, refining & packing Vegetable Oils, Ghee, shortening & Marigine Soap,
Glycerin, Powder Detergent, Liquid detergent & Animal Feeds for the benefit of the
company & other.
Products:

- Oils, Ghee, Shortening & Marigine, Soap & Glycerin, Powder detergent, Liquid detergent,
Animal Feed.

Oils
- The Company manufactures x edible oils produced as individual or as blend

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 - They serve for cooking, frying and salad. They are light, clear, of natural taste.
- They are distinguished with their light fright color and high quality produced according to
the Egyptian standard specifications No 49.2005 and the codex specification as well.

- They are available in / different / several starts and volumes.

"Mira" Sunflower oil

 In bottles: ¾L, 1L, 2L, 3L.

 It's light yellow oil.

 It contains unsaturated fatty acids which reduce the cholesterol rate in blood.

 It contains vitamin (H) which is a natural antioxidant.

"Al Fayrouz" Soybean oil

 In bottles: ¾L.

 It contains a high percentage of fatty acid, (Omega) , Linolenic acid & Linoleic acid .

 Which are very important due to the inability of the human body of producing them.

 Unsaturated fatty acids reduce cholesterol rate in blood.

"AL Safa" Corn oil

 In bottles: ¾L, 1L, 3L.

 It is golden light yellow. It has a distinguished flower, and taste.

 It contains unsaturated fatty acids which reduce the cholesterol rate in blood.

 It contains vitamin (H) which is a natural antioxidant.

"Faransawy" Cotton seed oil

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  ¾L, 1L. in Transparent & P.E.T bottles.

 It has a well-balanced compaction of fatty acids which makes it light in digestion

 & reduce the cholesterol rate in blood.

 It’s the best art of oils for frying.

Blended oils for frying purposes

 “Mixola”
1 L, 3L In Transparent & P.E.T. bottles.
 “AL Marwa”
¾ L, 1L. In Transparent & P.E.T. bottles, 20L jerry. Can.
 “Marmoura”
¾ L, 1L In Transparent & P.E.T. bottles.
They are blend of the best quality of vegetable oils...

Ghee

Hawanem
600 Gm

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 Hania
700 Gm

Fine el Nakhil

2kg, 3kg, 5kg, &12kg

Hanya

1kg , 2kg, 5kg, & 15kg

Shortening and Margarine

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 GOLDEN SHORTENING

900Gm One of the best products manufactured of the natural vegetable

oils suitable for all cooking purposes

MARGRINE
1KG Emulsion manufactured of the highest qualities, and purest vegetable oils.

It contains natural emulsifiers, flavors & colors. It's butter substitute.

LECITHIN
Its colour is between light yellow , & brown.
Its fragrance is light & distinguished .
Can centration ( is not less than ) 60% min.
Acid value is 36 max.
It is used as emulsifiers in the ( industry ) production of margarine , chocolates ,
& biscuits.

Soap and Glycerin

Toilet Soap

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 Has a soft texture with huge foam

Pensée: 120 gm 3 colours

 White, flower fragrance.

 Yellow, fruits fragrance.
 Honey, Bee honey fragrance.
 Rose, attractive French fragrance.

Oliva: 75gm , 85gm , &140 gm

 Green, oliva oiol fragrance .

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  Honey , honey fragrance .
 Blue , Jasmine fragrance .
 Rose , Bunch of flowers fragrance .

Rosa

 75gm. contains skin moistening martials .

 3 colours : Red , Spring breeze fragrance .
LANDURY SOAP

 Homogeneous, free of any off odors. It produces dense and soft foam, and has
a long shelf life.
 Domino: 140gm, 160gm & 200 gm.
 Diana: 400 gm, Lion 200 gm.
GLYCEROL
 Crude Glycerol
 Distilled Glycerol: It has a wide range of medical & Pharmaceutial applications.
 Concentration not less than 99%.
 Relative density: 1.260 - 1.264.
 Concentrated glycerol not less than 80%.

Powder Detergent

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  Hattrick depends not only on the active matter in removing dirts.
 Also on other active materials of effective cleaning power in removing spots.
 It contains vital materials specifying in removing fatty spots.
 Friend of environment.

Liquid Detergent

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 Animal Feed

It is pure fine and homogeneous meal, free of any lumps,

insect aflatoxins or extraneous matters. it is used in the manufacturing of the
cattle fodder,
&poultry fodder .it is a rich source of protein.
 CATTLE FODDER:
It is a mixture of the highest qualities of meals, corn, bran, mineral salt & vitamins.
Cylinders of diameter bet. 8 mm & 16 mm.

