ARABIAN FOOD INDUSTRIES COMPANY
(DOMTY) - S.A.E
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2016
TOGETHER WITH AUDITORS’ REPORT
Translation of Auditors’ report
Originally issued in Arabic
INDEPENDENT AUDITORS’ REPORT
TO THE BOARD OF DIRECTORS OF ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) S.A.E
Report on the Consolidated Financial Statements
We have reviewed the accompanying consolidated interim balance sheet of Arabian Food Industries Company
(DOMTY) – S.A.E (the “Company”), as of 30 June 2016 and the related interim statements of income, interim
changes in equity and interim cash flows for the three months then ended, and a summary of significant
accounting policies and other explanatory notes. Management is responsible for the preparation and fair
presentation of these interim financial statements in accordance with Egyptian Accounting Standards. Our
responsibility is to express a conclusion on these interim financial statements based on our review.
Scope of Review
We conducted our review in accordance with the Egyptian Standard on Review Engagements No. 2410, “Review
of Interim Financial Statements Performed by the Independent Auditors of the Entity.” A review of interim
financial statements consists of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit
conducted in accordance with Egyptian Standards on Auditing and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion on these interim financial statements.
Conclusion
Based on our review nothing has come to our attention that causes us to believe that the accompanying
consolidated interim financial statements does not give a true and fair view, in all material respects, of the interim
financial position of Arabian Food Industries Company (DOMTY) – S.A.E as of 30 June 2016, and of its
interim financial performance and its interim cash flows for the three months then ended in accordance with
Egyptian Accounting Standards.
Cairo: 11 August 2016
Auditors
Dr Khaled Samahai
FESAA – FEST- CPA
(RAA. 24973)
Nabil & Samaha & Partners Allied for Accounting & Auditing - EY
Public Accountants & Consultants Public Accountants & Consultants
Amr El Shaabini
FESAA – FEST
(RAA. 9365)
Translation of consolidated
financial statements originally issued
in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
2
CONSOLIDATED BALANCE SHEET
As of 30 June
Note 30 June 2016 31 December 2015
LE LE
Non-current assets
Property, plant and equipment (5) 222,572,690 188,537,569
Projects under construction (6) 97,185,625 20,175,099
Total non-current assets 319,758,315 208,712,668
Current assets
Inventories (7) 159,959,083 164,879,475
Accounts and notes receivable (8) 303,442,995 243,348,832
Prepayments and other receivables (9) 132,401,460 89,994,714
Cash on hand and at banks (10) 318,988,069 28,069,474
Total current assets 914,791,607 526,292,495
Current liabilities
Short term credit facilities (12) 429,784,433 316,137,812
Term loans - current portion (15) 11,533,126 11,525,000
Trade and notes payable (13) 101,862,499 78,828,392
Machines installments – current portion (18) 33,491,004 22,607,687
Provisions (11) 12,590,164 12,028,104
Accrued expenses and other payables (14) 37,312,544 29,261,457
Dividends payable 4,241,479 -
Income tax payable 14,301,105 37,971,903
Total current liabilities 645,116,354 508,360,355
Working capital 269,675,253 17,932,140
Total investment 589,433,568 226,644,808
Financed as follows
Equity
Issued and paid up capital (16) 56,521,739 50,000,000
Share premium 292,815,806 -
Legal reserve 18,859,359 14,445,807
Other reserve 170,196 170,196
Retained earnings (17) 85,377,050 6,681,462
Profit for the period/year 44,868,899 91,594,898
Merger reserve (26) (4,503,358) (4,503,358)
Equity attributable to equity holders of the parent 494,109,691 158,389,005
Minority interest 1,708 1,527
Total equity 494,111,399 158,390,532
Non-current liabilities
Term loans (15) 21,066,250 26,828,800
Machines installments – non current portion (18) 50,532,413 17,604,205
Sales tax payable on plant and equipment (19) 4,779,974 5,459,432
Long term notes payable 253,900 380,850
Deferred tax liabilities (20) 18,689,632 17,980,989
Total non-current liabilities 95,322,169 68,254,276
Total finance of working capital and non-current assets 589,433,568 226,644,808
Finance Managing Director
Chairman
Mohamed Abdelbaky Eng. Omar Mohamed El Damaty
- The accompanying notes from (1) to (32) are an integral part of these consolidated financial statements.
- Auditors’ report attached.
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
CONSOLIDATED STATEMENT OF INCOME For the period ended 30 June 2016
3
Note
From 1/1/2016
Till 30/6/2016
From 1/1/2015
Till 30/6/2015 From 1/4/2016
Till 30/6/2016
From 1/4/2015
Till 30/6/2015
LE LE LE LE
Sales 786,564,297 713,348,885 415,990,348 403,813,945
Cost of sales (600,537,589) (534,759,174) (327,007,883) (301,222,192)
GROSS PROFIT 186,026,708 178,589,711 88,982,465 102,591,753
Selling and marketing expenses (21) (100,628,124) (68,159,187) (52,279,155) (37,358,877)
General and administrative expenses (22) (15,100,379) (9,425,851) (7,886,712) (5,136,666)
Net other operating income/expenses (23) 9,015,295 6,486,924 5,041,133 3,902,758
Provisions (11) (156,750) (200,376) (4,050) (99,771)
OPERATING PROFIT 79,156,750 107,291,221 33,853,681 63,899,197
Finance income 5,825,000 159,211 5,825,000 88,939
Finance expenses (24) (25,102,922) (20,050,580) (12,083,373) (7,860,056)
PROFIT BEFORE INCOME
TAXES
59,878,828 87,399,852 27,595,308 56,128,080
Income tax expenses (20) (15,009,748) (25,326,019) (6,875,897) (16,600,759)
PROFIT FOR THE PERIOD 44,869,080 62,073,833 20,719,411 39,527,321
Attributable to :
Equity holders of the Parent 44,868,899 62,073,672 20,719,317 39,527,240
Minority interest 181 161 94 81
44,869,080 62,073,833 20,719,411 39,527,321
Basic and diluted earnings per share
attributable to equity holders of the
Parent
(27) 0,144 25,56 0,067 16,32
-The accompanying notes from (1) to (32) are an integral part of these consolidated financial statements.
Translation of consolidated
financial statements originally issued
in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the period ended 30 June 2016
4
-The accompanying notes from (1) to (32) are an integral part of these consolidated financial statements.
From 1/1/2016
Till 30/6/2016
From 1/1/2015
Till 30/6/2015 From 1/4/2016
Till 30/6/2016
From 1/4/2015
Till 30/6/2015
LE LE LE LE
Profit for the period 44,869,080 62,073,833 20,719,411 39,527,321
Other comprehensive income - - - -
Total comprehensive income 44,869,080 62,073,833 20,719,411 39,527,321
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY For the period ended 30 June 2016
5
- The accompanying notes from (1) to (32) are an integral part of these consolidated financial statements.
