EASTERN COMPANY (S.A.

E)

FINANCIAL STATEMENTS
TOGETHER WITH LIMITED REVIEW REPORT
FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022

1
 INDEX

Description Pages

Auditor’s report 2-1

Statement of Financial Position 3

Statement of Income 4

Statement of Comprehensive Income 5

Statement of suggested dividends 6

Statement of Changes in Shareholders’ Equity 7

Statement of Cash Flows 8

Notes to the Financial Statements 9-49

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 Translation of Financial Statements
Originally Issued in Arabic
EASTERN COMPANY (S.A.E)
PERIODIC STATEMENT OF FINANCIAL POSITION
AS AT JUNE 31, 2022
(Amounts expressed in Thousands of Egyptian Pounds)
Notes 30/6/2022 30/6/2021
ASSETS
Non - Current Assets
Property, plant, and equipment (8) 4 598 230 4 984 748
Projects in progress (9) 483 437 448 045
Investment’s property (10) 128 904 129 749
Intangible assets (11) 1 802 2 999
Financial assets measured at fair value through
(12) 4 453 441 5 332 441
other comprehensive income
Financial investments at amortized cost (13) 20 668 20 668
Right of use leased assets (14) 225 674 273 688
Other assets (15) 19 544 25 654
Total Non- Current Assets 9 931 700 11 217 992
Current assets
Inventories (16) 4 147 446 4 325 387
Trade and notes receivables (17) 141 140 409 307
Debtors and other debit balances (18) 819 416 488 276
Trade payables - advance payments (19) 52 068 129 370
Financial assets measured at fair value through
(20) 10 391 288 4 200 920
Profit or losses
Cash and cash equivalent (21) 1 260 606 1 063 604
Total Current Assets 16 811 964 10 616 864
Total Assets 26 743 664 21 834 856
Equity
Issued and paid-up capital (22) 2 230 000 2 250 000
Reserves (23) 4 294 320 4 327 968
Treasury stock (24) -- )259 360(
Retained earning (25) 1 878 295 1 975 280
Net profit for the period 4 029 941 --
Total equity 12 432 556 8 293 888
Non - Current Liabilities
Deferred tax liability (26) 270 041 135 490
Employees benefits delegation (27) 423 219 468 475
Total Non-Current liabilities 693 260 603 965
Current Liabilities
Provisions (28) 1 409 770 1 630 846
Banks overdraft (21) 1 256 537 --
Trade and notes payables (29) 1 278 197 696 038
Creditors and other credit balances (30) 9 393 360 9 641 369
Trade receivables - advance payments (31) 81 489 130 804
Employees benefits delegation (27) 58 914 60 307
Current income tax payable 139 581 777 639
Total current liabilities 13 617 848 12 937 003
Total liabilities 14 311 108 13 540 968
Total of equity and liabilities 26 743 664 21 834 856
- The accompanying notes (from No. 1 to No. 48) are an integral part of these financial statements and read therewith.

(Mrs. / Omima AbdelMoneim) (Mrs./ Neveen Ali)

Consultant (A) Financial sector Head of the financial accounts sector
(Mr./ Tamer Mossly) (Mr./ Hany Aman)
Executive Managing for finance affairs Chief Executive Officer and Managing Director

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 Translation of Financial Statements
Originally Issued in Arabic

EASTERN COMPANY (S.A.E)

PERIODIC STATEMENT OF INCOME
FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

Notes 30/6/2022 30/6/2021

Sales/Revenue (32) 17 139 443 16 022 112
Cost of goods sold (33) (9 260 031) (9 252 202)
Gross profit 7 879 412 6 769 910

Other income (34) 151 790 133 122

Sale and distribution expenses (35) (737 950) (727 293)
General and administrative expenses (36) (263 891) (250 448)
Other expenses (37) (3 450 075) (1 076 036)
Result of operating activities 3 579 286 4 849 255
Financing cost / income (38) 253 286 285 850
Other financial investments revenue (39) 1 438 394 523 546
Profit before tax 5 270 966 5 658 651
Income tax expenses (40) (1 241 025) (1 378 467)
Profit from continued operations 4 029 941 4 280 184
Profit from Discontinued operations -- --
Profit of the period 4 029 941 4 280 184
Earnings per share (41) 1.61 1.75

- The accompanying notes (from No. 1 to No. 48) are an integral part of these financial statements
and read therewith.

(Mrs. / Omima AbdelMoneim) (Mrs./ Neveen Ali)

Consultant (A) Financial sector Head of the financial accounts sector

(Mr./ Tamer Mossly) (Mr./ Hany Aman)

Executive Managing for finance affairs Chief Executive Officer and Managing Director

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 Translation of Financial Statements
Originally Issued in Arabic
EASTERN COMPANY (S.A.E)
PERIODIC STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL PERIOD YEAR ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

30/6/2022 30/6/2021
Net profit of the period 4 029 941 4 280 184
Other Comprehensive Income
Revaluation Financial assets measured at fair value through Profit/losses (43 417) (112 284)
Cash flow hedges -- --
Actuarial re-measurements of defined benefit pension plans -- --
Company shares of other comprehensive income from associates -- --
Less
Other comprehensive income tax 9 769 25 264
Total other Comprehensive Income of the period after deducting
tax (33 648) (87 020)
Total Comprehensive Income of the period 3 996 293 4 193 164

- The accompanying notes (from No. 1 to No. 48) are an integral part of these financial statements
and read therewith.

(Mrs. / Omima AbdelMoneim) (Mrs./ Neveen Ali)

Consultant (A) Financial sector Head of the financial accounts sector
(Mr./ Tamer Mossly) (Mr./ Hany Aman)
Executive Managing for finance affairs Chief Executive Officer and Managing Director

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 Translation of Financial Statements
Originally Issued in Arabic
EASTERN COMPANY (S.A.E)
STATEMENT OF SUGGESTED DIVIDENDS
FOR THE FINANCIAL PERIOD YEAR ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

30/6/2022 30/6/2021
Net profit before tax 4 029 941 4 280 184
Adding/ Retained earnings 1 878 295 1 938 548
Net profit for distribution 5 908 236 6 218 732
Deduct:
Legal reserve -- 214 009
Capital reserve 5 588 24 314
Net profit for distribution after deducting Legal and capital 5 902 648 5 980 409
reserve
Employees contribution 399 222 398 373
First distribution of capital to shareholders 111 500 111 417
(510 722) (509 790)
Balance 5 391 926 5 470 619
Deduct:
Board of directors reward 25 000 20 000
Second distribution to shareholders 3 456 500 3 453 938
Youth and sports contribution 20 150 21 401
(3 501 650) (3 495 339)
Retained earnings to next year 1 890 276 1 975 280
- The accompanying notes (from No. 1 to No. 48) are an integral part of these financial
statements and read therewith

(Mrs. / Omima AbdelMoneim) (Mrs./ Neveen Ali)

Consultant (A) Financial sector Head of the financial accounts sector
(Mr./ Tamer Mossly) (Mr./ Hany Aman)
Executive Managing for finance affairs Chief Executive Officer and Managing Director

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 Translation of Financial Statements
Originally Issued in Arabic
EASTERN COMPANY (S.A.E)
PERIODIC STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)
Reserve of Reserve of
expected credit revaluation of
Issued and Statutory Capital Other losses for debt financial Treasury Retained Net profit of
Paid up capital Legal reserve reserve reserve reserves instruments investment Total reserves stocks earnings the year Total equity
Balance as of July 1, 2020 2 250 000 991 495 1 673 498 550 815 960 857 -- -- 4 176 665 (432 343) 1 567 139 -- 7 561 461
Purchasing Treasury stocks -- -- -- -- -- -- -- -- (194 157) -- -- (194 157)
Selling Treasury stocks -- -- -- -- -- -- -- -- 367 140 (366) -- 366 774
Adjustments deferred tax for
-- -- -- -- -- -- -- -- -- (54 458) -- (54 458)
2020/2021
Adjustment of expenses and revenues
-- -- -- -- -- -- -- -- -- 426 233 -- 426 233
from previous years
Transferred to reserves from
-- 214 009 -- 24 314 -- -- -- 238 323 -- 36 732 -- 275 055
dividends for 2020/2021
Comprehensive income items -- -- -- -- -- -- (87 020) (87 020) -- -- -- (87 020)
Balance as of 30/6/2021 2 250 000 1 205 504 1 673 498 575 129 960 857 -- (87 020) 4 327 968 (259 360) 1 975 280 -- 8 293 888
Balance as of July 1, 2021 2 250 000 1 205 504 1 673 498 575 129 960 857 -- (87 020) 4 327 968 (259 360) 1 975 280 -- 8 293 888
Treasury stock (20 000) -- -- 239 564 (219 564) --
Selling Treasury stocks -- -- -- -- -- -- -- -- 19 796 (817) -- 18 979
Adjustment of expenses and revenues
-- -- -- -- -- -- -- -- -- 123 396 -- 123 396
from previous years
Other comprehensive income items -- --
Net profit for the period from
-- -- -- -- -- -- -- -- -- -- 4 029 941 4 029 941
1/7/2021 till 30/6/2022
Other comprehensive income -- -- -- -- -- 31 932 (65 580) (33 648) -- -- -- (33 648)
Balance as of 30/6/2022 2 230 000 1 205 504 1 673 498 575 129 960 857 31 932 (152 600) 4 294 320 -- 1 878 295 4 029 941 12 432 556

- The accompanying notes (from No. 1 to No. 48) are an integral part of these financial statements and read therewith.
(Mrs. / Omima AbdelMoneim) (Mrs./ Neveen Ali)
Consultant (A) Financial sector Head of the financial accounts sector
(Mr./ Tamer Mossly) (Mr./ Hany Aman)
Executive Managing for finance affairs Chief Executive Officer and Managing Director

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 Translation of Financial Statements
Originally Issued in Arabic
EASTERN COMPANY (S.A.E)
PERIODIC STATEMENT OF CASH FLOW
FOR THE FINANCIAL YEARA ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)
Notes As of
Total Subtotal Item
no. 30/6/2022
Cash flows from operating activities
64 662 106 Cash sales and receivables collection 59 737 129
(5 826 417) Cash purchases and payments to suppliers (4 719 699)
(3 802 583) Paid salaries (2 041 193)
3 658 579 Operating income for others and other revenues 2 783 421
90 179 Interest collected 341 879
(35 408) Interest Paid (9 041)
(50 657 605) Tax and fees paid (49 109 497)
1 061 Export subsidy / Grants and Subsidies 1 129
1 076 Insurance claims collected 3 840
-- Notes payable (41 965)
(14 134) Other payments (32 554)
8 076 854 (1) Net Cash flows from operating activities 6 913 449
Second: Cash flows from investment activities
(149 166) Disbursement for purchasing fixed assets (projects under (108 757)
construction)
-- Proceeds from sales of fixed assets 587
(48 895 687) Treasury Bills purchased (21 638 228)
(7 320 751) Bonds purchased (6 095 423)
(7 818 574) Purchase investments in investments documents (400 790)
47 980 351 Treasury Bills Sales 17 825 426
8 162 009 Bonds Sales 650 697
2 838 998 Sales investments in investments documents 23 000
(5 202 820) (2) Net Cash flows from investment activities (9 743 488)
Third: Cash flows from financing activities
(3 958 298) Dividends paid (3 546 804)
-- Treasury shares purchased (194 156)
19 796 Treasury shares Sales 264 778
(3 938 502) (3) Net Cash flows from finance activities (3 476 182)
5 164 (4) foreign currency exchange differences losses and gain (68 609)
(1 059 304) Net cash from 1/7/2021 to 30/6/2022 (6 374 830)
1 063 604 Cash balance as of 1/7/2021 7 438 434
4 300 (43) Cash and cash equivalent at the end of the year 30/6/2022 1 063 604
- The accompanying notes (from No. 1 to No. 48) are an integral part of these financial statements and
read therewith.
(Mrs. / Omima AbdelMoneim) (Mr./ Haitham Talaat)
Consultant (A) Financial sector Head of current account and financing sector
(Mr./ Tamer Mossly) (Mr./ Hany Aman)
Executive Managing for finance affairs Chief Executive Officer and Managing Director

