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Cairo Poultry Company
Annual Report 2011
CPC ANNUAL REPORT 2011 1
Table of ContentsChairman’s Letter 03
2011 At a Glance 04Key Facts 06
Who We Are 07Our Strategy 10
Koki 12Starch and Glucose 14The Year in Review 16
CPC Poultry Operations 17Corporate Governance 18
Corporate Social Responsibility 19Board of Directors 20
Executive Management 22Operations Management 24
Financial Review 26
2 CPC ANNUAL REPORT 20112 CPC ANNUAL REPORT 2011
The minimal impact that the crisis had on our financial performance is proof of the resilience of our business model. Recovery is already un-derway, and our strong fundamentals promise a bright future as Egypt regains stability.
CPC ANNUAL REPORT 2011 3
Dear Shareholders,
In 2011, CPC’s position of leadership in Egypt’s poultry sector and the integrity of our business model were put to the test as the company overcame significant chal-lenges to end the year with strong fundamentals and an optimistic outlook for recovery and sustained growth.
2011 has been a turbulent year for various indus-tries, with economic fluctuations and rapidly changing policy creating an uncertain business environment. The tenuous security situation that has persisted throughout 2011 created constraints for our operations, as logistics were disrupted, branch security was threatened and plunging levels of tourism led to a slowdown in demand from our clients in the hotel and restaurant business.
While these obstacles inevitably impacted our balance sheet, CPC managed to contain the situation with only a slight drop in bottom line. The minimal impact that the crisis had on our financial performance is proof of the resilience of our business model. Recovery is already underway, and our strong fundamentals promise a bright future as Egypt regains stability.
CPC’s profits remained robust in the face of chal-lenges throughout the year, balancing an unavoidable slowdown in demand and disruptions to operations with a clear-sighted vision for recovery and future growth based on our market-leading position and Egypt’s strong potential as an increasingly attractive market.
CPC’s steadfastness in 2011 is the direct result of the company’s strong foundations. Since our inception, CPC has led the local poultry sector first as a pioneer, and later as a market leader with a strong first-mover advantage.
This history of innovation has seen CPC lead the Egyptian market in breeding technology and health security systems. Our commitment to local content and our highly skilled staff are the other cornerstones of CPC’ continued excellence, and the key to our success year after year.
Our unique vertically integrated structure in Egypt has seen CPC through challenging and prosperous economic times alike. We believe that our ability to capture profits across the poultry industry value chain will continue to bolster CPC’s capacity and infrastructure expansion into 2012.
As always, the support of our partners and share-holders remains an invaluable asset to CPC’s ongoing growth and development, and we are proud to have
been able to reward their faith in the company with ever-increasing value and a prominent position in the market.
Our role in helping support disadvantaged communi-ties in Egypt remains a primary concern. Our commit-ment to helping forge the country’s path to a better future has seen CPC continue its support for organiza-tions that are important to us, and add new initiatives to our CSR portfolio during 2012.
We maintained our market leadership throughout 2011, engineering creative solutions to an evolving eco-nomic landscape and adapting our plans accordingly. We look forward to continuing our efforts to promote development in Egypt’s poultry industry in 2012 and beyond.
We hope that 2012 will bring great things for Egypt as the country builds on its historic accomplishments in 2011 and moves towards a future full of opportunities. At CPC we plan to play a central role in Egypt’s recov-ery, as we leverage our strong fundamentals and robust business model towards recovery and record growth during the coming years.
Professor Mamdouh SharafeldinChairman
Chairman’s Letter
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2011 At a Glance: Overcoming ChallengesCairo Poultry Company (CPC) is the region’s leading vertically integrated poultry producer with operations that span the entire poultry cycle from importation to feeding, hatcheries, and the processing of a wide variety of consumer products. Since its inception in 1977, CPC has witnessed steady growth and achieved robust profits, creating value for its share-holders and outperforming its competitors.
2011 was a challenging year for all businesses in Egypt, as economic instability and security con-cerns posed obstacles to operations and growth across the market. While CPC’s operations and
balance sheet were impacted, the company proved its resilience in the face of difficult market conditions by sustaining only a slight fluctuation in year-end financial results. In 2011 we focused on incorporat-ing the latest technology in our industry to maintain and upgrade our existing facilities in line with inter-national health and safety standards. The strength of our fundamentals, our experience as an innovative market leader and the integrity of our vertically inte-grated business model have seen CPC through the challenges of 2011, and will support a drive towards recovery and growth in 2012.
CPC ANNUAL REPORT 2011 5
EBITDA (in EGP million)
20072008200920102011
Net Profit (in EGP million)
20072008200920102011
Return on Equity 20072008200920102011
Net Worth (in EGP million)
20072008200920102011
Operating Profit (in EGP million)
20072008200920102011
With over 30 years of experience in the poultry industry, CPC has managed to overcome both eco-nomic downturns and industry challenges to emerge as a true market leader with a consistently strong financial position. In 2011, despite many challenges, CPC managed to post an increase in PP&E, which rose from EGP 919 million in 2010, to EGP 934 mil-lion at the close of the year.
PP&E (in EGP million)
20072008200920102011 934 253
972 191
18% 335
257
1,023 210
22% 331
299
1,104 232
22% 379
234
895 168
19% 294
138
894 145
17% 226
811
919
710
428
EGP 934 mnPP&E in 2011
6 CPC ANNUAL REPORT 2011
35years as
market leaderWith over three decades of experience, CPC has a strong first-mover advantage in the Egyptian poultry
industry.
3 complementarylines of business
In addition to its core poultry business, CPC is also involved in olive cultivation, starch and glucose
production, and security services.
7 farms, hatcheries and
production facilitiesCPC’s operations are spread throughout Egypt in
Nubaria, Regwa, Sadat City, 10th of Ramadan City, El Saff, Anshas, Salehia, and Wadi el Natroon.
1 new facility
CPC has established one new further processing facility for meat and poultry in 2011.
3 main feed production
facilitiesfollowing the completion of a new feed mill in
Nubaria, which will be operational during the second quarter of 2012.
12 retail outlets
for the direct sale of feed and one-day-old chicks throughout Egypt’s governorates.
2 large slaughtering
facilitiesCPC’s processing operation began in 1992 with its Koki factory located in the 10th of Ramadan City.
A second production facility was opened in 2008 in Nubaria.
19 Koki retail outlets
In 2010, Koki’s retail outlets witnessed marked expansion with 15 outlets in Greater Cairo, two on
the North Coast, and two within its production facili-ties in 10th of Ramadan City and Nubaria.
Key Facts
CPC ANNUAL REPORT 2011 7
Who We AreCairo Poultry Company (CPC), the region’s leading vertically integrated poultry producer with invest-ments that span the food and agriculture sectors, was founded in 1977 as a subsidiary of Americana Group. Backed by a strong first-mover advantage, a world-class management team and the vision to grow incrementally, CPC has developed into a dynamic operation that has experienced tremendous success, posting record growth rates year after year. CPC is listed on the Egyptian Exchange (EGX).
With 14 subsidiaries including successful brands Koki and Americana, and operations covering all stages of the poultry production cycle from hatcher-ies, broilers, parent and grandparent chicks, feed, frozen and chilled meats and value-added food prod-ucts, as well as related industries including starch and glucose, olive cultivation and security services, CPC benefits from a strong and diversified base covering all areas of the poultry industry.
A market leader from its earliest days in Egypt and the Middle East, CPC has grown to become a top brand locally as well as a successful exporter to GCC markets and African markets, with an eye towards in-ternational expansion. The company distributes under
both the Koki and Americana brand names in each location, with in-house operations for the distribution and marketing of all products. Americana is the public face of CPC, particularly in the GCC where the brand enjoys strong market recognition and has driven the development of a wide distribution network.
CPC is a key supplier for global fast food chains, hotels and restaurants including McDonald’s, KFC, Pizza Hut, Domino’s Pizza, Burger King, and the Marriott, Sheraton and Hyatt Regency Hotels. CPC is also the official supplier of poultry for the Egyptian Army, Multinational Forces, and the US Department of Defense in the Middle East.
As a fully vertically integrated poultry company in Egypt, CPC leads the market in technology in-novation, product range and use of local content. The company has pioneered the implementation of world-class breeding and health & safety technology in Egypt.
Together with an expert team and a strong network of partners and investors, CPC continues to grow and thrive across its spectrum of activities, improving product offerings in the Egyptian and regional markets and enriching the community around it in the process.
CPC continues to grow and thrive across its spectrum of activities.
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Consistency
20052001300
900
600
1200
1500
1800
2100
2002 20042003
739778
853
938948
CPC has posted steady growth since its founding. Between 2001 and 2012, our total assets have increased by over EGP 1.18 billion, overcoming tremendous odds to sustain growth of EGP 116 million in 2011.
CPC ANNUAL REPORT 2011 9
20102009200820072006 2011
1,294
1,569
1,681
1,768 1,8031,919
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CPC’s unique vertically integrated business model lies at the core of our strategy. Our vertical integra-tion of grandparents, parents, hatcheries, broilers, processing, feed, distribution and marketing has radically transformed the Egyptian poultry industry. With improved productivity and reduced processing and distribution costs, CPC is stimulating greater market competition and driving Egypt towards poul-try self-sufficiency.
With operations covering all stages of the poultry production cycle from hatcheries, broilers, parent and grandparent chicks and feed, to value-added products, as well as related industries including starch and glucose, agriculture and security services, CPC is able to ensure the quality, safety and avail-ability of everything needed to bring our products to market. Vertical integration ensures that CPC gains steady profits and guards against cyclical downturns in the various sub-sectors. If one area of business declines, another area will compensate to capture lost opportunities, providing stability to the compa-ny’s balance sheet as witnessed in 2011.
Strong market potential both in Egypt and interna-tionally drives CPC’s continued growth and expan-sion. In Egypt, chicken meat production exceeds that of all other meat categories combined despite a local per capita consumption rate that falls well below the international average. Approximately 70% of all poultry sold in Egypt continues to be sold in live form, which means there is still an immense amount of untapped potential in packaged and frozen poultry sales that CPC is well positioned to capture. Egypt’s comparatively low per capita consumption, the local supply shortage, and consumer conversion to chilled and frozen poultry, will be positive growth drivers go-ing forward. The company is also poised to explore different opportunities as we diversify further into complimentary businesses.
CPC’s intensive marketing strategy for flagship
brands KOKI and Americana is based upon the use of exclusive retail outlets and aggressive marketing to build strong brand identity. Clever and widespread advertising campaigns that seek to increase local brand recognition, deepen market penetration and expand market share have been carried out consis-tently over the past 35 years, resulting in a strong brand identity and widespread market recognition reflecting CPC’s equity and real value in the con-sumer market.
CPC is the sole agent for one-day-old grandparent chicks from Hubbard and Arbor Acers, the world’s leading grandparent breeders. Grandparent opera-tions are a sophisticated science requiring strict quality control standards and special technical skills. CPC was the first company in Egypt to introduce the concept of grandparents. All government and specialist inspections have certified that CPC meets all the highest international standards for the poultry industry.
We also take pride in the sophisticated technology systems that form the foundation of our organiza-tional success at CPC. Our financial modeling and reporting is carried out via world-class software pro-grams Oracle and MTECH, allowing us to generate sophisticated financial reports and models to support our operations and business decisions. MTECH is also used throughout our operations, coordinating activity at every level of the supply chain to maximize efficiency and integration.
CPC leads the industry in planning, technology and hygiene and this, together with our world class staff, ensures that CPC remains Egypt’s premier poultry company. Our leadership position is underscored by CPC’s commitment to the overall growth of Egypt’s poultry industry. Our efforts to promote international best practices across the industry have resulted in improvements in yields, quality of mash and pellet feed, and equipment and facilities at our operations.
Our Strategy
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CPC ANNUAL REPORT 2011 11
Clever and widespread advertising campaigns that seek to increase local brand recognition, deepen mar-ket penetration and expand market share have been carried out consistently over the past 35 years.
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KokiKoki is CPC’s highly successful flagship brand. With strong and growing brand recognition, proven cus-tomer loyalty, and an ever-increasing market share, Koki is Egypt’s first choice for quality poultry products.
Backed by quality products, an aggressive mar-keting strategy and branded retail outlets, Koki has maintained its position of strength on the Egyptian market in the face of increasing competition from Brazilian imports. Koki’s ongoing development of new products, attractive retail outlets and clever branding initiatives have also resulted in the brand’s continued success in both the local and export markets.
Our extensive and constantly expanding menu of products is developed with the diverse needs and
tastes of our valued customers in mind. In addition to children’s favorites like chicken fingers and nug-gets, Koki’s product lines now include both bone-in and boneless options, from classic fried and grilled chicken breast and thigh meals, to pane and Middle Eastern specialties such as chicken shawerma, shish tawook and kofta.
The brand’s dedicated retail outlets have reached 19 locations in Greater Cairo and the North Coast. A total of 15 outlets now serve Cairo’s central and suburban districts, and shops in Marina and Sidi Abdel Rahman ensure that Koki products are avail-able to loyal customers during the summer vacation months. Additionally, two Koki shops are located
CPC is a leading sup-plier to major global fast food chains, restaurants and hotels includingMcDonald’s, KFC, Pizza Hut, Burger King, Domino’s Pizza, Sheraton, Marriott and Hyatt Regency.