Attributable to the equity holders of the Parent
Issued and paid up
capital
Legal
reserve
Other
reserves
Share
premium
Retained
earnings
Profit for the
period
Merger
reserve
Total Minority
interest Total equity
LE LE LE LE LE LE LE LE LE LE
Balance as of 1 January 2015 50,000,000 11,001,561 170,196 - 83,894,541 28,266,359 (4,503,358) 168,829,299 1,194 168,830,493
Transferred to legal reserve - 1,587,613 - - - (1,587,613) - - - -
Transferred to retained earnings - - - - 26,678,746 (26,678,746) - - - -
Profit for the period - - - - - 62,073,672 - 62,073,672 161 62,073,833
Balance as of 30 June 2015 50,000,000 12,589,174 170,196 - 110,573,287 62,073,672 (4,503,358) 230,902,971 1,355 230,904,326
Balance as of 1 January 2016 50,000,000 14,445,807 170,196 - 6,681,462 91,594,898 (4,503,358) 158,389,005 1,527 158,390,532
Transferred to legal reserve - 4,413,552 - - - (4,413,552) - - - -
Transferred to retained earnings - - - - 87,181,346 (87,181,346) - - - -
Capital increase 6,521,739 - - - - - - 6,521,739 - 6,521,739
Share premium - - - 292,815,806 - - - 292,815,806 - 292,815,806
Dividends - - - - (8,485,758) - - (8,485,758) - (8,485,758)
Profit for the period - - - - - 44,868,899 - 44,868,899 181 44,869,080
Balance as of 30 June 2016 56,521,739 18,859,359 170,196 292,815,806 85,377,050 44,868,899 (4,503,358) 494,109,691 1,708 494,111,399
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
CONSOLIDATED STATEMENT OF CASH FLOWS For the period from 1 January to 30 June 2016
6
Non-cash transactions:
- Purchase of new packing machines during the period amounting to LE 56,534,145 by incurring machines
instalments liability.
- The accompanying notes from (1) to (32) are an integral part of these consolidated financial statements.
Note
30 June 2016
30 June 2015
LE LE
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before income taxes 59,878,828 87,399,852
Depreciation of property, plant and equipment (5) 12,717,025 11,202,241
Amortization of deferred capital gain and loss 69,543 10,396
Provisions (11) 562,060 200,376
Reversal of Provision for impairment of accounts receivable - (4,758,985) Provision for impairment of accounts receivables 279,503 -
(Gain) on sale of property, plant and equipment (5) (205,695) (60,190)
73,301,264 93,993,690
Change in working capital:
Change in inventories 4,920,392 (44,108,800)
Change in accounts and notes receivable (60,373,666) (92,321,965)
Change in due from related parties - (1,426,186)
Change in prepayments and other receivables (59,354,556) (12,822,705)
Change in trade and notes payable 22,907,157 30,666,543
Change in accrued expenses and other payables 7,371,629 7,231,037
CASH FLOWS (USED IN) OPERATING ACTIVITIES (11,227,780) (18,788,386)
Income tax paid (33,816,256) (11,422,216)
NET CASH FLOWS (USED IN) OPERATING ACTIVITIES (45,044,036) (30,210,602)
CASH FLOWS FROM INVESTING ACTIVITIES
Payment to acquire property, plant and equipment (5) (46,681,128) (5,510,755)
Proceeds from sale of property, plant and equipment (5) 244,197 2,328,508
Payment to acquire projects under construction (20,585,901) (8,566,744)
NET CASH FLOWS (USED IN) INVESTING ACTIVITIES (67,022,832) (11,748,991)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short term credit facilities 875,812,384 680,181,407
Payment of short term credit facilities (762,165,763) (591,496,495)
Proceeds from term loans 8,126 -
Repayment of term loans (5,762,550) (8,882,928)
Proceeds to increase capital 6,521,739 -
Proceeds from share premium 292,815,806 -
Dividends paid (4,244,279) (15,201,879)
NET CASH FLOWS PROVIDED FROM FINANCING ACTIVITIES 402,985,463 64,600,105
Net increase in cash and cash equivalent during the period 290,918,595 22,640,512
Cash and cash equivalent - beginning of the period 28,069,474 24,333,213
CASH AND CASH EQUIVALENT – END OF THE PERIOD (10) 318,988,069 46,973,725
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
7
1 REPORTING ENTITY
Arabian Food Industries Company (DOMTY) – S.A.E (the “Company”) or (the “Parent”) was originally
established under the name of Damati Company for Food Industries as a limited liability company under contract
No. 18/84 dated 14 March 1984. The contract was amended on 18 July 1988 when the Company's
headquarters changed, and on 14 August 1988 an Extraordinary General Assembly meeting was held and resolved
to change the company's legal form from limited liability company to joint stock company subject to the
Companies Law No. 159 of 1981 and its executive regulations.
Based on the shareholders resolution made in the Extraordinary General Assembly meeting held on 16 August
2005 the Company's name was changed to Domty Company for Food Industries "S.A.E"
Based on the shareholders resolution made in the Extraordinary General Assembly meeting held on 6 August
2006 the company name changed to Arabian Food Industries Company (Domty) S.A.E instead of Domty
Company for Food Industries and the commercial register was amended.
The Company has been registered under the commercial register number 80124 on 7 September 1988.
The Company's headquarter is located at 32 c Taha Hussein Street, previously Murad Street - Giza
The main activities undertaken by the Company is to manufacture all types of dairy and food products.
The consolidated financial statements comprise the financial statements of the Company and its subsidiary, El
Tatweer Food Industries Company (S.A.E) (collectively, the “Group”). On 30 April 2014 the Company acquired
99.99% of the shares of El Tatweer Food Industries Company (S.A.E) (note 2).
EL Tatweer Food Industries Company was established as a joint stock company subject to the Companies Law
No. 8 of 1997 and its regulations and for the purpose of establishing and operating a factory for the manufacture
of different kinds of cheese, canning juice and the establishing of stores and a refrigerator for dairy products by
cooling and freezing for the Company and for others, subject to the laws and its regulations.
The Company is registered under the commercial register number 37566 in the 11 March 2009.
2 BASIS OF PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared under the going concern assumption on a historical cost
basis.
On 30 April 2014, the Company acquired 99.99% El Tatweer for Food Industries Company (S.A.E) that was
previously under the control of the shareholders of the Parent (the “Common Control Transaction”) for LE
10,752,733 in cash. As this transaction involved the combination of businesses under common control, the
pooling of interests method of accounting was applied in the presentation of the consolidated financial statements
which present the results of the Group as if El Tatweer for Food Industries Company (S.A.E) had always been
part of the Group. Accordingly the assets and liabilities transferred to the Company were recognized at historical
amounts. The consolidated financial statements present the results and changes in equity of the Company and its
subsidiary as if the Group had been in existence throughout the years presented.
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
8
Statement of compliance
The financial statements of the company have been prepared in accordance with the Egyptian Accounting
Standards and the applicable laws and regulations.
Basis of consolidation
(a) Subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies
generally a shareholding of more than one half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls
another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They
are de-consolidated from the date that control ceases.