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  COTTON SEED MEAL:
It is pure fine and homogeneous meal, free of any lumps, insects, aflatoxins or
extraneous
matter. high in protein 24% min.

Company Objectives:

- Since the establishment of the company, it works inside and outside Egypt
in manufacturing and extraction of oils, plants and animal sources of oils
and refining oils, production of soaps industrial Margarine, shorting,
detergents, animal feeds, poultry feed & trading on them.

Company Headquarter:

- Address: No.35 Suez Canal, Mahram Bek, Alexandria.

- Tel.: 03/3817259 // 03/3816328
- Fax: 3813199/03
- Email: www.extractedoils.com

Factory: is insured by ( Misr Insurance )

1) Rageb branch; the address. ; Beside Al Gomhouria Hospital; Region. willing ;

Governorate. Alexandria for oil cooking

2) Oil packaging factory at el damnhour animal feeds

3) Mahram beek factory for toilet soap Liquid Detergent

4) Showroom for sale

in Alexandria (ibrahmia , wardyan and moharam bek , also at Cairo and el Mansoura(

Production lines, production CAPACITY, Moharram Bey factory produces 3,000 tons

per month.

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2 - Facility Structure

Facility Amount • EGP 30 Mio

• Fully secured OVD– Against Pledged 110% Pledged TDs in

Type of Facility

EGP.

Purpose • To finance the company’s WI needs

.
• Successful completion of the company’s ACC or TD
Source of repayment

liquidation

Tenor • . 1 Year

Pricing
TD rate + 2%, paid monthly
• Line to be covered by 110 % pledged TDs in EGP.
HDB Comm.
• Line available to finance local suppliers payment to
governmental bodies ‘Taxes, Customs, Utilities’ and social
insurance payments and salaries

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 Comm.

Security and Collaterals • 110% covered by pledged TDs held in the company account

Terms & Cond. • N/A

Legal documents After the td agreement client will sign a pledge agreement

My justification for non-finance the company is based on:

1) Profitability Margins are very low. (GPM / ROS)

2) 2021 Company realized losses due to Covid Effect along with Factory Fire

3) ROS 0.6% being very low is expected to read to negative number very soon
when the CBE raises the corridor offer over (20.25%)

4) High Reputation risk in the market of the appearance of contamination and

damage to oils and production. Refer to article link ………..

https://almalnews.com/%d8%a7%d9%84%d8%b2%d9%8a%d9%88%d8%aa-
%d8%a7%d9%84%d9%85%d8%b3%d8%aa%d8%ae%d9%84%d8%b5%d8%a9-%d8%aa
%d9%82%d8%af%d8%b1-%d8%ae%d8%b3%d8%a7%d8%a6%d8%b1-%d8%ad
%d8%b1%d9%8a%d9%82-%d9%85%d8%ad/

5) Collection of proceed is all in cash, giving us no room to finance against

receivables ( postdated checks ).

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 i. Company's background:

- Our subject company is an Egyptian joint stock company was established in 1959
according to the president decree no 534 which was published in the official
newspaper, issue no 81 on 23rd APRIL 1959. Other companies were in corporate into
the firm according to the president decree of nationalization in exectution of law no.
72 in 1963 punlished in the official paper issue no. 177 on 18th August 1963.
- According to the resolution made/ passed by the extraordinary general assembly held
on 26th feb. 1998, the company was transformed into an Egyptian joint stock
company liable to the terms of the law no. 159, issued in 1981.
- Managed by Mr. Hisham Mahmoud Gadallah (Chairman) & Chemist Mohamed
Refaat Hegab (Board Member)
- The company issued capital EGP 157,2 million. Distributed upon 157,2 million
stocks with a nominal value of EGP 1.
The company has got the iso quality certificate 9001

- .

- According to decree of extraordinary General Assembly took place on 26th of April

1998 the company switched to be joint stock company working under law 159 in
1981 named as Extracted oil and Derivatives co. On 21st of October 2006 authorized
capital of the company was determined by decree of general assembly as 200 million
(only two million Egyptian pounds) and licensed capital was 157.2 million (one
hundred fifty seven million) and two hundred thousand Egyptian pound nominal cash
shares traded on the stock exchange.

- In 2018 the company raised it’s Authorized capital to be EGP 400 Mio up from EGP
200 Mio & issued capital to be EGP 200 Mio distributed on 42.80 Million Shares.