CPC ANNUAL REPORT 2011 13
within CPC’s processing plants in 10th of Ramadan City and Nubaria.
At Koki we value customer service above all else. Koki outlets provide our customers with an attractive and convenient way to shop for a complete range of high quality fresh and frozen chicken products with the knowledge that our state of the art retail facili-ties maintain the same stringent health and safety standards that we require of all CPC operations. A dedicated, consumer-friendly call center is available to facilitate home delivery for our loyal and ever-expanding customer base.
While competition from international exporters is fierce, our decision to create branded retail outlets
and build a strong Koki brand identity has allowed CPC to maintain a strong market presence at this level of operations.
We continue to provide poultry products to global fast food chains, hotels and restaurants including McDonald’s, KFC, Pizza Hut, Burger King, Domino’s Pizza, and the Sheraton, Marriott and Hyatt Regency Hotels. CPC is also the official supplier of poultry to the Egyptian Armed Forces, the US Department of Defense in the Middle East and the Middle Eastern Multinational Forces. These contracts underscore CPC’s commitment to excellence and validate its reputation as a world-class supplier of quality poultry products.
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Starch and Glucose
Established in the 1940s, ESGC uses the most up to date technology and an in-depth knowledge of manufacturing based on years of experience in the industry to produce high quality starch, glucose, corn oil and animal feed. EGSC has a long-established relationship with Americana Group that dates back to early 2004.
With a a daily corn grinding capacity of 450 tons and an annual output of 145,000 tons, ESGC has emerged as a market leader in the Egyptian starch and glucose manufacturing sector. Since its earli-est days, ESGC has been committed to pioneering international best practices in the local market by integrating top of the line facilities and technology with world class safety standards. To this end, ES-GC’s starch and glucose factories have undergone
comprehensive renovations in collaboration with the World Bank.
Facilities have been fully upgraded to incorporate the latest environmentally friendly technology in a three phase plan that included successful im-provement of starch and glucose derivatives, and complete upgrades to both the starch and glucose operations, followed by a total facility renovation.
An aggressive growth strategy combined with strong brand identity and an extensive and expand-ing product line has enabled ESGC to capture strong market share in Egypt, a position the company looks forward to expanding upon in the future.
ESGC’s facilities, recently upgraded to incorporate the latest environme ntally-friendly technology, currently have a daily corn grinding capacity of 450 tons and an annual output of 145,000 tons.
Egyptian Starch and Glucose Manufacturing Co. (ESGC)
w w w . e s g c . c o m . e g
CPC ANNUAL REPORT 2011 15
Our Products
Corn StarchThis fine powder is used in the production of a variety of products, including packaging board, carton board, textiles, adhesives and glues, processed meat and chicken, sweets, biscuits, custards and pudding, bakery products, crackers and chips.
Glucose SyrupGlucose syrup is one of several natural sweeteners derived from corn starch. It is used in a wide variety of food products, including confectionary, chewing gum, chocolate, cookies, crackers, catsups, cereals, fla-vored yogurts, ice cream, lollipops and hard candies.
Corn Oil This mild oil is rich in vitamins and perfect for use in a variety of dishes from salads to desserts and fried foods.
Gluten Feed and MealGluten feed is a processing product rich in protein and fiber. It is used as feed for dairy cows, camels, horses and sheep. Corn gluten meal is a processing product rich in protein. It provides feed for poultry, fish and shrimp, pigeons and rabbits.
ESGC provides a broad portfolio of products for customers in the confectionary, dairy and beverage industries, as well as non-food markets such as paper and board manufacturing.
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The Year in ReviewOvercoming a myriad of challenges in 2011, CPC focused on developing our existing assets through investments in renovation and expansion into complementary business lines.
Nubaria Feed MillIn order to meet the expected increase in demand for pellet feed and address logistical issues such as transportation delays, CPC has established a new feed mill in Nubaria. Set to begin operations during the second half of 2012, this state of the art mill is fully equipped with the latest technology. The new feed mill will nearly double CPC’s overall feed capacity. BroilersCPC has become the largest player in the local broilers market following acquisitions of a number of smaller competitors since the end of 2007. In order to maintain this leadership position and produce the highest quality product possible, we have imple-mented international-standard measures for bio-safety, bio-security, and workforce training across our broilers facilities.
River TransportationIn line with our strategy of investing in related industries that streamline our supply chain, CPC has acquired a 5% stake in Middle East for River Transportation (MENA), a newly established com-pany operating in Egypt’s river transport sector. The company was created to address capacity and infrastructure constraints at Egypt’s river ports, and will focus on grain transport services.
Quantitative Highlights2011 was a turbulent year for the Egyptian economy. Despite the challenges, CPC managed to maintain its profit levels, sustaining only slight percentage change in net profits by year-end 2011. CPC’s total assets reached EGP 1,919 million in 2011, up from 1,803 mil-lion the year before. Meanwhile, net profit fell from EGP 232 million in 2010 to EGP 190.6 million in 2011.
TestingWe are committed to ensuring the safety and optimal nutritional value of all our products, and have imple-mented a continuous testing process to monitor the quality of all CPC product lines. These quality control measures have helped increase productivity: our yield percentages and feed conversion rates have improved consistently.
Cairo GreenCPC is committed to international best practices in bio-safety and security, and actively pursues investments in fields related to our primary focus on poultry produc-tion. The Group has established a new company called Cairo Green that will specialize in the bio-secure com-posting of treated chicken manure to produce high-value compost. Cairo Green’s operations will contribute to bio-safety across CPC’s operations and contribute positively to the environment by minimizing the risk of infection resulting from the transport of manure.
CPC ANNUAL REPORT 2011 17
Feed OperationProduces poultry compounded feed (pellets and mash) and any other types of feed.
Grandparent OperationRaises one-day-old grandparent stock to pro-duce one-day-old parent chicks for sale in the market and to CPC’s parent division farms.
Parent OperationRaises one-day-old parent chicks to produce ready-for-hatch eggs for CPC’s hatcheries division.
Hatchery OperationHatches ready-for-hatch eggs to produce one-day-old broiler chicks for sale in the mar-ket and to CPC’s broiler division.
Broiler OperationRaises one-day-old broilers for sale in the market and to CPC’s slaughtering facilities.
Processing and Further Processing OperationsSlaughters broiler chickens to produce frozen and fresh whole chicken and chicken parts in addition to value-added products for sale in the market.
CPC Poultry Operations
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Corporate GovernanceThe Board of Directors and management of CPC are firmly committed to upholding the principles of good governance. Designed to maximize accountability, fairness and transparency, our Corporate Governance policies enable the CPC General Assembly, the Board of Directors and the Audit Committee to function efficiently and independently.
CPC General AssemblyThe Assembly, whose membership includes all CPC shareholders, is the company’s ultimate governing body, responsible for electing the Board of Direc-tors, appointing the external auditors, and approving financial results and dividend distribution.
Board of DirectorsA clear majority of our board (six out of nine mem-bers) serve as non-executives to ensure the indepen-dence of decisions. CPC is in line with international best practices to reassure shareholders that their interests are being looked after in a manner that is both efficient and transparent. CPC’s board is re-sponsible for overseeing all aspects of the company and safeguarding its growth for our valued share-holders.
Audit CommitteeThe Audit Committee is charged with carrying out the procedures outlined in the CPC Audit Commit-tee Charter, which is reviewed and reassessed on an annual basis. The Audit Committee is responsible for making sure that CPC is in compliance with all financial and corporate laws and regulations as well
as additional reporting requirements in the markets in which the company operates. The Audit Com-mittee is also empowered to authorize and conduct investigations that fall within its scope of responsibili-ties, including reviews of significant accounting and reporting irregularities and their impact on financial statements, and overseeing the internal and external audit process.
CPC ANNUAL REPORT 2011 19
Corporate SocialResponsibilityContributing positively to the communities in which we do business is an integral com-ponent of CPC’s value sys-tem. From making targeted donations to organizations in need, to providing world-class training and educational op-
portunities to our staff, assist-ing the Ministry of Agriculture and supporting orphanages, we never miss a chance to further the development of the Egyptian poultry sector and engage with the community to address crucial social issues.
Community SupportIn keeping with our long history of cooperation with Egyptian institutions working to promote agriculture, CPC participated in several initia-tives to upgrade the faculties of agriculture at Cairo, Alexandria and Ain Shams universities. The company also sponsored attendance at the American University in Cairo’s annual Poultry Pathology conference in 2011. In the aftermath of the Egyptian Revolution, CPC stepped up to give support to various organizations that are working to assist those injured in recent events. Funds were contributed to both the Kasr El Aini Hospital and the Kasr El Aini Friends Association.
Employee TrainingOur employees are at the heart and soul of CPC’s operations, and we strive to provide them with op-portunities to enhance their skills through educa-tion and training. CPC offers opportunities for em-ployees to pursue MA and PhD degrees, as well as in-house summer training courses and scholar-ships to train and study in Egypt and abroad.
Health and SafetyMaintaining the highest international standards in health and safety has always been a top prior-ity at CPC. We meticulously implement the most up to date bio-safety and bio-security measures available in order to provide our customers with the highest quality products possible, and ensure a safe environment for our employees.
The EnvironmentAt CPC it is crucial that our operations do not have a negative impact on the environment. We are committed to implementing and utilizing the latest technology in our facilities to comply with international standards for environmentally friendly production techniques.
Community Job CreationWe believe that, when given the chance, even the most underprivileged groups in society have the ability to succeed and thrive. For this reason, CPC works with local orphanages to produce uniforms worn by employees in our laboratories, factories and farms. By sourcing uniforms from orphanages, CPC has created an economically sustainable project that gives orphans the chance to earn money and de-velop important skills that will sustain them economically into the future.
Research and DevelopmentAs a pioneer in Egypt’s poultry industry, we feel that it is our responsibility to transfer our know-how to advancing the sector as a whole. To this end, the company works with Egypt’s Ministry of Agriculture on research and development projects and provides facilities and funding for the development of testing farms. CPC also do-nates one-day-old chicks and feed to research-ers carrying out groundbreaking research on poultry production and related areas.
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Board of Directors
CPC ANNUAL REPORT 2011 21
Mr. Sayed Nassef
Board Member
Mr. Ahmed Al Khayat
Vice Chairman & Managing Director
Mr. Ayman Laz
Board Member
Dr. Hans Nagel
Board Member
Mr. Adel Al-Alfi
Managing Director
ProfessorMamdouhSharafeldinChairman
Mr. Moataz Al-Alfi
Board Member
Mr. Mahmoud Al Afifi
Board Member
Eng. Tarek Tawfik
Managing Director
22 CPC ANNUAL REPORT 2011
Executive Management
CPC ANNUAL REPORT 2011 23
Mr. Ahmed Al Khayat
Vice Chairman & Managing Director
Eng. Tarek Tawfik
Managing Director
Mr. Mostafa Rashed
Chairman Processing
Division
Mr. Hazem Zayed
Assistant Managing Director, Corporate Finance
& Business Development
Mr. Adel Al-Alfi
Managing Director
Mr. Ayman Roushdy
HR Director
Mr. Mohamed Taha
Chief Financial Officer
Eng. Wissam Al Adany
Information Technology
Director
Dr. Mohamed Hamoud
Chief Technical Officer
Dr. Nabil Darwish
Chairman, Grandparent
Division
Mr. Bas Zuidberg
Supply Chain Officer
Eng. Basem Aboul Wafa
Projects Director
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Operations Management
CPC ANNUAL REPORT 2011 25
Dr. Khaled Moustafa
Grandparent Division Manager
Eng. Mohsen Abdel MegeedParent Division
Manager
Mr. Aysar Abu Elenen
Hatchery Division Manager
Mr. Ahmed RefaatProcessing
Division Manager
Dr. Eng. Khaled Badr
Starch & Glucose Division Manager
Dr. Amir IskandarBroilers Division
Manager
Eng. Ali Mowafak
Feed Division Manager
26 CPC ANNUAL REPORT 2011
Financial Review
Cairo Poultry Company(An Egyptian Joint Stock Company)
Consolidated financial statements for the year ended December 31, 2011
Contents
28 Auditors’ report30 Consolidated balance sheet
31 Consolidated income statement32 Consolidated statement of changes in shareholders’ equity
33 Consolidated statement of cash flows34 Notes to the consolidated financial statements
CPC ANNUAL REPORT 2011 27
28 CPC ANNUAL REPORT 2011
KPMG Hazem HassanPublic Accountants & Consultants
Nasr Abou ElAbasMorison International
AUDITORS’ REPORTTo the shareholders of Cairo Poultry Company“An Egyptian joint stock Company”
Report on the Financial StatementsWe have audited the accompanying consolidated financial statements of Cairo Poultry Company S.A.E, which comprise the consolidated balance sheet as at 31 December 2011 , and the related consolidated statements of income, changes in shareholders’ equity, and cash flow for the year then ended, and a summary of significant ac-counting policies and other explanatory notes.
Management’s Responsibility for the Financial StatementsThese consolidated financial statements are the responsibility of Company’s management. Man-agement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the Egyptian Ac-counting Standards and in the light of the prevail-ing Egyptian laws, management responsibility includes, designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error management responsibility also includes selecting and applying appropriate accounting policies and making accounting esti-mates that are reasonable in the circumstances.