Accounting for business combination under EAS 29 only applies if it is considered that a business has been
acquired. For acquisitions meeting the definition of a business, the purchase method of accounting is used to
account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of
the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs
directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of
the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of
the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of
the net assets of the subsidiary acquired, the difference is recognized directly in the statement of income.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are
eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
(b) Transactions with minority interests
The Group applies a policy of treating transactions with minority interests as transactions with equity owners of
the Group.
For purchases from minority interests, the difference between any consideration paid and the relevant share
acquired of the carrying value of the net assets of the subsidiary is recorded in equity. Gains or losses on
disposals to minority interests are also recorded in equity.
Changes in accounting policies
The accounting policies adopted this period are consistent with those of the previous year.
3 SIGNIFICANT ACCOUNTING POLICIES
3-1 Foreign currency translation
The financial statements are prepared and presented in Egyptian pounds, which is the functional currency of the
Company and its subsidiary.
Transactions in foreign currencies are initially recorded using the exchange rate prevailing on the date of the
transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated using the exchange rate
prevailing at the reporting date. All differences are recognized in the statement of income.
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
9
Nonmonetary items that are measured at historical cost in foreign currency are translated using the exchange rates
prevailing at the dates of the initial recognition.
Nonmonetary items measured at fair value in a foreign currency are translated using the exchange rates prevailing
at the date when the fair value is determined.
3-2 Property, plant and equipment
Property, plant and equipment are stated at historical cost net of accumulated depreciation and accumulated
impairment losses. Such cost includes the cost of replacing part of the plant and equipment when that cost is
incurred, if the recognition criteria are met. Likewise, when a major inspection is performed, its cost is recognized
in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are
satisfied. All other repair and maintenance costs are recognized in the statement of income as incurred.
Depreciation of an asset starts when it is in the location and condition necessary for it to be capable of operating in
the manner intended by management, and is computed using the straight-line method according to the estimated
useful life of the asset as follows:
Depreciation %
Buildings 2.5%
Machinery and equipment 10%
Motor vehicles 20%
Tools 15%
Computers and software 20-25 %
Furniture and fixtures 10-20%
Property, plant and equipment are derecognized upon disposal or when no future economic benefits are expected
from its use or disposal. Any gain or loss arising on derecognition of the asset is included in the statement of
income when the asset is derecognized.
The assets residual values, useful lives and methods of depreciation are reviewed at each financial year end.
The Company assesses at each reporting date whether there is an indication that property, plant and equipment
may be impaired. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered
impaired and is written down to its recoverable amount. Impairment losses are recognized in the statement of
income
A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so
that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior
years. Such reversal is recognized in the statement of income.
3-3 Projects under construction
Projects under construction represent the amounts that are incurred for the purpose of constructing or purchasing
property, plant and equipment until it is ready to be used in the operation, upon which it is transferred to property,
plant and equipment. Projects under construction are valued at cost less impairment if any.
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
10
3-4 Inventories
Inventories are stated at the lower of cost and net realizable value. Costs are those expenses incurred in bringing
each product to its present location and condition as follows:
a) Raw materials and Spare parts: at purchase cost on a weighted average basis.
b) Work in process and finished goods: cost of direct materials and labour plus attributable overheads based on a
normal level of activity.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.
The amount of any write down of inventories to net realizable value and all losses of inventories shall be
recognized in cost of sales in the statement of income in the period the write down or loss occurs. The amount of
any reversal of any write down of inventories, arising from an increase in net realizable value, shall be recognized
as reduction of cost of sales in the statement of income in the period in which the reversal occurs.
3-5 Accounts receivable and other receivables
Accounts receivable and other receivables are stated at original invoice amount net of any impairment losses.
Impairment losses are measured as the difference between the receivables carrying amount and the present value
of estimated future cash flows. The impairment loss is recognized in the statement of income. Reversal of
impairment is recognized in the statement of income in the period in which it occurs .
3-6 Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past
event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are reviewed at the
financial position date and adjusted to reflect the current best estimate.
Where the effect of the time value of money is material, the amount of a provision should be the present value of
the expected expenditures required to settle the obligation. Where discounting is used, the increase in the
provision due to the passage of time is recognized as a finance cost.
3-7 Legal reserve
According to the Company’s articles of association, 5% of the net profits of the year is transferred to the legal
reserve until this reserve reaches 50% of the issued capital. The reserve is used upon a decision from the general
assembly meeting based on the proposal of the board of directors.
3-8 Borrowings
Borrowings are initially recognized at the value of the consideration received. Amounts maturing within one year
are classified as current liabilities, unless the Company has the right to postpone the settlement for a period
exceeding one year after the reporting date, then the loan balance should be classified as long term liabilities.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using
the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are
derecognized as well as through the effective interest rate method amortization process.
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
11
Amortized cost is calculated by taking into account any discount or premium on acquisition and fee or costs that
are an integral part of the effective interest rate. The effective interest rate amortization is included in finance cost
in the statement of income.
3-9 Income taxes
Income tax is calculated in accordance with the Egyptian tax law.
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted at the
reporting date in Egypt.
The current income tax charge is calculated on the basis of the tax laws enacted at the reporting date in Egypt.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected
to be paid to the tax authorities.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss
In respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint arrangements, when the timing of the reversal of the temporary differences can be
controlled and it is probable that the temporary differences will not reverse in the foreseeable future
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits
and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit
will be available against which the deductible temporary differences, and the carry forward of unused tax credits
and unused tax losses can be utilised, except:
When the deferred tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss
In respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint arrangements, deferred tax assets are recognised only to the extent that it is probable that
the temporary differences will reverse in the foreseeable future and taxable profit will be available
against which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax
items are recognised in correlation to the underlying transaction directly in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
12
3-10 Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the
revenue can be reliably measured. Revenue is measured at the fair value of the consideration received, excluding
discounts, rebates to customers and sales taxes or duty. The following specific recognition criteria must also be
met before revenue is recognized:
* Sale of goods
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods
have passed to the buyer, usually on delivery of the goods. Revenue from the sale of goods is measured at the fair
value of the consideration received or receivable, net of returns and allowances, trade discounts and volume
rebates, if any.
* Interest income
Interest income is recognized as interest accrues using the effective interest method. Interest income is included in
finance income in the statement of income.
* Government grants
Government grants that are received as compensation for expenses or losses already incurred for the purpose of
giving immediate financial support to the company with no further related costs are recognized in the income
statement in the period in which they become virtually certain and all attached conditions are complied with.
3-11 Expenses
All expenses including operating expenses, general and administrative expenses and other expenses are
recognized and charged to the statement of income in the financial year in which these expenses were incurred.
3-12 Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
All borrowing costs are expensed in the year incurred.
3-13 Related party transactions
Related parties represent associated companies, major shareholders, directors and key management personnel of
the Company, and entities controlled, jointly controlled or significantly influenced by such parties. Pricing
policies and terms of these transactions are approved by the boards of directors.
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
13
3-14 Impairment
Impairment of financial assets
The Company assesses at each reporting date whether there is any objective evidence that a financial asset or a
group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if,
and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the
initial recognition of the asset and has an impact on the estimated future cash flows of the financial asset or the
group of financial assets that can be reliably estimated.