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NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

Translation of Notes to Financial Statements

Originally Issued in Arabic
EASTERN COMPANY (S.A.E)
NOTES TO THE FINANCIAL STATEMENTS
AS OF JUNE 30, 2022

1- COMPANY
1.1 Company’s commercial name:
Eastern Company (S.A.E) Located in Giza.
1.2 Establish date and location:
- The Company was established on 12/7/1920 in Giza city - the Arab Republic of
Egypt.
- The Company was registered in the Commercial Register under No. 6069.
- The Company located at the sixth industrial zone - Oasis Road plots numbers 1
(87 to 98) - Fifth zone - 6th of October City - Giza.
1.3 Purpose
- The Company main activities are manufacturing and trading of Tobacco leaf, its
products and modern smoking alternatives and accessories/ practicing any
investment, financial, commercial, industrial, agricultural or service activities
(except all relevant provisions of the capital market according to the Law no. 95
for the year of 1992 with the commitment of the company to adjust its situation in
accordance with the provisions of the Law No. 120 for the year of 1982.
- Real estate Ownership and Construction, purchasing and dividing lands for the
purposes of utilization, rental or sale, import, export and commercial agencies.
- Establish, participate in establishing, purchasing of companies, contribute to them
even if these entities are practicing its activities or part of it inside or outside the
Arab Republic of Egypt, in order to develop or achieve any of its goals in
accordance to the provisions of the laws, regulations and current decisions. Taking
into consideration issuing the necessary licenses to practice these activities. The
Company may participate or cooperate in any way with other companies which
have similar or non-similar activities.
1.4 Main shareholders
The Holding Company for Chemical Industries owner of 50.95% from the company’s
shares as at 30/6/2022.
1.5 Trading Shares on the Stock Exchange Market:
The Company's nominal shares are traded in the Egyptian Stock Exchange market.
1.6 Company duration:
The Company's duration is Fifty years starting from 2/6/2019 till 1/6/2069 as from the
date of registration in the commercial register.
1.7 Date of issuing the financial statements:
The financial statements have been approved by the board of directors on 20/9/2022

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NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

1.8 Company’s financial year:

- From 1/7/2021 till 30/6/2022.
- Shares Percentage of the Holding Company for Chemical Industries have been
decreased from 55% to be 50.95%, (after execution of treasury stock) after offering
a percentage of 4.5% with maximum number of 101 250 000 shares for Public &
Private Offering IPO.
- Private Placement percentage was 95% from the total offered shares with number
of 96 187 500 shares, the share price was 17 EGP per share with total amount of
EGP 1 635 187 500.
- Public Placement percentage was 5% from the total offered shares with number of
(5 062 500 shares), the share price was 17 EGP per share with total amount of
EGP 86 062 500.
- IPO has been covered by total amount of EGP 1 721 250 000.
- According to the Extra-ordinary General Assembly meeting held on June 2, 2019
the shareholders approved to transfer the company and its legal statue from the
Public Business Sector Companies (Law no. 203 for the year of 1991) to be under
the Corporate Company Law no. 159 for the year of 1981, and its executive
regulation.
This is a result of decreasing the shareholder participation of the Holding company
for Chemical Industries percentage of shares to less than 51% of the share capital
of Eastern Company.
Approving the new Articles of association which prepared in accordance with the
Corporate Law no. 159 for the year of 1981 and its executive regulation as it was
presented to the General Assembly.
- The Extra-ordinary General Assembly held on June 2, 2019 approved the
company’s New Articles of Association.
- The Company General Assembly held on May 26, 2022 and decided the follows:
1. Approval of Amendment Agreement No. (1) of the agreement of the founders
of the United Tobacco Company in preparation for a contribution of 24% in
the capital of the United Tobacco Company.
2. Approval of the main agreement regulating relations between the United
Tobacco Company (under incorporation) and the Eastern Company "Eastern
Company".
3. Approval of a lease contract for a plot of land and buildings designated for the
production of Philip Morris products with the United Tobacco Company.
4. Approval of a lease contract for the production lines used in the production of
Philip Morris products with a promise to sell with the United Tobacco
Company.
5. Approval of the rental and leaseback the machines owned by Philip Morris
Company and intended for the production of Philip Morris products.
6. Approval of a contract to manufacture a limited amount of Philip Morris
tobacco products.
7. Approval of the printing contract with the United Tobacco Company

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NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

- The Extra Ordinary General Assembly held on May 26, 2022 and decided the
follows:
- Approval of the amendment of the company’s address in the industrial and
commercial register and the amendment of Article (4) related to that, as well as
approval of the amendment of Articles (7) and (21) regarding the amendment of
the name of the Chemical Industries Company to become the Holding for
Chemical Industries

2- BASIS OF PREPARING FINANCIAL STATEMENT:

2/1 Accounting Standards:
- The Financial Statements have been prepared in accordance with the Egyptian
Accounting Standards (EAS) and according to the relevant laws and regulations.
2/2 Basis of Measurement:
- The financial statements have been prepared in accordance with the historical cost
methods and based on the company continuity.
- The financial statements have been prepared according to the accrual basis except
the cash flows which is prepared according to the cash basis.
- The cash flows statements have been prepared according to direct method.

2/3 Functional and presentation currency:

- The company's financial statements presented in Thousand Egyptian Pound, while
the transaction currency is the Egyptian Pound.
2/4 Use of Estimates and Judgment:
The financial statements have been prepared in accordance with the Egyptian
Accounting Standards and this requires the use of estimates and assumptions that
affect the values of assets and liabilities and the disclosure of potential liabilities, as
well as on revenues and expenditures. Although these estimates are based on the best
information available to management on current conditions and events, the final
results are they may differ from these estimates, and changes in the accounting
estimate are included in the period in which this change occurred and in any future
periods affected.
The following are main items that the company applied estimation and
judgments:
• Useful life of fixed assets
• Provisions
• Deferred tax assets
• Deferred tax liabilities
2/5 Fair value measurement:
- The fair value for financial instruments is determined based on either the market
value or similar financial instrument at the date of the financial statements without
deducting any future selling costs.

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NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

- The financial assets value is determine based on the current purchase prices of these
assets, while the financial liabilities value are determine based on the current prices
which can settle these liabilities.
- In case of an active market to determine the fair value of financial instruments, the
fair value will be estimated by the different evaluation methods considering the
latest transaction’s prices or other similar instruments are guided, use the
discounted cash flows method or any other evaluation method that result a reliable
values.
- Estimates of the future cash flows based on the best the management estimates
when use the discounted cash flows as an evaluation method, and determine the
used discounted rate according to the prevailing market price as at the financial
statements date of similar financial instruments of their nature and conditions.

3- SIGNIFICANT ACCOUNTING POLICIES:

The Significant Accounting Policies applied in a consistent base throughout the
presented financial periods in these financial statements.

3/1 Foreign Currencies translation:

- The company’s functional and reporting currency is the Egyptian pound.
- Transactions denominated in foreign currencies during the year are translated to
Egyptian pounds at the prevailing rates as at the transaction date. At year-end,
monetary assets and liabilities denominated in foreign currencies are translated to
Egyptian pounds using the prevailing rates as at that date. Translation differences
are included in the income statements.
3/2 Fixed Assets and Depreciation:
- Items of property plant and equipment are stated at cost and presented in the
statement of financial position net of accumulated depreciation and accumulated
impairment losses, if any.
- The items of property plant and equipment are depreciated according to the
straight line method and the depreciation cost is charged to income statement over
the useful life for each item.
Estimated useful live Estimated useful lives (year)
Buildings 25-50
Machines 10
Vehicles 5-8
Tools 5
Furniture 4-10
[

3/2/1 Subsequent cost:

The replacement cost incurred for any component of the items of property recognized
as part of the asset cost after disposing the carrying amount of that component.

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NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

3/3 Projects under construction:

- Projects under construction are recognized initially at cost. Cost includes all
expenditures directly attributable to bringing the asset to the working condition for
its intended use. Projects under construction are transferred to the fixed assets at
cost when they are completed and are available for the purpose for which they
were acquired.
3/4 Investments property:
- Investments property are valued at cost, and in case of a permanent decline, it will
be charged to the income statement. Investment property are represented in lands
and properties held to earn rental or capital appreciation or both or increase in their
value. Investment property were measured initially at cost and were subsequently
measured at cost minus the accumulated depreciation and impairment losses, and
depreciation expense and impairment losses are charged to income statement.
- Investment property is depreciated according to the straight-line method, over the
estimated productive life of each item of investment property. Land is not
depreciated, and the useful life of properties is estimated at 2% to 3.75%.
- Profits or losses from disposing are calculated as the difference between the net
proceeds from disposal of the property and the net book value which charged to
income statement.
3/5 Investments:
3/5/1 Financial investments at fair value through comprehensive income:
- Financial investments at fair value through comprehensive income are measured
later at fair value through the statement of comprehensive income. Interest income
is calculated at amortized cost using the effective interest method, and foreign
exchange gains and losses are included in profit or loss. Upon exclusion, the
accumulated profits, and losses in the statement of comprehensive income are
reclassified as profit and losses.
3/5/2 Other financial investments:
- Investments in government bonds are valued at acquisition cost and the return on
these investments is recognized under the income from investment item in the
income statement.
3/5/3 Financial investments at fair value through profits and losses:
- Treasury bills are measured at cost through profits and losses, and investment funds
are measured at fair value through profits and losses.
3/6 Other assets:
- The other assets are represented in the licenses cost which expected to generate
future economic benefits for the company and the company contribute in
establishment of non-owned assets to serve its purposes.
- The other assets are recognized initially at cost after deduction amortization. Cost
includes all expenditures directly attributable to bringing the asset to the working
condition for its intended use.
- The amortization percentage for the non-owned assets 10%, H.R program
amortization 25%, and the Microsoft program amortization 25%,

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NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

3/7 Inventories:
- Inventories of raw materials and production’s inputs are stated at cost or net
residual cost which is less and the raw materials consumptions are evaluated based
on weighted average cost.
- Inventories of non-finished goods are stated at cost till the last production stage.
- Inventories of finished goods are stated at lower of cost or net realizable value.
- The company follow the continuing count method.
- The inventories of Tobacco leaf materials are sufficient for around 6.4 months.
- The inventories balance of finished goods is sufficient to meet the market needs
for 7.96 days.
- The raw materials inventory includes Tobacco leaf in customs warehouses
amounted to 1 252 million Egyptian pounds and the due customs duties must be
paid upon receipt from these warehouses.