Auditor’s ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit. Except as described below, We con-ducted our audit in accordance with the Egyp-tian Standards on Auditing and in the light of the prevailing Egyptian laws. Those standards require that we comply with ethical requirements and plan
and perform the audit to obtain reasonable assur-ance whether the consolidated financial state-ments are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and dis-closures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated finan-cial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consoli-dated financial statements in order to design audit procedures that are appropriate in the circum-stances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the ap-propriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial state-ments.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.
Basis for Qualified OpinionThe consolidated financial statements include as-sets, liabilities, revenues and expenses refers to subsidiaries that were audited by other auditors amounted to L.E. 592 096 974, L.E. 257 568 510 and L.E. 1 134 039 313 and 969 127 949 with a percentage of 31.44%, 27.21%, 35.25% and 32.05% respectively to total consolidated assets,
CPC ANNUAL REPORT 2011 29
liabilities, expenses and revenues as at 31 De-cember 2011. Against 21.31%, 26.11%, 34.55% and 32% respectively to total consolidated assets, liabilities, expenses and consolidated revenues as at 31 December 2010, So we couldn’t deter-mine whether there is an important adjustments to be made of the value of these assets, liabilities, expenses and revenues recorded in the consoli-dated financial statements to be relevant in accor-dance with Egyptian Accounting Standards.
Qualified OpinionIn our opinion, except for the effects of such ad-justments, if any, as might have been determined to be necessary had we audited the financial statements of such subsidiary companies referred to in paragraph above, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial posi-
tion of the group as at 31 December 2011 and the results of its operations and its cash flows for the financial year then ended, in accordance with Egyptian Accounting Standards and relevant Egyptian laws and regulations that related to pre-pare this consolidated financial statements.
Report on Other Legal and Regulatory RequirementsThe Company maintains proper books of account, which include all that is required by law and by the statutes of the Company; the consolidated financial statements are in agreement thereto.
The financial information included in the Board of Directors’ report, prepared in accordance with Law No. 159 of 1981 and its executive regula-tions, is in agreement with the Company’s books of account.
Ahmed SalemCapital Authority Controller
Register No.(94)KPMG Hazem Hassan
Nasr Abou ElAbasCapital Authority Controller
Register No.(106)Nasr Abou ElAbas / Morison International
Cairo, 11 January 2012
30 CPC ANNUAL REPORT 2011
Consolidated Balance Sheet As at 31 December 2011
Mr. Adel Al-Alfi General manager
Eng. Mohamed Tarek Zakaria Managing Director
Dr. Mamdouh Abdelwahab Sharafeldien Chairman
Acc. Mohammed TahaChief financial office
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)Consolidated Statement of financial position as at 31 December 2011
Note no.31/12/2011
L.E.31/12/2010
L.E.Non-current assetsProperty, Plant and equipment (13) 934 061 517 919 039 204 Breeders (14) 28 393 801 22 622 084 Plant Wealth (15) 1 197 580 1 270 670 Projects under construction (16) 97 713 872 52 867 801 Other financial investments (17) 1 516 971 1 025 377 Investments in associate companies (18) 83 731 964 89 336 821 Other investments (19) 129 697 622 214 524 899 Other non-current assets 356 969 371 143 Total non-current assets 1 276 670 296 1 301 057 999Current assetsInventories (20) 404 644 964 327 972 716 Trade receivables & other debit balances (21-1) 125 662 695 122 161 452 Due from related parties (32-1) 97 339 641 45 111 919 Cash and cash equivalent (22) 14 749 778 7 663 596 Total current assets 642 397 078 502 909 683Current liabilitiesProvision for Contingency (23) 1 358 080 11 884 884 Provision for claims (24) 60 282 629 61 223 190 Banks-credit facilities (25) 212 975 682 54 673 132 Banks-overdrafts 86 946 432 26 441 285 Tax authority creditors-income tax 7 947 722 24 359 578 Trade payables & other credit balances (26) 143 386 698 138 735 514 Due to related parties (32-2) 1 512 871 6 172 339 Long term loans - current portion (35) 101 540 366 67 777 053 Total current liabilities 615 950 480 391 266 975
Working capital 26 446 598 111 642 708
Total investment 1 303 116 894 1 412 700 707Financed as follows:Shareholders’ EquityIssued & paid - up capital (33-2) 290 304 000 290 304 000 Reserves 170 427 961 159 619 218 Special reserve- change in value of investments available for sale (34) 49 267 727 135 214 004 Revaluation surplus 46 820 572 46 820 572 Retained earnings 212 060 711 227 167 654 Parent company’s share in profits of treasury stocks sale 196 446 196 446 Net profit for the year 189 740 360 227 963 711 Total equity attributable to the shareholders of the parent company 958 817 777 1 087 285 605Minority interest 13 782 518 16 305 887 Total Shareholders’ Equity 972 600 295 1 103 591 492
Non-current liabilitiesLong term loans (35) 300 010 406 277 463 033 Deffered tax liabilities (27-1) 27 450 981 23 648 418 Long term notes payable 14 195 3 982 184 Deffered sales tax installments 3 041 017 4 015 580 Total non-current liabilities 330 516 599 309 109 215
Total shareholders’ equity and non-current liabilities 1 303 116 894 1 412 700 707
Notes from pages 34 to 65 form an integral part of the consolidated financial statements.
CPC ANNUAL REPORT 2011 31
Consolidated Income StatementFor the financial year ended 31 December 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
Consolidated financial statements for the year ended December 31, 2011
Note no.The year ended
31/12/2011L.E.
The year ended31/12/2010
L.E.Net Sales 1 885 960 197 1 961 573 256 Cost of Sales (1 585 392 320) (1 416 937 558)Gross profit 300 567 877 544 635 698
Other operating revenues (6) 146 187 272 73 654 775 Selling & Distribution expenses (84 577 665) (78 782 651)General & Administrative expenses (7) (84 907 312) (65 144 696)Other operating expense (8) (24 125 965) (175 424 613)Board of Directors remunerations (273 000) (273 000)Operating income 252 871 207 298 665 513
Revenue from investments available for sale 9 699 669 1 363 437 The group’s share in the net loss/ profit of associate companies (18) (3 514 609) 1 600 077 Profit from purchase of an associate - 6 545 537 Finance interest and expense (10) (56 618 906) (48 169 141)Net profit for the year before income tax 202 437 361 260 005 423Income tax (7 947 722) (24 359 578)Deferred tax (27-1) (3 802 563) (3 377 498)Net profit after income tax 190 687 076 232 268 347Distributed as follows:Parent company’s share in profit 189 740 360 227 963 711 Non controlling interest share in profit 946 716 4 304 636
190 687 076 232 268 347Earning per share for the year (L.E./Share) (36) 1.31 1.57
Notes from pages 34 to 65 form an integral part of the consolidated financial statements.
32 CPC ANNUAL REPORT 2011
Consolidated Statements of Changes in Shareholders’ EquityFor the year ended 31 December 2011
Des
crip
tio
nN
ote
No.
Sha
re
cap
ital
L.E
.
rese
rves
L.E
.
Sp
ecia
l re
serv
es
eval
uati
on
diff
eren
ces
of
avai
lab
le
for
sale
in
vest
men
tsL.
E.
Re-
eval
uati
on
surp
lus
L.E
.
Ret
aine
d
earn
ing
sL.
E.
Par
ent
com
pan
y’s
shar
e in
p
rofi
ts o
f tr
easu
ry
sto
cks
sale
L.E
.
Net
Pro
fit
for
the
ye
arL.
E.
Tota
lL.
E.
Bal
ance
as
at 1
/1/2
010
145
152
000
247
284
332
134
291
839
46 8
20 5
7222
7 37
2 60
819
6446
205
365
585
1 00
6 48
3 38
2
Tran
sfer
red
from
lega
l res
erve
to
pay
men
ts u
nder
in
crea
sing
cap
ital
145
152
000
(97
000
000)
--
(48
152
000)
--
-
Div
iden
ds
for
the
year
200
9-
9 13
5 44
8-
- 4
8 66
8 06
0-
(205
365
585
)(1
47 5
62 0
77)
Ad
just
men
ts-
199
438
--
(721
014
)-
-(5
21 5
76)
Ava
ilab
le fo
r sa
le fi
nanc
ial i
nves
tmen
t ev
alua
tion
diff
eren
ces
(23)
--
922
165
-
--
-92
2 16
5
Net
pro
fit fo
r th
e ye
ar-
--
--
-22
7 96
3 71
122
7 96
3 71
1
Bal
ance
as
at 3
1/12
/201
029
0 30
4 00
015
9 61
9 21
813
5 21
4 00
446
820
572
227
167
654
196
446
227
963
711
1 08
7 28
5 60
5
Bal
ance
as
at 1
/1/2
011
290
304
000
159
619
218
135
214
004
46 8
20 5
72
227
167
654
196
446
22
7 96
3 71
1 10
87 2
85 6
05
Clo
se 2
010
pro
fit in
ret
aine
d e
arni
ngs
--
--
227
963
711
-(2
27 9
63 7
11)
Tran
sfer
red
to
rese
rves
-19
049
983
-
-(1
9 04
9 98
3)-
--
Div
iden
ds
for
the
year
201
0-
(8 0
00 0
00)
--
(222
803
70
3)-
-(2
30 8
03 7
03)
Ad
just
men
ts-
(241
240
)-
-(1
216
968
)-
-(1
458
208
)
Ava
ilab
le fo
r sa
le fi
nanc
ial i
nves
tmen
t ev
alua
tion
diff
eren
ces
(23)
--
(85
946
277)
--
--
(85
946
277)
Net
pro
fit fo
r th
e ye
ar-
--
--
-18
9 74
0 36
018
9 74
0 36
0
Bal
ance
as
at 3
1/12
/201
129
0 30
4 00
017
0 42
7 96
149
267
727
46 8
20 5
7221
2 06
0 71
119
6 44
618
9 74
0 36
095
8 81
7 77
7
Not
es fr
om p
ages
34
to 6
5 fo
rm a
n in
tegr
al p
art
of t
he c
onso
lidat
ed fi
nanc
ial s
tate
men
ts.
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)Consolidated Statement of financial position As at 31 December 2011
CPC ANNUAL REPORT 2011 33
Consolidated Statement of Cash FlowsFor the financial year ended 31 December 2011
Note No.The year ended
31/12/2011L.E.
The year ended 31/12/2010
L.E.Cash Flows from Operating Activities Net profit for the year before income tax and minority interest in profits 202 437 361 260 005 423 Adjustments to reconcile net profit for the year to net cash flowsfrom operating activities:Depreciation of fixed assets (13) 76 137 101 69 304 122 Depreciation of plant wealth 73 090 200 887 Capital gain / loss (865 259) (2 813 564)Amortization of breeders 89 505 169 83 390 464 Profits from sale of breeders (21 387 147) (15 769 728)Impairment in fixed assets 220 412 8 805 537 Impairment in investment 8 406 1 427 123 Impairment in breeders 4 922 117 51 000 323 Impairment in trade receivables and other debit balances - formed 1 375 542 3 229 809 reverse Impairment in trade receivables and other debit balances - formed (290 270) (7 515 137)Reverse the impairment in trade receivables and other debit balances 3 539 607 53 065 234 Impairment in inventories - formed - (5 227 848)Reverse in breeding weath impairment (14 096 169) -Reverse the impairment in inventories (46 278 640) -The group's share in the net profits of associates companies 3 514 609 (1 600 077)Provision for Contigencies - formed 7 000 16 901 080 Provision for Contigencies - no longer required (10 533 804) (10 713 356)Provision of claims - formed (24) 8 987 454 33 553 400 Provision of claims- no longer required (9 880 616) (6 500 000)Investments revenue (9 699 669) (1 363 437)Credit interests (198 742) (42 647)Finance interests & expense (10) 60 373 450 48 727 501
337 871 002 578 065 109Changes in working capitalChange in inventories (33 933 215) (89 186 670)Change in trade receivables & other debit balances (4 572 341) (14 045 906)Change in trade payables & other credit balances (68 762 795) (1 660 211)Change in due from related parties (52 447 811) 19 610 677Change in due to related parties (4 659 468) 1 382 462Provisions for contengencies - used (47 399) (15 528 633)Financial interests paid (60 373 450) (48 727 501)Net cash flows generated from operating activities 113 074 523 429 909 327 Cash Flows From Investing ActivitiesProceeds from sale of fixed assets 8 469 164 3 841 465Payments for acquisition of fixed assets & projects under constructions (143 643 345) (116 489 112)Payments for purchase of Poultry breeders (110 108 794) (157 037 672)Proceeds from sale of Poultry breeders 45 393 107 74 835 738payments for purchase of financial investment (1 369 000) -Collected interests 198 742 42 647proceeds from sale of financial investments 9 699 669 1 363 437proceeds from revenue of investments in subsideries 600 129 394 520Net cash flow used in investing activities (190 760 328) (193 048 977)Cash Flows From Financing ActivitiesChange in banks - credit facilities 158 302 550 (57 794 012)Change in banks - overdraft 60 505 147 (48 001 505)Change in loans 56 310 686 12 310 296Decrease in minority interest (3 470 085) (4 212 990)Cash dividends paid for shareholders (186 876 311) (147 562 077)Net cash flows used in financing activities 84 771 987 (245 260 288)Net change in cash & cash equivalents during the year 7 086 182 (8 399 938)Cash and cash equivalents at 1 January 7 663 596 16 063 534 Cash and cash equivalents at 31 Dec. (22) 14 749 778 7 663 596
Notes in pages from 34 to 65 form an integral part of the consolidated financial statements.