Impairment of non financial assets
The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any
indication exists, the Company estimates the asset’s recoverable amount. An asset’s recoverable amount is the
higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is
determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of
those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount.
A previously recognized impairment loss is only reversed if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so
that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that
would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior
years. Such reversal is recognized in the statement of income.
3-15 Leases
Under Egyptian Laws and regulations all lease contracts including finance leases are accounted for as operating
lease, where the lease payments are recognized as an expense on a straight line basis over the lease term.
3-16 Sales lease back
Gain or loss resulting from the difference between the sale price and the net book value of disposal asset which is
sold under a sale lease-back contract is recorded as deferred capital gain or loss and is amortized over the lease
contract term.
3-17 Statement of cash flows
The statement of cash flows is prepared using the indirect method.
3-18 Cash and cash equivalent
For the purpose of preparing the cash flow statement, the cash and cash equivalent comprise cash on hand, current
accounts with banks and time deposits maturing within three months less bank overdrafts.
Translation of consolidated financial
statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
14
4 SIGNIFICANT ACCOUNTING JUDGMENTS AND ESTIMATES
The preparation of these financial statements requires management to make judgments and estimates that affect
the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures and the
disclosure of contingent liabilities at the reporting date. Uncertainty about these assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amount of the assets or liabilities affected in
future periods.
Estimates and their underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised.
The key judgements and estimates that have a significant impact on the financial statement of the Company are
discussed below:
Judgements
There were no matters involving significant management judgment for the presented periods herein.
Estimates
Impairment of trade and other receivables
An estimate of the collectible amount of trade and other receivables is made when collection of the full amount is
no longer probable. For individually significant amounts, this estimation is performed on an individual basis.
Amounts which are not individually significant, but which are past due, are assessed collectively and a provision
applied according to the length of time past due, based on historical recovery rates.
Useful lives of property, plant and equipment
The Company’s management determines the estimated useful lives of its property, plant and equipment for
calculating depreciation. This estimate is determined after considering the expected usage of the asset or physical
wear and tear. The management periodically reviews estimated useful lives and the depreciation method to ensure
that the method and period of depreciation are consistent with the expected pattern of economic benefits from
these assets.
Taxes
The Company is subject to income taxes in Egypt. Significant judgment is required to determine the total
provision for current and deferred taxes. The Company established provisions, based on reasonable estimates, for
possible consequences of audits by the tax authorities in Egypt. The amount of such provision is based on various
factors, such as experience of previous tax audits and differing interpretations of tax regulations by the Company
and the responsible tax authority. Such differences of interpretations may arise on a wide variety of issues
depending on the conditions prevailing in Egypt.
Impairment of non-financial assets
The Company assesses whether there are any indicators of impairment for all non-financial assets at each
reporting date. The non-financial assets are tested for impairment when there are indicators that the carrying
amounts may not be recoverable. When value in use calculations are undertaken, management estimates the
expected future cash flows from the asset or cash-generating unit and chooses a suitable discount rate in order to
calculate the present value of those cash flows.
Translation of consolidated financial statements
originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
15
5 PROPERTY, PLANT AND EQUIPMENT
- Audi Bank – Egypt has the right to a first degree commercial mortgage on the Parent company’s Property, Plant and Equipment and intangible assets covering not less than 110% of the loan balance in case of breaching any
financial covenants within the contract. (note 15)
- Depreciation expense is allocated as follows : Disposals of property, plant and equipment represent the sale of some assets as follows:
Sale of assets
The Group entered in a sale and lease back contract with Incolease company , whereby the Group sold assets amounting to LE 7,745,217 with net book value amounting to LE 8,440,641 , as a
results of this sale the Group incurred capital losses amounting to LE 695,424 to be amortized over 60 months (lease term ) starting from march 2015, the amortization for the period amounted to
L.E 69,543.
Land Buildings Machinery and
equipment Vehicles Tools
Computers and
software
Furniture and
fixtures Total
LE LE LE LE LE LE LE LE
Cost
As of 1 January 2016 8,221,307 42,405,008 187,630,792 30,344,855 10,126,567 7,465,333 5,849,137 292,042,999
Additions - 51,563 2,055,193 43,696,686 104,942 344,082 428,662 46,681,128
Transferred from projects under construction (note 6) - 109,520 - - - - - 109,520
Disposals - - - (77,002) - - - (77,002)
As of 30 June 2016 8,221,307 42,566,091 189,685,985 73,964,539 10,231,509 7,809,415 6,277,799 338,756,645
Accumulated depreciation
As of 1 January 2016 - (5,971,280) (67,296,304) (18,417,326) (4,326,850) (4,601,743) (2,891,927) (103,505,430)
Depreciation for the period - (531,205) (8,483,079) (2,289,018) (617,329) (541,790) (254,604) (12,717,025)
Disposals - - - 38,500 - - - 38,500
As of 30 June 2016 - (6,502,485) (75,779,383) (20,667,844) (4,944,179) (5,143,533) (3,146,531) (116,183,955)
Net book value as of 30 June 2016 8,221,307 36,063,606 113,906,602 53,296,695 5,287,330 2,665,882 3,131,268 222,572,690
30 June 2016
LE
Cost of sales 9,381,333
Selling and marketing expenses (note 21) 3,137,617
General and administrative expenses (note 22) 198,075
12,717,025
LE LE
Proceeds from sales of property, plant and equipment 244,197
Cost of disposed property, plant and equipment 77,002
Accumulated depreciation relating to disposals (38,500)
Net book value of disposed property, plant and equipment 38,502
Gain from sale of property, plant and equipment (note 23) 205,695
Translation of consolidated financial statements
originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
16
- Audi Bank – Egypt has the right to a first degree commercial mortgage on the Parent company’s Property, Plant and Equipment and intangible assets covering not less than 110% of the loan balance in case of breaching any
financial covenants within the contract. (note 15)
- Depreciation expense is allocated as follows : Disposals of property, plant and equipment represent the sale of some assets as follows:
Sale of assets
The Group entered in a sale and lease back contract with Incolease company, whereby the Group sold assets amounting to LE 2,135,523 with net book value amounting to LE 2,291,463, as a
results of this sale the Group incurred capital losses amounting to LE 155,940 to be amortized over 60 months (lease term) starting from march 2015, the amortization for the period amounted to
L.E 10,396.