3/8 Cash on hand and at banks:

- Cash and cash equivalents are comprised of cash on hands, at banks and time
deposits with maturity of three months or less.

3/9 Provisions:
- Provisions are recognized when the company has a present or constructive
obligation as a result of past events, and it is expected that the company will require
to settle the obligation, and a reliable estimated be made for the amount of the
obligation.
- The provisions balance are revised at financial statements date and adjusted
according to the best estimates (if necessary).

3/10 Capital:
- Paid up and issued capital represent the nominal value per share multiplied by the
number of shares as of financial statements date.

3/11 Employees benefits:

a. Short-term employee benefits:
The short-term employee benefits are recognized as expense when providing the
related service, the expected payment is recognized as a liability when the
Company has a legal or implicit obligation to pay this amount against a service
which has been provided by the employee and the obligation can be reliably
measured.
b. Share-Based Payments:
The fair value of shares-based payments paid as Equity instruments (at the grant
date ) is recognized as expense, and as a corresponding increase in equity during
the maturity period, the amount recognized as an expense is adjusted to reflect the
number of grants when the related services and performance conditions expected
to be met, therefore the recognized amount has to be based on the number of
granted equity instruments that met the relevant terms of service and non-market
conditions of performance on the maturity date, regarding the granting instruments

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NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

of equity on non-entitlement terms, the fair value of share-based payment (at the
date of granted) is recognized on paid of equity instruments is measured to reflect
these conditions and there is no subsequent adjustment to the differences between
the expected and actual results.
c. Defined Contribution Plans:
Defined Contribution Plans are recognized as an expense when providing the
relevant service, the prepaid contributions is recognized as an asset to the extent
that the down payment leads to reduce the future payments or cashback. the
company contribute in the government social insurance system for employees
interest according to social insurance law no. 97 for the year 1975, both of
employees and employers contribute according to this law by fixed percentage
from the salaries, the company committed by its contribution, the company's
contributions are charged to the Company profits or losses according to the accrual
basis.
d. Employee End of Service Benefits:
The company recognizes the Employee End of Service Benefits as an expense on
one of the following two dates, whichever comes first, when the company can no
longer cancel those benefits or when the company recognizes the costs of
restructuring, and when it is not expected that the benefits will be fully settled
within 12 months after the date of preparing the financial statements, It must be
deducted at a discount rate - before taxes to reflect the time value of money.

3/12 Reserves:
- The company’s reserves are formed by law or the company’s article of association
to support the company’s financial position. These reserves are used based on
approval from the general assembly upon the board of directors’ request to be used
in the benefit of the company.

3/13 Buy back shares or reissue ordinary shares (Treasury Stock):

When the shares of the issued capital are buyback, the amount paid for the buyback
shares is recognized including all direct costs related to the buyback by reducing
the equity, the buyback shares are classified as treasury stock and presented
deducted from the equity, when selling or issuing the treasury shares, the collected
amount is recognized as an increase in the shareholders' equity and the surplus or
deficit resulting from the transaction has to be presented as a shares premium.

3/14 Borrowing Cost:

- Borrowing cost are initially recognized upon receipt the loans or credit facilities,
current portion are classified in the current liabilities unless that the company has
the right to reschedule the payment of loans for more than one year after the date
of the financial position which will be classified as long-term loan in the long-term
liabilities.

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NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

3/15 Revenue:
a. The Egyptian accounting standard no.(48)-Revenue from contracts with
customers:
- The Egyptian Accounting standard No.(48) Revenue from contracts with clients
has been applied which replaced the accounting standards no.(11) and no.(8)
- Revenue recognition:
Revenue is recognized on the basis of Five-step model as defined in the Egyptian
accounting standard No. (48) as follows:
• Step (1): identify contract(s) with customers. Contract is defined as agreement
between two or more parties that creates enforceable rights and obligations and
specifies the criteria that must be fulfilled in each contract.
• Step (2): identify separate performance obligations in the contract.
Performance obligation is a promise in a contract with a customer to transfer
to the customer either good or service
• Step (3): Determine the transaction Price
The transaction price is the amount of consideration to which an entity expects
to be entitled in exchange for transferring promised goods or services to a
customer, excluding amounts collected on behalf of third parties
• Step (4): Allocation of transaction price to distinct performance obligations in
the contract for the contracts which has more than performance obligation. The
company will allocate the transaction price to each performance obligation to
a specific amount in exchange for the contract that the company expects to
obtain in exchange for fulfilling each performance obligation
• Step (5): Recognize revenues when the company satisfies the performance
obligations
b. Credit Interest Revenue:
The Credit Interests revenue are recognized using the effective interest rate, the
revenue of credit interest is recorded in the income statement.

3/16 Income tax:

- The income tax on the profit for the period comprises income tax for the period
and deferred tax, and it should be recognized in the income statement, the income
tax on the net profit is recognized by using the current tax price rate as of the
financial statements date.
- Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the period in which the liability is settled or the asset realized, based on
tax rates and tax laws that have been enacted by the balance sheet date.
- Deferred tax assets are recognized for the entity when there is a proven probability
to achieving profit subject to tax in the future, and can get a right of this asset, and
the value of the deferred tax assets is reduced by the value of the part from which
the expected tax benefit is achieved during the following periods.

3/17 Accounting for grants and subsidies:

The company recognized revenue from the export subsidy (grants and subsidies) in
income statements and the donated assets recorded as grants in the fixed assets item
and charge the depreciation related to income statement.

- 16 -
NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)
3/18 Financial leasing:
- The profit results from sales with lease back for machinery with financial lease are
recognized over the term of the lease contract.
- The rental value and the maintenance expenses were recognized as an expense in
the income statement till the year 2017/2018, and the accounting treatment is
changed to comply with the Amended Egyptian Accounting Standards for 2019 and
the Law no. 176 for the year of 2018 for financial leasing and factoring activities.
- The company applied the accounting treatment for financial leasing in accordance
with the Egyptian Accounting Standard No. (49) Instead of the Egyptian
Accounting Standard No. (20) according to the latest amendments to the Egyptian
Accounting Standards, which is in compliance to Law No. 176 of 2018 for
“Regulating Financial Leasing Activities And factoring.
3/19 Operating lease:
- Total payments for operating lease contracts are distributed minus any deductions
obtained from the lessor over the course of the contract period and the income
statement for the period is incurred its share of the lease on a time distribution basis
according to the accrual principle.
3/20 Dividends:
- Dividends are recognized when shareholders have the right to receive the amounts
of these dividends.
3/21 Employees' profits share:
- Employees' profits share should be paid without exceeding their total annual basic
salaries in accordance with the law.
3/22 Contingent liabilities:
Amounts in Thousands
Company contingent liabilities of Egyptian Pounds
letters of guarantee relevant to Cairo and Alexandria customs 273 794
Letter of credits 1 284 753
Total 1 558 547
4- FINANCIAL RISK MANAGMENT
4/1 Credit Risk:
- The financial instruments risk represents the inability to pay due to liquidity issues
of debtors with credit term and cash and deposit at banks except for cash at safe
and financial deposits in case that liquidity is not available to the other party, and
therefore its inability to pay these balances and fulfill its agreed obligations
- The company management to control credit risk deals with reputable financial
institution with high credit and stable rating.
4/2 Liquidity Risk:
- The liquidity risk is the risk that when the company cannot settle its liabilities or
financial commitments on due dates, the Company's approach regarding managing
liquidity is to ensure that it has a sufficient liquidity to meet its liabilities on its due
dates in both normal and critical circumstances without incurring unacceptable
losses or damaging the Company's reputation, the company also ensures the cash is

- 17 -
NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

available on request to meet the expected operating expenses for an appropriate

period of time including the financial obligations and disposal the potential impact
of acute and unpredictable conditions such as natural disasters.
Also the company invests the available excess cash from daily cash receipts in the
best aspects of short-term investment
4/3 Market Risk:
- Market risk represents in the changes in the market prices such as foreign exchange
currencies and interest rate.
- The purpose of managing market risk is managing and controlling the market risk
exposure within the acceptable parameters with maximizing revenue.
(a) Foreign currencies risk: The foreign currency risk is represented in changes in
foreign currency exchange rates, which affect the payments and receivables in
foreign currencies, as well as evaluating assets and liabilities in foreign currencies
which the company management facing it through setting policies such as the
value of what the company gets from the spare parts local manufacturing and
capital equipment, purchasing from suppliers agents, etc.
The Foreign currencies balances as of June 30, 2022: (In thousands)
Assets Liabilities Net value
Dollars 1 799 77 988 (76 189)
Euro 121 5 179 (5 058)
Sterling pound 3 822 (819)
Swiss Franc 4 0 4

(b) Interest rate risk: The Company is dealing with various banks with interest rates
that enable it to reduce the risk of changes in interest rates, whether debit interest
or credit interest through competition among banks in order to get the best rates
based on the large business size.
- Interest-bearing bank deposits during the financial time period referred to which
are the total deposits in local and foreign currencies.
- The fair values for the financial instruments are not materially different from their
carrying values at the end of the financial period.

4/4 Capital Management:

- The board of directors’ strategy is to maintain strong capital in order to keep the
trust of investors, creditors and the market, as well as to meet future developments
of activity. The Company's Board of Directors is monitoring the return on capital
and the level of dividends. There were no changes in the company's capital
management strategy during the year; also the company is not subject to any
external requirements imposed on its capital.

5- RELATED PARTIES DISCLOSURE:

- The Holding Company for Chemical Industries hold 50.5% from company’s shares
as of 30/6/2022. And the percentage has changed to 50.95% after the approval of
the concerned authorities on August 16, 2022 to reduce the capital of the company
with maintaining the same number of shares of the holding company

- 18 -
NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)
- Related parties are treated on the same basis as others.
- The company during the period from 1/7/2021 till 30/6/2022 has incurred salaries,
allowances, and bonuses for members of the high management and the company's
board of directors.
- The Holding Company for Chemical Industries did provide a set of banks
guarantees and non-bank guarantees to some governmental agencies (Customs
Authority - Customs Taxes - Egyptian Tax Authority "Value Added Tax") for the
favor of company amounted to 1 470 000 Thousand Egyptian pounds.