The extracted oils said, in a disclosure to the stock exchange, that this fire was controlled by the

Civil Defense Forces without casualties. The company added that the total losses so far are in

machinery and raw materials, and are being estimated financially in the coming days. Extracted

oils allocate 20 million pounds to develop Moharram Bek factories On August 25, the company's

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board of directors agreed to allocate 20 million pounds for a development project Moharram Bey

Factories

The company said, in a disclosure to the stock exchange at the time, that this amount would be spent on

a project to supply and install a chemical neutralization unit for soy and sunflower edible oils in

Moharram Bey factories, and rehabilitate the refining line to be compatible with the unit’s production.

Last June, the company announced the establishment of ten

Insurance portfolios It is owned by Misr Insurance and Misr Life Insurance companies, selling shares in it

for a total value of 11.2 million pounds

Ownership Structure

Name Number of Shares Value of shares Percentage

Food Industries 60,950,429 60,950,429 30.475 %

Holding

EL Yasmine holding 39,005,905 39,005,905 19,503 %

company

Moustafa Amin 18 MILO 5.809 9%

Mostafa

Union Workers 10,021,819 10,021,819 5 .11%

Shareholders -
Extracted

Other 56,399,438 56,399,438 28,200 %

shareholders

Hisham Hosny 15,622,409 15,622,409 7,811%

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 Mahmoud

Total 200MILLION 200MILLION 100 %

Below you will find more details about the two main shareholders:
-Food Industries Holding : 30.475 %
The Holding Company for Food Industries is an Egyptian government holding company, owned
by the Ministry of Supply and Internal Trade. Then its name was changed to the Holding
Company for Food Industries in accordance with In the field of food industries, the company’s
capital is about six billion Egyptian pounds, and 36 companies CEO Mr. Ahmed Hussein and its
capital 6 millibar EGP

- Yasmine Holding : 19,503 %

1)since 1991 its governmental co

2) it contains about 36 subsidiaries company
3) it`s a food industry

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 Eng. Mahmoud Magdy Hegazy Chemist/ Mohammed Refaat Hegab
COB CEO

Management Structure

Management and Board Members:

Members of the board Title

Chairman representing Food Holding

Mahmoud Magdy Hegazi
Company ( Biography)

Mohammed Refaat Hegab Chief Executive Officer

Director/Board Member (Represents

Amr Abdelhamid Mohammed Sadek
Food Industries Holding)

Ayman Elsaid Yunis D'ebes Director/Board Member

Medhat Mohammed Dokmak Director/Board Member

Attya Youssef Al-khelaly Director/Board Member

Hesham Honey Hammouda Director/Board Member

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Mr. Mahmoud Magdy Hegazi (Chairman of Board )

 Graduated in 1975 from Faculty of Engineering.

 Holds a bachelor's degree in civil engineering.
 worked as a regional director for Arab Contractors in Yemen between 1988 till 2002
 Representative Food Holding Company.

Mr. Mohamed Refaat Hegab (CEO & Managing director)

 Chemist
 Graduated from Faculty of science, Alexandria university.
 CEO and managing director for Extracted oils since 2020 till present
 Representative for food holding company

https://manhom.com/%D8%B4%D8%AE%D8%B5%D9%8A%D8%A7%D8%AA/%D9%85%D8%AD

%D9%85%D9%88%D8%AF-%D9%85%D8%AC%D8%AF%D9%8A-%D8%AD%D8%AC%D8%A7%D8%B2%D9%8A/

ii. Share class

Company-owned
Vote Quantity Free-Float shares Total Float

52,971,250 ( 26.
Stock A 1 200,000,000 49 %) 0 26.49 %

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 4 – Operations and ACC
Company Operations:
 Manufacturing, refining & packing Vegetable Oils, Ghee, shortening & Marigine Soap,
Glycerin, Powder Detergent, Liquid detergent & Animal Feeds for the benefit of the
company & other.
1. Purchasing Policy:
 It seems that the company is granted 15 to 20 days supplier facility from its suppliers,
because the payables DOH is up to 20 days.

- Importing (5%):

• Our subject company imports high tech chemicals needed for oil refining process through
CADs.
• Sometimes the company imports raw oil (before the refining process) .
-
Local Supplies (95%):

• Our subject company purchases raw oil and packing materials from the local market in cash.

Main Suppliers name Supplier Name

• Omega company for oils.
• Al Monairy company for maize
products.
• Oils and greens.
• El Safwa for packing and oil
refining
• Elzomoroda for corn products
• Elite for manufacturing and trading

• Argan. • Arabian Gulf for oil refining and

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 packing
• Alfa Egypt for Industrial • Suez Canal for trading
investment.