June 2015 Land Buildings Machinery and
equipment Vehicles Tools
Computers and
software
Furniture and
fixtures Total
LE LE LE LE LE LE LE LE
Cost
As of 1 January 2015 4,665,181 40,299,659 169,359,021 26,317,643 7,291,394 5,646,352 5,158,461 258,737,711
Additions - 1,698,076 906,479 855,141 191,702 1,635,469 223,888 5,510,755
Transferred from projects under construction (note 6) - 225,719 14,044,866 - - - - 14,270,585
Disposals - - (2,766,165) (188,000) - - - (2,954,165)
As of 30 June 2015 4,665,181 42,223,454 181,544,201 26,984,784 7,483,096 7,281,821 5,382,349 275,564,886
Accumulated depreciation As of 1 January 2015 - (4,930,504) (51,652,065) (15,494,078) (3,356,106) (3,611,052) (2,476,057) (81,519,862)
Depreciation for the period - (512,092) (7,968,391) (1,570,135) (494,407) (438,752) (218,464) (11,202,241)
Disposals - - 474,702 188,000 - - - 662,702
As of 30 June 2015 - (5,442,596) (59,145,754) (16,876,213) (3,850,513) (4,049,804) (2,694,521) (92,059,401)
Net book value as of 30 June 2015 4,665,181 36,780,858 122,398,447 10,108,571 3,632,583 3,232,017 2,687,828 183,505,485
30 June 2015
LE
Cost of sales 8,862,545
Selling and marketing expenses (note 21) 2,170,832
General and administrative expenses (note 22) 168,864
11,202,241
LE LE
Proceeds from sales of property, plant and equipment 129,953
Cost of disposed property, plant and equipment 662,702
Accumulated depreciation relating to disposals (662,702)
Net book value of disposed property, plant and equipment -
Gain from sale of property, plant and equipment (note 23) 129,953
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
17
6 PROJECTS UNDER CONSTRUCTION
30 June 2016 31 December 2015
LE LE
1 January 20,175,099 23,122,956
Additions 77,120,046 21,822,378
Disposals - (132,795)
Transferred to property, plant and equipment (note 5) (109,520) (24,637,440)
97,185,625 20,175,099
Projects under construction are analysed as follows :
30 June 2016 31 December 2015
LE LE
Buildings 18,008,491 4,431,188
Machinery and equipment 79,177,134 15,743,911
97,185,625 20,175,099
7 INVENTORIES
30 June 2016 31 December 2015
LE LE
Raw materials 128,072,686 131,909,218
Spare parts 10,050,333 9,923,457
Work in process 453,923 36,721
Finished goods 23,323,341 24,951,279
161,900,283 166,820,675
Write down of inventory* (1,941,200) (1,941,200)
159,959,083 164,879,475
8 ACCOUNTS AND NOTES RECEIVABLE
30 June 2016 31 December 2015
LE LE
Accounts receivable – Local market 257,085,014 169,296,825
Accounts receivable – Export 33,269,699 28,874,574
Notes receivable 21,694,037 53,503,685
312,048,750 251,675,084
Provision for impairment of accounts receivable* (8,605,755) (8,326,252)
303,442,995 243,348,832
* The provision for impairment of accounts receivable and its reversal are included in the selling and
marketing expenses
The movement of provision for impairment of accounts receivable is represented as follows:
30 June 2016 31 December 2015
LE LE
Balance at 1 January 8,326,252 12,807,466
Charged during the period (note 21) 279,503 277,771
Reversal (note 21) - (4,758,985)
Balance 8,605,755 8,326,252
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
18
9 PREPAYMENTS AND OTHER RECEIVABLES
30 June 2016 31 December 2015
LE LE
Prepaid expenses 15,316,645 7,642,473
Deposits with others 2,104,466 1,767,416
Employees’ advances 631,654 579,895
Advances to suppliers to purchase property, plant and
equipment 25,640,325 4,380,974
Amount due from tax authority 3,168,938 4,155,647
Deferred capital losses (note 5) 559,376 628,919
Advances to suppliers 27,720,460 22,638,065
Other receivables 47,592,674 48,806,697
Letters of credit 10,272,294 -
133,006,832 90,600,086
Provision for impairment of prepayments and other
receivables* (605,372) (605,372)
132,401,460 89,994,714
10 CASH ON HAND AND AT BANKS
30 June 2016 31 December 2015
LE LE
a) Local Currency
Cash on hand 5,340,345 1,269,607
Current accounts 35,870,625 19,233,926
Deposits 250,000,000 -
291,210,970 20,503,533
b) Foreign currency
Cash on hand 2,813,127 1,227,380
Current accounts 24,963,972 6,338,561
27,777,099 7,565,941
318,988,069 28,069,474
For purposes of statement of cash flows:
The cash and cash equivalent is equal to cash on hand and at banks as there are no bank overdrafts as of 30
June 2016 and 2015.
11 PROVISIONS
30 June 2016 31 December 2015
LE LE
Balance as of 1 January 12,028,104 10,289,966
Charge for the period 156,750 1,861,513
Transferred from other credit balances during the period 405,310 -
Used during the period - (123,375)
Balance 12,590,164 12,028,104
*The reversal of provision related to settlement of certain disputes .
The balance at 30 June 2016 is expected to be utilized in upcoming years. In the opinion of the Company’s
management after taking appropriate technical advice, the outcome of these claims will not give rise to any
significant loss beyond the amounts provided at 30 June 2016.
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
19
The information usually required by accounting standards is not disclosed because the management
believes that to do so would seriously prejudice the outcome of the negotiation with those parties. These
provisions are reviewed by management on an annual basis and they are adjusted based on latest
developments, discussions and agreements with those parties.
12 SHORT TERM CREDIT FACILITIES
30 June 2016 31 December 2015
LE LE
a) Egyptian pounds 334,379,640 277,508,945
b) Foreign currencies 95,404,793 38,628,867
429,784,433 316,137,812
- Credit facilities represent short term facilities from banks to finance the parent’s working capital. The
credit facilities carry on average interest rate of 13,9% for facilities denominated in Egyptian pound and
average interest rate of 2.7% for facilities denominated in foreign currencies .
- Credit facilities denominated in Euros amounted to LE 1,618,371. (31 December 2015: LE 2,117,674)
- Credit facilities denominated in other currencies amounted to LE 673. (31 December 2015: LE 80)
- Credit facilities denominated in USD amounted to LE 93,785,749. (31 December 2015:LE 36,511,113)
13 TRADE AND NOTES PAYABLES
30 June 2016 31 December 2015
LE LE
Trade payables 91,949,925 62,584,946
Notes payable 9,912,574 16,243,446
101,862,499 78,828,392
14 ACCRUED EXPENSES AND OTHER PAYABLES
30 June 2016 31 December 2015
LE LE
Accrued expenses 19,127,722 12,857,356
Advances from customers 8,920,734 8,092,792
Deposits from others 927,804 321,962
Due to Social Insurance Authority 927,761 728,981
Tax authorities 5,528,873 6,411,025
Other payables 1,879,650 849,341
37,312,544 29,261,457
15 TERM LOANS
30 June 2016 31 December 2015
LE LE
Non-current 21,066,250 26,828,800
Current 11,533,126 11,525,000
32,599,376 38,353,800
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
20
Loan from Audi Bank – Egypt
Represents a term loan granted to the Company during 2014, amounting to LE 46.6 million from Audi
Bank - Egypt in two tranches as follow :
- First tranche amounted to LE 36.4 million used to settle certain banks’ credit facilities and to be paid
in twenty quarterly installments starting from September 2014,
- Second tranche amounted to LE 10.2 million and was used to pay term loan granted to the company by
Ahli United Bank - Egypt and be paid in three semi-annual installments starting from December 2014,
- Interest is calculated on the basis of the corridor overnight deposit rate published by the Central Bank of
Egypt plus 2.25%.