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
Consolidated financial statements for the year ended December 31, 2011
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
34 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
1. Company’s and subsidiaries’ background Cairo Poultry Company – An Egyptian Joint Stock Company – was established in year 1977 according to the provisions of Investment Law No. 230 of 1989.which was replaced by the Investment Incentives and Guarantees Law No. 8 of 1997
The Company was registered under the commercial register on 26/7/1977 under No. 42444, The Company’s life was extended to be 25 Years starting from 19/7/2002.Company location: 32(B) Murad st –Giza – Egypt. Chairman of the board Prof. Dr. Mamdouh Sharf EL Dien.
The Company is a subsidiary to the Kuwait Company for the food (Kuwait joint stock Company).
The Company’s purposeThe Company’s objective is represented in producing, raising chicks and producing life stock fodder, mix preliminary ingredients and producing hatching eggs and participating in similar projects domestically and overseas.
Registration in the Stock ExchangeThe Company is listed in the formal table (A) of Cairo and Alexandria Stock Exchanges.
2. Basis of preparation2-1 Statement of compliance
The financial statements have been prepared in accordance with Egyptian Accounting Standards (“EAS”), and incompliance with applicable Egyptian laws and regulations.
The financial statements were approved by the Company’s Board of Directors in its meeting held on 8/1/2012 for issuance.
2-2 Basis of measurementThe consolidated financial statements have been prepared on the historical cost basis except for the following items of assets & liabilities which are stated by its fair value:· financial instruments at fair value through profit or loss are measured at fair value · Semi-Finished production ( Chicks at the fatten station)· Semi-Finished production (eggs in incubation labs)· Available for sale investmentsThe methods used to measure fair values are discussed further in note 4.
2-3 Functional and presentation currencyThese consolidated financial statements are presented in Egyptian pound, which is the Company’s and its subsidiaries functional currency.
2-4 Use of estimates and judgmentsThe preparation of financial statements in conformity with Egyptian Accounting Standards requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimate is revised and in any future periods affected.
Information about critical judgments in applying accounting policies that have the most significant
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 35
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
effect on the amounts recognised in the financial statements is included in the following notes:Note (3-6) : Breeding wealth Note (3-1) : Business combination
Information about uncertainties assumptions and estimation that have a significant risk of resulting in a material adjustment within the next financial year are included in the following:
Note (13) : Property, plant and equipment.Note (20) : Inventory impairment.Note (21-2) : trade receivables and other debit balances impairment.Note (24) : Provisions and Contingent liabilities.Note (27-1) : deferred tax.
3. Significant accounting policiesThe accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.
3-1 Basis of consolidationSubsidiary companiesSubsidiaries are those enterprises controlled by the Company. Control exists when the Company has the power, to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. And when evaluating this power we have to take in consideration the present and possible voting rights in the consolidated financial statements’ date. And the subsidiaries’ financial statements will be consolidated in the consolidated financial statements from the acquisition date till the holding company loses its power.
AssociatesAssociates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Associates are accounted for using the equity method. The consolidated financial statements include the Group’s share of the income and expenses of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.
Transactions eliminated on consolidation Intra-group balances, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.
3-2 Foreign currency Foreign currency transactionsTransactions in foreign currencies (other than functional and presentation currency the Egyptian Pound) are translated to the functional currency at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
36 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss except for differences resulted from translation of available for sale investments which is to be recognized directly in shareholders’ equity. Non-monetary items in a foreign currency that are measured in terms of historical cost are translated using the exchange rate at the date of the balance sheet.
3-3 Financial instruments
Non-derivative financial instrumentsThe Company initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including assets designated at fair value through profit or loss) are recognised initially on the trade date, which is date that the Company becomes a party to the contractual provisions of the instrument.
The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
The Company classifies non – derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for sale financial assets.
Financial assets at fair value through profit or lossA financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. Financial assets are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy. Attributable transaction costs are recognized in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss.
Financial assets designated at fair value through profit or loss comprise equity securities that have been classified as available for sale.
Loans and receivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans are measured at amortised cost using the effective interest method, less any impairment losses. Generally, trade and other receivables are stated at their nominal value less an allowance for any doubtful debts.
Loans and receivables comprise cash and cash equivalents, and trade and other receivables.
Cash and cash equivalentsCash and cash equivalents comprise cash balances in banks and call deposits with original
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 37
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
maturities of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Available-for-sale investments Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the above categories of financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses (note (19) and foreign currency differences on available-for sale debt instruments, are presented in fair value reserve in equity. When an investment is derecognised, gain or loss accumulated in equity is reclassified to profit or loss. Available-for-sale financial assets comprise equity securities and debt securities.
Non-derivative financial liabilities The company initially recognizes debt securities issued and subordinated liabilities on the date that they are originated. All other financial liabilities (including liabilities designated at fair value through profit and loss) are recognized initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument.
The Company derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
Financial assets and liabilities are offset and the net amount presented in the balance sheet when , and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liabilities simultaneously.
The Company classifies non – derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at the fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.
Other financial liabilities comprise loans and borrowings , bank overdrafts, and trade and other payables.
CapitalAuthorized capitalThe Company’s authorized capital amounts to L.E one billion.
Issued and paid up capitalThe holding Company’s issued and paid up capital amounts to L.E. 290 304 000 divided into 145 152 000 shares at par value L.E. 2 each.
Repurchase, disposal and reissue of share capital (treasury shares)When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased shares are classified as treasury shares and are presented in the reserve for own shares. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is presented in share premium. Any profit or loss from selling or purchasing or issuing these equity instruments should not be recognaised in profit or loss.
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
38 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
3-4 Property, plant and equipmentItems of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses (note: 13).
Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. and capitalised borrowing costs.
Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment . the cost of borrowing for the acquisition, construction or production of assets included in the income statement when incurred When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items.
The gain and loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognized net within other income/other expenses in profit or loss.
B- Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property, plant and equipment are recognized in profit or loss as incurred.
C- DepreciationDepreciation is recognized in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives for the current and comparative periods are as follows:
Description Estimated useful
Lives (Years)
Buildings & Constructions 10 - 40Machinery and equipments 7 - 14Motor Vehicles & Transportation means 5Tools & Equipments 5Furniture and office equipment 3-8
Depreciation commences when the fixed asset is completed and made available for use. Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
3-5 Grants Granted assets gained by group companies from grantee are recorded after deduction the cost of purchasing till reaches the book value for the assets, the grants are recorded as revenue at consolidated income statement during the estimated life time for the asset with reducing the annual depreciation burden.
3-6 BreedersThe grand Parent and parents Poultry are recorded at cost after deducting accumulated amortization for every station which consists of the cost of purchasing chicks (parent chicks) aged one day in addition to all expenses during the breeding of parents and grand parents before parents and grand
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 39
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
parents started producing hatching eggs for each station of grand parents and parents breeding expenses for each station is calculated based on estimated production period for grand parents and parents at the station and the expected production (hatching egg production). The disposal of parents and grand parents is recognized at the liquidation of the herd.
3-7 Projects under constructionExpenditures incurred on purchasing and constructing fixed assets are initially recorded in projects under construction until the asset is completed and becomes ready for use. Upon the completion of the assets, all related costs are transferred to fixed assets. Projects under construction are measured at cost less accumulated impairment losses.
3-8 Plant life stock All the expenditures of planting olive trees that have been capitalized as fixed assets in the balance sheet under the plant life stock item after reaching the marginal production, and to be depreciated on 50 years according to its nature taking the value of accumulated impairment losses into consideration.
3-9 GoodwillGoodwill is initially measured at its cost, being the excess of the cost of the business combination over the Group’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities. After initial recognition, the group measures acquired goodwill at cost less impairment losses. Recognized goodwill impairment losses are not subsequently reversed.
3-10 LeasesLeases are classified as operating leases. The costs in respect of operating leases are charged on a straight-line basis over the lease term (after deducting any discounts and rent-free periods effect). The accrued value from lease incentive received to take on an operating lease is recognised as income.
3-11 InventoriesInventories of raw materials, packing materials and spare parts are measured at the lower of cost or net realizable value.Net realizable value is the estimated selling price, in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost includes any other costs directly attributable to bringing the inventory to a working condition for their intended use
The cost of inventory determined as follows:Raw materials and packing materials is determined at cost according to first in First out method.
Spare parts and supplies are determined at cost according to weighted average method.
The work in progress (Chicks in batteries) at fair value determined by career’s specialists after deducting estimated cost of sales, the increase or decrease in fair value are recorded to income statement – on selling price basis after taking to account the current value at the date of the financial statements.
Finished goods of (Fodders and frozen breeders) are measured at the lower of manufacturing cost or net realizable value. The manufacturing cost comprises raw materials, direct labor, and cost includes an appropriate share of overheads based on normal operating capacity.
3-12 Impairment Financial assetsA financial asset carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
40 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Loans and receivables and held-to-maturity investment securitiesThe Company considers evidence of impairment for loans and receivables and held-to-maturity investment securities at both a specific asset and collective level. All individually significant receivables and held-to-maturity investment securities are assessed for specific impairment. All individually significant loans and receivables and held-to-maturity investment securities found not to be specifically impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Loans and receivables and held-to-maturity investment securities that are not individually significant are collectively assessed for impairment by grouping together receivables and held to-maturity investment securities with similar risk characteristics.
In assessing collective impairment the Company uses historical trends of the probability of default, the timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account against loans and receivables or held – to – maturity investment securities. Interest on the impaired asset continues to be recognised. When a subsequent event (e.g. repayment by a debtor) causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Available-for-sale financial assetsImpairment losses on available-for-sale financial assets are recognised by reclassifying the loss accumulated in the fair value reserve in equity, to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to time application of the effective interest method are reflected as a component of interest income.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in equity.
Non-financial assetsThe carrying amounts of the Company’s non-financial assets, other than biological assets, investment property, inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each year at the same time. An impairment loss is recognised if the carrying amount of an asset or its related cash –generating unit (CGU) exceeds its estimated recoverable amount.
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 41
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGU.
The Company’s corporate assets do not generate separate cash inflows and are utilized by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and consistent basis and tested for impairment as part of the testing of the CGU to which the corporate asset is allocated.
Impairment losses are recognised in profit or loss. An impairment loss in respect of other assets, that recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
3-13 Defined contribution plansThe Company contributes to the government social insurance system for the benefits of its employees according to the social insurance Law No. 79 of 1975 and its amendments, the Company’s contributions are recognized in income statement using the accrual basis of accounting. The company’s obligation in respect of employees’ pensions is confined to the amount of aforementioned contributions.
3-14 ProvisionsA provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
3-15 Revenue recognitionRevenue from the sale of goods is measured at the fair value of the consideration received or receivable, and are stated net of returns, less trade discounts and sales tax.
Revenue is recognised when the significant risks and rewards of ownership have been transferred to the buyer. recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
The timing of the transfers of risks and rewards varies depending on the individual terms of the contract of sale. In usually times transfer occurs when the product is received at the customer’s warehouse. No revenue is recognised in case of uncertainty to collect the receivables or its related cost or sales return or continuing management involvement with the goods.
Rental IncomeRental income is recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income, over the term of the lease.
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
42 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
Lease paymentsPayments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.
3-16 Finance income and expenses
Finance income comprises interest income on invested funds, dividend income, gains on the disposal of available-for-sale financial assets, fair value gains on financial assets at fair value through profit or loss.Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend income received from investments is recognised in profit or loss when company right to this dividends arises in the financial period in which dividends are approved by the investees General assemblies .
Finance cost comprise interest expense on borrowings, fair value losses on financial assets at fair value through profit or loss, impairment losses recognised on financial assets. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method Foreign currency gains and losses are reported on a net basis as either finance income .
3-17 Income taxIncome tax on profit or loss for the year comprises current and deferred tax. Income tax is recognized in the income statement except to the extent that it relates to items recognized directly on equity, in which case it is recognized in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
3-18 Deferred taxDeferred tax providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the consolidated balance sheet date.
A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realized through incoming years.
3-19 Segmentation reportsEach sector of the companies’ activity segments considers as a unit that contributes in providing variant products different that the other activities (Activity segments) and each unit have risks and utilities different than the other unit exist on the company according to its activity.
3-20 Earnings per shareThe Company presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period.
4. Determination of fair valueA number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non- financial assets and liabilities. Fair values have been determined for measurement
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 43
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes concerning that asset or liability.
4-1 Semi finished - production (Chicks in batteries)Determined by fair value based on its present value.
4-2 Semi finished - production (eggs in incubation labs)Determined by fair value based on its present value.
4-3 Available for sale investmentsAvailable for sale investments in active market is determined by fair value.
4-4 financial instruments at fair value through profit or lossfinancial instruments at fair value through profit or loss are measured at fair value and recognise the change in faire value through profit & loss.
5. Financial risk management OverviewThe Group has exposure to the following risks from its use of financial instruments:• credit risk• liquidity risk • market risk.
Risk management frameworkThe Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Board is responsible for developing and monitoring the Company’s risk management policies.