2. Inventory Policy:
The company keeps strategic inventory as follows:
o Raw material is for 30 to 90 days .
o WIP are for 1 week.
o Finished goods are for 1 week.

3. Selling Policy:

Client sells all his products on cash basis as evidenced from the spreadsheet whereas
the AR DOH is only around 4 days to 5 days max all through the period under study.
Sales are mostly local sales, exports percentage doesn’t exceed USD 1Mio per year .
Export countries are West Africa, European Union & some Arab Countries.

List of Main Local Clients / customers:

• Alexandria freezes company • Egyptian sphinx company

• El Ahram freezes company • Multi trade company

• Alexandria for oils and soaps • The pharaonic company for

transport and trade

cash

A/R RM

FG WIP

Assets Conversion Cycle (ACC) = DOH/INV +DOH/AR

Cash Conversion Cycle (CCC) = ACC – Acc \pay DOH

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 -Year 2022
Asset Conversion Cycle = A/R DOH + Inv. DOH =4+111 =115 days

Spontaneous Finance DOH = A/P DOH =17 days

Cash Conversion cycle (Financing Gap in days) = 98 Days

-Year 2021
ACC = A/R DOH + Inv. DOH =5+36=41 days

Spontaneous Finance DOH = A/P DOH = 5 days

CCC (Financing Gap in days) = 36 Days

-Year 2020

Asset Conversion Cycle = A/R DOH + Inv. DOH =4+98=102 days

Spontaneous Finance DOH = A/P DOH = 22 days

Cash Conversion Cycle = Net operating cycle (Financing Gap in days) = 80 Days

5 - Risks and mitigates

Risk Risk Rating Mitigations

The industry of oils and its derivatives

has a lot of suppliers wither local or

Supply risk low external that provide same products

( soap , oils , ghee..etc)

Extracted oils

FX Risk Purchasing Policy includes importing

raw material from abroad, so the client

Moderate is subject to high FX risk because of the

to High EGP devaluation and it increases

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 Both raw materials and finished goods

Stocking Risk have short lives so they cannot be

Or Moderate stored for long periods company

Inventory Risk to low maintain strategic level of inventory

and there is high turnover in inventory

Company buy new machines to

Low to increase it production line and increase

moderate its sales

Labour Force Risk Labor risk is moderate to high as

company contains 1200 labor and they

has shares by 0.5% which leads our

company to work on the loyalty of its

labors and set successful planning and

opportunity in new job vacancy

High Factory has been subject to fire risk

which mainly affected the production

Production risk
and ultimately affected the RM DOH
Machinery Risk
and decreased it from 90 days to 30

days and eventually the company

yielded losses in 2021.

Competition Risk The industry of oils and its derivatives

Or moderate has a lot of well-known companies

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 competitors

Sales risk

low Collection risk is very low as our

Collection Risk company selling policy depends mainly

on cash basis

low The company is enjoying with a strong

Management Risk and well-known qualified management

which they achieve ISO certificate

Industry Analysis
Highlights of Vegetable Oils in the International and Domestic Market:
• Egypt imported refined oils worth USD 1 363 000 000 in 2021 and USD 851 150 000 in 2020.
• Egypt depends on the importation of vegetable oils by almost 98% from many countries,
mainly Indonesia, Malaysia, and Ukraine, as following: -
✓ Importation of seeds in purpose of squeezing in the local market.
✓ Importation of raw oils in purpose of refinery in the local market.
✓ Importation of refined oils in purpose of packing in the local market.
• Egypt imports about 1.7 million tons of vegetable oils as follows: -
✓ About 65% palm oils.
✓ About 35% corn & sunflower oils.
• There are some countries that manufacture and export palm oils, but the main ones are: -
✓ Indonesia produces 36 million tons and exports 28 million tons.
✓ Malaysia produces 21 million tons and exports 16 million tons.
• Egypt imports palm oils from the following countries: -
✓ About 60% from Indonesia and Malaysia
✓ About 40% from Singapore, China, KSA, Sudan, and Germany.
• Egypt imports sunflower oils from the following countries: -
✓ About 55% from Ukraine.
✓ About 19% from Russia.
✓ About 26% from different countries.
• In the context of the international crisis and the war between Ukraine and Russia, it disrupted
the supply chain. On April 22, 2022, Indonesia, the world's largest producer and exporter of oils,