6- FINANCIAL INSTRUMENTS:
- The company applied the Egyptian Accounting Standard No. (47) financial
instruments, and in light of the way of applying the change in the accounting
policies chosen by the company in applying this standard, the differences resulting
from the application of this standard referred to “if any” within the Retained
earnings and the comparative information included in these financial statements
was not modified to reflect the requirements of the new standards.
6/1 Accounting standard No. (47) - Financial instruments:
Standard No. (47) contains main classifications to financial assets:
- Measurement at amortized cost
- Fair value through comprehensive income
- Fair value through profits and losses
And the classification of the financial assets under accounting standard no. (47) is
based to the business model in which the financial assets management and the
characteristics of the contractual cash flow takes place
The Egyptian accounting standard no. (47) omit the previous items of the Egyptian
accounting standard no. (26) from investments held to maturity, loans and
receivables and available- for -sale financial assets
The Egyptian accounting standard no. (47) Keeps to a large extent the current
requirements in the standard no. (26) for measurement and classification the
financial liabilities
The application of the Egyptian accounting standards no. (47) doesn’t have a
significant effect on the accounting policies related to the financial liabilities and
derivative financial assets
6/2 Impairment of financial assets:
Egyptian Accounting Standard No. (47) replaces the “incurred loss” model in
Egyptian Accounting Standard No. (26) with the “expected credit loss” ECL model.
The new impairment model is applied to financial assets measured at amortized
cost, contractual assets and investments in debt instruments measured at fair value
through Other comprehensive income, but not on investments in equity instruments
under Egyptian Accounting Standard No. (47), credit losses are recognized earlier
than in Egyptian Accounting Standard No. (26), for assets that fall within the scope
of the impairment model contained in Egyptian Accounting Standard No. (47) It is
expected that impairment losses will increase in general and become more volatile.

- 19 -
NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

6/3 Contingent assets

The potential assets represent the compensation values issued in favor of the
company according to the following statement:

Value (in millions)

A judgment was issued in Case No. 9869 of 1994 (total civil) 12
Cairo appeals to compensate the company, and that was
during the 10/5/2017 hearing and until this date, the judgment
has not been implemented. And the implementation
procedures are underway in cooperation with the governor of
Cairo.
A judgment was issued in Case No. 3650 Civilians, College 42
of Giza, on December 25, 2019, and to date, the judgment has
not been implemented And the implementation procedures
are underway in cooperation with the governor of Giza
Total 54

7- TAX POSITION
7/1 Corporate Tax:
- The company was inspected till the financial year 2014/2015.
- The company has received for years 2015, 2016 form no. (19) income tax and
appealed on legal due date.
- The financial year 2016, 2017, 2018, 2019 and 2020 is under inspection.
7/2 Stamp Tax:
- The company was inspected from 1/7/2016 till 30/6/2020 and was received form
no. (19) stamp and appealed on legal due date.
7/3 Payroll Tax:
- The company was inspected till the financial year 2012 and there are no due
requirements from the company.
- For the years 2013, 2014, 2015 the company received Form No. (38) and it was
appealed and these years are being re-examined
- For the year 2016, a salary form (38) was received and appealed on legal due date
- The financial year 2017, 2018 and 2019 is under inspection
7/4 Value Added Tax:
- The company is paying the monthly value added tax amount (VAT) according to
the Law no. 67 for the year of 2016, and the company was inspected till the
financial year 2018/2019.
7/5 Property Tax:
- The company paid the accrued property according to claims received from real
state tax authorities for the year of 2022

- 20 -
 NOTES TO THE PERIODIC FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds unless otherwise stated)

8- PROPERTY, PLANT AND EQUIPMENT

(Amounts expressed in Thousands of Egyptian Pounds)
Machines Furniture
and and office
Fixed assets movement statement: Lands Buildings equipment Vehicles Tools equipment Total
Cost as of 1/7/2020 302 033 3 535 897 5 670 787 357 221 166 631 858 514 10 891 083
Transfers -- -- 3 414 -- (2 414) -- --
Additions during the period -- 69 428 341 350 7 260 1 291 23 314 442 643
Transferred to real estate investments 103 515 42 025 -- 3 965 -- 21 178 170 683
Disposals and transfers during the period 3 10 191 381 925 4 993 4 17 397 133
Total Cost as of 30/6/2021 198 515 3 553 109 5 632 626 355 523 165 504 860 633 10 765 910
Cost as of 1/7/2021 198 515 3 553 109 5 632 626 355 523 165 504 860 633 10 765 910
Transfers -- -- -- -- -- -- --
Additions during the period -- 86 93 566 1 259 36 522 16 647 148 080
Transferred to real estate investments -- -- -- -- -- -- --
Disposals and transfers during the period -- -- 14 675 8 679 2 512 17 964
Total Cost as of 30/6/2022 198 515 3 553 195 5 711 427 356 774 201 347 874 768 10 896 026
Accumulated depreciation and impairments movement:
Accumulated depreciation as of 1/7/2020 -- 867 261 3 671 852 297 073 154 762 663 272 5 654 220
Transfers -- -- 2 414 -- (2 414) -- --
Additions during the period -- 94 558 386 439 16 238 4 510 70 799 572 544
Transferred to real estate investments -- 24 250 -- 3 965 -- 21 178 49 393
Disposals and transfers during the period -- 2 277 381 925 4 993 4 16 389 215
Impairment of fixed assets -- 262 658 -- -- -- 920
Disposals impairment provision -- 7 914 -- -- -- -- 7 914
Accumulated depreciation and impairment as of 30/6/2021 -- 927 640 3 679 438 304 353 156 854 712 877 5 781 162
Accumulated depreciation as of 1/7/2021 -- 927 640 3 679 438 304 353 156 854 712 877 5 781 162
Transfers -- -- -- -- -- -- --
Additions during the period -- 91 966 373 123 14 230 6 764 47 621 533 704
Disposals and transfers during the period -- -- 14 766 8 679 2 509 17 962
Impairment of fixed assets -- -- 892 -- -- -- --
Disposals impairment provision -- -- -- -- -- -- --
Accumulated depreciation and impairment as of 30/6/2022 -- 1 019 606 4 038 687 318 575 162 939 757 989 6 297 796
Property, plant and equipment assets of 30/6/2021 198 515 2 625 469 1 953 188 51 170 8 650 147 756 4 984 748
Property, plant and equipment assets of 30/6/2022 198 515 2 533 589 1 672 740 38 199 38 408 117 779 4 598 230

- 21 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

An amount of 97 550 Thousand pound related to Al-Zumar site, as well as 53 337 Thousand
pounds for the Manesterly site, as well as 19 797 Thousand pounds for the Niaza site, was
transferred from fixed assets to investments property in accordance with the company's Board of
Directors Decision No. 16 of 2020
On 24/11/2019 the company’s board of director decided in its meeting the decision No. 10 for
2019, going through procedures to re-exploit the company’s stores and factories of Al-Zumar
Street and change its activities to a hospital and tourism services this is in exchange for paying
the value of the improvement which amounted 83 930 Thousand Egyptian Pounds, to be paid in
two installments:
• First installment 50% and it was paid upon the issuance of the approval of the Chairman
of Giza City Council.
• Second installment the 50% remained was paid on 1/12/2020
On 15/2/2020 the company was have the approval of the Exceptions Committee of the Housing
and Utilities Directorate in Giza was obtained and initial approvals of (water, sanitation, civil
defense, traffic, electricity) were obtained and the approval to construction of the project was
paid, and the first installment was paid upon obtaining this approval, and on 6/9/2020 The Board
of Directors decided, in a session No. 16 of 2020, to approve the conversion of all the assets of
Al-Zumar site as well as the Manesterly site from fixed assets to investments property.
* The fully depreciated property, plant and equipment as of June 30, 2022 is 3 463 068
Thousand Egyptian Pounds include:
* Fully depreciated property, plant and equipment still in use amounted to
2 738 622 Thousand Egyptian Pounds (including machines and equipment amounted to
1 788 261 Thousand Egyptian Pounds)
* Fully carried depreciated fixed assets and others under scrap process amounted to
315 856 Thousand Egyptian Pounds.
* The fixed assets are including approximately 79 695 Thousand Egyptian Pounds
representing net donated assets as following:
Amounts expressed in Thousands of
Donated Assets
Egyptian Pounds
Production’s machinery 78 239
Production Utilities, equipment of Services 158
Vehicles 2
Furniture 1 296
Total 79 695

* Deduct amount 6 667 Thousand Egyptian Pounds from Machines and, equipment which
represent impairment in line in Talbieh and el-Koly Filling equipment
* The buildings include a value of EGP 4 million related to Giza buildings, and an
optimization study is underway.
* The amount of 262 thousand pounds was deducted from the value of the buildings and
represents the value of the impairment of the building of the power station in Muharram
Bey, and the amount of 7 914 thousand pounds was excluded from the impairment
allowance for the resort of Al-Asafra to demolish the building.

- 22 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

* The General Assembly held on 25 October 2020 decided to Waiver the company's land
in the city of Al-Arish to a sovereign side due to the expiry of the license and the
impossibility of using it under the security conditions in the region
Financial Leasing:
- The Decree of Minister of Investment and International Cooperation No. (69) of 2019
was issued to modify some provisions of the Egyptian Accounting Standards which
issued by the Minister of Investment Decree No. 110 of 2015 by replacing the Financial
Leasing Standard no. 20 (old one) by a new one numbered (49) covering the Financial
Leasing Contracts.
- The financial leasing contracts were treated by the Egyptian Accounting Standard no.
(49) according to the Amended Accounting Standards for the year of 2019, This
amended standard applied for the leasing contracts which were under the finance leasing
law no. 95 for the year of 1995 and its amendments, these contracts were treated by the
Egyptian Accounting Standard no. (20) which was stating that “the accounting rules and
standards related to process of the finance leasing” and the finance leasing contracts
which established under the law of organizing the finance leasing and the factoring
activities no. 176 for the year of 2018 starting from the beginning of the annual report
time period which in the law no. 95 for 1995 was canceled and instead of the law no.
(176) for 2018 was issued.
- A contract was signed with QNB Al-Ahly Company for Financial Leasing to sell and
rent some machines with total cost of (398 324 153 Egyptian Pounds) by changing
interest rate (average price of corridor + 1.2%) on 28/6/2012 for 6 years in addition to
two years as an extra years, after that time period the total rental amount should be paid
for 72 months
- The ownership of these machines will devolve to the company at the end of contract
with a memorial amount of one Egyptian Pound.
- The last installment of the lease value of the financial leasing contract was paid with
QNB Al-Ahly Financial Leasing Company on 28/6/2020.

9- PROJECTS UNDER CONSTRUCTION

In thousands
30/6/2022 30/6/2021
Investments provided 481 810 404 484
Investment spending 1 627 43 561
Total 483 437 448 045

9.1 Projects investment provided includes:

30/6/2022 30/6/2021
Buildings 1 513 1 101
Machines 285 429 293 129
Vehicles 30 9 348
Tools 189 --
Office equipment and installations 194 649 100 906
Total 481 810 404 484

- 23 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

9.2 Investments spending include:

30/6/2022 30/6/2021
Advance payments fixed assets 775 33 436
LCs of fixed assets 852 10 125
Total 1 627 43 561

• Projects under construction includes total amount of 214 million Egyptian pound
related to Installation of the new naturalized line and the line has installed and tested
and some modifications requested from the executing company and the required
modifications applied and tests are underway, ending on September 21, 2022 and after
ending the tests, the line will operate.