The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Company’s Board oversees how management monitors compliance with the Company’s risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. The Company’s Board is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the management.
Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivables from customers and investment securities.
Trade and other receivablesThe Company’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The demographics of the Company’s customer base, including the default risk of the industry
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
44 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
and country, in which customers operate, has less of an influence on credit risk. Credit risk is considered limited due to the Company’s policy that points to dealing with a different customers sector and changing the Company’s policy to cash sales.
The Board of Directors has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Company’s standard payment and delivery terms and conditions are offered. Purchase limits are established for each customer, which represents the maximum open amount without requiring approval from the management; these limits are reviewed quarterly. Customers that fail to meet the Company’s benchmark creditworthiness may transact with the Company only on a prepayment basis.
Most of the Company’s customers have been transacting with the Company for many years, and losses have occurred infrequently. In monitoring customer credit risk, customers are grouped according to their credit characteristics, including whether they are an individual or legal entity, whether they are a wholesale, retail or end-user customer, geographic location, industry, aging profile, maturity and existence of previous financial difficulties. Trade and other receivables relate mainly to the Company’s wholesale customers. Customers that are graded as “high risk” are placed on a restricted customer list and monitored by the Management, and future sales are made on a prepayment basis.
Goods are sold subject to retention of title clauses, so that in the event of non-payment the Company may have a secured claim. The Company does not require collateral in respect of trade and other receivables.
The Company establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistics for similar financial assets.
The Company held cash and cash equivalents of L.E 14 749 778 at 31 December 2011 (2010: L.E 7 663 596), which represents its maximum credit exposure on these assets. The cash and cash equivalents are held with bank and financial institution counterparties.
Liquidity riskLiquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.
The Company uses activity-based costing to cost its products and services, which assists it in monitoring cash flow requirements and optimizing its cash return on investments. Typically the company ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition, the Company maintains credit facility amounted to L.E 86 946 432 with interest rate between 9.5% (9.5% 2010.
Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return. The Company buys and sells derivatives, and also incurs financial
CPC ANNUAL REPORT 2011 45
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
liabilities, in order to manage market risks. All such transactions are carried out within the guidelines set by the Management.
Currency riskThe Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than the respective functional currencies of the Company (EGP L.E), primarily the U.S. Dollars (USD) and (Euro).
In respect of other monetary assets and liabilities denominated in foreign currencies, the Company ensures that its net exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances.
Interest rate riskThe Company adopts a policy of ensuring that between 9 and 10 percent of its exposure to changes in interest rates on borrowings is on a fixed-rate basis, taking into account assets with exposure to changes in interest rates. This is achieved by entering into interest rate swaps.
Other market price riskInvestments at fair value through profit or loss. Management of the Company monitors the mix of debt and equity securities in its investment portfolio based on market index. Material investments within the portfolio are managed on an individual basis and all buy and sell decisions are approved by the B.O.D.
Capital managementThe Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists of paid up capital and retained earnings. The Board of Directors monitors the return on capital, as well as the level of dividends to shareholders.
The Company’s net debt to adjusted equity ratio at the reporting date was as follows:31/12/2010
L.E.31/12/2011
L.E.700 376 190946 467 079Total liabilities
7 663 59614 749 778 Less: cash and cash equivalents692 712 594931 717 301Net debt
1 103 591 492972 600 295Total equity
62.8%95.8%Net debt to adjusted equity ratio at 31 DecemberThere were no changes in the Group’s approach to capital management during the year.
6. Other operating revenuesFinancial year
ended 31/12/2011
L.E.
Financial year ended
31/12/2010L.E.
Export support revenue - 2 028 563Profit from selling Grand’s/Parents 21 387 147 15 769 729Capital gain 865 259 2 813 564*Recovery of service duties 16 182 979 -Other revenues 24 384 250 21 334 108Provision no longer required 20 414 421 18 965 826Reversed impairments in breeding wealth 14 096 169 -Reversed impairments in inventory 46 278 640 7 515 137**Reversed impairments in trade receivable 2 578 407 5 227 848
146 187 272 73 654 775
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
46 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
* This item represents the amounts recovered from custom duty port said custom related to the service duties that has been
paid to custom duty for several years on which the company has litigate by suit no 3805 for 2005 on which the company has
won the suit to recover the duties in.
** The raw material inventory was reduced on 31 December 2010 by an amount of LE 46 million represent (Elsheleem) material
this amount is reversed during 2011 based on the technical study prepared & authorized by the responsible department that
states that:
- The misused of operation related to the raw material and recommended not to use during the year ended 31/12/2010.
- During the year 2011 the technical department has renew this study and recommended to use this materials by using other
new operation ways that achieve the maximum production from the material and gives effective results.
7. General and administrative expensesThe year ended
31/12/2011L.E.
The year ended31/12/2010
L.E.Salaries 60 635 972 39 209 375Depreciations 3 723 722 3 460 487Early retirement - 3 200 000Other expenses 20 547 618 19 274 834
84 907 312 65 144 696
8. Other operating expenses
The year ended31/12/2011
L.E.
The year ended31/12/2010
L.E.*Bad debts 3 166 757 3 229 809Impairment in assets 220 412 1 427 123Impairment in investments 8 406 11 047 959Impairment in breeding wealth 4 922 117 51 000 323Impairment in inventory 3 539 607 -Impairment in debtors & other debit accounts 209 900 55 672 213Provision for claims-formation 8 987 454 32 580 635Provision for Contingencies-formation 7 000 3 124 704**Professional fees 2 022 872 -Others 1 041 440 17 341 847
24 125 965 175 424 613
* This item represents the amounts that have been authorized by the company’s board of directors as bad debts were due on
company’s clients.
** This item represents the professional fees to recover the services duties from custom duty- Port said custom duty (note no. 6)
9. Personnel expensesThe year ended
31/12/2011L.E.
The year ended 31/12/2010
L.E.Wages and salaries 196 996 663 141 476 362Compulsory social security contributions 15 463 139 13 033 742Contributions to defined contribution plans 4 658 993 3 741 554
217 118 795 158 251 657
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 47
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
10. Finance expenses
Financial year ended
31/12/2011L.E.
Financial year ended
31/12/2010L.E.
Credit interest 205 580 42 647Debit interest (60 373 450) (48 727 501)Foreign currencies exchange gain 3 548 964 515 713
(56 618 906) (48 169 141)
11. Tax status11-1 Cairo Poultry Company(Holding)
11-1-1 Corporate taxThe Company’s profits shall be subjected to corporate tax according to the provisions of Tax Law No. 187/1993 that was amended, and superseded by Law No. 91/2005.
Years till 1993The company made final tax reconciliation with Tax Authority regarding the corporate tax and settled the due tax differences thereon. Some disputed points pertaining to the period from 9/10/1993 till 31/12/1993 were referred to the court for consideration and are still being considered before the court, & there was a form of reconciliation has been applied on January 6, 2010, & the reconciliation committee has been signed, & the court decision issued on 10 March, 2010 to finish that dispute .
Years from 1994 till 2002 Tax amounts due were paid.
Years 2003/2004Tax inspection is under proceeding for these periods.
Years 2005/2010Tax inspection has not been made until this date, & the tax returns are being delivered on dates.
11-1-2 Salary tax
Years from 1988 till 1993There was a dispute between the company, & Tax authority in the court, the company has applied for a reconciliation according to Law No. 91/2005, & the court decision issued on 29 March, 2010 to finish that dispute .
Years from 1994 till 2008Tax amounts due were paid to the Tax Authority.
Years 2009/2010Tax inspection has not been made until this date, & the tax returns are being delivered on dates.
11-1-3 Stamp taxThe period from 1998 till 31/7/2006Tax inspection was made for the company and the tax amounts due were paid to the Tax Authority.
11-1-4 General sales tax
The company’s activity is exempted from general sales tax according to clause No. (11) of schedule No. (1) Attached to Law No. (2) for the year 1997
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
48 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
11-2 Subsidiaries companiesFirst: Companies that are subject to corporate tax.
Subsidiaries Tax statusNew Cairo Poultry CompanyIncubation lab / Noubarya project/ Salehya
Inspected till 31/12/2004
Cairo Poultry Processing Inspected till 31/12/2005Misr Grand Parents Co. Inspected till 31/12/2005Cairo Grand Parents Co Inspected till 31/12/1998
Second: Companies that are exempted from the corporate taxSubsidiaries Date ends tax exemptionNew Cairo Poultry Company(Sina 2000 for fatten chicks Incubation Lab ,mechanical processing & Hasbo projectCairo Feed Company
2016/2014/20192014/2019/201331/12/2013
Cairo Broilers Company 9/7/2013Cairo Misr grandparents co. 31/12/2014Wadi Al Natron for ParentsCairo Leasing CompanyAl-Madena for poultry productionAl-Madena for poultry companyWadi Al Natron for Broilers Company(Alkadsia)Cairo Poultry company for Broilers
31/12/201731/12/201427/3/201530/4/2012Exemption is under taken To be exempted for 5 years
Third: Companies that are not exempted from the corporate tax and have not been inspected until 31/12/2010Corporation Guard Services
Fourth: Companies have not commenced its activities
Cairo for Oil ExtractionCairo Cold StoresWadi Al Natron for Broilers Production Co.New Cairo Grand Parents Wadi Al Natron for Grand Parents
Fifth: Withdraws & deposits under tax account “New Cairo Poultry Company”- subsidiary Company
Years from 1994 to 2003Based on estimation, the general tax authority charged the company for LE 10 125 714. The company objected on this estimation, further based upon the company’s prospective, the company paid LE 11 251 159 representing the tax dues in addition to the payments provided every 3 months according to the quarterly tax return .The company settled the dispute with the tax authority and paid the tax difference of L.E 149 464 in excess to what were previously paid.
Years from 2004 to 2006The company received a tax claim amounting to LE 1 815 297 represents the difference in the income statements for the years 2004, 2005, 2006. The company applies the withholding tax -withdraws and deposits under tax account - .Total payments paid by the Company on these periods amounted to LE 1 337 288 .The company settled the dispute with regard to the withdraw tax and paid the tax difference of LE 285 580.
12- Segmentation reportsThe segmentation reports was prepared on activity segments basis, the primary report for the activity segments was prepared in accordance with organizational and managerial chart of the company and its subsidiaries.
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 49
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
12-1 Segmentation reports for the year ended 31 December 2011 Activities segmentations results include a direct participation unit in each sector activity.
The primary report for activity segmentations:
Act
ivit
y S
egm
ents
Feed
Sec
tor
L.E
.31
/12/
2011
Bro
iler
Sec
tor
L.E
.31
/12/
2011
Hat
cher
yS
ecto
rL.
E.
31/1
2/20
11
Pro
cess
ing
S
ecto
rL.
E.
31/1
2/20
11
Gra
ndp
aren
tsS
ecto
rL.
E.
31/1
2/20
11
Sec
urit
yS
ecto
rL.
E.
31/1
2/20
11
Ag
ricu
ltur
e S
ecto
rL.
E.
31/1
2/20
11
Und
istr
ibut
-ab
le it
ems
L.E
.31
/12/
2011
Ele
men
atio
n o
f C
ons
oli-
dat
ed t
rans
-ac
tio
nsL.
E.
31/1
2/20
11
Tota
lL.
E.
