EZZ STEEL

Balance Sheet
2016 2017
Non-Current Assets (mn EGP) (mn EGP)
Fixed assets (net) 28,145 26,625
Projects under construction 609 944
Investments in associates 0 0
Available -for-sale investments 110 110
Deferred tax assets 2,719 2,046
Long term lending to others 37 43
Other assets 30 25
Goodwill 315 315
Total Non-Current Assets 31,965 30,108

Current Assets
Inventory 6,131 7,462
Trade and notes receivable (net) 287 188
Debtors and other debit balances (net) 2,596 3,491
Suppliers - advance payments (net) 169 616
Investments in treasury bills 12 8
Cash and cash equivalents 5,105 4,730
Total Current Assets 14,300 16,495
Total Assets 46,265 46,603

Shareholders' Equity
Issued and paid-up capital 2,716 2,716
Reserves 182 182
Modification surplus of fixed assets 2,299 2,125
Retained losses -1,968 -3,382
Treasury stocks -72 -72
Foreign entities and translation reserves 4,061 3,871
Total holding company shareholders' equity 7,218 5,440
Non-controlling interest 2,979 3,378
Total shareholders' equity 10,197 8,818

Liabilities
Non-current liabilities
Long-term loans 9,235 9,767
Long-term liabilities 831 1,548
Deferred tax liabilities 3,701 3,782
Total non-current liabilities 13,767 15,097
Current liabilities
Banks - overdraft 60 7
Loan installments and credit facilities due within one year 14,916 13,898
Trade and notes payable 4,467 4,775
Customers - advance payments 1,243 2,131
Creditors and other credit balances 1,390 1,423
Accrued liabilities - Income tax 3 133
Liability of the supplementary pension scheme 5 9
Provisions 217 312
Total Current Liabilities 22,301 22,688
Total Liabilities 36,068 37,785
Total Shareholders' Equity and Liabilities 46,265 46,603

Income Statement
(mn EGP) (mn EGP)
Sales (net) 23,189 41,742
Less: Cost of sales 20,677 37,407
Gross Profit 2,512 4,335
Other operating revenues 62 76
Less: Selling and marketing expenses 194 287
Less: Administrative and general expenses 756 1,069
Less: Other operating expenses 22 152
Operating profit 1,602 2,903
Finance income 296 516
Finance cost 1,826 3,703
Foreign currency exchange differences gains 816 87
Less: Net finance costs 714 3,100
Net (loss) profit of the year before tax 888 -197
Less: Income tax 3 133
Less: Deferred tax 325 766
Net (loss) profit of the year after tax 560 -1,096
Change
%
-5.40%
55.01%

0.00%
-24.75%
16.22%
-16.67%
0.00%
-5.81%

21.71%
-34.49%
34.48%
264.50%
-33.33%
-7.35%
15.35%
0.73%

0.00%
0.00%
-7.57%
71.85%
0.00%
-4.68%
-24.63%
13.39%
-13.52%

5.76%
86.28%
2.19%
9.66%
 -88.33%
-6.82% 25,042 25,220 0.71%
6.90%
71.44%
2.37%
4333.33%
80.00%
43.78%
1.74%
4.76%
0.73%

80.01%
80.91%
72.57%
22.58%
47.94%
41.40%
590.91%
81.21%
74.32%
102.79%
-89.34%
334.17%
-122.18%
4333.33%
135.69%
-295.71%
Ratio

1- Funding Gap

Funding Gap (in days)

Funding Gap (in amounts)

2- Activity Ratios

Accounts Receivables T/O

Accounts Receivables DOH

Inventory T/O

Inventory DOH

Accounts Payables T/O

Accounts Payables DOH

Accrued Expenses T/O

Accrued Expenses DOH

3- Profitability Ratios
Net Operating Profit (NOP) Margin

Net Profit After Unusual Items (NPAUI) Margin

Return On Assets

Return On Equity

4- Liquidity Ratios

Current Ratio

Quick Ratio

Working Capital

Working Capital Turnover

5- Solvency Ratios

Gearing Ratio

Assets Financing Ratio

 2016 2017 Change %

[ARs DOH + INV DOH] - [Aps DOH +Accrued Exp's DOH]