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 stopped its exporting operations.
• On May 23, 2022, it was published on FAO’s website that the Government of Indonesia
introduced Regulation No. 30/2022, reinstating the possibility to export crude palm oil (CPO),
refined, bleached, and deodorized (RBD) palm oil, RBD palm olein, and used cooking oil (UCO),
following a three-week ban that began on April 28, 2022. The ban was lifted given that domestic
supply conditions were deemed sufficient and following a recent decline in domestic prices after
the ban was introduced, as well as the importance of the palm oil sector for large parts of the
population.
• Following the withdrawal of the ban, the government introduced additional requirements for
exports, including reinstating the Domestic Market Obligation (DMO) and the Domestic Price
Obligation (DPO), in an effort to stabilize the supply and price of domestic cooking oil. The DMO
requires palm oil supplies to be reserved for domestic consumption versus export at a 1:3 ratio,
with an aim to safeguard 10 million tons of domestic cooking oil supplies. Additionally, export
permits are only authorized for companies that did not apply for subsidies on palm olein for
delivery to local markets during the three-week ban.
• We must take into consideration the military events between Ukraine and Russia that have
affected and will continue to affect all businesses within these countries and the nearby
countries.
• On March 12, 2022, the ministry of trade issued a decision to ban the export of vegetable oils
for three months, and on August 6, 2022, the decision had been renewed for another three
months. In the same frame, we have to highlight that:
✓ In 2021, Egypt exported vegetable oils worth USD 230,000,000.

✓ The domestic oil manufacturers had asked the prime minister to cancel the a/m

decision, which affected their exporting, which generates USD proceeds that are used in

importation operations.

PESTEL analysis
Egypt was one of the few emerging market countries that experienced a positive
growth rate in 2020. As a result of the government’s swift and prudent policy
Political factors response, coupled with IMF support, the Egyptian economy showed resilience in
the face of the pandemic.

- Economic factors are very important on the food industry. The industry has showed
Economic excellent ability to adapt in the face of the changing trends.
factors - To better adjust to recession and low economic activity, and that appeared in Egypt
while inflation and the devaluation, we could say that food industry was the most

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 stable industry now and then.
- GDP: annual gross 3.3%
- Inflation rate: 16.2% in october2021
- Negative effect of the floating of the national currency against the foreign currency
which negatively affect the price of the imported raw material

- 40% of the volume of Egyptian consumer spending is directed to food and drink,
Social factors which is higher than the global average, which increase demand with high rates

- Technology helps food manufacturers produce more efficiently for a growing world
population.
- Many companies use technology to help them “go green
Technological - Research and development (R&D) is to create new products and launch them
factors successfully on the market,
- reduce costs, which lowers product prices, improve food safety and offer greater
choices of food items to consumers

- Each company in the industry must be committed to the protection of the

environment surrounding its facilities.
Environmental - Must comply with relevant environmental rules and regulations.
factors - According to Law No. 4 of 1994 the industry is considered nonpolluting & harming the
industry to the environment
- No legal laws or regulations governing this industry except the laws effecting health
standards &food quality
- The Egyptian Parliament established the new National Food Safety Authority (NFSA) “
‫”الهيئ ة الوطني ة لس المة الغ ذاء‬in January 2017 the new authority is an independent
Legal factors
organization under the Office of the Egyptian Prime Minister.
- Its mission is to protect consumer health, by ensuring that food products consumed,
distributed, marketed or produced in Egypt meet the highest standards of food
safety and hygiene.

● 2 - Internal Environmental Analysis:

A- Porter Five Forces

Risk Risk level Comments

- new firms need large capital requirements to set up their

operations
- Moderate - Advanced technologies make it difficult for new competitors to
Threat of new
to low enter the market because they must develop those technologies
entrants before effectively competing.

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 - The market is approaching maturity stage and has experienced low
growth in revenues, and this has forced some firms to downsize
- High their operations. High storage, transport, and energy costs have
Rivalry among made it difficult for many firms in the industry to register positive
existing players performance. Most firms have resorted to price reduction
strategies and strong advertising campaigns to attract new buyers.

Bargaining power - Moderate - Buyers can easily switch to other brands if their needs are not
of buyers to High satisfied. However, the industry has strong brands and many firms
have differentiated their products because they target. As a result,
some firms have been able to benefit from strong brand loyalty
from consumers.