- The bank has the right to a first degree of commercial mortgage on the Company’s property, plant and
equipment and intangible assets covering not less than 110% of the loan balance in case of breach of the
loan covenants. The loan is also guaranteed by the Company shareholders .
Loan from National Bank of Egypt
Represents a term loan granted to the Company during 2014 amounting to LE 2.1 million from National
Bank of Egypt in order to finance 70% of the cost related to development of hygienic production structure
of Company, in accordance with "environmental compliance" agreement with Egyptian Environmental
Affairs Agency. The loan is due in 16 equal quarterly installments.
- The interest rate is 2.5% per year.
- The equipment financed by this loan is pledged to the National Bank of Egypt until the loan is totally
paid. No equipment was purchased up to 30 June 2016.
Loan from HSBC Bank
The company obtained a term loan during 2013 amounting to LE 18.6 M from HSBC Bank – Egypt. The
loan is repayable over 60 monthly installments starting from August 2013. The loan carries an interest rate
of corridor plus 3.25%.
AUDI
BANK
NATIONAL
BANK OF
EGYPT
HSBC Total
LE LE LE LE Balance as of 1 January 2016 27,300,000 1,443,800 9,610,000 38,353,800
Proceeds during the period - 8,126 - 8,126
Payments during the period (3,640,000) (262,550) (1,860,000) (5,762,550)
Balance as of 30 June 2016 23,660,000 1,189,376 7,750,000 32,599,376
AUDI
BANK
AHLI
UNITED
BANK
HSBC Total
LE LE LE LE Balance as of 1 January 2015 41,380,000 1,650,182 13,330,000 56,360,182
Payments during the period (14,080,000) (206,382) (3,720,000) (18,006,382)
Balance as of 31 December 2015 27,300,000 1,443,800 9,610,000 38,353,800
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
21
16 ISSUED AND PAID UP CAPITAL
At each of 30 June 2016, 31 December 2015, the Company’s authorized capital amounts to LE
500,000,000.
As of 31 December 2012 , the issued and paid up capital was L.E 30,000,000 divided over 1200000 shares
of par value LE 25 each.
On 30 June 2013 the Extraordinary General Assembly approved the raise of the issued and paid up capital
by L.E 20,000,000 divided over 800000 shares at the par value of L.E 25 to reach L.E 50,000,000 through
share dividends of 2 shares for every 3 outstanding shares,
on 21 October 2015 the Extraordinary General Assembly decided the fragmentation of the nominal value
of each share from LE 25 to LE 0,2 and was approved in the commercial register on 15 December 2015.
On 7 April 2016 the Board of Directors decided (authorized by the extraordinary General Assembly in the
15 January 2016) to increase the paid-up capital by LE 6.521.739 distributed over 32608695 shares with a
nominal value of 20 piaster per share then the initial public offering held on the final fair value for the
share amounted to LE 9,20 per share were the difference of LE 9 were share premium. and the capital
increase was approved in the commercial register on 17 May 2016
accordingly the issued and paid up capital as of 30 June 2016 amounted to L.E 56,521,739 divided over
282608695 shares at the par value of LE 0,2. (2015:LE 50,000,000).
17 RETAINED EARNINGS
The retained earnings of the Group includes an amount of LE 453,913 in 30 June 2016 (31December
2015:LE 287,703) not available for distribution being the legal reserve of the subsidiary.
18 MACHINES INSTALMENTS
The machine installments represent outstanding installments for the purchased packing machines from the
supplier and do not bear interest. The balance is represented as follow :
30 June 2016 31 December 2015
LE LE
Not later than one year – current 33,491,004 22,607,687
Later than one year and not later than five years – non current 50,532,413 17,604,205
84,023,417 40,211,892
19 SALES TAX PAYABLE ON PLANT AND EQUIPMENT
Sales tax payable on plant and equipment represents the deferred installments of sales tax on the imported
machines and equipment which is deferred for 10 years with 3 years grace period in accordance with
applicable laws.
20 INCOME TAXES
From 1/1/2016
Till 30 /6/2016
From 1/1/2015
Till 30 /6/2015 From 1/4/2016
Till 30 /6/2016
From 1/4/2015
Till 30 /6/2015
LE LE LE LE
Current income taxes 14,301,105 26,314,293 5,920,501 18,405,098
Deferred income taxes 708,643 (988,274) 955,396 (1,804,339)
Income Taxes 15,009,748 25,326,019 6,875,897 16,600,759
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
22
RECONCILIATION OF THE EFFECTIVE INCOME TAX RATE
30 June 2016 30 June 2015
Rate LE Rate LE
Profit before income taxes 59,878,828 87,399,852
Income taxes at the applicable tax rate 22,5% 13,472,736 5%-25% 26,169,956
Non-deductible expenses 828,369 144,337
Income taxes at the effective tax rate 23,9% 14,301,105 30,1% 26,314,293
Components of deferred tax liability are as follows:
30 June 2016 31 December 2015
LE LE
Depreciation of Property, plant and equipment 18,689,632 17,980,989
Net deferred tax (liability) 18,689,632 17,980,989
21 SELLING AND MARKETING EXPENSES
From 1/1/2016
Till 30 /6/2016
From 1/1/2015
Till 30 /6/2015 From 1/4/2016
Till 30 /6/2016
From 1/4/2015
Till 30 /6/2015
LE LE LE LE
Advertising and marketing activities 23,054,540 14,320,676 10,267,061 6,392,940
Salaries and wages 42,095,895 30,911,745 23,238,683 16,121,975
Warehousing 4,713,950 3,092,521 2,410,204 1,672,125
Vehicles and transportation rent expenses 8,317,611 6,202,606 4,278,738 3,316,340
Lease (Note 28) 2,425,910 2,184,631 1,163,711 1,110,414
Spare parts and maintenance 4,246,983 4,046,006 2,335,256 2,055,429
Depreciation (note 5) 3,137,617 2,170,832 1,745,881 1,106,458
Insurance 1,311,500 1,214,891 790,831 669,657
Provision for impairment of accounts receivable (note 8) 279,503 - - -
Reversal of impairment of accounts receivable (note 8) - (4,758,985) (9,593) -
Fright expenses 5,148,403 4,572,487 2,941,803 2,588,630
Employees benefits 518,134 315,147 265,566 167,117
Other 5,378,078 3,886,630 2,851,014 2,157,792
100,628,124 68,159,187 52,279,155 37,358,877
22 GENERAL AND ADMINISTRATIVE EXPENSES
From 1/1/2016
Till 30 /6/2016
From 1/1/2015
Till 30 /6/2015 From 1/4/2016
Till 30 /6/2016
From 1/4/2015
Till 30 /6/2015
LE LE LE LE
Salaries and wages 11,515,677 6,255,446 5,923,284 3,222,272
Board allowance 125,000 - 125,000 -
Depreciation (note 5) 198,075 168,864 99,325 93,560