50.16 43.21 -14%

[(COGS + SGA)/365] X Funding Gap days

2972.25 4588.44 54%

Sales / AR's = xxx times per annum

8.04 11.35 41%

[365 / AR's T/O] =xxxx days

45.38 32.17 -29%

COGS / Inventory = xxxx times per annum

3.37 5.01 49%

[365 / Inventory TO] = xxxx days
108.23 72.81 -33%

COGS / Accounts Payables = xxxx times per annum

3.53 6.04 71%

365/ AP's T/O = xxx days

103.39 60.48 -42%

COGS / Accrued Expenses = xxxx times per annum

6892.33 281.26 -96%

[365/ Acc. Exp. TO] = xxxx days

0.05 1.30 2351%

NOP / Sales

6.91% 6.95% 1%

NPAUI / Sales

2.41% -2.63% -209%

NPAUI / Total Assets

1.21% -2.35% -294%

NPAUI / Total Shareholders' Equity

5.49% -12.43% -326%

Current Assets / Current Liablilities

64.12% 72.70% 13%

[Current Assets - Inventory]/ Current Liabilities

36.63% 39.81% 9%

Current Assets - Current Liablilities

-8001.00 -6193.00 -23%

Sales / WC
-2.90 -6.74 133%

Total Debts [STD & LTD] / Total Shareholders' Equity

2.46 2.86 16%

Total Debts [STDs + LTDs] / Total Assets
0.54 0.54 -0.02%
Justification

Drop of Funding Gap by 14% is attributed to drop of Ars DoH by 29% & Inventory
DoH by 33% in 2017, while Aps DoH declined by 42%, while A. Exp's DoH slightly
increased by 2351% to reach 1.30days. The drop is not reflecting the funding
gap in amount --> higher efficiency in managing the ACC

FG amount increased by 54% in 2017 , due to 81% increase of COGS, 48% & 41%
of SG&A, while FG days declined by 14% in 2017. The increased FG is function of
increased operating expenses during 2017.

AR's TO increase by 41% is due to 80% sales increase in 2017, while AR's (trade &
notes receivable and debtors & other debit balances) increased by 28% , that
indicates incresed cash sales which is healthy sign.

The AR'S DoH drop by 29% is linked to the increase of AR's TO in 2017 than
during 2016 --> indicates incresed cash sales which is healthy sign.

Inventory TO increase by 49% is driven by 80% increase of COGS while inventory

increased by 21% only during 2017. The ratio reflects better sales.
The 33% drop of Inventory DoH is due to 21.71% increase in inventory in 2017.
The ratio reflects better sales.

AP TO increased by 71% due to increase in COGS by 81% which matches the

increase in sales by 80%. Yet, A/P (trade & notes payable and creditors and other
credit balances) increased by 5.8% which implies that the company is now paying
its suppliers rather in cash than on credit which is mainly a result of enhanced
cash sales & limited ARs which reflects better payment ability of the company.

AP's DoH drop by 42% is attributed to AP's TO increase by 71% in 2017 that
reflects better payment ability of the company of it dues mainly driven by
enhanced cash sales.

Accrued expenses TO decreased by 96% because accrued expenses increased by

4333% which offset the increase in COGS by 81%.

A. Exp's DoH increase by 2351% in 2017 is high in percentage still very limited in
days, mainly due to major drop of A. Exp's TO due to large percentage increase
of A. Expenses in 2017 of 4333%, still it represents limited liability in amount.
NOP margin remained stable during 2017 due to same level of increase of both
the sales as well as the Operating Profit (80%) during 2017 over 2016, said
coherent increase is mainly driven by increased Gross Profit driven by increase in
sales and limited increase of operating costs --> reflects slightly enhanced
efficiency in managing operating costs

The ratio turned to negative due to losses realized in 2017 mainly due to the
334% increase of net finance costs in 2017, driven by the increase in interest
rates from 2016 to 2017 after the devaluation --> reflects worse profitability

The ratio turned to negative due to losses realized in 2017 mainly due to the
334% increase of net finance costs in 2017, driven by the increase in interest
rates from 2016 to 2017 after the devaluation --> reflects worse profitability
The ratio turned to negative due to losses realized in 2017 mainly due to the
334% increase of net finance costs in 2017, driven by the increase in interest
rates from 2016 to 2017 after the devaluation --> reflects worse profitability

13% increase of Current Ratio, is mainly driven by 15% increase in current assets
while current liabilities increased by 1.7% , the limited level of current ratio
reflects slightly enahnced abilitiy to meet short term liabilities --> generally bad
liquidity management, current ratio less than 1

The ratio increased by 9% due to the increase in current assets by 15.35%

(mainly debtors and other debit balances & inventory but inventory is not
indicative here because it is then deducted) while current liabilities increased by
1.74% only --> generally bad liquidity management

Declining negative Working Capital ( driven by increase in CA, mainly debtors &
other debit balances & inventory and decrease in loan installments and credit
facilities due within one year) reflects declining WC deficit --> generally bad
liquidity management
Working Capital TO is negative due to negative working capital --> generally bad
liquidity management

16% increase of Gearing Ratio driven by the drop of equity by 13.51% in 2017
mainly driven by the increased retained losses and drop in foreign entities and
translation reserves --> generally high indebtness, bad solvency management
Total debts increased by 0.71% and total assets increased by 0.73%. Thus, the
ratio did not change