Bargaining power - Low to - Significant reliance on the domestic market rather than import,
of supplier moderate which provides a huge number of suppliers competing among
themselves to reduce procs for producers so there is no bargaining
power of suppliers

Threat of Moderate to - Huge number of substitutes mean that customers can easily find
substitutes High other products that fulfil their needs.

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 B- The Seven Risk Characteristics

Risk Degree of Justification

Risk

- The industry is considered as Low Operating Leverage as the Company

depend on moderate Investment cost according to the fixed cost
represent low weight from the total direct cost.
Cost Structure The industry mainly depends on the variable costs as (costs of labor,
Moderate raw material or overheads, sales, and advertising expenses) which are
the driver of costs.

- The industry can pass any increase in the cost to the end customers
consequently the industry can sustain same level of profitability
Profitability Low Due to the moderate cost structure, the Industry relies on economies
of scale to achieve the client satisfactory.

- this industry is non-cyclical as it is related to oils and derivatives

Cyclicality industries which is irreplaceable and it became extremely important
Low in all countries especially in Egypt, and countries with high population
rate, also the industry’s sales growth isn’t affected by economic or
political circumstances as it is affordable to all standard of living &
salaries
-
- Industry is in maturity stage; The demand is stable, and products are
standardized and while the population growing the growth rate of
Low sales increase
Maturity
- Know how is well known

- Supply side considered as a moderate due to dependence on other

industries (oils , soap, etc.)
Moderate - Demand side it is low risk due To wide base of consumers and
Dependency
Inelasticity of demand.

- The field of oils and its derivatives have a lot of substitutes, and many
companies have their impact in this industry
High
Substitutes

- The only regulations affecting the industry are to ensure the quality
Regulations of the products as well as its impact on public health.
Moderate - NSFA to protect consumer health, by ensuring that food products
consumed, distributed, marketed, or produced in Egypt meet the
highest standards of food safety and hygiene.

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  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)
- The company’s board of directors are well-
known
- Our Subject depends mainly on local
currency avoiding prices fluctuation.
- Company achieves ISO certificate
- High demand on necessary products like
oils , ghee
- Fx change wouldn’t affect negative as the
company depends on local currency
Opportunities (Industry)
- The covid19 pandemic has
resulted in increased demand
for grocery which presents
new channels for
manufacturers and retailers
to reach consumers.
- Egypt has one of the largest
consumer bases in the region as
the population more than 100mn
- The Egyptian government
invest in industry & expands
new projects that will
increase production.
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Weaknesses (Company)
- The mass grocery retail network is
underdeveloped.
- Poor operational & regulatory
environment delays the company
activities.
- Low prices lead to low profit margin
specially with increasing cost
Threats (Industry)
- Fluctuations in raw
material costs could affect
the company’s profits.
- rising food prices could
result in increased social
and political instability
2022
- increase price of raw
materials
- competitions with small
firms
- increase and shortage of
labor cost
 7 - Financial Statement Analysis
8
 Auditors name: Central Auditing Organization - Mohab Akram Abdullah office
 Auditors Opinion: Un-Qualified
 Financials status: Audited
 Financial Statements Currency: EGP

Financial Analysis:
(1) Sales & Profitability:

Figures in ( EGP 000) June-2020 June -2021 June -2022

Sales 1,763,742 1,881,036 2,827,896
Sales Growth (%) N/A 6.65% 50.34%
COGS/Sales (%) 93.4% 96.5% 95.6%
SG&A/Sales (%) 4.5% 3.9% 3.2%
EBITDA Margin 1.6% -0.7% 0.8%
ROS (%) NPAUI/Sales 1.07% -1.09% 0.61%
ROE (%) NPAUI/Equity 7.51% -9.42% 7.37%
ROA (%) NPAUI/Assets 3.22% -6.06% 1.74%

 Sales Growth (50.35%) :

Sales 2021: sales had been increased with acceptable ratio reached to almost 7% comparing to 2020 due
to the increased in demand on products like cooking oils and cleaning products
Sales 2022:
Reaching to 2022 the company achieved a remarkable sales growth recorded 50% due to adding new
machines to increase the production capacity of the factory and also depending on main products like
cooking oils which enjoys high demand in the market

 COGS/Sales:

In 2021 COGS/Sales had been increased as the company affected by the effect of corona virus which started in
2020 and the effect was extended to the beginning of 2021 & increase in prices of RM & slowing down of import
& export across the world

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It worth to mention that the company tried control the variable costs during 2022 & it was succeed in reducing it
with acceptable ratio to reach 95.6%

 SG&A/Sales :

During years under study the management had the ability in controlling the fixed costs & reducing it
with acceptable ratio which shows the management capability of controlling the indirect expenses.