31/1
2/20
11
Sal
es 8
21 4
78 8
61
140
515
560
68
735
265
762
795
286
7
7 78
8 97
4 1
2 21
5 70
1 2
430
550
-
- 1
885
960
197
S
ales
bet
wee
n se
gm
ents
517
293
874
48
3 31
1 15
2 2
44 5
37 6
44
258
703
075
4
0 85
5 68
9 7
341
000
-
-(1
552
042
434
)-
Tota
l sal
es 1
338
772
735
62
3 82
6 71
2 3
13 2
72 9
09
1 0
21 4
98
361
118
644
663
1
9 55
6 70
1 2
430
550
-
(1 5
52 0
42 4
34)
1 88
5 96
0 19
7
Seg
men
ts' g
ross
pro
fit 2
39 4
31 1
37
5 3
26 2
16 (
62
374
147)
80
559
313
33
768
604
2 8
54 8
76
1 0
01 8
78
--
300
567
877
D
istr
ibut
ion
& s
ales
ex
pen
ses
(17
415
794)
--
(62
138
992)
(5 0
22 8
79)
--
--
(84
577
665)
Gen
eral
& a
dm
inis
trat
ive
exp
ense
(12
758
185)
(5 1
45 5
73)
(3 4
25 8
56)
(19
595
737)
(3 1
77 9
93)
(1 8
04 9
61)
-(8
999
008
)-
(84
907
313)
Oth
er o
per
atin
g e
xpen
ses
(11
076
607)
(118
715
)(6
808
232
)(4
731
313
)(1
283
132
)(1
07 9
66)
--
-(2
4 12
5 96
5)B
oar
d o
f D
irect
ors
re
mun
erat
ions
--
--
--
-(2
73 0
00)
-(2
73 0
00)
Oth
er o
per
atin
g p
rofit
65
717
278
6 1
27 0
82
40
030
332
2 2
50 4
77
12
444
323
12
4 99
9 (1
145
802
) 2
0 63
8 58
3 -
146
187
272
P
rofi
ts r
esul
ts f
rom
o
per
atio
n 2
63 8
97 8
29
6 1
89 0
10
(32
577
903)
(3 6
56 2
52)
36
728
923
1 0
66 9
48
(143
924
)(1
8 63
3 42
5)-
252
871
206
Rev
enue
of
avai
lab
le f
or
sale
inve
stm
ents
--
--
--
- 9
699
669
-
9 6
99 6
69
The
gro
up's
sha
re in
the
ne
t p
rofit
of
asso
ciat
e co
mp
anie
s-
--
--
--
(3 5
14 6
09)
-(3
514
609
)
Fin
ance
exp
ense
s &
in
tere
sts
(11
978
585)
(7 2
33 9
47)
(5 5
56 1
13)
(11
400
887)
(490
686
)
11 2
37
(103
810
)(1
9 86
6 11
5)-
(56
618
906)
Net
pro
fit
for
the
year
b
efo
re in
com
e ta
x 2
51 9
19 2
44
(1 0
44 9
37)
(38
134
016)
(15
057
139)
36
238
237
1 0
78 1
85
(247
734
)(3
2 31
4 48
0)-
202
437
360
Inco
me
tax
--
--
(3 1
76 8
59)
(216
544
)-
(4 5
54 3
19)
-(7
947
722
)D
effe
red
tax
(654
318
)-
(1 0
13 9
67)
(256
485
)(2
19 3
32)
(27
969)
-(1
630
492
)-
(3 8
02 5
63)
Net
pro
fit
for
the
year
af
ter
inco
me
tax
251
264
926
(1
044
937
)(3
9 14
7 98
3)(1
5 31
3 62
4) 3
2 84
2 04
6
833
672
(247
734
)(3
8 49
9 29
1)-
190
687
075
Oth
er In
form
atio
nsD
epre
ciat
ion
10
069
116
15
576
629
17
650
327
29
704
491
2 6
59 1
29
25
3 53
5
223
875
--
76
137
102
Ass
ets
619
496
867
43
6 27
1 46
7 3
51 4
50 0
40
461
945
973
4
2 95
4 43
1 4
978
260
9
284
884
-
- 1
926
381
922
Li
abili
ties
471
206
531
17
9 26
2 93
5 1
04 7
94 2
48
169
267
779
1
5 78
0 95
4 2
206
775
3
202
758
-
- 9
45 7
21 9
80
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
50 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
Act
ivit
y S
egm
ents
Feed
Sec
tor
L.E
.31
/12/
2010
Bro
iler
Sec
tor
L.E
.31
/12/
2010
Hat
cher
yS
ecto
rL.
E.
31/1
2/20
10
Pro
cess
ing
S
ecto
rL.
E.
31/1
2/20
10
Gra
ndp
aren
tsS
ecto
rL.
E.
31/1
2/20
10
Sec
urit
yS
ecto
rL.
E.
31/1
2/20
10
Ag
ricu
ltur
e S
ecto
rL.
E.
31/1
2/20
10
Und
istr
ibut
-ab
le it
ems
L.E
.31
/12/
2010
Ele
men
atio
n o
f C
ons
oli-
dat
ed t
rans
-ac
tio
nsL.
E.
31/1
2/20
10
Tota
lL.
E.
31/1
2/20
10
Sal
es84
8 33
7 63
9 17
5 83
6 53
0 10
2 89
4 71
6 74
2 69
1 77
8 81
885
766
9
742
025
184
802
--
1 96
1 57
3 25
6S
ales
bet
wee
n se
gmen
ts36
5 14
5 71
6 30
8 42
6 88
0 21
1 48
2 34
2 23
8 53
4 73
4 60
713
230
6
391
046
--
(1 1
90 6
93 9
48)
-To
tal s
ales
1 21
3 48
3 35
548
4 26
3 41
031
4 37
7 05
898
1 22
6 51
214
2 59
8 99
616
133
071
184
802
-(1
190
693
948
)1
961
573
256
Seg
men
ts’ g
ross
pro
fit24
4 02
4 66
330
159
202
154
161
006
56
049
845
58
935
348
3
650
912
(2 3
45 2
78)
--
544
635
698
Dis
trib
utio
n &
sal
es
exp
ense
s(2
0 03
0 98
2)-
-(5
3 69
1 21
7)(5
060
452
)-
--
-(7
8 78
2 65
1)
Gen
eral
& a
dm
inis
trat
ive
exp
ense
(11
059
340)
(5 1
71 8
92)
(3 1
89 9
97)
(14
436
904)
(2 1
17 3
89)
(1 4
38 9
30)
-(2
7 73
0 24
4)-
(65
144
696)
Oth
er o
per
atin
g ex
pen
ses
(84
479
799)
(6 4
65 6
02)
(57
139
375)
(1 4
02 7
75)
(12
851
274)
(100
000
)(1
0 80
4 74
2)(2
181
046
)-
(175
424
613
)B
oard
of D
irect
ors
rem
uner
atio
ns-
--
--
--
(273
000
)-
(273
000
)
Oth
er o
per
atin
g p
rofit
15 8
45 9
343
399
287
29 1
40 2
746
242
467
11 6
16 0
8630
100
-
7 38
0 62
7 -
73 6
54 7
75P
rofi
ts r
esul
ts f
rom
o
per
atio
n14
4 30
0 47
621
920
995
122
971
908
(7 2
38 5
84)
50 5
22 3
192
142
082
(13
150
020)
(22
803
663)
-29
8 66
5 51
3
Rev
enue
of a
vaila
ble
for
sale
inve
stm
ents
--
--
--
-1
363
437
-1
363
437
The
grou
p’s
sha
re in
the
ne
t p
rofit
of a
ssoc
iate
co
mp
anie
s-
--
--
--
1 60
0 07
7-
1 60
0 07
7
Neg
ativ
e go
odw
ell f
or t
he
acq
uire
d c
omp
anie
s-
--
--
--
6 54
5 53
7-
6 54
5 53
7
Gai
n fr
om s
ale
of
avai
lab
le-f
or-s
ale
inve
stm
ents
--
--
--
--
--
Fina
nce
exp
ense
s &
in
tere
sts
(11
838
659)
(8 9
67 2
12)
(4 0
65 1
74)
(10
229
781)
(456
119
)-
(127
184
)(1
2 48
5 01
2)-
(48
169
141)
Net
pro
fit
for
the
year
b
efo
re in
com
e ta
x 13
2 46
1 81
712
953
783
118
906
734
(17
468
365)
50 0
66 2
002
142
082
(13
277
204)
(25
779
624)
-26
0 00
5 42
3
Inco
me
tax
(5 0
00 6
12)
(4 7
52 6
21)
(8 9
82 6
67)
-(5
028
099
)(5
43 8
10)
-(5
1 76
9)-
(24
359
578)
Def
fere
d t
ax-
(178
744
)(1
402
337
)(1
312
365
)(2
28 6
31)
(13
915)
-(2
41 5
06)
-(3
377
498
)N
et p
rofi
t fo
r th
e ye
ar
afte
r in
com
e ta
x 12
7 46
1 20
58
022
418
108
521
730
(18
780
730)
44 8
09 4
701
584
357
(13
277
204)
(26
072
899)
-23
2 26
8 34
7
Oth
er In
form
atio
nsD
epre
ciat
ion
8 61
4 67
016
230
294
13 9
18 6
9628
128
359
2 67
8 47
4 19
1 48
417
9 31
03
554
-69
944
841
Ass
ets
533
959
995
435
781
413
353
225
048
427
350
590
38 7
28 4
84
4 88
0 97
19
778
684
--
1 80
3 70
5 18
4Li
abili
ties
257
844
945
153
978
883
125
632
394
137
290
294
19 7
49 8
71
2 17
2 02
93
487
276
--
700
155
692
12-2 Segmentation reports for the year ended 31 December 2010 Activities segmentations results include a direct participation unit in each sector activity.
The primary report for activity segmentations:
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 51
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
13. Property, plant and equipment
Land
s L.
E.
Bui
ldin
gs
L.E
.
Mac
hine
ry &
eq
uip
men
tsL.
E.
Vehi
cles
L.E
.
Too
ls a
nd
equi
pm
ents
L.E
.
Furn
itur
e &
o
ffice
sup
plie
sL.
E.
Tota
lL.
E.
Cos
t as
at
1 Ja
nuar
y 20
1010
6 44
7 73
841
3 34
6 15
952
5 86
8 47
991
373
298
37
510
451
23
633
310
1 19
8 17
9 43
5A
cqui
red
cos
t2
703
231
9 96
3 23
33
383
046
130
000
390
364
27
658
16
597
532
Ad
diti
ons
dur
ing
the
year
2 24
8 23
4 89
423
067
65
468
422
9 87
7 69
06
419
376
6
75 5
34
174
112
323
Dis
pos
als
dur
ing
the
year
-(1
45 2
46)
(3 6
17 7
29)
(3 4
64 1
47)
(523
466
)(3
17 2
58)
(8 0
67 8
46)
Imp
airm
ent
(7 6
60 4
05)
(1 1
22 8
38)
(22
294)
--
-(8
805
537
)B
alan
ce a
s at
31
Dec
embe
r 20
1010
3 73
8 79
851
1 46
4 37
559
1 07
9 92
497
916
841
43
796
725
24
019
244
1 37
2 01
5 90
7
Bal
ance
as
at 1
Jan
uary
201
110
3 73
8 79
851
1 46
4 37
559
1 07
9 92
4 9
7 91
6 84
1 4
3 79
6 72
5 2
4 01
9 24
41
372
015
907
Ad
just
men
t(2
96 4
56)
(1 1
52 0
52)
242
455
1
4 60
5 (6
05 3
12)
2
449
274
652
514
Co
st a
s at
1 J
anua
ry 2
011
afte
r ad
just
men
t
103
442
342
510
312
323
591
322
379
97
931
446
43 1
91 4
13
26
468
518
1
372
668
421
Ad
diti
ons
of t
he y
aer
-47
388
718
29
784
618
13
953
072
4 19
6 60
5 3
660
718
98
983
731
Dis
pos
als
of t
he y
ear
-(6
338
879
)(2
465
382
)(1
0 53
4 17
1)(4
096
570
)(9
85 1
30)
(24
420
132)
Co
st a
s 31
Dec
emb
er 2
011
103
442
342
551
362
162
618
641
615
101
350
347
43 2
91 4
4829
144
106
1 44
7 23
2 02
0A
ccum
ulat
ed d
epre
ciat
ion
as a
t 1/
1/20
10-
75 6
51 2
5321
2 57
2 26
459
312
434
25 1
57 4
7214
865
850
387
559
273
Dep
reci
atio
n of
acq
uire
d fi
xed
as
sets
-62
5 72
81
381
855
129
999
45 8
96
8 63
4 2
192
112
Dep
reci
atio
n of
the
yea
r-
15 4
10 0
5236
980
271
11
279
008
3
757
865
1 87
6 92
6 69
304
122
Dis
pos
als
accu
mul
ated
d
epre
ciat
ion
-(3
5 44
7)(2
708
902
)(2
723
489
)(4
64 0
67)
(146
899
)(6
078
804
)
Acc
umul
ated
dep
reci
atio
n as
at
31/1
2/20
10-
91 6
51 5
8624
8 22
5 48
8 6
7 99
7 95
228
497
166
16
604
511
452
976
703
Acc
umul
ated
dep
reci
atio
n as
at
1/1/
2011
-91
651
586
248
225
488
67 9
97 9
5228
497
166
16
604
511
452
976
703
Ad
just
men
t-
(83
400)
24 3
0721
614
(55
455)
745
443
652
509
Co
st a
s at
1 J
anua
ry 2
011
afte
r ad
just
men
t-
91
568
186
248
249
795
68
019
566
28 4
41 7
1117
349
954
453
629
212
Dep
reci
atio
n of
the
yea
r-
16 3
56 2
67 4
0 28
4 76
812
722
344
3 96
9 37
82
804
344
76 1
37 1
01D
isp
osal
s ac
cum
ulat
ed
dep
reci
atio
n-
(1 0
25 4
20)
(1 8
36 1
68)
(9 3
89 9
48)
(3 3
82 0
19)
(962
255
)(1
6 59
5 81
0)
Acc
umul
ated
dep
reci
atio
n as
at
31/1
2/20
11-
106
899
033
286
698
395
71 3
51 9
62
29
029
070
19 1
92 0
43
513
170
503
Net
bo
ok
valu
e as
at
31/1
2/20
1110
3 44
2 34
2 4
44 4
63 1
2933
1 94
3 22
029
998
385
14
262
378
9 9
52 0
63 9
34 0
61 5
17N
et b
oo
k va
lue
as a
t 31
/12/
2010
103
738
798
419
812
789
342
854
436
29 9
18 8
89 1
5 29
9 55
9 7
414
733
919
039
204
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
52 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
13-1 The following represents the fixed assets items which were purchased through the group com-panies based on initial selling contracts, the necessary regulatory procedures for registering and transferring its possession under the company’s name are currently under progress :-
L.E.Land 93 846 371Building& Construction 23 209 976
117 056 347
13-2 The machinery and equipment balance includes L.E. 10 934 739, representing in the cost for acquiring a treatment line for solid wastes purposes (Cairo processing company), this amount was partially financed by the Ministry of Environment (The project of controlling the industrial pollution- financed by the World Bank-). The amount of L.E. 1 108 279 equal to 20% of total finance repre-sents a non-refundable grant. Based on the accounting policy no. (3-5), the value of this grant was deducted from cost value of the said treatment line.