Lease (note 28) 204,598 7,081 102,392 612
Rent 122,173 116,879 61,213 57,705
Employees benefits 257,282 190,843 128,547 99,540
Vehicles and transportation rent expenses 140,928 121,883 74,922 49,807
Amortization of deferred capital gain and loss (note 5) 69,543 10,396 34,772 7,797
Donation 106,150 824,503 90,500 519,735
Other 2,360,953 1,729,956 1,246,757 1,085,638
15,100,379 9,425,851 7,886,712 5,136,666
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
23
23 NET OTHER OPERATING INCOME / EXPENSES
From 1/1/2016
Till 30 /6/2016
From 1/1/2015
Till 30 /6/2015 From 1/4/2016
Till 30 /6/2016
From 1/4/2015
Till 30 /6/2015
LE LE LE LE
Export support subsidy 1,958,008 1,861,434 858,793 772,027
Marketing support from Tetra Pak Company 4,792,043 2,685,761 2,951,428 1,991,361
Scrap sales revenue 1,137,907 1,337,507 537,177 812,747
Job orders for others 554,895 542,032 258,418 361,933
Gain from sale of Property, plant and equipment (note 5) 205,695 129,935 180,722 34,435
Loss from sale of project under construction - (69,745) - (69,745)
Other revenues 366,747 - 254,595 -
9,015,295 6,486,924 5,041,133 3,902,758
24 FINANCE EXPENSES
From 1/1/2016
Till 30 /6/2016
From 1/1/2015
Till 30 /6/2015 From 1/4/2016
Till 30 /6/2016
From 1/4/2015
Till 30 /6/2015
LE LE LE LE
Interest on loans and credit facilities 20,411,665 15,260,249 11,022,692 7,684,887
Expenses from foreign exchange differences 4,691,257 4,790,331 1,060,681 175,169
25,102,922 20,050,580 12,083,373 7,860,056
25 CONTINGENT LIABILITIES
At 30 June 2016 the Group had contingent liabilities in respect of banks’ letter of guarantees issued by the
banks on behalf of 3rd parties from which it is not anticipated that material liabilities will arise amounting
to LE 5,483,813 (31 December 2015: LE 3,211,776).
26 MERGER RESERVE
Merger reserve represents the difference between the nominal value of the shares of the subsidiary
acquired in the Common Control Transaction and the cash paid as consideration for such acquisition. Until
the date of the Common Control Transaction, the merger reserve represents the nominal value of the shares
of the subsidiary owned by the controlling shareholders of the Parent. Cash consideration paid by the
Company to the controlling shareholders for the purchase of the subsidiary shares on 30 April 2014 has
been reflected as a distribution.
27 EARNING PER SHARE
Basic and diluted earnings per share are calculated by dividing the profit for the period attributable to the
equity holders of the Parent by the weighted average number of shares outstanding during the year. The
Company has no dilutive securities.
* According to the Egyptian law, employees and Board of Directors members are entitled to a percentage
of the company’s profit as a profit sharing when dividends are declared.
30 June 2016 30 June 2015 LE LE
Net profit for the period 44,868,899 62,073,672
Employees and Board of directors dividends* (7,816,227) (10,954,298)
Net profit available for distribution after employees and board of
directors share of profit 37,052,672 51,119,374
Number of shares outstanding 258152174 2000000
Basic and diluted earnings per share 0,144 25,56
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
24
28 CAPITAL AND LEASE COMMITMENTS
a. Capital commitments
The balance of the company’s contracted capital commitments as of 30 June 2016 amounted to
LE 4,969,061 (31 December 2015 : LE 15,294,319) as follow:
30 June 2016 Contract
amount Paid amount Un-paid
amount
LE LE LE
-Buildings and construction 21,646,550 (17,396,844) 4,249,706
-Machines 496,000 (204,364) 291,636
-Vehicles 13,593,960 (13,166,241) 427,719
35,736,510 (30,767,449) 4,969,061
31 December 2015 Contract
amount Paid amount Un-paid amount
LE LE LE
-Buildings and construction 21,276,550 (6,255,867) 15,020,683
-Machines 430,000 (156,364) 273,636
21,706,550 (6,412,231) 15,294,319
b. Finance lease commitments
The table below present the details of finance lease commitments including the breakdown by type
of expenses of the period.
30 June 2016 Contract
Amount
Purchasing
Price
Total Lease
Amount
Period lease
payments
LE LE LE LE
Machinery and equipment 28,405,219 (7) 28,405,212 3,294,745
Vehicles 26,092,822 (20) 26,092,802 2,630,508
54,498,041 (27) 54,498,014 5,925,253
31 December 2015 Contract
Amount
Purchasing
Price
Total Lease
Amount
Annual lease
payments
LE LE LE LE
Machinery and equipment 27,723,078 (7) 27,723,071 3,843,180
Vehicles 27,483,237 (24) 27,483,213 5,143,891
55,206,315 (31) 55,206,284 8,987,071
The period lease expenses are charged as follow:
30 June 2016 30 June 2015
LE LE
Cost of sales 3,294,745 1,566,867
Selling and marketing expenses 2,425,910 2,184,631
General and administrative expenses 204,598 7,081
5,925,253 3,758,579
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
25
The company leases certain of its assets under finance leases. The average lease term is 5 years (31
December 2015: 5 Years). The company has the option to purchase the assets for a nominal amount
at the end of lease terms. The company’s obligation under finance leases are secured by the lessor’s
titles to the leased assets.
Finance lease commitments are as follow:
30 June 2016 31 December 2015
LE LE
Not later than one year 10,135,471 9,924,686
Later than one year and not later than five years 21,922,840 24,672,075
32,058,311 34,596,761
29 SEGMENT REPORTING
In 2012 the company was operating in one segment. From September 2013, the Company started the
production of juice, therefore the Company started to operate into two segments as follows:
- Dairy products
- Juice Products
The Executive Management Committee monitors the operating results of its business units separately for
the purpose of making decisions about resource allocation and performance assessment. Segment
performance is evaluated based on gross profits and is measured consistently with profit or loss in the
consolidated financial statements. However the Group’s financing (including finance costs and finance
income) and income taxes are managed on a Group basis and are not allocated to operating segments.
The amount of each segment item reported shall be the measure reported to the chief operating decision
maker for the purposes of making decisions about allocating resources to the segment and assessing its
performance.