 EBITDA Margin:

Ratio had been affected by the increase in COGS which happened in 2021 as per mentioned before & the
company was trying to recover the ratio by controlling the COGS which happened in 2022

 Return on sales (ROS) :

Ratio had been decreased in 2021 due to the decrease in NPAUI in 2021 & it was rectified in 2022 as the
sales had been increased to record 0.6%

 Return on Assets (ROA) :.

Ratio had been decreased in 2021 due to the decrease in NPAUI & increase in assets in 2021 due to the
investment in fixed assets & AR.

 Return on equity (ROE) :

Ratio had been decreased in 2021 due to the decrease in NPAUI more over the increase in equity which
reflect the shareholders commitment toward the company to invest in the equity (net income of 2022
inc)

The DuPont Formula:

Three-factor DuPont for the return on equity: (ROS*ATO*ALEV)
1- Assets turnover (ATO) = Sales/TA EFF. = 2828/995 = 2.8x
2- Assets leverage (ALEV) = TA/Equity FIN. 995M /236M = 4.2x
3- Return on sales (ROS) = NPAUI/Sales PRO. 0.6%

Dupont Formula = 2.8*4.2*0.6 = 7 times

The higher the dupont ratio the better .

Ratio 2020 2021 2022

ROS 0.61%
(NPAUI/Sales) 1.07% -1.09%

ATO 3.01 5.55 2.84

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 )Sales/TA)
ROE 7.51% -9.42% 7.37%

(2) Liquidity & Solvency ratios :

Item in (EGP 000) June-2020 June -2021 June -2022

Working Capital (WC) 198,229 114,978 154,382

Current Ratio 1.60 1.99 1.20
Quick Ratio 0.25 0.45 0.11
DEBT/EQUITY 1.31 0.53 3.20
Gearing Ratio
CPLTD+STB+LTD)/
Equity 0 0 0

 Working Capital & Current Ratio :

Company enjoys positive working capital during years under study which shows management efficiency
to cover its current obligations from its current operations
Current ratio is above 1 during years under study which reflecting the long term liquidity of the company
and the ability of current assets to cover the current liability across the years
.
.
 Quick Ratio:
Quick ratio recorded below 1x which represents high liquidity position for the client.

 DEBT/EQUITY:
Ratio had been increased in 2022 because of the increase in total debts especially in the dues to sister
company

 Gearing Ratio:
The company is not depending on banks facilities & depending on sister company & suppliers’ facility so
the gearing is zero
.

3) Asset Efficiency Ratios:

Item in days 2020 2021 2022

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 Working Investment 361,946 113,688 726,179

WI / sales 20.52% 6.04% 25.68%

INV DOH 98.7 36.0 111.0

A/R DOH 3.9 5.5 4.3

A/P DOH 22.7 18.8 17.4

ACC* 115 41 102

CCC* 98 days 36 days 80 days

 Working Investment: As WI increases in years of study as client needs a financing from bank

 WI / sales: in year 2020 WI records while sales increase in 2022 but decreases in 2021 due to the
factory fire which affected the sales and company production

 Inventory DOH: records 98.7 days in year 2020 but it decreases by 36 days in 2021 Due to the factory
fire which affects a lot of machines and inventory but it increases again by 111 days
.
 Accounts Receivable DOH: Client sells on cash basis within 5 days which matches his A/R policy

 Accounts Payables DOH: Clients pays to his suppliers on credit within 20 which meets A/P policy as
per years study

 8 - Cash Flow Analysis

i. 3 Blocks
ii. 2022
EBITDA (EXCLUDING NON-OPERATING) 22,393
Change in W/I (612,491)

Block 1 : Operating Cash Flow (590,098.0)

Block 2 : Total Investing Cash Flow 6,104.0

Block 3 : Total Financing Cash Flow 613,859.0

Change in cash 29,865.0

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 i. 2021
EBITDA (EXCLUDING NON-OPERATING) (13,324)
Change in W/I 248,258

Block 1 : Operating Cash Flow 234,934

Block 2 : Total Investing Cash Flow (28,796)

Block 3 : Total Financing Cash Flow (246,225)

Change in cash (40,087)

NB.
 Block 1
( measuring the Co.’s ability to generate sufficient cash flow from its operation or core
business.)

• Because of the negative NPAUI the NOPAT had been negative for 2022
but the company was able to cover it by the decrease happened in the
inventory so the cashflow from operations had become positive.