13-3 The building caption includes the amount of L.E 2 247 812 represents total finance cost capitalized to this caption during the period of its construction in the previous years and an amount of LE 683 754 capitalized during 2011.
13-4 The machinery and equipment caption includes the amount of L.E 2 972 379 represents total finance cost capitalized to this caption in the previous years.
14. Breeding wealth31/12/2011
L.E.31/12/2010
L.E.CostBeginning of the year 32 263 857 24 545 253Additions for the year 31 146 842 40 506 691Disposals for the year (23 929 243) (9 327 601)Amortization for the year (12 452 918) (23 460 486)End of the year 27 028 538 (32 263 857)Breeding expense Beginning of the year 41 358 550 34 495 955Breeding additions 78 961 951 66 389 431*Amortization for the year (77 052 251) (59 526 836)End of the year 43 268 250 41 358 550Breeding wealth 70 296 788 73 622 407*Deduct impairment (41 902 987) (51 000 323)Net book value as at 31 December 2011 28 393 801 22 622 084
* The company’s management formed an impairment of the year represents the impairment in the value of Breeding
wealth(Breeders) represents the impairment in the value of Grandparents according to the study of the Company’s technical
based on the expected mortality standards of Breeding
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 53
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
15. Plant Wealth31/12/2011
L.E.31/12/2010
L.E. Cost as at 1 Jan 2011 10 625 290 10 686 878Transfer from project for the year - 14 213Adjustments - (75 801)Cost at 31 December 2011 10 625 290 10 625 290less Amortization for the year (408 535) (207 649)wealth amortization (73 090) (200 886)Total amortization as at 31 December 2011 (481 625) (408 535)Impairment (8 946 085) (8 946 085)Net book value as at 31 December 2011 1 197 580 1 270 670
The company’s management formed impairment by percentage of 90% from the value of the plant wealth based on technical specialist study which clarify the inability of the plant wealth to reach its marginal production
16. Projects under construction
Balance as at 1/1/2011
L.E.Additions
L.E.
Transferred to fixed assets
L.E.Adjustments
L.E.
Balance as at31/12/2011
L.E.Buildings & construction in progress 38 838 089 70 694 705 (42 389 652) (7 933 492) 59 209 650Machinery & Equipment under installation
8 618 572 16 684 657 (12 592 529) (1 904 508) 10 806 192
Supplies 239 656 - (239 656) - -Vehicles under preparation 519 570 2 971 880 (3 106 895) (384 555) -Advance payments for fixed assets acquisition
1 448 946 28 551 258 (1 447 696) (3 692 756) 24 859 752
L/Cs for purchasing fixed assets 2 116 478 10 775 734 (10 989 163) (1 853 387) 49 662Plant life stock – land reclamation 1 086 490 772 860 - - 1 859 350Furniture under installation - 929 528 - (262) 929 266
52 867 801 131 380 622 (70 765 591) (15 768 960) 97 713 872
The building caption includes the amount of L.E 2 221 240 represents total finance cost capitalized to this caption during 2011.
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
54 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
17. Other financial investments
Country of establish-
ment
Number of purchased
shares
Participation percentage
%
Nominal value per
shareL.E.
Nominal value as at 31/12/2011
L.E.
paid up till 31/12/2011
%
value as at 31/12/2011
L.E.
value as at 31/12/2010
L.E.
A - Investments of Cairo poultry Company (The parent company)
* Cairo Feed Ingredients Trading Egypt 42 000 84 100 4 200 000 25 1 050 000 1 050 000
** Cairo Reyer Breeding Company Egypt 6 000 60 100 600 000 100 600 000 600 000
*** Cairo for Oil Extraction Egypt 4 900 98 100 490 000 25 122 500 122 500
*** Cairo Cold Stores Egypt 4 900 98 100 490 000 25 122 500 122 500
**** New Cairo grand parent Poultry Company
Egypt 4 900 98 100 490 000 25 122 500
**** Wadi Al -Natron for grand parent company
Egypt 4 900 98 100 490 000 25 122 500
Less:Impairment in investment value - (1 200 000) (1 200 000)Total 6 760 000 940 000 695 000 Investments of Misr poultry grand parent (subsidary)Rosters Misr company (under liquidation)
- - -
B - Investments of Cairo Misr poultry grand parent (subsidary)
* Cairo Feed Ingredients Trading Egypt 500 5 100 50 000 25 12 500 12 500 Wadi Al -Natron for Agricultural Development
Egypt 50 1 100 5 000 25 1 250 1 250
Wadi Al - Natron for land reclamation
Egypt 50 1 100 5 000 25 1 250 1 250
Cairo company for land reclamation
Egypt 50 1 100 5 000 25 1 250 1 250
Cairo Company for Agriclatural Development
Egypt 50 1 100 5 000 25 1 250 1 250
Al - Frafra for Agricultural development
Egypt 50 1 100 5 000 25 1 250 1 250
*** Cairo for Oil Extraction Egypt 50 1 100 5 000 25 1 250 1 250
*** Cairo Cold Stores Egypt 50 1 100 5 000 25 1 250 1 250
**** New Cairo grand parent Poultry Company
Egypt 50 1 100 5 000 25 1 250 -
**** Wadi Al -Natron for grand parent company
Egypt 50 1 100 5 000 25 1 250 -
Less:Impairment in investment value - (12 500) (12 500)Total 95 000 11 250 8 750
C- Investments in New Cairo Poultry company (Subsidiary)
** Cairo Reyer Breeding Company Egypt 2 000 20 100 200 000 100 200 000 200 000 Wadi Al - Natron for land reclamation
Egypt 50 1 100 5 000 25 1 250 1 250
Wadi Al -Natron for Agricultural Development
Egypt 50 1 100 5 000 25 1 250 1 250
Cairo company for land reclamation
Egypt 50 1 100 5 000 25 1 250 1 250
Cairo Company for Agriclatural Development
Egypt 50 1 100 5 000 25 1 250 1 250
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 55
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
Country of establish-
ment
Number of purchased
shares
Participation percentage
%
Nominal value per
shareL.E.
Nominal value as at 31/12/2011
L.E.
paid up till 31/12/2011
%
value as at 31/12/2011
L.E.
value as at 31/12/2010
L.E.
Al - Frafra for Agricultural development
Egypt 50 1 100 5 000 25 1 250 1 250
*** Cairo for Oil Extraction Egypt 50 1 100 5 000 25 1 250 1 250 **** Cairo Cold Stores Egypt 50 1 100 5 000 25 1 250 1 250 **** New Cairo grand parent Poultry
CompanyEgypt 50 5 000 1 250 -
**** Wadi Al -Natron for grand parent company
Egypt 50 5 000 1 250 -
Less:Impairment in investment value - (50 000) (50 000)Total 245 000 161 250 158 750
D- Investments of Cairo Poultry processing (subsidiary)Cairo Trading & Importing Company
Egypt 5100 51 100 510 000 25 127 500 127 500
El Delta Trading & Importing Egypt 9800 98 100 980 000 25 245 000 -Less:Impairment in investment value - (123 029) (114 623)Total 1 490 000 249 471 12 877
E- Investments of Cairo Broilers Company (subsidiary)
** Cairo Reyer Breeding Company Egypt 2 000 20 100 200 000 100 200 000 200 000 Less:Impairment in investment value (50 000) (50 000)Total 200 000 150 000 150 000
F- Investements of Wadi Al -Natron for grand parent company(subsidary)El Delta Trading & Importing Egypt 100 1 100 10 000 25 2 500 -Total 10 000 2 500 -
H- Invesrements of Cairo Poultry company for Broilers(subsidary)El Delta Trading & Importing Egypt 100 1 100 10000 25 2 500 -Total 10 000 2 500 -
Balance as at 31/12/2011 8 810 000 - 1 516 971 1 025 377* Cairo Feed Ingredients Trading company is temperorly inactive according to board of director desicion dated 21 February
2007.** Cairo Reyer Breeding Company has been under liquidation according to the general assembly on 23 January 2010*** Cairo for Oil Extraction & Cairo Cold Stores have been under liquidation according to the general assembly on 5 July 2010**** both New Cairo grand parent Poultry & Wadi Al -Natron for grand parent companies were put into liquidation according to
General assembly meeting on 22/2/2011
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
56 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
18. Investements in associates
The
val
ue o
f in
vest
emen
t ac
cord
ing
to
eq
uity
met
hod
Des
crip
tio
nC
ount
ry o
f es
tabl
ishm
ent
Num
ber
of
pur
chas
ed
shar
es
Par
ticip
atio
n pe
rcen
tage
%
No
min
al
valu
e p
er
shar
eL.
E.
inve
stee
no
min
al
valu
e as
at
31/1
2/20
11L.
E.
Per
cent
age
pai
d u
p t
ill
12/3
1/20
11%
as a
t 31
/12/
2011
L.E
.
as a
t 31
/12/
2010
L.E
.E
gyp
tian
Co
mp
any
for
Sta
rch
& G
luco
se
ind
ustr
yE
gyp
t 8
413
533
27.2
310
84 1
35 3
3010
081
209
872
86
688
715
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ro C
om
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r S
tarc
h &
Glu
cose
in
dus
try
2 52
2 09
22
648
106
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l val
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f inv
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ent i
n su
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s83
731
964
89
336
821
A b
rief o
f fina
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l st
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of E
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atio
n C
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ny fo
r S
tarc
h&
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ind
ustr
y
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ticip
atio
n pe
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%
Non
cur
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as
sets
Cur
rent
as
sets
Tota
l ass
ets
Cur
rent
lia
bilit
ies
Long
term
lia
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ies
Tota
l lia
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ies
Rev
enue
sEx
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r co
nsol
idat
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d
Gro
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e in
as
soci
ate
com
pani
es’
net l
oss
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ct p
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ion
(26.
01%
), In
dire
ct
par
ticip
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n (1
.22%
)27
.23
554
105
045
188
597
855
742
702
900
317
098
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126
567
399
443
665
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Com
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r S
trac
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d G
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se In
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try
was
con
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as
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ents
in a
ssoc
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com
pan
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tha
t co
mp
any
is a
sub
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pta
tion
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h &
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ind
ustr
y.
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 57
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
19. Other investments
Cou
ntry
of
est
ab-
lishm
ent
Num
ber o
f pu
rcha
sed
shar
es
Par-
ticip
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va
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/31/
2011
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12/3
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/31/
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3.5
980
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980
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0 52
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.S.$
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Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
58 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
20. Inventory 31/12/2011
L.E. 31/12/2010
L.E.*Raw materials 177 516 857 68 434 738**Spare parts & supplies 61 409 640 52 880 326***Packing material 7 910 206 10 506 489Work in process 36 883 570 41 738 644Finished goods 97 178 272 65 803 519
380 898 545 239 363 716L.C’s for purchasing raw materials & supplies 20 223 137 83 772 775Consignment goods with others 3 524 282 4 836 225
404 644 964 327 972 716
* The raw material inventory was reduced by an amount of LE 46 million represent (Elsheleem) material this amount is reversed during 2011 based on the technical study prepared & authorized by the responsible department which states that:
- The miss operation related to the raw material and recommended not to use during the year ended 31/12/2010.
- During the year 2011 the technical department has renew this study and recommended to use this materials by using other new operation ways that achieve the maximum production from the material and gives effective results.
** The Spare parts & supplies inventory was reduced by an amount of LE 3 764 790 as at 31/12/2011 represent inventory obsolete against LE 3 722 436 as at 31/12/2010.
*** The Packing material inventory was reduced by an amount of LE 2 267 185 as at 31/12/2011 represent inventory obsolete against LE 3 343 070 as at 31/12/2010
21. Trade receivables and other debit balances21-1
31/12/2011L.E.
31/12/2010L.E.
Trade receivables 85 098 488 88 645 260Notes receivable 13 471 327 8 823 488Impairment in trade receivables(21-2) (41 629 087) (44 207 497)
56 940 728 53 261 251Suppliers – advance payments 37 518 379 29 576 922Tax Authority – withholding tax 19 477 401 20 198 461Other debit balances 12 286 008 14 653 445Accrued revenues 195 149 5 303 608Prepaid expenses 3 795 844 2 875 581L/G’s margin 15 000 264 072Deposits with others 1 029 453 1 191 814Employees imprests 266 992 364 361Customs authority - 124 296
131 524 954 127 813 811Impairment in debtors & other debit balances (5 862 259) (5 652 359)
125 662 695 122 161 452
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 59
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
21-2 Impairment in Receivables
31/12/2011L.E.
31/12/2010L.E.
Balance at beginning of the year (44 207 497) (49 642 406)Formed during the year - (3 229 809)Impairment reversed 2 578 410 7 515 137Utilized during the year - 1 149 581Balance at the year end (41 629 087) (44 207 497)
22. Cash at banks & in hand
31/12/2011L.E.
31/12/2010L.E.
*Banks - time deposits 1 141 504 1 487 683Banks - current accounts 5 972 400 4 056 161**Checks under collection 4 345 746 1 634 833Cash in hand 3 290 128 484 919
14 749 778 7 663 596
* Banks – time deposits represents in banks deposits at banks that is not exceed three months period.