Primary segments results – related products for the period ended 30 June 2016 are as follows:
Dairy products Juice products Unallocated Total
LE LE LE LE
Segment Sales 670,964,374 115,599,923 - 786,564,297
Segment cost of sales (499,882,835) (99,319,705) (1,335,049) (600,537,589)
Gross Profit 171,081,539 16,280,218 (1,335,049) 186,026,708
Operating expenses net of other operating
income
(106,869,958)
Finance income 5,825,000
Finance expenses (25,102,922)
Income tax expenses (15,009,748)
Net profit for the period 44,869,080
Depreciation expenses (5,768,747) (2,714,332) (4,233,946) (12,717,025)
Primary segments results – related products for period ended 30 June 2015 are as follows:
Dairy products Juice products Unallocated Total
LE LE LE LE
Segment Sales 598,443,034 114,905,851 - 713,348,885
Segment cost of sales (442,557,551) (90,917,326) (1,284,297) (534,759,174)
Gross Profit 155,885,483 23,988,525 (1,284,297) 178,589,711
Operating expenses net of other operating
income
(71,298,490)
Finance income 159,211
Finance expenses (20,050,580)
Income tax expenses (25,326,019)
Net profit for the period 62,073,833
Depreciation expenses (5,347,381) (2,621,010) (3,233,850) (11,202,241)
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
26
Segments Assets
30 June 2016 Dairy products Juice products Unallocated Total
LE LE LE LE
Total assets 72,490,741 41,415,861 1,120,643,320 1,234,549,922
Segments Assets
31 December 2015 Dairy products Juice products Unallocated Total
LE LE LE LE
Total assets 76,486,190 43,848,297 614,670,676 735,005,163
Secondary Segment results – geographical sales by areas for the periods ended 30 June 2016 are as
follows:
Geographical areas
Local
30 June 2016 30 June 2015
LE LE
Cairo 377,010,688 309,786,083
Alexandria 94,692,847 72,506,147
Delta 149,078,963 122,123,460
Upper Egypt 126,664,848 170,110,528
747,447,346 674,526,218
Export 39,116,951 38,822,667
786,564,297 713,348,885
30 TAX SITUATION
30-1 Arabian food industries company (DOMTY)
a) Corporate taxes
The Company was exempted from corporate taxes for ten years started from the commencement of
operation till 13 December 2000.
All years up to 2010 were inspected by the Tax Authorities and all additional tax liabilities resulted
from the inspection has been agreed and settled by the Company.
The years 2011 and 2014 are currently under inspection
The company submitted the Tax declaration for the year 2015
b) Sales taxes
The Company’s records were inspected and all taxes due were paid for the years from the
commencement of operation till 2014.
From January 2015 till April 2016, the company submitted the sales tax returns on monthly basis
and at the legal dates. No tax inspection took place for that period.
c) Salary taxes
From commencement of operation till 2006, the Company’s records were inspected and all taxes
due were paid.
From 2007 till 2012, the inspection is still in progress.
For the years 2013,2014 and 2015, the company withheld and paid the taxes due on monthly basis
at the legal dates according to relevant tax law till June 2016.
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
27
d) Stamp duty taxes
For all years up to 2010, stamp and duty taxes have been inspected by the Tax Authority and
agreed by the Company.
The years from 2011 to 2014, the company calculate and pay the tax regularly those years are
currently being inspected
The period from 2015 to 30 April 2016, the company calculate and pay the tax regularly.
e) Withholding tax
The Company withholds tax on its transactions in accordance with tax law 91 of 2005 article (59)
and the Ministry resolution no. 310 of 2013.
30-2 El Tatweer for Food Industries Company
a) Corporate taxes
- The Company is subject to tax in accordance with the provisions of Law 91 of 2005. The
company has started its activity in October 2011.
- From commencement of operation till 2015, the Company submitted the tax return on a regular
basis in the legal deadlines in accordance with the provisions of the income tax law.
- No inspection has taken place till 2015.
b) Sales taxes
- From the commencement of operation till 2015, the Company submitted the sales tax returns on
monthly basis and at the legal dates.
- No inspection has taken place till 2015.
c) Salary taxes
- From the commencement of operation till March 2016, the Company withheld and paid the
taxes due on monthly basis at the legal dates according to tax law.
- No inspection has taken place till 2015.
d) Withholding tax
The Company withholds tax on its transactions in accordance with the tax law.
31 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
a) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Company is exposed to interest rate risk on
its interest bearing liabilities, banks credit facilities and long term loans.
30 June 2016 30 June 2015
Change in
interest rate
Effect on profit
before TAX
Change in
interest rate
Effect on profit
before TAX
LE LE
Liabilities +1% 60,126,295 Liabilities +1% 87,582,364
-1% 59,631,361 -1% 87,217,340
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
28
b) Foreign Currency Risk
The foreign currency risk is the risk that the value of the financial assets and liabilities and the related
cash inflows and outflows in foreign currencies will fluctuate due to changes in foreign currency
exchange rates. The total financial assets denominated in foreign currencies amount to LE
89,142,689 (2015:LE 54,605,085) whereas, the total financial liabilities denominated in foreign
currencies amounts to LE 217,498,508 (2015:LE 93,198,351) .
c) Credit Risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and
cause the other party to incur a financial loss.
The Company seeks to limit its credit risk with respect to banks by applying many control procedures
include credit limits and only dealing with reputable banks.
The Company seeks to limit its credit risk with respect to customers by setting credit limits for all
customers based on internal rating criteria and monitoring outstanding customer receivables balances.
d) Liquidity risk
The Company’s objective is to maintain a balance between continuity of funding and flexibility
through the use of loans and finance lease . The company uses credit limits and watches the loans due
dates.
Financial Liabilities
Less than 3
months
From 3 to 12
months
From 1 to 5
years
More than 5
years Total
30 June 2016
Loans 2,881,250 8,651,876 21,066,250 - 32,599,376
Suppliers, accrued expenses and
other payables 132,586,131 - - - 132,586,131
Sales tax payable on plant and
equipment 199,516 718,301 4,589,054 190,920 5,697,791
Income Tax payable - 14,301,105 - - 14,301,105
Notes Payable 8,367,453 1,545,121 253,900 - 10,166,474
Total financial liabilities 144,034,350 25,216,403 25,909,204 190,920 195,350,877
Less than 3
months
From 3 to 12
months
From 1 to 5
years
More than 5
years Total
31 December 2015
Loans 2,881,250 8,643,750 26,828,800 - 38,353,800
Suppliers, accrued expenses and
other payables 91,257,508 - - - 91,257,508
Sales tax payable on plant and
equipment 60,333 528,562 3,671,264 1,788,168 6,048,327
Income Tax payable 37,971,903 - - - 37,971,903
Notes Payable 15,353,819 889,627 380,850 - 16,624,296
Total financial liabilities 147,524,813 10,061,939 30,880,914 1,788,168 190,255,834
Translation of consolidated
financial statements originally issued in Arabic
ARABIAN FOOD INDUSTRIES COMPANY (DOMTY) – S.A.E
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 June 2016
29
e) Capital risk management
The company manages its capital to ensure that it will continue in sufficient level while maximising
the return to the shareholders through the optimisation of debt to equity balance. The company’s
overall strategy remains unchanged.
32 FINANCIAL INSTRUMENTS
The Company’s financial instruments are represented in financial assets and financial liabilities.
The financial assets include cash on hands and banks, trade and notes receivables, due from related
parties, and other receivables. The financial liabilities include trade and notes payables, term loans,
short term credit facilities, machinery instalments, long term notes payable and other payables.
The significant accounting policies applied for the recognition and measurement of the above -
mentioned financial assets and liabilities and the related income and expenses are included in note
(3) of the notes to the financial statements.