10- INVESTMENTS PROPERTY

The net investments property on June 30, 2022 amounted to 128 904 Thousand
Egyptian pounds. The following is the movement of investments property during the
period:
Cost as of 1.7.2020 9 303
Transfer from assets 170 684
Cost as of 30.6.2021 179 987
Less
Transfer accumulated depreciation fixed assets as of 30.6.2021 49 394
Depreciation during the period 844
Net book value as of 30.6.2021 129 749

Cost as of 1.7.2021 129 749

Depreciation during the period 845
Net book value as of 30.6.2022 128 904
The items of investments property represented as follows:
Land of Gezerat Eldahab at Al-Bahr Al-Azam Street – Giza 8 894
Land of Salloum Factory – Alexandria 404
El Zommor site ‫٭‬ 97 550
El Manisterly site ‫٭‬ 53 337
El Niaza site 19 797
Gan Marshan land 5
Total 179 987
• Al-Zumar and Al-Manesterly sites have been reclassified to investments property
according to the approval of Board of Directors meeting no. (16) for 2020, held on
September 6. 2020, based on the memorandum presented on September 2.2020 to
convert of all the assets of Al-Zumar site as well as the Manesterly site from fixed
assets to investments property it was also approved to convert Niaza factory site to
investment property.
- 24 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

• The plot of land owned by the company located at 41 Abu Darda Street, Laban
Division, Alexandria Governorate, was announced for sale by public bidding in the
closed envelopes system on Thursday, January 30. 2020, with a total value
approximately 51 743 thousand pounds, where the payments will be as follows: -
- Receiving the guarantee payment amounted 500 thousand pounds to the company's
treasury after the auction has been awarded.
• The remaining 25% of the guarantee value has to be paid within fifteen days from the
date of notification of the award.
• 25% of the sale value should be paid within 3 months from the date of notification of
the award.
• The remaining 50% should be paid in 12 installments over three years, considering
adding an interest equal to the declared lending interest of the central bank as a
compensatory interest.
- The preliminary sales contract will be released upon paying 50% of the total sale value,
in addition to that the land still belongs to the company`s properties.
• The sales procedures were not completed because one of the partners failed to pay a
share in the next payment of the initial insurance amount to complete the first 25% of
the total sale value and exit and waive its share and the solidarity of the rest of the
partners in paying the dues of that partner after the approval of the Board of Directors
of session No. 12 for the year 2020 on 25 June 2020. To date, however, only 14 049
million pounds of land value has been paid without the rest of the partners completing
the 50% of the sale value and are committed to paying it within 3 months of the date
of notification of the gearing until the sale contract is released and the procedures are
completed.

11- INTANGIBLE ASSETS

30/6/2022 30/6/2021
Computers’ program and H.R software license
37 113 37 113
update
Amortization (34 962) (33 765)
Refunded Sales tax (349) (349)
Net 1 802 2 999

Amortization statement as follows:

30/6/2022 30/6/2021
Beginning balance 2 999 1 674
Additions -- 3 359
Amortization (1 197) (2 034)
Ending balance 1 802 2 999
*The economic life of intangible assets was reassessed by technicians, which
was estimated at four (4) years.
- 25 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

12- FINANCIAL AT FAIR VALUE THROUGH OTHER COMPREHINSIVE

INCOME
30/6/2022 30/6/2021
Investments in bonds 3 286 772 4 482 055
Investments in dollars bonds 1 354 302 962 670
Less impairment in securities* (187 633) )112 284(
Net 4 453 441 5 332 441
* The financial investments available for sale and offered in financial statements are
debt instruments measured at fair value through other comprehensive income where
assets are subsequently measured at fair value and revenues from investments
calculated using actual interest, profit and losses results from revaluation of foreign
currencies and the amortization related to these investments are recorded in the income
statement. foreign exchange profits and losses, profit or loss are recorded profits and
other losses in the other comprehensive income list when excluded, profits and
accumulated losses in the other comprehensive income to profits and losses. The fair
value of Egyptian bonds in June 30, 2022 amounted 3 228 065 thounds and The fair
value of dollar bonds in June 30, 2022 amounted 1 225 309 thounds’

13- OTHER FINANCIAL ASSETS:

30/6/2022 30/6/2021
Deposit in the Central Bank of Egypt invested in 20 663 20 663
government bonds*
Investments in other companies shares 5 5
Investments in foreign securities** 23 23
Total 20 691 20 691
Less impairment in securities 23 23
Net 20 668 20 668
* Cash deposit in the Central Bank of Egypt to be invested in Governmental bonds
and National Investment Bank against 5% of the surplus from the prior years of issuing
the law no. 203 for the year of 1991, the cash deposit yields a return of 3.5% annually
against surplus invested in governmental bonds.
** Investments in foreign securities
14- RIGHT OF USE LEASED ASSETS
30/6/2022 30/6/2021
Right of use leased assets 507 561 507 561
Accumulated depreciation right of use leased assets (281 887) (233 873)
Net 225 674 273 688
- The company's financing leases (sale and lease back), which expired before the issuance
of The Egyptian Accounting Standard No. (49), which still have a productive age, were
processed in accordance with the requirements of Annex C of the standard, which
consists of the company's buildings, which range in age from 40 , 50 years, which were
sold and re-leased during fiscal year 2009, where the date of operation in the fiscal year
2007 and includes these buildings (building of the preparation factory - building of
Workshops - Power plant building) which its historical cost of 348 million pounds, in

- 26 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

addition to the previous treatment of the assets of the right of use and for machinery,
which costs about 159 million pounds.

15- OTHER ASSETS

30/6/2022 30/6/2021
The company's contribution to the project of filling,
544 654
improvement and coverage of the El Zomor Canal
Long term prepaid expense * 19 000 25 000
Net 19 544 25 654
* The 19 million pounds represents the value of the non-rolling and prepaid part of the
electricity consumption project for the construction of a B.O.T power plant in the
industrial complex on October 6th.
* An amount of 178 pounds deducted as a provision for expected credit losses for other
assets

16- INVENTORIES
30/6/2022 30/6/2021
Raw materials * 515 841 810 446
Raw materials (Tobacco leaf) under customs
1 253 388 1 136 671
custody (unpaid custom yet) **
Fuel inventory 2 182 2 475
Spare parts 640 157 534 441
Packaging 1 418 545 1 351 607
Waste and scrap 2 239 739
Materials and spare parts under process storage 962 1 071
Production work in process 47 002 56 094
Finished goods 216 126 405 429
Consignment packing materials and spare parts 4 697 841
Goods in transit -- 5 929
Letter of Credit 94 404 66 302
Total 4 195 543 4 372 045
Less the impairment in inventory *** 48 097 46 658
Net 4 147 446 4 325 387
* The raw materials stock as of 30/6/2022 includes items under inspection mixed
materials with an amount 3 418 thousand Egyptian pounds, and Items under inspection
(packaging materials) with an amount 43 775 thousand Egyptian pounds. The
examination and final receipt are carried out periodically for all items received.
** Raw tobacco leaf material at customs balance includes items under inspection (tobacco
leaf raw materials) with estimated amounted to 897 696 thousand Egyptian pounds, and
unpaid customs fees are estimated at 153 100 thousand Egyptian pounds. The total
unpaid fee for the development of the state’s financial resources is estimated at 27 706
thousand Egyptian pounds.
Production work in process included goods in transit (Visero minced smoke), smoke
worth 3 321 thousand pounds and mixing worth 276 thousand pounds. The balance of

- 27 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

refrigerators (International Cooling and Freezing) on 30/6/2022 for smoke and mixing
stocks weighing 49 thousand kilograms
*** The inventory impairment represented in spare parts and gear by 47 269 thousand
Egyptian Pound, and raw smoke by 598 thousands , mixed material by 109 thousands
and finished goods by 121 thousand Egyptian Pound.

17- TRADE AND NOTES RECEIVABLE

30/6/2022 30/6/2021
Trade receivables (foreign production) 126 679 249 161
Trade receivables (co-production*) 10 336 159 935
Foreign Trade receivables 4 343 211
Total 141 358 409 307
Deduct: provision of expected credit losses 218 --
Net 141 140 409 307
* The trade receivables foreign production and co-production will pay in the next
month, although the company does not give credit in the domestic sales.

18- DEBTORS AND OTHER DEBIT BALANCES

30/6/2022 30/6/2021
Holding company debit balance* -- 567
Debtor Accounts to governmental Authorities 468 602 164 506
Accrued revenues 253 443 253 079
Prepaid expenses 10 400 12 954
Other debit balances 106 240 71 574
Total 838 685 502 680
Less impairment in debtors 17 593 (14 404)
Less provision of expected credit losses (debt
1 676 --
balances)
Net 819 416 488 276
* The due of the holding company was collected in July 4. 2021.

18/1 Debtor Accounts to governmental Authorities

30/6/2022 30/6/2021
VAT tax authority 451 344 148 266
Custom authority 1 329 501
Debit balance for other governmental authorities 15 929 15 739
468 602 164 506

- 28 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

Accounts receivable with other authorities include the following:

- 7 183 Thousand Egyptian pounds for Customs Department, Drupak Tobacco.
- 2 231 Thousand Egyptian pounds for sales paid on returned goods
- 1 023 Thousand Egyptian pounds for sales tax paid on investment goods
- 5 392 Thousand Egyptian pounds for Ministry of Finance - imported sales tax.
- 101 Thousand Egyptian Pounds others.

18/2 Accrued revenues

30/6/2022 30/6/2021
Accrued export incentives 310 724
Securities accrued income 251 892 250 911
Debit rents accrued 703 772
Miscellaneous income accrued 538 672
Total 253 443 253 079

18/3 Other debit balances:

30/6/2022 30/6/2021
Guarantees for others 11 037 10 980
Employees loans 7 128 12 320
Other debit balances * 88 075 48 274
Total 106 240 71 574
* The other debit balance includes the follows:
Amount
EGP
El Shrouk Hospital and El Nile badrawy Hospital 33 059
Stock for others joint production (Viceroy / pal mal) 4 786
Forfeited merchandise belongs to the company, fines due to the company, 10 404
as well as travel allowances abroad
The treasury of the Rusafa factory, which is registered with Misdemeanor 2 840
No. 4900/2016.
Insurance claims under settlement and for cars 11 545
The mosque deposit, and it has a charge in other credit accounts of the same 585
value.
Settled for next months 4 551

- 29 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

19- TRADE PAYABLES - ADVANCE PAYMENTS

31/3/2022 30/6/2021
Public sector suppliers 3 482 111 347
Private sector suppliers 18 449 13 041
Public sector services suppliers 5 192 4 982
Total 27 123 129 370

20- FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSSES:

30/6/2022 30/6/2021
Treasury bills investments 5 006 667 3 823 130
Investment of investment deposits 5 384 621 377 790
Total 10 391 288 4 200 920

21- CASH ON HAND AND AT BANKS

30/6/2022 30/6/2021
Banks current accounts 1 008 750 1 041 434
Cash on hand 152 087 22 170
Deposit banks/ currant currencies 100 000 --
Total 1 260 837 1 063 604
Less:
Less provision of expected credit losses (Banks
131 --
current account)
Less provision of expected credit losses (deposits) 100 --
Net 1 260 606 1 063 604
Banks overdrafts 1 256 537 --
Cash balance 30/6/2022 4 069 1 063 604
* the credit balance at National Egyptian Bank as of 30/6/2022 against a cheque for
tax was cashed on 17/7/2022.