** Checks under collection represents checks which its due date till 31/12/2011.
23. Provision for Contingency
Balance as at 1/1/2011
L.E.
Additionsduring the year
L.E.
Used during the yearL.E.
No longer required
L.E.
Balance as at 31/12/2011
L.E.Provision for Contingency
11 884 884 7 000 - (10 533 804) 1 358 080
24. Provision for Claims
31/12/2011L.E.
31/12/2010L.E.
Balance at the beginning of the year 61 223 190 34 196 287Acquisition during the year - 38 765Formed during the year 8 987 454 33 357 333Transfer from credit balance - 196 068Used during the year (47 399) (65 263)Not longer required for the year (9 880 616) (6 500 000)Balance at year end 60 282 629 61 223 190
25. Banks – Credit FacilitiesThis item amounting to L.E 212 975 682 (against to LE.54 673 132 at 31/12/2010) is represented in the value of the used portion of the bank facilities granted by banks dealing with the company amounted to L.E. 673million at an average interest rate between 10 % and 11.45% annually on facilities granted in the Egyptian currency obtained by the company with regard to these facilities granted in U.S Dollars the interest rate would be varying from 1%to 2.5 % annually in addition to the labor including the commission of the highest debit balance for various guarantees that the banks obtained for the facilities were granted to the group
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
60 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
26. Trade payables and Other Credit Balances
31/12/2011L.E.
31/12/2010L.E.
Suppliers & contractors 55 707 550 44 797 338Notes Payable 17 771 976 9 732 166Customers – credit balances 7 158 162 22 922 432Other credit balances 8 251 992 10 936 052Accrued expenses 26 692 781 27 909 379Tax Authority 3 478 163 3 564 766Deposits from others 5 020 105 3 880 415Installments of sales tax due within one year 1 155 662 1 124 163Employees & Board Dividends payable 8 511 104 5 403 691Shareholders’ Dividends payable 162 738 162 738Social insurance Authority 2 373 691 2 038 521Employees and service fund 2 314 230 803 590Advanced revenue 1 779 32 005* Early retirement 4 786 765 5 428 258
143 386 698 138 735 514
* The board of directors decided on his meeting in 17-1-2010 the approval of the employees retirement system regarding the
employees in region El-saf with an amount of LE 5.5 million starting from year 2011.
** An amount of LE 641 493 was paid to employees resigned through 2011.
27. Deferred Tax Assets / Liabilities27.1 Deferred Tax Liabilities
Deferred Liabilities31/12/2011
L.E.
Deferred Liabilities31/12/2010
L.E.Deferred Tax Liabilities balance at year beginning 23 648 418 20 270 890 Fixed assets Deferred tax – liability 3 802 563 3 183 704 Adjustments on retained earnings - 193 824 Net tax deferred tax Liability 3 802 563 3 377 528 Deferred Tax Liabilities balance at year end 27 450 981 23 648 418
27.2 Unrecognized deferred tax assets Deferred tax assets have not been recognized in respect of the following item:
31/12/2011L.E.
31/12/2010L.E.
Impairments in trade receivable 8 325 817 8 841 500Impairments in debtors 1 172 452 1 130 472Provision for contingencies 271 616 1 247 542
9 769 885 11 219 514
Deferred tax assets have not been recognized in respect of the above items as it is not probable that future taxable profit will be available against which the company can utilize the benefits there from.
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 61
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
28. Financial Instruments and Related Risk ManagementCredit risk
Exposure to credit riskThe carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
Carrying amountNote 31/12/2011 31/12/2010
Other Investments 19 129 697 622 214 524 899Cash and cash equivalents 22 14 749 778 7 663 596Credit facilities 25 212 975 682 54 673 132Loans 35 401 550 772 345 240 086
The maximum exposure to credit risk for trade and receivables at the reporting date by type of counterparty was:
Carrying amount31/12/2011 31/12/2010
Trade and Receivables 98 569 815 97 468 748
Impairment losses The aging of trade and receivables at the reporting date was:
Gross Impairment31/12/2011
L.E.31/12/2010
L.E.Past due 45 days 36 386 092 34 680 807Past due 90 days 18 847 484 17 891 812Past due 180 days 2 226 168 1 072 159More than one year 41 110 071 43 823 970
98 569 815 97 468 748
The allowance accounts in respect of receivables and held-to-maturity investments are used to record impairment losses unless the Company is satisfied that no recovery of the amount owing is possible; at that point the amounts considered irrecoverable and is written off against the financial asset directly. At 31 December 2011 the Company does not have any collective impairment on its receivables or its held-to-maturity investments.
Liquidity riskThe following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:
Carrying amountContractual cash
flowsSecured bank loans 401 550 772 541 500 000Credit facilities 212 975 682 755 000 000
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
62 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
Currency riskExposure to currency riskThe Group’s exposure to foreign currency risk was as follows based on notional amounts:
USD Euro GBP31 December 2011
Receivables & other debit balances 3 562 956 - -Suppliers & credit balances (37 077) (16 202) (1 100)Cash and cash equivalents 89 124 49 892 10 373Credit facilities (288 465) (1 206) -31/12/2011 3 326 538 32 484 9 27331/12/2010 (22 248) (6 759 911) 10 076
The following significant exchange rates applied during the year: Reporting date
Average rate Closing rate31/12/2011 31/12/2010 31/12/2011 31/12/2010
Euro 8.24 7.51 7.63 7.86USD 5.92 5.42 6.02 5.82
29. Contingent LiabilitiesIn addition to the amounts considered as part of the consolidated balance sheet, there are other contingent liabilities at 31/12/2011 representing amounts against uncovered portion of L/G’s issued by the banks on behalf of the group for the benefit of others. And in addition to the uncovered part of letter of credits existent at year end, the following are contingent liabilities:-
31/12/2011L.E.
31/12/2010L.E.
Letters of guarantee 12 167 092 7 177 285Letters of Credits 56 289 469 52 622 492guarantees for credit facilities granted to subsidiaries 321 462 647 303 967 466
389 919 208 363 767 243
30. Capital CommitmentThe company’s capital commitments at the consolidated balance sheet date are:
31/12/2011L.E.
31/12/2010L.E.
Unpaid capital contribution in investments in subsidiaries which are not yet due
4 016 250 37 500
Commitments to incur capital expenditure 97 552 261 52 389 503101 568 511 52 427 003
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CPC ANNUAL REPORT 2011 63
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
31. Group CompaniesThe following represents subsidiaries of Cairo Poultry Company that are acquired and controlled by the Company as at 31/12/2011 demonstrated alongside with its contribution percentage held as at the consolidated balance sheet date:
Subsidiary nameContribution Percentage Country
New Cairo Poultry Company 96.82 EgyptCairo Poultry Processing 99.97 Egypt• Misr Grand Parents Co 94.76 Egypt• Cairo Grand Parents Co. 96.42 Egypt• Cairo Feed Company 99.97 Egypt• Cairo Broilers Company 99.97 Egypt• Cairo Misr Grand Parents Co. 95.10 Egypt Cairo for Oil Extraction 99.92 Egypt Cairo Cold Stores 99.92 Egypt• Corporation Guard Services 67.33 Egypt• Cairo Leasing Company 99.92 Egypt• Wadi Al Natron for Parent Company 99.92 Egypt• Wadi Al Natron for Broilers Production Co. 99.92 Egypt New Cairo Grand Parents Co. 99.92 Egypt Wadi Al Natron for Grand Parent Company 99.92 Egypt- Cairo Reyer Eggs Company 99.36 Egypt- Cairo Feed Trading 84.95 Egypt** Cairo for trading and importing 50.98 Egypt• Cairo Poultry company for Broilers •Al madena for Poultry Production-indirect share (Talaea)
99.9699.97
EgyptEgypt
•Al madena Poultry(Almadena) - indirect share 99.97 Egypt
• The financial statement of the companies referred to above represent 31.44% of total consolidated assets, 27.21% of total
consolidated liabilities, 35.25% of total consolidated revenue and 32.05% of total consolidated expenses of the financial year
ended 31 December 2011.
* Cairo Feed Ingredients Trading was temporarily discontinued from practicing its trading activities according to the decision of the
board of director dated 21 February 2007.
** Net assets of Cairo for trading and importing Company as at 31 December 2011 amounted L.E 8 767.
- The Group’s management is of the opinion that there is no necessity to consolidate the above mentioned companies
whether it is solely or consolidated as its effect will not be significant to the consolidated balance sheet either on group
performance or on its cash flows at that date.
- Cairo Reyer Eggs Company was put under liquidation according to the company’s ordinary meeting on 23/1/2010.
- Cairo for Oil Extraction & Cairo Cold Stores companies were put under liquidation according to the company’s ordinary
meeting on 5/7/2010.
- New Cairo Grand Parents & Wadi Al Natron for Grand Parent Companies were put under liquidation according to the
company’s ordinary meeting on 22/2/2011
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
64 CPC ANNUAL REPORT 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
32 Related Parties TransactionThe related parties are represented in the shareholders of the Company and the Companies in which they directly own shares on it, which gives them a significant influences or great control over these companies.
The following presents a brief summary of important transactions made between the Company and its related parties during the year:
32-1 Due from Related Parties
Name of the CompanyNature of
transactions
Volume of transactions during the
year
Balance as at 31/12/2011
L.E.
Balance as at 31/12/2010
L.E.
The Egyptian Company for Starch & Glucose Materials Purchases
1 072 801 63 181 394 520 644
Americana Kuwait Meet sector Frozen chicken sales
19 300 212 2 131 557 3 601 333
Americana Kuwait restaurants sector Frozen chicken sales
- - -
Americana Egypt for Stores & Cool Stores Current account - 9 351 4 413
Cairo feed ingredients trading
Payment of expenses on behalf of the company
152 210 308 365 156 154
Egyptian Company for touristic projects Sales 194 135 234 31 042 163 40 798 104Beafy Sales - - 31 271Americana group for food and beverages Sales - 5 331 - Green Land 715 000 661 480 -
97 339 641 45 111 919
33-2 Due to Related Parties
Name of the CompanyNature of
transactions
Volume of transactions during the
year
Balance as at 31/12/2011
Balance as at 31/12/2010
Cairo Reyer Breeding Company Current account - 744 166 763 371
Farm Frites CompanyNew materials
Purchases3 655 890 282 834 460 135
New Cairo Trading & Importing Company
Payment of expenses on behalf of the
company
9 201 478 9 679
Americana group for food and beverages Current account 51 701 24 554 - Kuwaiti Company for Food Current account - 10 274 4 718 501 Cairo for Oil Extraction Current account - 109 249 110 249 Cairo Cold Stores Current account - 109 249 110 249 El Delta Trading and Importing Current account 21 146 228 854 - Beafy Current account 15 15 - Americana for cans Current account 74 802 3 198 - Arab Company for cold stores & transporting Cars rent - - 155
1 512 871 6 172 339
CPC ANNUAL REPORT 2011 65
33. Capital33-1 Authorized capital
The Company’s authorized capital is determined to be L.E. 1 000 000 000 (One Billion Egyptian Pound).
33.2 Issued and paid up capitalThe holding company’s issued and fully paid up capital is L.E 290.304 million is distributed over 145.152 million shares at a nominal value of L.E. 2 each.
34. Special reserve – Change in value of investments available for saleNotes
No.31/12/2011
L.E.31/12/2010
L.E.The balance at the beginning of the year 135 214 004 134 291 839Add:Change in value of investments available for sale at year end (19-2) (85 946 277) 922 165Balance at the end of the year 49 267 727 135 214 004
35. Long Term LoansLong term
loansL.E.
Long term loans Current portion
L.E.
TotalL.E.
Balance of the loans granted by group of domestic Banks 300 010 406 101 540 366 401 550 772
Balance as at 31/12/2011 300 010 406 101 540 366 401 550 772Balance as at 31/12/2010 277 463 033 67 777 053 345 240 086
36. Earnings Per ShareEarning per share for the year was determined by using the weighted average method for the outstanding number of shares during the years, as follows:
Year ended31/12/2011
L.E.
Year ended31/12/2010
L.E.Net profit for the year 189 740 360 227 963 711Outstanding shares 145 152 000 145 152 000Earnings per share (L.E / share) 1.31 1.57
37. Economical & political eventsThe Arab Republic of Egypt has encountered certain events through 2011 that have a significant impact on the economic sectors in general, a matter which may lead to a substantial decline in the economic activities in the foreseeable future. Therefore, there is a possibility that the above mentioned events will have a significant impact on the Company’s assets, liabilities, their recoverable/settlement amounts and the results of operations in the foreseeable future. At the present, it is not possible to quantify the effect on the Company’s assets and liabilities included in the company’s financial statements, since quantifying the effect of these events relies on the expected extent and the time frame, when these events and their consequences, are expected to be finished.
Notes To The Consolidated Financial Statements For the financial year ended 31 December 2011
CAIRO POULTRY COMPANY(An Egyptian Joint Stock Company)
66 CPC ANNUAL REPORT 2011
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CPC ANNUAL REPORT 2011 67
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68 CPC ANNUAL REPORT 2011
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Cairo Poultry Company
32H Mourad St., GizaP.O. Box 42 Giza, Egypt
Tel: + (202) 3570 7694 - 3571 4124Fax: + (202) 3570 7716
www.cpg.com.eg