 Block 2 (reflecting any changes (+/-) fixed assets, long term investments and sundry non-
current assets.)

The company has negative cashflow from investment due to the increase of
fixed assets that happened in 2022
 Block 3 (financing activities) reflecting the changes in financing source either equity or banking finance

The company is mainly depending on its equity to finance its operation

instead of banks.

Source & uses analysis

Year 2022

Source 000 % Use 000 %

EBITA 22393 Taxes 4765

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 W/I 612491

Total 100% 100%

Year 2021

Source 000 % Use 000 %

EBITDA = 132324 taxes 267

W/I

Total 100% 100%

In general, the company has a strong cashflow which is able to cover its
dues

Ratios Measuring the Co. cash flow :- the purpose of this ratios is :

iii. DSR = EBITDA / Financial payment = 2,827,896/0 =zero

IT NORMAL BECAUSE THERE IS NO BANK DEBT AND NO INTEREST

9 - Projections’ Assumptions

 Income Statement Assumptions:

1 Sales = 2,827,896

2 COGS = /sales average 35% from sales

3 Depreciation (Direct & Indirect) = growth is average historical rate

4 SG&A = growth is average historical rate

5 Interest income = same as historical year 2022dividend income

6 Provisions: same as historical year 2022
7 Interest Expense: same as historical year 2022

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 8 Sundry Income / Expenses = same as historical year 2022
6 FX gains or losses = same as historical year 2022
7 Tax expense same as historical year 2022

 Balance Sheet Assumptions:

 CURRENT ASSETS
1- Cash = 35 % of sales
2- A/R DOH same as historical year 2022
3- Inventory DOH same as historical years
4- R/M = same as historical year 2022
5- F/G = same as historical year 2022
6- Advance payment DOH = same as historical year 2022
7- Sundry Current Assets same as historical year 2022
 NCA
8- Investments, 132
9- Due from sis, = zero as company settled all
10- deferred tax assets, same as historical year 2022
11- other Non-Current Assets same as historical year 2022

 PLANT
12- Fix Ass same as historical year 2022
13- Accumulated depreciation same as historical year 2022
15-Construction in progress 30,678 same as historical year 2022

CURRENT LIABILITIES

14- Short term borrowing Exist =zero

15- Short term borrowing New = zero
16- A/P. DOH same as historical years
17- Tax payables = ( 9853 )
18- A/E DOH = 1
19- Down payment DOH same as historical year 2022
20- Div payable = same as historical year 2022
21- Other currents liabilities = (31757 )
22- Deferred taxes same as historical years
23- Common stock same as historical years
.
 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

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 Projected DSR = Projected EBITDA / Projected FP ZERO

Comment overall in year 2023 sales and cogs will increase more up to
35% as increase in prices and float and client won’t pay dividends in 2023 to be
capable to increase his revenues, taxes will be zero and zero money need

References shown below:

https://www.extractedoils.com/website/index.php/en/
i. https://youtu.be/SuDRgz_hgMA
ii. https://www.researchgate.net/figure/percentage-of-castor-oil-extracted-oil-content_tbl3_260087164
iii. https://ar.tradingview.com/symbols/EGX-ZEOT/
iv. https://almalnews.com/%d8%a7%d9%84%d8%a8%d9%88%d8%b1%d8%b5%d8%a9-
%d8%a7%d9%84%d9%85%d8%b5%d8%b1%d9%8a%d8%a9-%d8%aa%d8%a8%d8%af%d8%a3-
%d8%a7%d9%84%d9%8a%d9%88%d9%85-%d8%a8%d8%aa%d8%ad%d8%b1%d9%83%d8%a7%d8%aa-
%d9%85%d8%aa/

v. https://ar.wikipedia.org/wiki/%D8%A7%D9%84%D9%82%D8%A7%D8%A8%D8%B6%D8%A9_

%D9%84%D9%84%D8%B5%D9%86%D8%A7%D8%B9%D8%A7%D8%AA_%D8%A7%D9%84%D8%BA

%D8%B0%D8%A7%D8%A6%D9%8A%D8%A9

vi. https://ar.wikipedia.org/wiki/%D8%A7%D9%84%D9%82%D8%A7%D8%A8%D8%B6%D8%A9_
%D9%84%D9%84%D8%B5%D9%86%D8%A7%D8%B9%D8%A7%D8%AA_
%D8%A7%D9%84%D8%BA%D8%B0%D8%A7%D8%A6%D9%8A%D8%A9

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