22- ISSUED AND PAID-IN CAPITAL

The Authorized Capital amounted to 3 000 Million Egyptian Pounds (Three Billion
Egyptian Pounds) and the Paid and Issued Capital amount is 2 230 Million Egyptian
Pounds (Two Billion and two hundred and thirty Million Egyptian Pounds) divided
to 2 230 Million Shares with nominal amounted of one Egyptian Pound.

- 30 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

The Capital Structure as of 30/6/2022 as follow:

Company name Shares number Percentage

The holding company for Chemical industries 1 136 250 000 50.95%
Employees associations 138 135 692 6.20%
Free trading 955 614 308 42,85%
Total 2 230 000 000 100.00%

- On 29/5/2018 the Extra-ordinary General Assembly increased the company’s’

issued and paid capital from 1.5 Billion Egyptian Pounds to 2.25 Billion Egyptian
Pounds (with total increasing amount of 750 Million Egyptian Pounds) divided to
450 million shares as nominal shares amounted to five Egyptian Pound per share
financed from the legal reserves and other reserves appeared in financial statements
for the financial year ended on 30/6/2017, and the securities committee issued a
decision to approve this increase on 1/8/2018.
- The nominal share was divided by percentage of 1:5 to be one Egyptian Pound
instead of five Egyptian Pounds with keeping the company’s’ capital as it is
amounted to 2.25 Billion Egyptian Pounds to be divided to 2.25 Billion Shares, and
the necessary approval has been obtained from the concerned authorities according
to the decision of the extra-ordinary general assembly for the Eastern company
which held on 29/8/2018.
- The employee’s association of the Eastern company has bought number of
100 000 shares from the Eastern company shares at March 25, 2021 so, the
company’s shares will be 138 135 692 shares by contributions percentage up to
6.14%.
- The company’s board of directors which held on 19/3/2020 decided that buy of
treasury stock up to a maximum of 3% of the company's shares traded on the stock
exchange, the purchasing process will be during a month start from 23/3/2020 till
22/4/2020 and notifying the shareholders that not perform any operations on it, The
board of directors also decided to seek the assistance from (CI Capital company and
EFG company).
- The company’s board of directors which held on 23/4/2020 approved to complete
the purchase of treasury shares start from 28/4/2020 till 27/7/2020 to complete the
aforementioned percentage 3% The company's board of directors, held on
28/7/2020, decided to extend the completion of the purchase of treasury shares,
provided that the purchase process starts on 29/7/2020 and ends on 28/10/2020, and
the Board of Directors decided on 24/11/2020 as well. By extending the completion
of the purchase of treasury shares from 25/11/2020 until 24/2/2021 until the full
quantity is implemented, and what has been purchased has reached until 30/11/2020
52 303 418 shares, or 2.324% of the company’s shares.

- 31 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

- The company’s board of directors decided, in its session held on January 27, 2021,
to stop the purchase of treasury stock, and the company's board of directors decided
in its passing session held on 3/3/2021 to approve the sale of treasury shares owned
by the company and purchased during the period from 24/3/2020 until 31/5/2020, of
which there are 35 382 492 shares, at the market price on the day of execution.
- The decision of the Board of Directors taken on 3/3/2021 has been completed, as
- 30 650 708 shares were sold out of a total of 35 382 492 shares.
- The number of treasury shares that had been purchased for more than a year without
disposing of them reached 16 372 710 shares, the company did not sale it during the
sale period ended 14/9/2021.
- On 11/11/2021 The extraordinary General approved to execution of 20 million
shares of the company’s treasury shares, and thus the issued and paid-in capital will
after the reduction became 2,230 million pounds distributed over 2,230 million
shares. Instead of 2,250 million shares, the amendment of Articles 7.6 of the
company’s articles of association, and approval by a majority to amend Article (22)
of the company’s articles of association by adding the cumulative vote to elect the
members of the board of directors.
- On 16/8/2022 the national regulatory authority approved reducing the paid up capital

23- RESERVES
30/6/2022 30/6/2021
Legal reserve 1 205 504 1 205 504
Statutory reserve 1 673 498 1 673 498
Capital reserve 575 129 575 129
Reserve to be invented in governmental bonds 20 662 20 662
Reserve of revaluation of financial investments (152 600) (87 020)
Reserve of expected credit losses for debt
31 932 --
instruments
Reserve of profits estimated budget 940 170 940 170
Other reserves 25 25
Total 4 294 320 4 372 968

- 32 -
 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

The balance of the issued and paid-up capital and reserves, retained earnings on
June 30, 2022, amounted to 8 402 615 thousand Egyptian pounds. The following is the
movement of capital accounts, reserves and retained earnings: -
Thousand Egyptian Pounds
Balance as Balance as
of 1/7/2021 Additions Exclusions of 30/6/2022
Issued and paid-up share capital 2 250 000 -- (20 000) 2 230 000
Legal reserve 1 205 504 -- -- 1 205 504
Regular /Statutory reserve 1 673 498 -- -- 1 673 498
Capital reserve 575 129 -- -- 575 129
Reserve to be invested in governmental bonds 20 662 -- -- 20 662
Reserve of profit estimated budget 940 170 -- -- 940 170
Reserve of revaluation of financial
(87 020) (75 349) 9 769 (152 600)
investments
Reserve of expected credit losses for debt
-- 31 932 -- 31 932
instruments
Other reserves 25 -- -- 25
Treasury shares )259 360( 259 360 -- --
Retained earnings 1 975 280 123 396 (220 381) 1 878 295
Total 8 293 888 339 339 230612 2402615

The legal reserves: according to the corporate law no .159 for 1981 and the company’s
article was conforming by percentage of 5% from the year net profit and to legal reserve
account, and based on the suggestion of the Board of Directors, it is permissible to
suspend part of the profits for the legal reserve account if the legal reserve reaches 50%
of the issued capital the legal reserve is not available for distribution to shareholders.

The Other reserves: the remaining reserves in the financial statements its formation
according to law no. 203 for 1991.

Reserve of revaluation of financial investments: This account represents the fair

value recognition differences for the financial investments available for sale through
other comprehensive income

Reserve for expected credit losses: accumulated against expected credit losses for debt
instruments with fair value through comprehensive income

24- TREASURY STOCKS

The total bought treasury stocks is 52 303 418 share amounted 626 500 043 EGP with
average price 11.98 EGP/share during the period from March 24, 2020 till
November 30, 2020, and reduce share 32 303 418 with amounted 385 820 664 EGP
from the shares sale during the period from March 4, 2021 till November 3, 2021.

- 33 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

25- RETAINED EARNINGS

The charge on retained earnings during the financial period from 1/7/2021 till 30/6/2022
amounted to 123 396 thousand pounds, which is the adjustments of previous years
expenses and previous years revenues and 220 381 sales treasury bills losses.

26- DEFERRED TAX

30/6/2022 30/6/2021
Deferred tax liabilities (497 836) (464 506)
Deferred tax assets 227 795 329 016
Net tax liabilities 270 041 (135 490)

- The deferred tax which result from temporary time differences between book value
for assets and liabilities according to the account basic and its value according to the
tax basic are recognized, the amount of deferred tax was determined according to
what expected to achieve or settle values of assets and liabilities by using current tax
price on the financial statements date, the deferred tax assets will be recognized
when having a strong probability to achieve profits that may be taxed in the future
where the assets can be used and the value of deferred tax assets can be decreased
by the value of the part which will not achieve any tax benefits through the future
years.
- Clearing was performed between the deferred tax assets and deferred tax liabilities.

27- EMPLOYEE BENEFITS

- The total employee benefits is representing an amount of 482 639 Thousand
Egyptian Pounds which expressing the end of service grant for the permanent
employees of the company on 30/6/2022. According to the valuation of the actuarial
expert hired by the company
- The expected value of the end-of-service grant for graduates during the fiscal year
2022/2023, amounting to 58 914 thousand pounds, has been separated and included
in current liabilities and the used 46 650 thousand pounds from the current and the
rest has been included in long-term liabilities.
- The company assigned the actuary / Marwa Hisham Salah El-Din Zaki - companion
of the Actuarial Experts Association in the United States of America to assess the
obligations of the end-of-service grant, and the actuarial study ended with:
- The company pays the end-of-service to the employees at the end of their service,
where the employee will receive two months' wages for each working year at the
company, which is calculated on the basis of the last basic wage at the end of the
service date with a maximum of 200 thousand Egyptian pounds.
- This grant is due at the end of the employee service for one of the following reasons:
1- Reaching the legal age of retirement.
2- Early retirement cases for those who over 55 years old.
3-Partial or total service disability.

- 34 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

4- Case of death during service.

The company will finance the amount of the grant due completely, at the employee
end of service.
- The company’s data was reviewed by the actuarial expert to ensure the
reasonableness and consistency of the data, on the basis of which actuarial study was
conducted, in order to ensure that:
- The absence of any fields that does not contain data or are illogical.
- The reasonableness of the dates of birth and dates of employment by ensuring that
the age of the worker at the time of employment and upon evaluation is limited to
the age limits accepted by the Labor Law.
- The reasonableness of salaries values.
- The guidelines and requirements of the study performed according to Egyptian
Accounting Standard No. (38) employee benefits, where unbiased actuarial
assumptions were used that are consistent with the experience of the Egyptian
market, taking into account the company's actual experience and what is expected
in the future.
The method used for estimation:
The Projected unit credit method was used to calculate the following main items:
Defined benefit obligation which is the present value of the expected future payments
required to settle the obligation resulting from the employee's service in the current
and prior periods.
The current service cost which is the increase in the present value of the defined benefit
obligations resulting from the employee's service in the current period.
The interest cost of the obligation which is the increase during the year to the present
value of the obligation as a result of the approaching settlement period.
Actuarial assumptions used in the estimation:
The study was conducted using the following actuarial bases:
1- The life table used: A double decrement table was used, where 130% of the 52/49A
death table was used to represent the probabilities of death and disability, and a
standardized resignation rate of 0.05% was used to represent the probabilities of
resignation and termination of the contract.
2- Discount rate used: 11.5% annually.
3- The pay scale rate: 10%.

- 35 -
 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

28- PROVISIONS:
The provisions are composing according to the Egyptian Accounting Standard No. (28).
▪ Movement of provisions:
Thousand Egyptian Pounds
Balance as No longer Balance as of
of 1/7/2021 Provided needed/ used*** 30/6/2022
Provision of disputed taxes * 972 238 1 925 250 1 608 181 1 289 307
Provision of legal claims ** 158 608 -- 38 145 120 463
Provision of early pension *** 500 000 1 232 353 1 732 353 --
Total 1 630 846 3 157 603 3 378 679 1 409 770
* The provision of disputed taxes: composed to meet the tax liabilities.
** The provision of legal claims, salaries, and other: the company’s lawyer prepared
cases lists from his point of view according to the prospect liabilities and the value of
used provision equal 38 145 thousand pounds
*** Early pension obligations provision: It was formed to meet early pension
obligations, The company's management signed a collective work agreement to allow
an early retirement opportunity (Optional) employees of the Eastern Company in all
its branches, which allows workers of all ages to apply for early retirement and benefit
from the new benefits that were agreed upon between the company’s management and
representatives of the union committee for food industries and the union committee of
the company, where the agreement allows the exit of nearly three thousand workers
Of different ages, jobs and locations (optionally) after the approval of the company’s
management during the period from 15/3/2022 to 30/4/2022, the disbursed employees
were paid according to this system amount 1 732 million Egyptian Pounds till
30/6/2022. Knowing that The actuarial expert study targeted the exit of 2 761 worker
and 3 170 workers were discharged on 19/9/2022 due to the demand for the voluntary
pension program

29- TRADE AND NOTES PAYABLES

30/6/2022 30/6/2021
Trade payables (public sector) 46 883 75 326
Trade payables (private sector) 221 739 167 339
Foreign Trade payables 1 009 575 453 373
Total 1 278 197 696 038

- 36 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

30- CREDITORS AND OTHER CREDIT BALANCES

30/6/2022 30/6/2021
Governmental authorities current account 8 303 268 4 561 648
Dividends payable 468 4 007 527
Accrued expenses 645 922 601 596
Other credit balances 443 702 470 598
Total 9 389 826 9 641 369
30/1 Governmental authorities credit accounts
30/6/2022 30/6/2021
Customs Department Tobacco secretariats 9 250 --
VAT tax authority* 8 152 794 4 468 254
Health insurance contribution 45 442 3 63142 451
General Tax Authority (salary tax-withheld from others at source) 70 340 21 957
Property tax authority 4 865 1 119
National organization for social insurance 20 577 27 867
Total 8 303 268 4 561 648

30/2 Accrued expenses

* 645 922 Thousand Egyptian Pounds representing accrued expenses for employees and
other.
30/3 Other credit balances
30/6/2022 30/6/2021
Deposits from others 61 392 61 707
Fixed assets supplies 32 270 34 513
Creditors amounts deducted from employees 10 535 7 774
Deferred revenue related to gifted fixed assets* 80 195 99 259
Sums set aside for the benefit of workers - social
169 967 193 783
services**
Other*** 89 343 73 562
Total 443 702 470 598
* Credit balances include deferred revenue.
79 695 thousand Egyptian pounds, pertaining to the net gifted fixed assets.
500 thousand Egyptian pounds for equipment against tobacco leaf raw materials.
** The amounts withheld for the benefit of social services workers are the value of the
remaining profits to be distributed at least 10% of these profits and not more than the
total annual wages of the employees, where the company was subject to the provisions
of Law No. 203 of 1991, where article 33 of that law stipulates that "the employees of
the company shall have a share in the profits to be distributed determined by the
Association based on the proposal of the Board of Directors at least 10% of these
profits.
- 37 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

The workers total cash distribution of these profit must not exceed total them yearly
basic salaries, executive regulations show how to distribute what it exceeds total
yearly basic salary from profit on services that benefit the company's employees.
When the company became under the Law No. 159 of 1981 by the decision General
Assembly of the Company on 2/6/2019, article 41 of the same law stipulates that "the
employees of the company shall have a share in the profits to be distributed determined
by the General Assembly on the proposal of the Board of Directors at least 10% of
these profits and does not exceed the total annual wages of the employees of the
company and the executive regulations show how to distribute more than 10% of the
profits indicated by the employees and services that come to them by benefit.
The workers total cash distribution of these profit must not exceed total them yearly
basic salaries, executive regulations shows how to distribute what it exceed total
yearly basic salary that benefit the company's employees.
When the company became under the Law No. 159 of 1981 by the decision General
Assembly of the Company on 2/6/2019, article 41 of the same law stipulates that "the
employees of the company shall have a share in the profits to be distributed determined
by the General Assembly on the proposal of the Board of Directors at least 10% of
these profits and does not exceed the total annual wages of the employees of the
company and the executive regulations show how to distribute more than 10% of the
profits indicated by the employees and services that come to them.
*** Includes other credit balances.
14 966 thousand Egyptian pounds for the social solidarity committee of the company
and 12 represent in treasury bills and its interest, It expires its maturity at the end of
November 2022
14 049 EGP thousand under the account of selling the plot of land at 41 Abu Darda
Street - Laban Division
12 443 Egyptian pounds for joint production stocks (target / LD)
26 814 thousand pounds for marketing expenses due and others
585 thousand pounds for the deposit of the mosque

31- TRADE RECEIVABLES - ADVANCE PAYMENTS

30/6/2022 30/6/2021
Receivables - other credit balances 80 934 128 799
Receivables credit balances - scrap 555 2 005
Total 81 489 130 804

* CAPITAL COMMITMENTS
The capital commitments represented in accrued customs fees on the company which
the company paid after the smoke out from the custom warehouses and the development
resources fees amounted 180 806 Thousand Egyptian Pounds.

- 38 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

* THE INCOME STATEMENT:

The cost of revenues includes an amounted 48 013 Thousand Egyptian Pounds related
to the depreciation of finance leased assets (for the financial year from 1/7/2020 till
30/6/2022), in addition to an amount of 2 146 Thousand Egyptian Pounds as
maintenance expenses (spare parts) related to the leased assets. Also, the income
statement does not include any expenses related to investment property, except for the
depreciation of investment property, as there are no maintenance or other expenses, and
no income is generated from these investments until the date of preparing the financial
statements.
32- SALES REVENUE
30/6/2022 30/6/2021
Net sales 15 087 882 13 659 595
Revenue of operation for other 2 046 925 2 362 517
Carpentry workshop revenue 418 33
Covered hall revenue 4 218 1 197
Total 17 139 443 16 022 112

33- COST OF GOODS SOLD

30/6/2022 30/6/2021
Raw Materials 6 269 396 6 700 582
Depreciation and amortization 504 292 543 161
Wages 1 948 495 2 025 250
Maintenance 125 834 165 943
Miscellaneous service expenses 144 091 72 083
Insurance expenses 28 764 29 214
Loss of decrease in scrap value 227 --
Loss of decrease in material cost 4 638 1 736
Loss of decrease in inventory 707 --
Reverse decrease in inventory (3 424) (8 749)
Decreased/increased customs balance differences (1 561) --
Change in inventory 198 396 (316 943)
Others 40 176 39 925
Total 9 260 031 9 252 202

- 39 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

* The cost of goods sold has been reduced by the value of the decrease in inventory in
exchange for what was agreed upon in terms of replacement of spare parts with suppliers
3,133 thousand Egyptian pound
** Cost of goods sold reduced by the reverse in decrease of inventory by 291 thousand
Egyptian Pound

*** Cost of goods sold includes the cost covered hall by 11 837 thousand Egyptian
Pound and the cost of carpentry workshop by 363 thousand Egyptian Pound

34- OTHER INCOME

30/6/2022 30/6/2021
Gain from materials sales 4 463 138
Other miscellaneous income* 31 879 41 454
Gain from scrap sales 10 520 7 626
Rents income 2 137 1 439
Credit compensation 349 1 095
Capital profit 5 588 24 314
No-longer provisions 74 259 56 035
Grants and subsidies *** 647 1 021
Gains/losses on revaluation of securities*** 21 948 --
Total 151 790 133 122

* The miscellaneous revenues include an amount of 19 567 Thousand Egyptian Pound

relevant to gifted assets
** Other revenues include grants and subsidies for the period from 1/7/2021 to
30/6/2022, as well as for the comparable period, as they were transferred from
revenues to other incomes.

*** The gains/losses on revaluation of securities are as follows

Description
Profits on revaluation securities 25 576
Losses on revaluation financial securities (3 628)
Net revaluation of securities 21 948

- 40 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

35- SALES AND DISTRIBUTION EXPENSES

30/6/2022 30/6/2021
Salaries 439 252 454 327
Depreciation and amortization 4 484 4 863
Maintenances 966 2 136
Miscellaneous service expenses 6 025 4 879
Insurance expenses 4 108 3 952
Marketing expenses 33 759 66 183
Discount permitted 180 906 132 934
Finished goods transfer 28 329 23 121
Other 40 002 34 898
Total 737 950 727 293

- 41 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

36- GENERAL AND ADMINISTRATIVE EXPENSES

30/6/2022 30/6/2021
Salaries 184 604 167 169
Depreciation and amortization 16 833 17 259
Maintenances 269 259
Miscellaneous service expenses 45 253 47 243
Other 15 132 18 518
Total 263 891 250 448
- The general and administrative expenses includes amount of 45 for health
contribution Thousand Egyptian Pound for the financial year from 1/7/2021 ended
30/6/2022.

37- OTHER EXPENSES

30/6/2022 30/6/2021
Donations for other 36 535 25 060
Extraordinary losses 171 545 41 784
Capital loss -- 3
Provision of early pension 1 232 353 500 000
Provision for allowance of doubtful accounts 3 603 3 128
Provisions of disputed tax 1 925 250 501 000
Impairment provision -- 920
Provision of Expected credit losses 34 059 --
Compensation and fines 45 837 4 141
Total 3 450 075 1 076 036

* Provision of Expected credit losses

30/6/2022 30/6/2021
Accounts receivable 219 --
Debit balances 1 676 --
Banks current accounts 131 --
Deposits 100 --
Egyptian bonds 22 133 --
Dollar bonds 9 800 --
Total 34 059 --

- 42 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

38- NET FINANCING COST/ REVENUE

30/6/2022 30/6/2021
Credit interest 107 531 357 611
Gains revaluation differences on foreign currencies 262 112 11 550
Total finance revenue 369 643 369 161
Bank interest and bank expenses (38 675) (11 972)
(Losses) revaluation differences on foreign currencies (77 682) (71 339)
Total finance expenses (116 357) (83 311)
Net financing Revenue 253 286 285 850

39- OTHER FINANCIAL INVESTMENTS REVENUE

The other financial investments revenue includes 734 714 thousand Egyptian Pounds as
a treasury bill return and 631 140 thousand Egyptian Pounds from treasury bonds
revenue, and 71 817 thousand Egyptian Pounds from dollars bonds and 723 thousand
Egyptian Pounds from government bonds returs
40- TAX EXPENSES
- The income tax in the income statement as of 30/6/2022 was amounted to
1 096 706 thousand Egyptian Pounds.
- The deferred tax in income statement as of 30/6/2022 was amounted to
144 319 thousand Egyptian Pounds according the following:
Thousand Egyptian Pounds
Deferred tax liabilities 110 990
Deferred tax assets 33 329
Total 144 319

- The current tax average 20%

- 43 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

41- EARNINGS PER SHARE

Unit 30/6/2022 30/6/2021

Net profit for the year after deducting
the dividends for employees, Youth Thousand
3 585 569 3 840 410
and sport Authority, and rewards of Egyptian Pounds
Board of Directors Members.
Weighted average number of common
Thousand shares 2 229 443 2 208 438
shares
Portion per share in net profit Egyptian Pounds 1.61 1.74

- The weighted average number of ordinary shares was calculated according to standard
(22) weighted by the number of days after the reduction of treasury stocks.

The Cash Flows Statement:

42- CASH AND CASH EQUIVALENT
- The cash and cash equivalent balance amounted to 4 300 thousand Egyptian Pounds
are as following:
30/6/2022 30/6/2021
Banks accounts 1 008 750 1 041 434
Cash on hand 152 087 22 170
Deposit for current currencies 100 000 --
Total 1 260 837 1 063 604
Less:
Banks overdrafts 1 256 537 --
4 300 1 063 604
- The credit facilities which available to be used in future amounted to 6 519 million
Egyptian Pounds.

43- CONTRACTUAL COMMITMENTS

The spare parts for Laboratory equipment maintenance amounted 36 thousand US Dollars
fully in Gas tube laser mix tox 690 with amount 3 Thousand Euro..

44- COMPARATIVE FIGURES

Some comparative figures have been reclassified to conform to the presentation of the
financial statements for the current period.

- 44 -
NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

45- OTHER DATA

46/1 Fight smoking:
- On 21/6/2007 the law no. 154 for the year of 2007 issued a modification of some
provisions of the law no. 52 for the year of 1981 about the protection from the
damage of smoking which prevents smoking completely in all facilities as health,
educational, governmental departments, sports and social clubs, youth centers and
all other places that the ministry of health determine. This law state penalties on
those responsible for these places and on the smoker.
In addition the company is obliged to print a warning of smoking risk on at least
the half of the two sides of the package accompanied with adding other warnings
or publishing photos confirm damage of smoking, The company to comply with
this law and the decree of minister of health and population no. 443 for the year of
2007, the company endured by additional burden cost as a result of the continuous
adjustment in printing cylinders which resulting losses in the publications material
related to products.
In addition, the company is obliged to change the photo each six months according
to the decision of ministry of health and population.

46/2 Insurance:
- The company have various insurance using insurance policies which covered all
potential risks that company may face, such as:
a. All industrial hazards and political violence Certificate/document:
- To cover all risks based on 7mI certificate Including machine breakdown, loss
of revenue, burglary, theft using violence (coercion), general civil liability, and
removal of rubble. public civil responsibility and the removal of rubble.
Political violence also covers the dangers of terrorism, vandalism, age-related
acts, riots, civil strikes, armed insurrection, revolution, rebellion, military coup
and costs debris removal
b. Cars Certificate/document:
- Cover all risks fleet of cars facing (comprehensive insurance - compulsory
insurance).
c. Transportation Certificate/document:
- Cover risks of transportation, sea and air transportation for all production
materials and finished goods.
d. Dishonesty Certificate/document:
- Cover the drivers who are working on contractual terms for transporting the
company’s’ products.
e. Lifts Certificate/document:
- Cover the civil responsibility result from operation.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

f. Cash transfer Certificat/document :

- Covers cash transporter (treasurers - money changers - custodians) for the risk
of theft under duress or threat of weapon and violence to the person charged
with transporting cash
g. Dishonesty Certificate/document:
- Covers cash and in-kind custodians in the company from the material losses
that it incurs or its property as a result of an accident of waste or embezzlement
committed by the insured workers.
h. Life Certificate/document:
- Life insurance for workers to cover the risk of death from any reason
i. Personnel accident violence Certificat/document:
- Covers the risks that the company's employees are exposed to over 24 hours
because of an accident and the resulting cases (death, total and partial
disability.
46/3 Environmental responsibility:
- According to the Eastern company’s continued efforts to achieve protecting
environment and preserving the common health and as a commitment by the
company to apply the environmental requirements of Environment Law No. 4
for the year of 94 and it’s amendments and executive regulations through
implementing and maintaining the internal environment in its factories and the
external environment surrounding the company in the purpose of achieving
sustainable compatibility of its environmental conditions, these points are
representing in some projects as following:
▪ The company has established and implemented the integrated industrial
complex in the industrial zone at the City of 6th October to include all its
locations. This procedure is an evidence of commitment towards the
environmental laws and regulations.
▪ The company has used the Natural Gas as a clean source of energy in
operating boilers, generation power as a clean source of energy, and to
reduce environmental pollutants from combustion.
▪ The company established an environment friendly incinerator and the heat
generated are used to generate ice water in a heat exchange to A/C factories.
▪ The company has controlled the emissions of fine tobacco leaf using
cyclones with non-permeable filters to prevent dust of tobacco leaf powder
in the airspace in order to protect the environment from pollution and reuse
and recycling through manufacturing natural tobacco leaf flakes.
▪ The company established a station of liquid waste treatment (industrial
drainage) in the industrial complex of the company in the City of 6th October
with total capacity of 610 m3/day and the company got the environmental
approval for energy raising up to be 1220 m3/day. Installations and the
station are currently in the testing phase to start operation.
▪ The company has also implemented a project of central air conditioning
operating by natural gas to one of its factories to avoid the impact of thermal

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NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

stress knowing that there is no raise in the temperature of the working

environment as a result of various industrial processes more than allowed
rates according to the executive decisions and regulations, through the
monitoring carried out at the facility.
▪ The company established a central station for collecting the manufacturing
process outputs resulting from the company's production activities. Some
items are sold and others are recycled in industries. Compost production
from unusable dust of tobacco leaf is also been studied.
▪ The company already bought a group of the environmental measuring
devices to monitor pollutants and emissions of the work environment to
determine the permissible limits in accordance with the requirements of the
environmental law (number 4 for the year of 1994) and its executive
regulation. In addition, the experts of the National Research Center had done
the required regularly measurements and approved it in the environmental
records for the different locations of the company. It is worth mentioning
that the company spares no effort in supplying all personal protection tools
to employees according to the nature of each activity.
▪ Extensive environmental approval was obtained for the project of
establishing and extending a factory of roots plant (ESS) as space of 13350
m3 in the industrial complex of the company in the City of 6th October, the
company has also planted green areas and windbreaks and ornamental plants
inside the industrial complex zone , and that with the implementation of the
construction requirements and green spaces in the general plan for the
industrial complex approved by the Urban Communities Authority as well
as green areas around the eastern side of the industrial complex.
▪ Environmental approval was obtained for the construction of a 1 MW solar
power station with an area of 14000 m2 in the industrial complex of the
company in the City of 6th October, the station has already been completed
and it is currently in the testing phase for its service entry in order to reduce
the burden on the electricity network in the industrial complex of the
company in the City of 6th October. The company also is in the process
stage of establishing additional electricity generating station by (BOT)
system and 2 MW power.
▪ The soiled thinner is recovered and reused by an organic solvent separator.
▪ The company has all the environmental approvals and has updated
environmental records approved by the largest research and scientific bodies
(National Research Center) and it has been reviewed by the Environmental
Affairs Agency. Also, the company is committed to all environmental laws
and regulations.

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NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

46- SIGNIFICANT EVENT

46-1 The impact of the spread of the new Coronavirus (Covid 19) on the economy and
global markets continues, as world governments, including the Egyptian government,
companies, and individuals, have taken all measures to prevent the spread of the virus
and protect the health of their societies as much as possible.
- The health and safety of all workers, their families, clients, and their families was
and remains the top priority company while ensuring the continuity of work to fulfill
obligations, especially towards shareholders. We have formed a Service Response
Team assigned to perform specific tasks and this team is working around the clock
to deal with all the challenges associated with this global pandemic.
- Despite belief that the spread of the virus represents a great challenge at present, but
that gave us the chance to stand out , as the strength of our financial position and its
high liquidity support us exceptionally during that crisis, but most importantly is our
belief that our credibility and our tremendous record of strong performance at the
most difficult times and our focus on the client’s needs during the crisis is what
distinguishes us in those times in particular.
- From our point, we can see that there is no material impact on the current economic
situation of the company (its financial position, business results, and cash flows).
- We work in a sector characterized by very strong demand, which has proven its
resilience in the face of historical and current challenges, and in light of our current
knowledge and available information, there is no impact of the emerging (Covid-19)
virus on the company's ability to continue in the foreseeable future.
46-2. The Russian-Ukrainian war broke out in Eastern Europe during the year 2020, which
affects the increase in global inflation rates, but it is currently difficult to estimate the
potential effects on the financial statements of that war.
46-3 On March 21, 2021, the Monetary Policy Committee announced an increase in the
interest rate on lending and the credit rate, which led to the movement of the exchange rate
of the US dollar against the Egyptian poundThe matter, as a whole, may have an impact on
the local economy, but it is not possible to estimate this impact at the present time
47. Based on the company's leading role in the consumer products market and the large
volume of dealings it represents and guided by its leadership role in implementing
the financial inclusion system, with all segments of merchants obtaining
appropriate financial services, and from this standpoint, a cooperation protocol was
signed with the National Bank of Egypt, a leader in the field of support automation
of payments This is to seek to provide mechanisms for payment and collection
through electronic mechanisms to support the culture of financial inclusion
48. On 18/3/2019, the Minister of Investment and International Cooperation amended
some provisions of the Egyptian accounting standards issued by the Minister of
Investment’s Decree No. 110 of 2015, which includes some new accounting
standards and an amendment to some of the existing standards and because of the
current conditions that the country is going through due to the outbreak of the new
Coronavirus. As explained in detail in clarification No. (1-48), the Egyptian
government has implemented some preventive measures to counter the spread of
the virus, including reducing working hours and temporarily stopping some
activities, including aviation and tourism activities. As a result, private companies
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NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED JUNE 30, 2022
(Amounts expressed in Thousands of Egyptian Pounds)

have also applied different preventive measures from one company to another.
According to the activity, the number of employees, the work location, and other
considerations, these procedures included imposing restrictions on the number and
period of the presence of human resources in the companies, which led to some
companies delaying the procedures for fully implementing the new Egyptian
accounting standards package on the effective date of those standards which is
January 1, 2020. Due to these circumstances, the Higher Committee for the Review
of Egyptian Standards and Egyptian Standards for Review and Limited
Examination and other assurance tasks agreed to a defer applying New Egyptian
Accounting Amendments accompanying it to Resolution No. (69) of 2019 on the
annual financial statements of these companies at the end of 2020, And the
combined effect was included by the end of, and the financial regulatory authority
announced the postponement of applying the standards (47), (48), (49) and this was
based on prime ministers decision no. (1871) for 2020 and the combined effect at
the end of 2021 the application of these amendments was postponed to begin on
January 1, 2021 in accordance with Prime Minister Decision No. (1871) For the
year 2020.

(Mrs. / Omima AbdelMoneim) (Mr./ Neiveen Ali)

Consultant (A) Financial sector Head of financing sector
(Mr./ Tamer Mossly)
Executive Managing for finance affairs

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